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Goldman Does It Again: Banco Espirito Santo Bonds & Stock Are Crashing
A week ago, investors were exuberantly buying Banco Espirito Santo (BES) stocks and bonds on the back of disclosures from Goldman Sachs that they have bought stakes in the bank "by virtue of its client transactions." This morning, Goldman along with its muppeted clients (and hedge funds D.E.Shaw and Baupost) are licking their falling-knife-catching wounds as the stock of BES is down over 50% to new record lows and its bonds have cratered nearly 20 points to 57, after announcing a stunning $5 billion loss. Exuberance has turned to fear over 'burden-sharing' and bail-ins across the capital structure.
As Bloomberg reports,
Concerns persist over possible burden-sharing for subordinated debt, and even senior debt, after BES loss, CreditSights analysts John Raymond and Puja Poojara write in client note.
1H loss was as bad as anticipated, and lack of firm details on how CET1 will be returned to levels consistent with AQR, and surprise losses related to repackaged bonds and special purpose entities suggest situation is worse
Absence of concrete information on any capital support that may be in works, and on whether reported backing continues: CreditSights
With CET1 capital ratio at 5%, and 8% likely the requirement for both local regulator and baseline in ECB stress test, calculates needs of EU4b to boost capital to ~EU7b and transitional ratio to >11.5% before stress test
* * *
The bottom line - this is not going to get any better anytime soon as once again the European 'rules' are set to be changed and the 'template' from Cyprus maybe applied.
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and Gold plummets with this and Argentina LOL
....and my grandkids just received another IOU from Yellen this morning.
Blasphemy to name a bank after the Holy Spirit. No wonder it failed. Harbingers of things to come. Don't even try to hold your breath - the smell is just going to keep getting stinkier.
btfd
was it really blasphemy for José Maria Espirito Santo da Silva to found a bank in 1884 with his family name? how likely was it that in Portugal, a very devout Christian nation, particularly in the 19th Century, a guy christened by his parents "Joseph & Mary" (JC's foster father's and mother's names) would be allowed to blaspheme in a country where this kind of thing was considered a crime?
btw, Espirito Santo is typical for foundlings, which were given family names from the parishes that adopted and raised them. different customs, similar to the typical Spanish and Latin American christian name... Jesus
It's Ok, this is GS, they'll just undo the trades as if they never happened. A do over if you will
A Mulligan. Plus they have POTUS printed on their balls....
Those central bank naked shorts are killers for the PMs.
If Russia and China wanted to they could reveal the amount of over-subcribed paper to real PM assets.
Goldman Sachs' advice on buying these bank bonds is comparable to what happened on 9/11/2001 on the 44th floor elevator lobby of Two World Trade Center. A jet had just crashed into One World Trade Center. Employees who had evacuated their offices on higher floors of 2WTC got off the satellite elevators that served the higher floors and went to take one of the six jumbo elevators that went non-stop to the ground floor. Then, over the public address system, someone from the Port Authority (unidentified then and now) told the employees and visitors to return to their offices upstairs repeating the message. In other words, get back to work, peasants. A few minutes later, the second jet (with no markings on it) crashed into Two World Trade Center, trapping those people who were on higher floors after RDX military explosives blew out the staircases. The sprinkler system had already been disabled during the building shutdown over the weekend to supposedly install new power cables (power was shut off and security cameras no longer worked from the 45th floor and above). That PA message was a death sentence for the employees who obeyed. Goldman Sachs acted like that voice over the 2WTC PA system, sending investors who followed Goldman Sachs advice to their financial doom.
It seems they've lost the "tune" a bit in interacting with markets not rigged by them...
How to make a quick 50% return on your investment in a failing bank: first lose 90% by listening to Goldman's retail recos.
Sure didn't see that coming.
come on ECB, time to force capital controls in portugal. steal their money. steal their money. just like you fuckers did in cyprus.
Cryphus, cyprus'd again.
you mean Cypress, don't you?
Cypress is a tree. Cyprus is a country.
tell this to the Cyprus-Crisis ZH Posters of that time. or, better, to their spell-check. have a look in the archives, if you don't believe me
The avatar at left says it all.
A week ago, investors were exuberantly buying Banco Espirito Santo (BES) stocks and bonds [from Golman Sachs] on the back of disclosures from Goldman Sachs that they [had] bought stakes in the bank "by virtue of its client transactions."
There, fixed it.
Goldman Sachs that they have bought stakes in the bank "by virtue...
"by virtue"? "Goldman Sachs"? VIRTUE? WTF?
