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Spanish Bond Spreads Back Below 300bps - At 17 Month Lows
Despite rising (and record) unemployment, non-performing loans at record levels crushing the banking system's balance sheets, pension funds all-in, and their Italian neighbor now expecting more budget cuts of almost 1% of GDP in 2015-17 (and further downside risks to the GDP forecasts); Italian and Spanish bond spreads are pressing below critically 'positive' levels. While Italy remains above recent low spreads, Spain has just breached the 300bps (spread to Bunds) level; last seen in November 2011. The last 3 days have been the best run in Spanish bonds for six months. This level has been significant resistance a number of times since the European crisis began, but this time it's different, since the BoJ is seemingly blind to 'risk' and only sees 'return'. With the market telling the politicians that Europe is fixed, is it any wonder they are all asking for a stop to austerity? Or is bad once again good, as it forces Draghi's hand to follow his BoE, BoJ, Fed compatriots down the rabbit hole?
Best 3-day run in Spanish bonds for six months...
Chart: Bloomberg
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How do you know it's a bubble?
Buyers buying in spite of the fact that everyone knows the rally is counterintuitive.
We'll do whatever it takes ... with Japan's money ...
Oh, you dont know whats good for bad
https://www.youtube.com/watch?v=wmS6vQ6lzp4
Guys/Gals, let's not fight among us. Let's listen to each other. What many economists say is what they have been taught and almost never challenged the assumptions behind the teachings, that is why I am going to business school, just to understand their view of things and how they think! They are wrong, but you need to get deep into their assumptions to argue your point. Polarizing and fighting instead of intelligent discussion favor Bernanke, and is what allows him to keep on doing what he is doing.
Where is the falacy they miss? The falacy is in the level of monetization. The more monetization, the higher the bet is for one side or the other one (growth/inflation vs. stagnation/deflation), therefore the higher the gain of each block in the system, the higher the gain (gain is like the size of the loss you will have if you miss which side of the scale your investment decision places you and spikes your fear/greed juices and speed with which you react to events), the higher the likelihood of positive feedback loops that create bubbles (see "irrational exhuberance from Shiller). The key here is whether you trust on faith alone, whether the FOMC will be able to shrink the money supply fast enough to maintain under control the economic system. My position, similar to most people who understand the physics of nonlinear, dynamic, non-stationary, hysterisis prone feedback systems, and how they lead to fractal behavior and mathematical chaos behavior, is that once the system gets out of its control range, there is no way to bring it back short of stopping the world financial system for a few weeks to restart it with completely new rules. This is similar to what we do in any chemical plant whose control system gets out of whack. So, the key question is: Does the FOMC know how much is too much? The answer is HELL NO. Therefore, they are running a monetary experiment to try to attempt to avoid what has happened in the past, bankruptcies and depressions that enable the restart with the healthy parts of the economy (similar to the ecological need for fires in a forest). And even though they are doing an experiment, they never bothered to obtain an informed consent from the people they are placing at risk. Something you would go in jail for in the USA health care system. The solution, the dream of a PhD student (Bernanke), has never been tested and the final outcome could well be much worse than the depression and bankruptcies that it is trying to avoid. The point is nobody knows for sure. My point is: who gave him the right to play GOD with our lives? An unelected official? This is the line of argument we need to have and go as deep as possible. Insulting will only fracture us into small non-relevant pieces. If we start uniting and elevating the level of the discussion we will become a very threatening force to the status quo. There are plenty of scholars in the economics world that are very upset at what they see happening, but without a forum for now, where they can both discuss and communicate with people in a way that the sheeple will understand. Also, those of you who think you know where we will end (i.e. stone age), you are claiming to be GOD, because only him can know. All the computer power available in the world can predict only a few seconds forward in this system, given its complexity and fractal characteristics (mathematical chaos theory).
Until next time,
Engineer
To the last dead European :/ Dang you Draghi!
Meanwhile everyone plows into the last piece of shit standing. For now.
Markets are in Inflation
Metals in Deflation.
gold whacking continues. I guess premiums for Silver
not big enough should be $20-$23..
anyone else watching these silver miners head towards zero with the gold miners right behind them. Literally ZERO.
If I was a bank that was heavily short these metals and manipulating them I would stock up on the miners and then if a delivery failure took place I guess I would own the next best thing.
That is probably wishful thinking. They will probably just head to zero.
