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BTP Stick-Save Fail!

Tyler Durden's picture





 

All it took was 30 minutes of reality-soaked headlines from Cannes and Draghi's heroic efforts to hold 10Y BTPs below 450bps have failed. BTPs have reached almost 456bps over Bunds now - only 6bps tight of all-time intraday record wides.

And with a h/t to @AndrewYorks we note the interesting dislocation between ES and BTPs today:

UPDATE: 88 handle up for BTPs (6.37% yield and Bunds +457bps)

 

Charts: Bloomberg

 


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Fri, 11/04/2011 - 10:22 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Called it!

WORSE.THAN.YODA

 

Fri, 11/04/2011 - 10:26 | Link to Comment slaughterer
slaughterer's picture

We want 500bp before EOD.  Have Mario try another stick save to get it there.   

Fri, 11/04/2011 - 10:38 | Link to Comment rosex229
rosex229's picture

Correct me if I'm wrong, but the entire point of the summits, meetings, initiatives, announcements, stick saves, interventions, agreements, etc. over the last several weeks that caused stocks to soar was to prevent contagion to Italy.

Being that the single purpose of that this fretting and market rise was to protect Italy from needing a bailout (because they're impossible to bail out as the worlds 2nd largest bond market) shouldn't stocks crater?

I'm going all in TVIX, I'm hoping to win big, but there's always that possibility... in other words, risk ON on my risk OFF trade.

Fri, 11/04/2011 - 10:51 | Link to Comment TrafficNotHere
TrafficNotHere's picture

Could someone please explain what this means?

" hold 10Y BTPs below 450bps have failed. BTPs have reached almost 456bps over Bunds now - only 6bps tight of all-time intraday record wides."

I am assuming it is bad news (its on zero hedge after all :) but clueless as to what. Yes, I am still trying to learn and have accessed such quesitons before and people have been helpful in thier explainations.

Thanks

TNH

Fri, 11/04/2011 - 10:56 | Link to Comment rosex229
rosex229's picture

If the spread holds above 450 bps, then Italian bonds are seen as being risky enough to warrant higher margin requirements leading to a positive fedback loop that would deteriorate the situation much further.

Fri, 11/04/2011 - 11:36 | Link to Comment TrafficNotHere
TrafficNotHere's picture

Thanks! Understand now. :)

Fri, 11/04/2011 - 14:09 | Link to Comment Eurodollar
Eurodollar's picture

I guess one in laymans terms could say:

450bp+ off the bund mark means higher margin requirements for those holding italian debt. Especially if you have been caught with your fingers in the leverage cookie jar, as that would lead to sell offs to pay for that said margin increase. Imagine a snowball that starts rolling and turning into an avalanche. The avalanche being investors selling because the width between the italian debt and the german debt keepson increasing due to the avalanche itself forcing the italian yield up. It's perhaps not odds on to happen, but it is certainly a possibility.

One should also mention that this easily also means that repayment of Italian debt gets so expensive that Italy can't realistically finance itself in the marketplace. There is no magic limit for when it can't realisticaly finance itself anymore, but it is widely considered by most to be at around 6.5% on the 10Yr. If Italy would enter into even a mild recession I believe that figure to be a lot lower. It would simply just spiral out of control. The big cuts necessary in public spending to get the Italian economy have a great chance of at the very minimum throwing Italy into a zero growth scenario. It is not very likely that Italy itself, the rest of Europe, or the world for that matter will help Italian growth happening. There is no growth wand in the real economy. We don't have bots for that yet.

 

The consequence is that Italy very possible will need grande support from the funny funny EFSF or IMF or whoever decides to get on the "white horse". Their banks, that hold most of the italian debt will be wiped out. They can raise all the capital they want, it is not going to be fractionally enough.

One problem here should worst come to worst (based on the above):... There might be issues with haircuts on Italian debt here as we are talking in-need-of-painkillers sums of money and already most likely undercapitalized banks. I believe the finance industry lobby would have a hard time deciding on that one and as always the politicans will try kicking the dead can for another bounce. A hard default could happen, triggering the not so funny CDS'es that might send the whole world on a not-so-merry-go-unlucky ride for some time.

 

Troubeling times indeed, but stay tough, stay focused and invest well! GL!!!

Fri, 11/04/2011 - 15:27 | Link to Comment Shvanztanz
Shvanztanz's picture

Thanks for that explanation. It makes sense. What will happen when what you described happens, but even though it is obvious that it is arbitrarily forced on private investors, it is declared voluntary and therefor not a credit event to trigger CDS? 

Fri, 11/04/2011 - 12:22 | Link to Comment Capire
Capire's picture

Why is 450bps the magic number?

