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"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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Mon, 05/14/2012 - 13:52 | 2424326 Cognitive Dissonance
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. :)

Mon, 05/14/2012 - 13:58 | 2424347 Mr Lennon Hendrix
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), 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:

Mon, 05/14/2012 - 14:02 | 2424357 EscapeKey
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


Mon, 05/14/2012 - 14:24 | 2424444 redpill
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.

Mon, 05/14/2012 - 14:35 | 2424482 EscapeKey
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.

Mon, 05/14/2012 - 14:38 | 2424492 Killtruck
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.

Mon, 05/14/2012 - 19:54 | 2425270 boogerbently
boogerbently's picture

Here's the financial/investment lesson, here:

Anything times zero = zero

Tue, 05/15/2012 - 13:30 | 2427996 SpaceMonkey603
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.

Mon, 05/14/2012 - 14:06 | 2424368 tocointhephrase
tocointhephrase's picture

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

Mon, 05/14/2012 - 19:52 | 2425267 boogerbently
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).

Mon, 05/14/2012 - 14:05 | 2424372 LawsofPhysics
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"?

Mon, 05/14/2012 - 14:16 | 2424416 Cognitive Dissonance
Cognitive Dissonance's picture

Just don't eat that (global cooling) yellow snow.

Mon, 05/14/2012 - 15:01 | 2424559 Drachma
Drachma's picture

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

Mon, 05/14/2012 - 14:52 | 2424535 blunderdog
blunderdog's picture

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


Mon, 05/14/2012 - 14:56 | 2424547 Drachma
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.

Mon, 05/14/2012 - 15:39 | 2424684 ejmoosa
ejmoosa's picture

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

Mon, 05/14/2012 - 16:10 | 2424779 Widowmaker
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.

Mon, 05/14/2012 - 14:23 | 2424446 PivotalTrades
PivotalTrades's picture

Yes and that fraction is 7/8s

Mon, 05/14/2012 - 21:43 | 2425530 Buck Johnson
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.

Mon, 05/14/2012 - 13:51 | 2424329 redpill
redpill's picture

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

Mon, 05/14/2012 - 13:55 | 2424340 CrashisOptimistic
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.

Mon, 05/14/2012 - 14:07 | 2424387 Dr. No
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.

Mon, 05/14/2012 - 14:17 | 2424427 Quinvarius
Quinvarius's picture

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

Mon, 05/14/2012 - 16:10 | 2424780 Widowmaker
Widowmaker's picture

i second.

Mon, 05/14/2012 - 14:28 | 2424461 redpill
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.

Mon, 05/14/2012 - 13:52 | 2424334 orangegeek
orangegeek's picture

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

Mon, 05/14/2012 - 13:53 | 2424335 EscapeKey
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".

Mon, 05/14/2012 - 15:17 | 2424609 resurger
resurger's picture

You cant have bad news, Must HOLD!

Mon, 05/14/2012 - 13:58 | 2424343 Conman
Conman's picture

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

Mon, 05/14/2012 - 14:00 | 2424356 junkyardjack
Mon, 05/14/2012 - 13:57 | 2424346 Burr's 2nd Shot
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.

Mon, 05/14/2012 - 14:38 | 2424494 TonyCoitus
TonyCoitus's picture

Watch it and see.  Film at 11PM.

Mon, 05/14/2012 - 14:00 | 2424349 Broccoli
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!

Mon, 05/14/2012 - 14:00 | 2424353 Boilermaker
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.

Mon, 05/14/2012 - 15:16 | 2424608 brooklynlou
brooklynlou's picture

Like WaMu, Lehman, Bear Stearns, Wachovia ....

Mon, 05/14/2012 - 15:32 | 2424664 Nobody For President
Nobody For President's picture


Mon, 05/14/2012 - 13:59 | 2424350 Boilermaker
Boilermaker's picture

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

Mon, 05/14/2012 - 14:19 | 2424431 Quinvarius
Quinvarius's picture

Oh...there is a reason.

Mon, 05/14/2012 - 14:58 | 2424550 Boilermaker
Boilermaker's picture organic natural reason.

Mon, 05/14/2012 - 15:01 | 2424566 GeneMarchbanks
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...

Mon, 05/14/2012 - 15:08 | 2424581 FinalCollapse
FinalCollapse's picture

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

Mon, 05/14/2012 - 13:59 | 2424352 I Am Not a Copp...
I Am Not a Copper Top's picture

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

Mon, 05/14/2012 - 14:03 | 2424365 Bill D. Cat
Bill D. Cat's picture

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

Mon, 05/14/2012 - 14:08 | 2424388 Broccoli
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.

Mon, 05/14/2012 - 19:59 | 2425280 boogerbently
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 !!!

