"No-Brainer Trade Of The Year" Plummets As Bondholders Duck Ahead Of Possible Greek Bankruptcy Tomorrow

Tyler Durden's picture

Was it only two weeks ago that the smartest investors in the room were calling 'buying Greek bonds' as the no-brainer trade-of-the-year? Sad to say that for such power-houses of intellectual prowess as Greylock (who if you remember could not get enough media coverage during the PSI discussions) have once again grabbed that falling knife with 3 hands and lost a finger, thumb and perhaps even their toes. Longer-dated Greek bonds have dropped to an all-time low price of 13.75 cents on the Euro (a magnificent 27% drop in 2 weeks since the NYT ran the buy it now or you're a big loser article). These bonds are down over 43% since the PSI deal and have plunged in price in the last few days as the reality of a potential bankruptcy of absolutely cash-strapped Greece comes to bear tomorrow with the EUR430mm bond due.

Perhaps instead of paying 2-and-20 to listen to nothing but glorified knife-catching heads-I-win-tails-its-your-money-we-lose funds, investors should heed digital dick-weeds for back in January we described in detail exactly how to trade Europe this year; and those non-Greek-law bonds have returned 31% (or 135% annualized since that time).

...and while we know that these bonds were/are illiquid, this BVAL chart fits with the chatter we hear from desks where there is little trading now (obviously) as those in the know hold and those not in the know remain in the dark.

Chart: Bloomberg

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Cognitive Dissonance's picture

"No-Brainer Trade Of The Year" Plummets As Dead Duck Greek Debt Holders Bond Ahead Of Possible Greek Bankruptcy Tomorrow"

Fixed it for ya. :)

Mr Lennon Hendrix's picture
Alex Jones is going to need to rethink his theory - his theory is the fallacious logic "If A then not B" by means that "If the PTB say something, it is the opposite" (he admits this)...so, today, the CEO of Total says Peak Oil is not real, they have plenty of reserves. So, Jones, now he must be a Peak Oil Theorist, right?
THE debate about peak oil is over and the world has used just a fraction of the petroleum it will be possible to extract, an expert believes.

Speaking at the Australian Petroleum Production and Exploration Association (APPEA) 2012 conference in Adelaide, oil major Total's chief executive Christophe de Margerie said new sources of petroleum, such as tight gas and shale oil, meant that the world had ample supplies of petroleum.

Mr de Margerie said while there were economic and environmental issues which would affect how quickly resources were exploited, there was "definitely not a concern about reserves''.

Peak Oil Debate Over, Say EXPERTS:

http://www.adelaidenow.com.au/business/peak-oil-debate-is-over/story-e6frede3-1226354771053

EscapeKey's picture

The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth

http://ftalphaville.ft.com/blog/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/

 

redpill's picture

Expressing it in dollar amounts clouds the issue because then you get into fiat values.  The actual equation is: how many barrels of oil does it take to get one barrel of oil out of the ground?  Currently that ratio is still well under 1, but eventually it won't be, and that will be the end.

EscapeKey's picture

I don't disagree with you, especially considering a marginal price increase is a self-perpetuating monster, but at present time the Dollar is the generally used measure.

Killtruck's picture

And when that ratio nears one or better, we start calculating how rounds of 5.56  it takes to procure one barrel of oil.

Hmm? What's that? I should look around? ...oh.

boogerbently's picture

Here's the financial/investment lesson, here:

Anything times zero = zero

SpaceMonkey603's picture

While you get into fiat values they are still important because they express the relative difference in value between alternative forms of energy. The concept of "barrel to barrel" while it is nice, simple, and easy to understand, it is incorrect. Hypothetically say we have cheap energy (think units of energy i.e. btu's) in the future for industrial uses but still rely on oil for transportation. We will continue to utilize greater energy content then is available in a barrel of oil to extract one because of the intrinsic value of the form of the energy and it's intended application. In that scenario, we would still be exploring for and producing oil at a ratio greater then 1 to 1 and I can assure you, if this hypotentical situation arises we most certainly will be doing it. We have to be able to monetize energy content when we have various sources with various applications, no offense to your position, it makes logical sense on the surface, but there is a great deal more to energy markets and the oil industry in particular then can be summed up in 3 scentences.

tocointhephrase's picture

Who said we were running out, more so, the cost to get it out of the ground/sea bed....

boogerbently's picture

....but will anyone learn the lesson, here, about greed?

Not while they have US pay them for their mistakes. (wow, it's the same way we raise our kids......everyone get's a trophy).