Fri, 11/04/2011 - 11:53 | Link to Comment nope-1004
nope-1004's picture

What's magic about 450 bps?  Is there some type of formula or known level being 450?

Curious to know why 450 and not 500, for example.

 

Fri, 11/04/2011 - 12:38 | Link to Comment nugjuice
nugjuice's picture

450 bps has been quoted by LCH. Clearnet to be a key level indicating increased sovereign risk which would lead them to raise margin requirements. Since they clear about half the interest rate swaps and a large portion of bonds and repos, this means that a LOT of people (read: banks) will be caught with their pants down should the 450 bps spread hold.

Fri, 11/04/2011 - 12:02 | Link to Comment Chappy
Chappy's picture

Just discovered TVIX the other day.  Already made a few bucks day trading.  It's not leveraged like my shorts and 20 seems to be the low end of where it trades.  So I think it is a good bet!  I am going in hot this weekend.  Hopefully I won't ruin it for you.

Fri, 11/04/2011 - 10:39 | Link to Comment Divided States ...
Divided States of America's picture

Looks like Super Mario needs his trusty sidekick Yoshi to come to the rescue.

Fri, 11/04/2011 - 10:40 | Link to Comment Xtreeeme
Xtreeeme's picture

Super Mario needs his mushrooms... o wait.. he might already be on them

Fri, 11/04/2011 - 11:25 | Link to Comment prains
prains's picture

Told Ya the 5 hole was open

 

Fri, 11/04/2011 - 10:22 | Link to Comment KlausK
KlausK's picture

Not quite "bella figura" ...

Fri, 11/04/2011 - 10:22 | Link to Comment Matt1973
Matt1973's picture

Bullish...buy Euros

Fri, 11/04/2011 - 10:24 | Link to Comment Miss Expectations
Miss Expectations's picture

OFF TOPIC...Volcano video...El Hierro...Canary Islands...venting from ocean

http://www.youtube.com/dutchsinse#p/u/1/rtq8ACRVibQ

Fri, 11/04/2011 - 10:26 | Link to Comment SheepDog-One
SheepDog-One's picture

That doesnt look too nice.

Fri, 11/04/2011 - 10:44 | Link to Comment Doña K
Doña K's picture

Seismologist have predicted that the west side of the volcano will slide into the ocean a la St. Helens and create a enormous tsunami to hit the SE coast of the US.

That's not if, its when. Goodby FL to SC coastal areas. Looking fot the link.

Fri, 11/04/2011 - 10:45 | Link to Comment Jim in MN
Jim in MN's picture

Pretty sure there's an episode of NOVA about that.

Fri, 11/04/2011 - 10:28 | Link to Comment Randall Cabot
Randall Cabot's picture

Thanks, but the sound nearly blew out my ear drums when it first came on.

Fri, 11/04/2011 - 10:34 | Link to Comment sabra1
sabra1's picture

the epic floods in taiwan have killed off the major food source, rats! rats have to be imported from other oriental countries! delicious!!!!

Fri, 11/04/2011 - 11:39 | Link to Comment Randall Cabot
Randall Cabot's picture

If you ever visit downtown Philadelphia, don't look down if you are walking across a plank over a trench in the street.

Fri, 11/04/2011 - 10:36 | Link to Comment Hephasteus
Hephasteus's picture

Told you. Computers going off on 11-10-11 and I'm not turning it back on till either earthquakes stop or electronics stop frying or whatever the hell is going to happen happens.

Fri, 11/04/2011 - 10:59 | Link to Comment Jim in MN
Jim in MN's picture

Pretty picture of the day from NASA last week

http://modis.gsfc.nasa.gov/gallery/individual.php?db_date=2011-10-29

 

Fri, 11/04/2011 - 11:45 | Link to Comment Enceladus
Enceladus's picture

Been following this for awhile, here are some links

http://www.rapideye.de/news/elhierro.html Sat pics

http://www.emsc-csem.org/Earthquake/?view=1 current earthquake list

http://www.wired.com/wiredscience/2011/11/whole-lotta-shakin-at-el-hierro-suggests-new-eruption-might-be-imminent/  Great volcano blog

http://earthquake-report.com/2011/09/25/el-hierro-canary-islands-spain-volcanic-risk-alert-increased-to-yellow/

local reports from the island itself

But don't forget the sun!! http://www.spaceweather.com/

CHANCE OF FLARES: NOAA forecasters have upgraded the chance of X-class solar flares today to 20%. The source would be AR1339, one of the biggest sunspots in many years. The active region rotated over the sun's eastern limb two days ago and now it is turning toward Earth.