I can remember when virtue made one feel gay. That was back when GS was reputable.
Gay in the sense of bending over?
No.
Gay when the word gay did NOT mean "Flaming Queer".
I am old enough to remember that time. It is sad that GS has lost ant credibility whatsoever. They have been transformed from having some trustworthiness to becoming totally corrupt. It only took 40 years after the Gold Standard was abandoned as we all became Keynesianists as the Head Crook, Richard M. Nixon, declared.
But the GenXers were not taught that honesty, integrity, fidelity and morality were of any importance and value.
Gay took on a new and perverse meaning.
America lost its Moral Compass.
GS is just a reflection of that.
Welcome to the Animal Kingdom as the Kingdom of God has been all but abandoned.
The Animal Kingdom will reap its just Rewards as the new philosophy is that Might makes Right, Survival of the Fittest is the Natural Order, while the weak shall be devoured as all semblance of gentle society and civilization is stripped away.
Enjoy your world filled with ravenous wolves.
You can downarrow this all that you want but it will not change the truth by one iota or uncross any tau.
When you're loaded up with put options, and sold an ass ton of calls, one must hedge by buying the actual stock.
Good point. They only tell their muppets one side if the trade story.
Goldman, DE Shaw and other hedge funds who have bought equity positions should also declare if they have counterparty relationships with the Bank or other holding companies of the Espirito Santo titanic. This is especially important because derivatives or opaquely reported may well have senior bailout position.
Instead the public is told about equity positions when those very positions are purchased for insight and priority access first, shareholder gains second.
C'mon, ZH, you know this. ARe there counterparty relationships to contemplate?
"C'mon, ZH, you know this. ARe there counterparty relationships to contemplate?
There are always counterparty relationships to consider in every transaction.
If GS had to disclose every counterparty relationship in every transaction or recommendation they'd never get any of God's Work done.
Which is entirely subjective to one's own interpretation.
Noted in yesterday's article: http://www.zerohedge.com/news/2014-07-30/portuguese-regulator-bans-short...
I asked: http://www.zerohedge.com/news/2014-07-30/portuguese-regulator-bans-short...
Is anyone shorting PT or buying puts?
https://www.google.com/finance?q=NYSE%3APT
From yesterday's PDF:
Impairment of the participation in Portugal Telecom As is publically known, BES Group holds a participation in Portugal Telecom registered in the available forsale portfolio. As determined by the applicable accounting rules, such assets should be recognised at fairvalue and the corresponding valuations registered under a specific equity caption (fair value reserve).As of June 30th, 2014, this investment’s acquisition value was EUR 346.6 million and its market value EUR240.5 million (31% devaluation). Accordingly, a EUR 106.1 million impairment was recognised; as thepotential loss has already been deducted to equity (negative fair value reserve), the impact on capital ratioswas smallAlright. Off to the LCS
Damn. Looks like its going to be hard to catch this bounce.
Just shows you how much a degree or PHD at harvard is worth...
They come in perforated rolls. I've got some in my bathroom.
Just tear one off and put your name on it.
CAN ZH please explain to me WHY the Argentinian stock exchange is UP 65% since Jan 1 2014 all the while the country is now in default and has been in the eye of the cyclone since at least 6 months !
How can the Bourse be + 65% in a situation like that.
If I transpose that logic to Portugal then the Portuguese bourse should spike now by 65% on the back of Espirito Santo default.
The peso is nearly worhtless. And people who don't have enough to buy real assets like houses don't know what gold and silver is and think they can maintain most of their wealth in the stockmarket.
So when their currency drops 60 to 70%, some of them will actually be able to maintain their purchasing power.... untill somebody actually tries to sell a stock... than it crashes.
Sudden Debt, gold and silver offer some protection *before* the crash. Argentina *has already crashed*, and it crashed multiple times... It's a post-apocalypse world, albeit one that still manages to maintain considerable degree of order & productivity. Therefore, it still makes sense to convert the worthless peso paper into stakes in real, productive businesses.
Portugal uses the Euro as their currency whereas Argentina uses the Peso. Argentina is in the process of hyperinflation and those extra Pesos flow into the market.
If your currency is on a fast track to zero keep your assets in something that will retain some value. Argentines don't have a lot of choice where to put the wealth. After the crash but before the hyperinflation sets in I expect the Dow to make these lofty levels look like bargains.
What Sudden Debt said.
View the Argentinian stocks in relation to "solid" *cough* currencies such as the € or $. They should be losing ground.
