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Citi Battens Down The Hatches, Prepares For Global Risk Offness In A Few Short Hours

Tyler Durden's picture




 

Citi's head FX guy Steven Englander is barely back to the US, and already is pouring the daily dose of fire and brimstone (much deserved) into a market that after nearly 2.5 years of unprecedented complicity, is about to realize that every escalator action has an equal and opposite express elevator reaction (oh, and those same HFTs that make money in an upward momentum environment, are just as effective at putting a minus sign in front of all their signals, wink wink). Some key soundbites from his just released note on what to expect (spoiler alert: nothing good): "The accelerated timing is a surprise and comes at a point at which global market sentiment is extremely weak, so it seems more likely that the reaction in markets will be negative than positive" ..."there may be concern in FX markets that the EUR AAAs are not solid, given the political and economic issues facing the euro zone and how conditions have worsened since the agencies last commented on ratings"..."a downward shock to markets is likely to be USD positive in the near term. This is hardly USD positive once things settle down, but before they settle down, the short term will likely dominate the long-term"..."The odds are that the week will start with FX investors challenging the SNB and MoF to intervene in size"... most importantly, why Europe is sweating bullets after the last bailout attempt announced from Friday has now gone up in flames and the EFSF is seen as being on edge of functionality: "In terms of FX market impact, the biggest would come from a downgrade of one of the AAA eurozone countries who back the EFSF’s AAA rating. This would mean either dropping the EFSF AAA or increasing the contributions of the remaining AAA."and on the topic of everyone's most favorite Federal Reserve: "A Fed response is likely to emerge only if there is turmoil in markets." And here we were warning anyone who cared to listen that the Fed needs a 25% correction before QE3 comes. Well, you may just get it very soon.

Full observations:

Broad market reaction the key 

Investors expected that the US would either be downgraded a bit or avoid a downgrade by a hair, so a small downgrade over a couple of months would not have been a big surprise. Given the concern about the US debt ceiling and long term deficit prospects, a significant downgrade risk was very likely already priced in. US rates have been on a steady downturn, so  in the market view the downgrade threat was second order to the deterioration in economic prospects.
 
(As an aside I am just back from 2 1/2 weeks of travels, primarily abroad, in which the overwhelming focus was on the debt ceiling negotiations and the risks of downgrade/default. There was perplexity about the process and concern that the US was not taking its fiscal issues seriously enough.I did not have the impression that either official or private clients were anticipating a near-term downgrade (I certainly wasn't), but it was certainly on the radar screen as a major risk over coming months. My impression is that foreign clients would not automatically dump Treasuries on a downgrade, if market reaction was not extreme.)
 
The accelerated timing is a surprise and comes at a point at which global market sentiment is extremely weak, so it seems more likely that the reaction in markets will be negative than positive. The confidence impact in a weak market may be larger than the substantive impact based on the surprise in credit markets..

We would emphasize that the USD reaction against most currencies will probably follow broader market reaction. In particular, as emphasized below, if equity and commodity markets keep sliding globally, the main reaction is likely to cut long positions in equities, EM and commodities. These are mainly funded by short USD, so whether or not the safe-haven status of the USD is impaired over the long term, a downward shock to markets is likely to be USD positive in the near term. This is hardly USD positive once things settle down, but before they settle down, the short term will likely dominate the long-term.

As we discuss below, there may be concern in FX markets that the EUR AAAs are not solid, given the political and economic issues facing the euro zone and how conditions have worsened since the agencies last commented on ratings. Official and private investors instinctively may want to sell USD and buy EUR, but the EUR sovereign issues do not look better because the US’ looks worse, and a global risk-off response would be EUR negative. The key immediate investor worry is that no set of European policymakers is willing to buy sufficient peripheral and quasi-peripheral bonds to narrow spreads, so there is little pushback against the panic on Spain and Italy.

The biggest upside for the EUR would come if the ECB bought Spanish and Italian bonds and that might be enough to generate a global response among risk-correlated currencies, if it was done in sufficient size to convince the investors that contagion was overdone.
 
