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Charting Irrational Credit Bubble Exuberance Euphoria
If there is one market that represents the sheer unbridled lack of respect for risk it is the Greek Government bond market. In the last year, GGB prices have surged 380% from under EUR 14 to almost EUR 67% of par today! That is a plunge in yields from over 29% in May 2012 to a mere 8% currently (US Treasuries yielded 8% in 1994)... The driver for all this exuberance? Every major macro data point for Greece has worsened from a year ago - from unemployment to GDP growth... behond the 'wretch'-for-yield. Or perhaps we are overthinking it: it appears that Greek bond prices are merely matching Greek youth unemployment almost tick for tick: expect GGBs to hit par when every single Greek between the ages of 16 and 25 is out of a job.
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You think Corzine is pissed that his trading plan is finally working ?
This is a pair of charts that can be presented without comment. Gotta love inverse relationships.
One thing, or the other, is always going up.
The talking heads on CNBC can always choose the happy one to report.
He walked away with a cool 1.2 billion, chances are it doesn't bother him a bit.
that's an excellent comment, actually. to be frank, I have no idea how much the fair price of those bonds would be. over the last years I bought them, I sold them, I bought them again, I sold them again and now I'm missing this recovery but I can't really complain
a friend of mine who faired less well (we aren't big shoppers of those things, mind you - and for us shorting is a very foreign concept) constantly mutters under his beard that he's convinced that "they" were "attacking" Corzine and not Greece - don't know but don't think it likely
for all differences that Greeks have from the other eurozoners they share something which seems to be alike, at a 60% level:
- attachment to the EUR,
- a new/deeper distrust in the vaunted capabilities of the EU (a good thing, imho),
- a better comprehension that federalists like Barroso don't promise a really better model from the current one (hurray for confederation over federation), and
- a request for qualitatively better state spending instead of just increases in the quantititative amounts
the latter point is important, and in the South of Europe this is better understood - then white elephants examples constructed for nothing abound
what is the market supposed to do when a in-theory socialist country endorses at popular level "austerity", a drive against corruption, better instead of moar spending and a sensible plan to achieve this in perhaps ten years? coupled with the support they had until now?
note that besides the banks/megabanks, the real buyers of Greek bonds were always mostly Greeks (including people like me who know a bit the country) - which confuses the statistics because a Greek shipping magnate living in London (as example) looks like a foreign buyer in the stats
you can't "fix" a situation like the Greek one, but you can heal it - over the years
I know, the horrendous youth unemployment. but Greeks are anything but stupid: they just look over the Aegean to see that in Turkey it's as bad - and Turkey is supposedly "faring well", with an own currency and all that
imho eurozoners are becoming "Austrians" - not rabidly and not radically so, but nevertheless... getting back towards sanity - including an understanding that a sustainable economy grows organically, while a financialized "magic" one breaks when under shock
nuff said, only time will tell
I'd guess it is the account holders of MFGlobal that are the ones which really are.
Like Greylock Capital said "This is the trade of the year".
tyler, would you just stop being such a rally hater before Josh Brown destroys you?
Here's A List Of Snotty Headlines From Business Insider
http://chartistfriendfrompittsburgh.blogspot.com/2013/05/heres-list-of-snotty-headlines-from.html
red eye; **** man!
"The Greek shall inherit the Earth."
You forgot the 'D' before 'Earth.'
That heritage shall be taxed hefty!
You are overthinking it.
The yield has lowered because the risk of default is zero. The ECB is backstopping.
Clearly 'the say so' world is all that matters now.
Whatever the masters say - it is so because the masters have full command of their puppets who echo precisely what the masters say - over and over and over until in time the masses start saying it too.
5 years and over 20Trillion served.
FED by the FED, taste the taste of money!
As price goes up in a given bond, yield goes down. People are willing to pay more to "guarantee" themselves a return. You really only need to show one of these charts.
Today government statistics and the investment desisions are out of this world...crazy stuff...Economics 101 is out the window...the Central banks have destroyed economics...and we are in a whole new world.....I am lost and losing...My gold and silver are crashing even though demand is going up...but yet the S&P hits new highs everyday...with low volumes...and the average Joe not even in the market...just wierd stuff...we are not inventing stuff...we are printing paper...Is GOOG really worth $1000 a share
Demand is not going up. Retail demand is going up, but ETFs are selling their physical gold as money flows out of them. Net, more gold is being sold than bought, hence lower prices
NBG up 290% from its low from about a month ago.
https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximiz...
Google is worth more it is the NSA.
Plus 1. The NSA has had its dick up googles behind for some time now.
quit reminding me I missed that rally / s
youngman,
Economics 403 is out of the window too.
Is GOOG is really worth $1000 a share: yes, spot price doesn't reflect the services that the company provides to .gov
So complete collapse is the most bullish event of all.
WHY THE FUCK ARE THE ELITES WAITING TO COLLAPSE THE USA???
The DOW would go to 700k almost immediately. THINK OF THE WEALTH EFFECT!!!!
Anybody,
What's happening to gold; it's driffting lower. I am just sitting with my finger on the trigger to go in.
Looks to me like it wants to test the recent lows. Could be a great buying opportunity but I'll wait to see if it puts in new lows or bounces before buying.
Dollar strenght/central scrutinizer control...and not necessarily in that order
Pay more, get less.
Hmm...
Why not? Everything is backstopped by central banks. Nobody is hiring because they are all concentrating on the race to being first(or not last) to the top of the ultimate(last) ponzi on earth
I'll take TWO!
I just sit here and think....now what if i was a Japanese....what am i buying....JGB´s....no way...cash....no way....I would be buying something that is going to hold its value for my family in the future....to me that is not FRN´s of any western country...or the bonds of them either....and to me the stock market is being puffed up because of all the free money floating around....its a trend..but no fundimentals for the gains....to me its PM´s...only PM¨S for security....
It's called quick money, all the fast money fixed income desks snatched up as much as they could post restructuring (recall when CDS was at all time wides). After they did, the less smart fund managers stocked up, and finally the uber clueless long-term money is picking them up, directly from the fast money which bought in what seems ages ago.
I know the ZH team knows better than to question what is going on, so let's say this is rhetorical.
the abating tide of HF speculation, when a dead carcass is marginally of interest.
As the hot money gets strangulated may the speculation frenzy move to other assets than poor club med bashing.
The Greater Fool Theory presented graphically.