 

Fri, 11/04/2011 - 12:34 | Link to Comment Mike2756
Mike2756's picture

wow, that is new, they were concernd that if it moved intoo shallower water, there would be an explosive eruption.

http://www.volcanodiscovery.com/volcano_news.html

Fri, 11/04/2011 - 10:24 | Link to Comment Ancona
Ancona's picture

Berlusconi better start heading for the bunga bunga bunker.

Fri, 11/04/2011 - 10:24 | Link to Comment Dick Darlington
Dick Darlington's picture

Massive bear flattening in Italy curve.

Fri, 11/04/2011 - 10:24 | Link to Comment SheepDog-One
SheepDog-One's picture

30 minute monetization stick-save halflifes? Oh this isnt lookin too good.

Fri, 11/04/2011 - 10:25 | Link to Comment Gene8696
Gene8696's picture

How can I short the ES?

Fri, 11/04/2011 - 10:30 | Link to Comment drivenZ
drivenZ's picture

buy ticker "SH"...for the most basic way to short S&P

Fri, 11/04/2011 - 10:38 | Link to Comment junkyardjack
junkyardjack's picture

Or short the SPY for more liquidity

Fri, 11/04/2011 - 10:26 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

This plus the 50,000 accounts at MF getting margin calls TODAY (per Reuters) will make for an interesting roller coaster ride today.

Fri, 11/04/2011 - 10:26 | Link to Comment pendragon
pendragon's picture

ecb money well spent...

Fri, 11/04/2011 - 10:27 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Bullish-imo!

Fri, 11/04/2011 - 10:27 | Link to Comment NOTW777
NOTW777's picture

money down the rat hole

Fri, 11/04/2011 - 10:27 | Link to Comment HD
HD's picture

Default rate: 29.99% APR not to mention the $39 over the limit fee.

Fri, 11/04/2011 - 10:28 | Link to Comment Xtreeeme
Xtreeeme's picture

Don't worry.. next rumor coming up in 3..2..1

Fri, 11/04/2011 - 10:29 | Link to Comment NOTW777
NOTW777's picture

just wait til the EUR trap door at 1.36ish is opened

Fri, 11/04/2011 - 10:31 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

Oh shit...now 88.94

Better try again asshats.

Fri, 11/04/2011 - 10:32 | Link to Comment tmosley
tmosley's picture

It's taking exponentially more intervention to maintain the ponzi.  How much longer can it last?

Fri, 11/04/2011 - 10:50 | Link to Comment john39
john39's picture

until the printers are exposed or blow out.

Fri, 11/04/2011 - 10:32 | Link to Comment Jim in MN
Jim in MN's picture

Does Italy have nukes?  No?  Fuck 'em then.

 

(psst) All they have is 2,000 years of blackmail material stashed in the Vatican.

 

BELLA ITALIA!  We are with you!!!

Fri, 11/04/2011 - 10:36 | Link to Comment sabra1
sabra1's picture

they've got pukes! big fat hairy horny women! picture an italian janet napolitano!

Fri, 11/04/2011 - 10:32 | Link to Comment NOTW777
NOTW777's picture

bear flag on spx broken - push it

Fri, 11/04/2011 - 10:33 | Link to Comment traditionalfunds
traditionalfunds's picture

Can't shake the sense that there is a Dow down 1000 day coming soon.

Fri, 11/04/2011 - 10:38 | Link to Comment HD
HD's picture

...and if were lucky, it'll be just like potato chips, you can never have just one.

Fri, 11/04/2011 - 10:41 | Link to Comment Mitzibitzi
Mitzibitzi's picture

Might be today, the way things are going so far this week. Just need a dark-plumaged water fowl to finish the job.

What time is that G-Pap vote of no confidence, again?

Ah, around 22.00 GMT. So after the markets are mostly closed for the weekend, then. Jolly good.

Fri, 11/04/2011 - 12:00 | Link to Comment Saxxon
Saxxon's picture

Right soon, right soon . . . and moreover, peeps will wake up to that 7-10% gapdown . . . there will be no warning posted . . . and of course the online broker wires will sizzle & fuse . . . there will be No Exit.

Fri, 11/04/2011 - 10:36 | Link to Comment fizz
fizz's picture

6.39%....it's getting dangerous Draghi! Looks like your "buy" button is not working.

Fri, 11/04/2011 - 10:36 | Link to Comment RobotTrader
RobotTrader's picture

The time to buy stocks is when:

 

Credit spreads are blown out to record wides.

Consumer stocks like SBUX and HANS are showing relative strength and making new record highs.

