Muppet Slaying Must Go On: Goldman Closed Out Of Its Short Bunds Reco For 2% Loss

Tyler Durden's picture

That greatest contrarian indicator in the history of finance, Tom Stolper (arguably even better than Dennis Gartman), may no longer be at Goldman but his muppet-crushing spirit lives on. With Bund (and Treasury) yields tumbling to lows not seen since mid 2013, adding insult to injury, and accelerating the short squeeze, here is Goldman's Francesco Garzarelli with "Trade Update: Close Trade recommendation selling short Euro Bund June 14 futures (RXM4), for a potential loss of 2%."

Reflecting our conviction that the ECB was willing to support credit markets more directly and potentially engage in SME CLOs to improve the transmission of monetary policy and counter deflationary risks, on April 3 we recommended selling short Euro Bund June 14 futures (see Global Market Views: Hedging Long EUR Credit with Short Bunds, April 3).This trade was also supported by Bunds’ valuations: based on the macro outlook, 10-year German yields ranked, after Japan’s, as the most expensive across the major markets. Moreover, the trade recommendation served as a hedge for long EUR credit positions.


At the time of opening, we highlighted that the main risk was timing, as the template from other QE experiences was that the long-end of the yield curve performed well ahead of the actual policy decision, to sell off afterwards. But, a combination of negative inflation surprises, a stronger EUR and a slower ECB response to these dynamics have coalesced to flatten the yield curve. Inflows into the Euro area as the Ukrainian crisis intensified and short-covering extended the bullish price action.


We opened the trade recommendation at 142.91, with a stop on a close above 145.5. Given yesterday’s closing values, we close the position for a potential loss of 2% since inception. We find that German Bunds are even more mis-priced than before and, barring a change in the economic picture, we will be looking for opportunities to reinstate the risk.

Well as long as we all agree that the market is broken...

Yet considering it was just over two weeks ago that "Goldman Sachs Strongly Suggests Clients Sell Them Their Treasury Bonds", it makes sense that this may well be the bottom for Bunds.


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MillionDollarBoner_'s picture

Goldman Sachs: Destroying Confidence One Market at a Time





GetZeeGold's picture




Anyway, like I was sayin’, muppets is the fruit of mainstreet. You can barbecue it, boil it, broil it, bake it, saute it. Dey’s uh, muppet-kabobs, muppet creole, muppet gumbo. Pan fried, deep fried, stir-fried. There’s pineapple muppet, lemon muppet, coconut muppet, pepper muppet, muppet soup, muppet stew, muppet salad, muppet and potatoes, muppet burger, muppet sandwich. That...that’s about it  -  Lloyd Blankfein

Vice's picture

"Oh, don't forget that's why I'm richer than you!" - Lloyd

BandGap's picture

Kneejerk investing, the herd is spooked. Every slight perturbation leads to an action, however abrupt. The herd has no direction.

Did they fix the NYSE, or move to a different part of the alphabet?

Sudden Debt's picture

yeah... they're also blamming europo's bad economie on the "soft winter" we had...

no vortex for us... we could have used one...


I bet economists will be scared shitless if it rains this weekend...

christiangustafson's picture

Now why would you ever short bonds, when the 10Y Treasury Note is headed to a sub-1% yield?

Oh, that's right, it was the conventional wisdom a few months ago that the 10Y would be above 3.5% by now, as the recovery continued, with the growth and the animal spirits.

But deflation is in charge here, and yields won't start rising again until the real monetary crisis makes landfall.

Quinvarius's picture

There is no deflation.  The Fed is just buying that garbage.  The monetary crisis is here now.  You are looking at a bandaide on a fatal headshot. 

pomlad5's picture

"Tom Stolper (arguably even better than Dennis Gartman), may no longer be at Goldman"

I argue this conclusion. This trade being a Muppet manipulation brings lots of moneys to the house. Cherish the Tom.

R-502's picture

Why would anyone listen to these assholes anymore?  Oh yeah....Muppets!  :P

JDFX's picture

Reflecting our conviction that the ECB was willing...


You may aswell throw darts on a chart for execution of trading rationale , as opposed to guessing the mindset of others and how they may behave. 

Don't guess what others are thinking and may or may not do. That's just bonkers.


Are these supposed to be educated professionals doling out trade reasons ? Run. 




pomlad5's picture

depends who educates them

Watson's picture

This is just one recommendation that went wrong, so on it's own not significant.
But I seem to remember a whole series of Stolpher's that went south.

Does anyone keep a record of all Goldman's recommendations?
Broken down by recommender?

Personally, I would be interested.

Bloody Muppet's picture

When I get a hold of the son of a bitch Tom Stolper, I'm gonna tear his eyeballs out and I'm gonna fuck his fucking skull.

Mamzer Ben Zonah's picture

The meaning of "muppet" is actually "marionette-puppet".

The Muppets are the group of muppets made by Jim Henson. I'm not 100% sure who is to credit for the invention of the muppet, but I think it was Jim Henson. It's a muppet because it has external wires/rods to operate the body parts (a marionette) and a person using their hand to operate the mouth/face (puppet).

If you actually look at Kermit, it's obvious (in an awesome way) that somebody's hand- originally Jim Henson's- is Kermit's emotion-morphing skull.

So yes, somebody is definitely fisting Kermit. And all the rest of the Muppets.