European Financials Drop To 7-Month Lows

Tyler Durden's picture

European bank stocks are officially in bear market territory, now down over 22% from their highs with today's drop closing the index at seven month lows. Financial stocks have played catch down to credit's early warning weakness but still have more room to run. The correlation between financials and sovereigns has been notably broken down in the last few weeks - as it seems an external funding source has saved European sovereign debt (perhaps one that just wants to get away from its vicious cycle-like devaluation and diversify into anything non-JPY-denominated). On the day, Portugal blew wider at the open (+22bps) only to be magnificently bid back to unchanged by the invisible hand. Spain and Italy drifted slightly tighter on the day. Stocks were similarly low range today. Swiss 2Y closed at 3-month lows as EURUSD retraced back from its highs to close practically unchanged from Friday at 1.3000.

 

Bank stocks are -22% from their highs in Late January. Notice the stability in European sovereign risk (the blue line is a GDP-weighted average of nation spreads)... and its ignorance of the collapse in recent weeks...

it seems the 'promise' still holds... and the equity-credit arb has almost converged...

 

Portugal was sold and bid right back out of the gate; European stocks surged at the open but leaked lower all day...

 

Charts: Bloomberg

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Hopium Dealer's picture

Mario Draghi needs to get his shit together and ctrl p Europe to prosperity.

Ghordius's picture

there is a lot to complain about the ECB but printing for stock levitation is at the moment still a FED prerogative

btw stock markets are less important for eurozoners in general than for Brits and Americans - corp funding through markets is way lower

mdtrader's picture

EUR/USD double top out at 1.3040, I think it  looks set to crumble back below 1.30 and head lower. No reason to own euros in my view and no reason to put your money into a currency where the authorities have form at stealing it.

Ghordius's picture

I just note that it returns to 1.30 like a yoyo

lotusblue's picture

Borrowed dollars buying Euros to keep a smiley face

gjp's picture

right, so you're saying to sell Euros where the authorities steal your money and buy USD where the authorities ... do what, exactly?

Ghordius's picture

drop loads of it with helicopters on the roofs of megabanks

Black Markets's picture

Yawn, no story here.

Ban KKiller's picture

Pssst...wanna buy some derivatives...cheap? Sorry...can't take Euros, dollars, pesos....

 

lotusblue's picture

One of these days Euro Finacials will drop and keep dropping.

asteroids's picture

NBG (National Bank of Greece) down 12% today trading at .70 Great job ECB. Mission accomplished. Just another 70 cents to go to bring it to zero!

SheepDog-One's picture

That's alright, as long as U.S. stawk markets remain at all-time highs that's all that really matters in the world.

butchee's picture

I know this is bullish....I just can't explain why.

walküre's picture

The sellers of bank stocks in Europe are buying gold.

adr's picture

... or Bitcoins...

Someone has to be behind the surge.

I say we crash Bitcoin and blame it on Iran.

GOLD AND SILVER NATZI's picture

Bullchit!  Europe is fixed!