Sprott is in major liquidation mode Fonz....if you look at the TSX Venture...its became a zombieland with many others following suit. Everyday you get a blowup, yesterday was Eastplats (ELR CN). I dont know how it is positive for one part of the markets (Equities) to be surging while others such as Commodities are languishing. This new paradigm of world trade and globalization was supposed to lift everything up or down at the same time. But I guess the Central banks have figured out a way to detach this theory...for now. Sprott is in deep shit and I wonder how this will effect other hedge funds who are commodity related, they are dumping names which is causing others to dump. Its 2008 all over again but this time its just in the commodity names. I would short the Canadian banks here because the tankage that the mining and energy sector is having on the TSX can push the Canadian economy quicker into recession.
My brain just broke DS....Are you telling me that the main guy who has been out front pounding Silver as the single greatest investment over the next decade blah blah blah is dumping bigtime right now?
Is this registering to anyone else?
Is king world news going to report this?
I will tell you this fonz....Sprott is not doing well at all right now...they are offloading individual positions here and there...AUN CN, GCM CN names like that...of course when you are in deep shit, you would offload the most liquid names or the ones you dont like the most....All I am saying is that if this continues another month, yeah you may hear this on King World News...its all about survival but when you have a ton of people owning the same shit as you, its like a vicious cycle.
I dont know for a fact if he is dumping silver but I am sure he is dumping some of his holdings.
I can't thank you enough for this input. I am completely unable to process it at the moment, but somehow I think it is the most important thing I have heard in a long long time.
So instead of a bank going bust because they can't deliver something they don't have. Sprott is the one being caught in a vice.
Freaking amazing
Fonz I cant process whats going on in the world either right now...Everyday is a brand new day that manages to open my eyes wider in amazement and amusement.
But I can tell from your comments that you are pretty astute member of ZH and if you cant process things either, than not many people in this world can.
Canada is on the edge of a cliff at the moment. Watch things start to get worse over there.
Thanks man I've been on here for a while and I can usually take all this with a grain of salt but what you just said completely blew a fuse in my brain. I am going for a walk.
Guys/Gals, I repeat it is predictable, what is happening is predictable. We are in what we physicists call a fractal chaotic system. We can predict we will move from one attractor to another one, but it is impossible to predict the trajectory... ANYTHING can happen on the way, and it is also impossible to predict to which other attractor we will move!!!
This is the naked truth of what those who understand this call the experiment of the century by the FOMC.
Until next time,
Engineer
Thanks that clears it all up.
Sprott is the modern day Hunt. We know how that turned out.
LOOK!!!
OVER THERE!!! AND THERE!!! AND THERE!!!
WWWWAAAAWWWWW!!!
YOU CAN JUST SEE THE ECONOMY GROWING!!!
Ah, the magic of QE!
In the meanwhile....
DEXIA IS SHORT 70 BILLION EURO'S!!
Will look like a great bet as EURO rates come down next week.
Serious question: When are you New Yorkers going to get rid of Bloomfuck? Bloomberg says the interpretation of the constitution will have to change...
http://politicker.com/2013/04/bloomberg-says-post-boston-interpretation-...
Not that there is anything left of it anyway.
New Yorkers are some of the most self centered idiotic people on this planet.
okay... not everybody... make that 99% of all New Yorkers.
Don't worry Doc he is leaving soon. Heading to a bigger stage I'm sure.
Pompous windbag.
If Bloomberg and our other politicians would enforce the laws already on the books we wouldn't have to "re-interpret" anything.
Put the Hitler mustache on him and the other whack-jobs that can't enforce existing laws but want new ones to punish citizens.
Bloomberg needs to have his usefulness to society (nil to negative) "re-interpreted".
I think its the Japanese chasing yield......kind of like Hari Kari...japanese suicide
Are you fucking joking?
here... we're not joking about fucking...
I did not know that austerity had already started. Spain borrows 25 cents for every Euro they spend, their overall budget increases every year, government spending on social issues has never been higher and entitlements still shooting through the roof.
Money sloshing from country to country, sector to sector; citizens getting seasick, bankers getting richer.
Domo arigato, BOJ.
Stop trying to make sense of this shit. Do exactly the opposite of what your common sense tells you to do in this new normal and you'll be just fine. Seriously, I went long overnight, against my better judgement, saw Asia overnight and said I'm screwed in the morning. I saw the S&P futures higher and Europe ripping, in the face of terrible economic numbers and said of the course the market is higher. Keep an eye on USD/JPY. If AAPL doesn't tank on earnings, SPY will go over 160 in short order. After that, get ready to short again.
If Apple is close...it will NetFLix II.....to da moon.....
It's to provide a buffer, once the next wheel falls off this-or-next week.
Once that happens, you wouldn't want PIIGS at yield 13.666%, though apparently 7-8% is fine.