Mon, 05/14/2012 - 14:02 | 2424354 rubearish10
rubearish10's picture

There's a colored Swan approaching.

Mon, 05/14/2012 - 14:26 | 2424457 junkyardjack
junkyardjack's picture

That's racialist 

Mon, 05/14/2012 - 14:26 | 2424459 farmerjohn2112
farmerjohn2112's picture

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

Mon, 05/14/2012 - 14:05 | 2424359 firstdivision
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.

Mon, 05/14/2012 - 14:03 | 2424363 divedivedive
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 


Mon, 05/14/2012 - 14:02 | 2424364 youngman
youngman's picture

"Greece will conserve cash " are assuming they have any left..I bet they have been paying salaries in advance the last few days....get it while you can...I want my vacation pay for 2015 now thank is just being blown out everywhere in Greece..if they have it in their government accounts....take it...that is the Greek way

Mon, 05/14/2012 - 14:04 | 2424370 Stoploss
Stoploss's picture

They strugglin a lil bit today. Lil bit..

Mon, 05/14/2012 - 14:06 | 2424374 fonzannoon
fonzannoon's picture

It baffles me that the performance of these bonds is in line with the performance of the companies that mine the most precious metals out of the ground.

Mon, 05/14/2012 - 14:05 | 2424375 Manthong
Manthong's picture

How big is it?..

Can't Buffet just write a check for it?


Mon, 05/14/2012 - 14:22 | 2424438 Quinvarius
Quinvarius's picture

In fact, Buffet will write a check for it.  Who do you think sells CDS?

Mon, 05/14/2012 - 20:02 | 2425288 boogerbently
boogerbently's picture

He could just BUY Greece, but it comes NO WHERE NEAR his guidelines as a good investment.

Mon, 05/14/2012 - 14:06 | 2424377 The worst trader
The worst trader's picture

Buy the Fucking dips, haven't we learned anything?

Mon, 05/14/2012 - 14:29 | 2424472 Zero Govt
Zero Govt's picture

all good things come to an end, nothing lasts forever

this may be a dip to buy too far

Mon, 05/14/2012 - 14:06 | 2424383 LawsofPhysics
LawsofPhysics's picture

Paging Max Fischer...

Mon, 05/14/2012 - 14:29 | 2424465 Zero Govt
Zero Govt's picture

Max is currently to be found digging a hole in the sand bury his head in

Mon, 05/14/2012 - 14:42 | 2424509 TonyCoitus
TonyCoitus's picture

I like reading Max.  Hearing an opposing viewpoint is beneficial.

Mon, 05/14/2012 - 17:36 | 2425036 resurger
resurger's picture

I like Reading him too, he is so fucking AMAZING, Good Looking and SMART!

I will vote for him , I love his thoughts, the way he writes, thinks, shits, farts ...

He is 3 levels or maybe 4 below god

Mon, 05/14/2012 - 14:07 | 2424386 jus_lite_reading
jus_lite_reading's picture

Uh, the "smartest investors in the room" are really nothing more than the best snake oil salesmen that Wall Street has... that group includes the likes of 'Jimmy Dimonds,' 'Uncle BEnron Bernank,' 'Alan Greenpondscum,' 'Angelo Gizzillo,' 'Dickhead Fuld,' and lest we forget the ultimate snake oil salesman, 'Lloyd Banktime.'

Mon, 05/14/2012 - 14:06 | 2424389 LongSoupLine
LongSoupLine's picture

No brainer trade of year?...

All problems go away at European closing bell...well, until Europe opens again of course.

Mon, 05/14/2012 - 14:07 | 2424391 carbonmutant
carbonmutant's picture

CACs anyone?

Mon, 05/14/2012 - 14:17 | 2424421 rubearish10
rubearish10's picture

Ther'e just no "natural" selling cycle. Bumfucking mindboggling turdackle whackle frackle and mysterious. What? Cash is not ok? Ummm.

Mon, 05/14/2012 - 14:26 | 2424443 Zero Govt
Zero Govt's picture

this'll set a precedent for the rest of Govt debt: 'Bonds Away'

watch 'em all leg-it out of the sector, except the zombie banks of course mandated by ECB liquidity to but this crap 

Mon, 05/14/2012 - 14:36 | 2424487 Zero Govt
Zero Govt's picture

"New York Times ran the buy it now or you're a big loser article"

a journalist never more deserving of a good monkeyhammering

Mon, 05/14/2012 - 14:35 | 2424489 Madcow
Madcow's picture
This is the ultimate "Rube Goldberg Machine" - watching the dominoes fall and daily chain unravel into a defaltionary vortex will be fascinating to watch - so long as you're not living in a big city in what was once called the "West" -  a preview of what's to come over the next 10 years ...
Mon, 05/14/2012 - 14:48 | 2424520 Navymugsy
Navymugsy's picture

When Ireland defaults I'll finally get my apartment near the river Liffey on the cheap! There won't be any cops, firemen or sanitation but hey, you gotta economize somehow...