Fri, 11/04/2011 - 10:40 | Link to Comment d00daa
d00daa's picture

so what are you loading up on here momo???  don't be shy.

Fri, 11/04/2011 - 10:54 | Link to Comment HD
HD's picture

Hopium - it's free and there is plenty of it. Unfortunately the ROI isn't so good...

Fri, 11/04/2011 - 10:45 | Link to Comment rosex229
rosex229's picture

Robo I know a lot of people are pretty hard on you, but you have to admit that not only does Europe have some serious issues at this moment (consider all the sound and fury over the last few weeks all amounting to... nothing). Not only that, but the U.S. is clearly not done with its recent rendezvous with credit downgrades.

Lets say that everything is made better for a few months. Demand grows, oil prices spike (global production has been stagnant for 7 years now), and we're right back to where we are now, but worse off because we've wasted more time and resources.

When your throwing trillions (who cares what currency) at a problem simply to keep the world from imploding, and yet it continues to deteriorate you've got to admit something is fundamentally wrong, and will eventually break.

Fri, 11/04/2011 - 10:46 | Link to Comment somethingisrotten
somethingisrotten's picture

Nah, I don't hear no stinking train - keep picking up those pennies on the track.

Fri, 11/04/2011 - 11:30 | Link to Comment CvlDobd
CvlDobd's picture

I got 200 of your ANF yesterday @ $58.36 with an initial stop at $52.95

Thinking of getting some WHR today

Fri, 11/04/2011 - 10:37 | Link to Comment RobotTrader
RobotTrader's picture

Junker solars like FSLR showing relative strength today

Somebody is already front-running the turn in Europe

Fri, 11/04/2011 - 10:39 | Link to Comment somethingisrotten
somethingisrotten's picture

MoMo, why don't you just go off and masturbate somewhere to release some of your pathetic excitement.  It will save you money and sanity in the long run.

Fri, 11/04/2011 - 10:43 | Link to Comment jcaz
jcaz's picture

keep touting those winners, dude-  you're doing Gods work....

Fri, 11/04/2011 - 11:27 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

With all your winning stock picks you should be a multi-millionaire by now.

Oh wait, I forgot, it's all rear-view mirror stuff.

Fri, 11/04/2011 - 10:41 | Link to Comment jm
jm's picture

There it goes. 459 in two minutes flat...

Fri, 11/04/2011 - 10:41 | Link to Comment Sudden Debt
Sudden Debt's picture

At least this attempt will go into history. 100 years from now, somebody will pull this decade  chart and his eyes will pass over this wobble for 1 microsecond.

 

Fri, 11/04/2011 - 10:43 | Link to Comment Darth Sidious
Darth Sidious's picture

please stop using hockey metaphors, associating such a wonderful sport with the actions of such clowns is highly offensive to those of us who love the game

Fri, 11/04/2011 - 10:50 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

88.81

Fri, 11/04/2011 - 11:02 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

He's back, spike up to 89.125.

 

Fri, 11/04/2011 - 11:22 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Since '08 it's been nothing but bail out this insolvent bank and bail out that insolvent bank and keep lending to this insolvent government and that insolvent government.

That's it. Just bailing out insolvent banks and lending more money to bankrupt governments.

How is any nation's economy going to recover when all available credit is used to keep insolvent banks afloat and keep bankrupt governments operating?

Massive currency printing (and resulting inflation) is a foregone conclusion. There's no other way.

If this isn't the end game, what is it?

Fri, 11/04/2011 - 11:24 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Oil.

Fri, 11/04/2011 - 11:56 | Link to Comment Ghordius
Ghordius's picture

cranky, there is no other end game, IMO

but it might take a looooooooooong time

the first time I thought this will be the end game was 1983 - and I still ended up with some Italian Sovereign Bonds - something nearly no Brit or American has ever considered except for shorting (whithout knowing anything about the underlying reality, IMO)

Hugh Hendry famously said: "if you think this, you are not contrarian, you are mainstream"

Fri, 11/04/2011 - 11:38 | Link to Comment Mutatto
Mutatto's picture

 Does anyone have a link where I can watch these bonds online? I don't have them in my data service.

 

Thanks

 

Fri, 11/04/2011 - 11:44 | Link to Comment Kilgore Trout
Kilgore Trout's picture
The "88"
Flugabwehr-Kanone  8,8 cm Flak 18, 36  and  37

The German 88 mm Flak gun was one of the most highly publicized, famous and feared weapons of the Second World War.

Fri, 11/04/2011 - 11:46 | Link to Comment GolfHatesMe
GolfHatesMe's picture

looks like Ryan Miller's attempt at a shoulder save the other day.

Do NOT follow this link or you will be banned from the site!