The Chart That Draghi Should Be Worried About

Tyler Durden's picture

Europe is fixed from what we are told (though even Herr Schaeuble mutters under his breath that the crisis is not quite over). Given the increasingly tight coupling between European financials and their domestic sovereign credit - thanks to OMT promises and LTRO funding - one could be forgiven for thinking that the most important thing to watch in Europe is the financials. Indeed, year-to-date, European financial stocks have surged over 7% (driven mostly by a global pump in the first few days of January) while at the same time, European senior financial credits (the other 'safer' end of the spectrum in terms of capital structure support from stocks) are 1bps wider on the year... we suggest Mr. Draghi quickly come up with another solution to save the banks (cough Commerzbank cough) before stock markets catch on.


2013 has been a year of concern for European financials among credit traders - but the central bank spice must flow and equities ignored such silliness (for now)...


Charts: Bloomberg

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PontifexMaximus's picture

Will be fixed, Ben will also give his helping hand to Mario. Do not worry! All is fine and under control. Move on.

SheepDog-One's picture

Uh, yea we're completely broke and business is in shambles and have the highest unemployment ever, bit it's 'fixed'...see we got the free money'.

ANYONE actually believe this shit? I guess it's just 'Whatever, as long as we close another market day with banks unscathed it's all good'....fuckin screwy world.

Stoploss's picture

Throw a live chicken in it's mouth!!!

Iocosus's picture

Euro exploded 120 pips today.

What's it gonna be, are they going to kill the euro first, or as Kyle Bass relates, the dollar?

Edward Fiatski's picture

Both at the same time. :) Deny peasants their bread!

Iocosus's picture

That will be trippin' to watch on the EUR/USD chart.

My bet is short term dollar strength with flight to safety (like a citizen running to NYPD for help) as Europe fragments OR another March war explodes somewhere. Either way, dollar will benefit. I think.

Panafrican Funktron Robot's picture

"What's it gonna be, are they going to kill the euro first, or as Kyle Bass relates, the dollar?"

The funny part is they keep framing this as competitive debasement.  I see it as cooperative debasement.    

falak pema's picture

what does RM have to say on this?

German and French banks/insurances  are frontline as back ups to the exposed Spain and Italy asset decay. 

Soc Gen has moved up 100% since Jan 1 2012....just as an example...BNP and Cred agr are not far behind.

Even tho the national asset risk transfer to national bank via swaps amongst Euro banks and via ECB balance sheets has been churning full speed to further delink inter country-banks, all the while the Bank safety and solidarity network is supposed to be in place by 2014 (IF Merkel accepts that plan). The festering debt stays ominous.

Bottom line : it'll take consistent >2% growth to even start truly writing down that debt; over what, 20 years...?

Meanwhile the banks don't have enuff funds to support that real growth in 2013/2014...more debt, more pain down the road.

Jason T's picture

smell a sovereign debt crisis brewing

Cpl Hicks's picture

It's been smelling like that for about 4 1/2 years now.

asteroids's picture

Oh yes, everything has been fixed! Check out the chart of NBG. Looks like it'll break $1 tomorrow.

Woodrox's picture

Nov 19th......all up, topix, spy, euro financials....dow, yen , euro credit.....all independent variables




Woodrox's picture

Nov 19th......all up, topix, spy, euro financials....down- yen , euro credit.....all independent variables