LawsofPhysics's picture

< sarc on > Wow, that must be why the cost to recover oil has been going down and the markets are being flooded with a huge glut of cheap oil.  < sarc off > 

How many more "experts" do we need to piss down our backs and tell us that "it's raining"?

Drachma's picture

Was a hundred degrees below zero...And my mama cried.

blunderdog's picture

Yeah, right, just like that's why global oil production continues to climb at a steady rate.

[drool]

Drachma's picture

The equation is that simple then? Recovery Cost und Supply? I would say you are missing quite a few variables, tangible and intangible. Cheers.

ejmoosa's picture

...and it's warm rain because of "global warming".

Widowmaker's picture

ive got more than 26 years of dealing with faggot experts.  The only thing i can say is piss is unlimited, and the experts are arsonists.

Buck Johnson's picture

There is no govt. for them to pay anything and who's authorized to pay.  The reason why the markets are red and continue to be red is the fact that they know that Greece will officially default and will be forced to leave the Euro.

redpill's picture

Well that's easy, they just won't pay the bond.  Starting to get the picture, Europe?

CrashisOptimistic's picture

For those particular bonds, that is a swap trigger.

Odds seem very high that Greece will conserve cash and not pay tomorrow, triggering swaps.  This may prove a generally bullish thing as people can swagger around and point at how swaps are thus proven valid hedge vehicles.

Dr. No's picture

Provided they are paid out.  I am not sure FED can bail out AIG again.  I would expect years of litigation, in the mean time Corzine type hedge funds would go belly up witing for the cash.

Quinvarius's picture

The Fed is conducting bailouts at this very moment, I assure you.  What they are not doing is talking about it.

redpill's picture

For the Greek people, a swap is 1 fish for a cross-town bike ride.  They are past the point of caring about derivatives and are concentrating on how to survive in a barter economy.  They have a lot more experience with it than many other countries do, so I think they'll get along better than some folks expect.

orangegeek's picture

First EU member to go bankrupt.  Others to follow - Italy, Spain, Portugal, Ireland.  Guess that will be next week's news.

EscapeKey's picture

It's ok - the DJIA is now surging on the back of "we haven't had fucking terrifying news for 5 minutes".

resurger's picture

You cant have bad news, Must HOLD!

Conman's picture

BTFD - Can't keep US Equity markets down on anything. Yay PPT, we Heart you!

Burr&#039;s 2nd Shot's picture

I always wondered what "next Tuesday" would look like when the loan shark came to collect from Wimpy.

TonyCoitus's picture

Watch it and see.  Film at 11PM.

Broccoli's picture

Human nature is amazing. Everyone knows it is a ponzi scheme, but most still think they won't be the last guy on the trading floor, so there is still money to be made!

Boilermaker's picture

There is money to be made.  As long as you are one of the few to get the script prior to the next act.

Boilermaker's picture

...As the equities markets grind higher for no apparent fucking reason.

Boilermaker's picture

...no organic natural reason.

GeneMarchbanks's picture

Carbon based reasons are over-rated anyway or is that over-sold?

What's that phrase you use? Ass slammed? Organic enough...

FinalCollapse's picture

The short sellers' money is vaporizing and condensing on the JPM's accounts.

I Am Not a Copper Top's picture

No-brainer trade of the year is buy everything at 11:30 EST

Bill D. Cat's picture

That trade will last ..... until it doesn't .

Broccoli's picture

No brainer trade of the year is betting on valuation uncertainty and disfunctional trading platforms dressed up as markets.

So PMs in your mattress and buried under your hydrangea bush. And if you must gamble like me, serve yourself up with a helping of day trading artificial indexes of uncertainty. Buy the calm, sell the storm, it is the way to play bullshit markets.

boogerbently's picture

Buying the USDollar is the SAME "no brain trade".

We ill give you 1/3 of a percent per year for your money, and inflation will rise 2% per year. Net loss, 1.7% per year. Well, at least it's keeping gold prices down......hey, wait a minute !!!

rubearish10's picture

There's a colored Swan approaching.

farmerjohn2112's picture

Natalie Portman is so fine... just sayin'.

firstdivision's picture

Why the dump?  Look at equites, they've already been able to shed off 50% of reality that set in today.  Equites do swimingly well when they are off their Clozapine and back on the glue.

divedivedive's picture

One of the pieces I don't understand relates to this post from February. Wasn't all this anticipated ? Didn't the ECB threaten to not make the payment ? and then werent't some assurances worked out ? If so, and I were involved in any of those conversations - Greece would not ever, ever get another dime from me.

Samaras Pledges To "Renegotiate" Bailout Pact After April Elections

http://www.zerohedge.com/news/samaras-pledges-renegotiate-bailout-pact-after-april-elections