Mon, 05/14/2012 - 14:50 | 2424525 Muppet
Muppet's picture

Ron Paul quit? Bloomberg just said

Mon, 05/14/2012 - 14:54 | 2424538 Bastiat009
Bastiat009's picture

Yep .. the campaign made it official.

Mon, 05/14/2012 - 15:03 | 2424571 forexskin
forexskin's picture

He sees the writing on the wall. Baraomney is going to the be bag holder for this coming shitstorm, and rightly so.

Liberty Forever!

Tue, 05/15/2012 - 00:33 | 2425888 StychoKiller
StychoKiller's picture

Ron Paul only has to hold onto 178 delegates to keep the Romneylan from getting the nomination outright.  Methinks some new planks will be added to the party platform (and then used to slap some banksters upside the haid!)

Mon, 05/14/2012 - 14:55 | 2424542 Crash2012
Crash2012's picture

Am I the only one wondering if the JP Morgan loss is tied to this Greek bond problem?

Mon, 05/14/2012 - 15:00 | 2424562 sockratte
sockratte's picture

looks like greece also prepares for tomorrow with its coalition talks...

Mon, 05/14/2012 - 15:08 | 2424580 Bastiat009
Bastiat009's picture

Lending money to a broke country is never a good idea.

Yet, for now, it is not true in the US.

Tue, 05/15/2012 - 00:34 | 2425892 StychoKiller
StychoKiller's picture

Wall street is just a Potemkin Village...

Mon, 05/14/2012 - 15:15 | 2424602 franzpick
franzpick's picture

New daily bank lows and BKX falling apart at 3pm.  The JPM $100 BIL trade and $2-4 BIL loss is surely the camel's nose in the yield-chasing tent, and everyone but TD is ignoring or covering it up.  My screens point to JPM 32, now back to a 35 handle, and equity indices down 3% more to SPX 1300, so who nose? 

Mon, 05/14/2012 - 15:17 | 2424610 YesWeKahn
YesWeKahn's picture

Bernanke's QEx is ensured. Bernanke has the deep pocket to bail out anyone if his boss is in danger.

Mon, 05/14/2012 - 15:28 | 2424646 Joe The Plumber
Joe The Plumber's picture

I have waited 2 1/2 years for the collapse of greece. The popcorn is stale and the sodas are flat

Please please please collapse this time

Pretty please?

Mon, 05/14/2012 - 15:41 | 2424689 Nobody For President
Nobody For President's picture

Actually, it WAS the 'no-brainer trade of the year' - you make that trade, you don't have a brain.

Worked out well.

And JPM actually broke to a 36 handle for awhile today, and is about to maybe close real close.

PPT working hard at 1530 +

DIE you fuckers...

Mon, 05/14/2012 - 15:47 | 2424708 HungrySeagull
HungrySeagull's picture

Everytime something is sold, defaulted or whatever... someone has given up money to someone else.

Transparency in who bought what, ate which losses and so forth would be illuminating.

But now we just have charts that are generated after the fact.

Tomorrow is going to be interesting.

Mon, 05/14/2012 - 16:00 | 2424759 blueridgeviews
blueridgeviews's picture

Wasn't it the NY Times that promoted Obuma as the cure all for what ails the US? We went from having the Flu to having Pneumonia.

Mon, 05/14/2012 - 16:31 | 2424851 GNWT
GNWT's picture


Really, politics?  I thought everyone was aware that this "election" is just pro wresting...

Or do you think Bush and Obama are different?...

Or do you think Obama and Romney are different?...

Stay liquid...and short my friends...


Mon, 05/14/2012 - 16:10 | 2424777 franzpick
franzpick's picture

Nice weak close with no bank index daily low...tomorrow's menu may be popcorn and ouzo...

Mon, 05/14/2012 - 16:21 | 2424828 GNWT
GNWT's picture

What comes up must come down, yin/yang, pendulum swings and hurts when it hits...


There is balance in this world, as the Emperor of the Han Dynasty discovered...

Stay liquid...and friends...


Mon, 05/14/2012 - 16:40 | 2424884 GernB
GernB's picture

"have once again grabbed that falling knife with 3 hands and lost a finger, thumb and perhaps even their toes."

Not to criticize your writing style, but eww. A little to graphic on the imagery :)

Mon, 05/14/2012 - 17:34 | 2425032 Super B
Mon, 05/14/2012 - 20:00 | 2425284 suckerfishzilla
suckerfishzilla's picture

Instead of Euros I bought Silver Greek Drachmas.  I wonder if those are worth anything yet.

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