Then you have the issue of tight capital controls and therefore the lack of investment opportunities beyond Argentina. Bonds, cash and savings account are a no-no, which means you only have 3 things to invest in: local property, precious metals (are there restrictions?) and local stocks.
So if I understand you right the PESO has devalued more than 65% since Jan 1 2014 relative to say the Euro or the £ ?
depends on the market. "black market" prices or the officially sanctioned government FX? which goes with an officially sanctioned inflation number of 10%
Argentines try to protect their wealth by stashing away paper dollars. They're in for a rude awakening.
The US Gov will announce an expiration date for the prior 2012 $100 bill; then there will be caos.
You have to remember that stawks are just a meaningless scam, they could all open at -0- tomorrow, and what would anyone do about it? Nothing.
Can you explain why the DOW hit 17K on the back of this "recovery"? C'mon...don't ask stupid questions
hey, dummy, the Dow is backed by king kong FED...capische?
WHereas Lady Kirchner has NOBODY to pump up her PESO or stock titties except faith, hope and charity; the LAST now being denied by the Supreme Court in favor of the Vultures.
As for faith it comes from the Man in the street with nowhere else to run and Hope, it comes from BRICS saying : we'll lend you some if you give us a piece of your gas production ass !
So, Lady Kirchner has to choose to whom she sells her titties...
At least SHE HOPES she has a choice...Lets say skol to that hope before it goes Pop !
Inflation! The Argentinian currency have dropped something like 65% since the beginning of 2014. If you calculate the stock market gains it's around zero; actually less because the government claims taxes on your "profits".
Also, it's nigh impossible to get currency out of Argentina. It's offficially illegal to use other currencies to buy and sell. Where else can you put your money?
Gold? Who'll sell it to you? No one with half a brain will sell their's. You can't buy it from outside the country (you can't take any currency out), so where would you get it from?
I didn't realize the "Holy Spirit" had a bank.
Yes, it's called the Vatican bank and they invest their money mostly in weapons industries because of the high returns.
you are pulling his leg. no, the truth is neither prettier nor uglier. Banco Espirito Santo is the main Portuguese colonial legacy bank. Meaning they are all in many deals in Angola, for example. Cue in the little scandal of the daughter of the previous leader of that country
It's for the children
God lost his stawk options....now he's PISSED!
I am not buying until Gartman does...he is usually right on the timing
All is well folks gold is selling off accordingly.
https://www.tradingview.com/x/sPwIatWs/
Somehow I doubt that Goldman will be licking any wounds on this deal.
I am sure GS only paid 50 centson the dollar....
You can be sure that Goldman had their asses covered with CDSs. They had the inside scoop from Singer that the Argentine thing was going down with BES at the same time.
The big drop in claims two weeks ago was probably triggered in part by annual summer shutdowns by some major U.S. manufacturers to retool their plants for new production.
HUH?
If plants shut for retooling and workers are temp laid off, unemployment claims go up, not down. Better stick with the 'cold weather' spin.
Soon they'll be blaming sharknadoes.
Go Fin!!!
If you had looked at the details you'd have seen that about 500,000 full-time jobs were lost; 800,000 part-time jobs were gained, giving a net "gain" of 288,000 jobs.
Just more lies by the Obama administration and the news media.
Never underestimate Lloyd Blankfein and the evil Squid.
Yet Giant Squid always reports a near perfect trading track record with 0 losses.
Please disperse...nothing to see here...
https://www.youtube.com/watch?v=5NNOrp_83RU
Down over 50%? BTFD, bitchez!
When I lived in Rio, the Argentines bought (a) US Dollars and (b) Brazilian Real.
They wanted the illusion of safety.
They named a bank Holy Spirit??? Doing God's work I guess. They should rename it Holy Shit (Mierda Santo?)
now this is a valid example for blasphemy
hey I have a great investment strategy(maybe one of you can check it out).
Just track every Goldman public buy recc...and short it on the assumption they a just a bunch of lying devious bastards not doing Gods work.
I wonder what the rate of return would be over the past 5 years ?
A lot of contrarians are already doing that.
The problem is that GS knows they are and once-in-a-while they'll throw in an acurate prediction to screw them up.
let me guess they will be "rescued" by manchurian Mario Draghi just as Goldman makes their biggest purchase and then call Draghi and tells him what to do
Maybe this bitch gets their neighbours, the Spaniards to the ATM's en masse. After Cyprus nothing really happened.
Portuguese Gov and Regulator prohibited shorting of BES stock per law on monday.
How can GS screw those stupidos, who bought the BES stock?
ZH should check out GS' CDS exposure to BES...likely they had offsetting hedges just as they had with AIG.