More pressure on safe havens

CHF is the only certain safe haven among the remaining G10 countries. Moreover it is the only AAA G10 country that whose currency appreciates on bad news. The other G10 AAAs with independent currencies – Canada, Australia, Sweden and Norway tend to sell off when risk aversion rises. Investors may buy JPY despite its own fiscal situation, but the Japanese are increasingly concerned about appreciation given their structural growth and deficit issues. CHF and JPY intervened in currency or money markets over the last week to weaken their currencies.  If they do not intervene again on strength, investors may see them as giving up on intervention because of the magnitude and nature of the forces at play. The odds are that the week will start with FX investors challenging the SNB and MoF to intervene in size.

Reserve managers handed a small diversification gift

The downgrade may increase the desire of reserve managers to diversify out of USD, and if risk sells off, they may be given an opportunity to buy the attractive risk correlated G10 AAAs -- NOK, SEK, CAD, AUD -- at significantly lower levels. In thin markets even modest buying will probably lead to a sharp rally, so there may be more price action than flow.
 
At the end of the day, the downgrade is unlikely to lead to greatly accelerated changes in USD holdings. Reserve managers buy USD because they do not want their currencies to appreciate rapidly, not because they view Treasuries as attractive investments. Unless they are reconciled to more rapid appreciation, the odds are that they will continue to buy USD assets, however unhappily. In the past when faced by a choice of acute pressure on the USD without reserve manager buying and moderate pressure with reserve manager buying they have always chosen the latter, which is why reserve accumulation tends to be faster when the USD is under pressure. The likelihood is that they will complain about how badly treated they are as investors, a complaint which has some validity, but that they are unwilling to walk away and allow a USD rout.

Similarly, calls for creation of alternative reserve assets miss the point. The problem is that buying any alternative assets means selling the USD now in reserves. The reserves managers would have to find investors willing to hold the USD that they are selling – such selling will generate the USD collapse they have spent the last decade trying to avoid. (As an example consider the possibility that the IMF were able to increase the supply of SDR’s as an alternative reserve asset. Presumably central banks would line up to sell USD against this new asset, but they would have to find someone willing to buy the USD.)

S&P vs. the Treasury

The original S&P downgrade contained a USD2trn calculation error. After correcting they chose to downgrade anyway, focusing on the poor political process and the likelihood that debt to GDP keeps rising beyond the middle of the decade. The S&P error and limited re-examination may serve to diminish slightly the credibility of the downgrade in FX markets.  Both the casualness of the S&P mistake and the ease with which US policymakers debated deficit changes of several trillion reinforces the perception that a trillion dollars is not what it used to be.

The S&P downgrade: document:
http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563

Why USD2trn here and there does not matter to S&P:
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DPressReleaseAug6.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243943612380&blobheadervalue3=UTF-8

The Treasury strikes back:
http://www.treasury.gov/connect/blog/Pages/Just-the-Facts-SPs-2-Trillion-Mistake.aspx
 
What can the Fed do?

A Fed response is likely to emerge only if there is turmoil in markets. On the margin if the downgrade contributes to conditions that support QE3 or other easing measures, the USD is likely to weaken once the measures are announced. In the first instance the fed will probably hope that the market reaction is minimal and that they are not called on to take a position. In my encounters with foreign officials, I find that the response to QE2 (and even more so to QE3 in anticipation) is overwhelmingly negative. If QE3 were implemented it would likely be far more negative for the USD than any direct reaction to the downgrade is likely to be.

Other FX market risks

In terms of FX market impact, the biggest would come from a downgrade of one of the AAA eurozone countries who back the EFSF’s AAA rating. This would mean either dropping the EFSF AAA or increasing the contributions of the remaining AAA.   As of Friday close, the only two AAA countries with CDS over 100bps were Austria (101bps) and France (144bps). The US (56bps) was the fourth lowest. France was 37th lowest, with CDS slightly wider than Mexico, Brazil, Thailand and Philippines, and slightly narrower than Indonesia, Peru and South Africa, none of whom are close to AAA.  While CDS and credit ratings do not map one to one onto each other, if FX investors come to perceive that rating agencies are taking a more aggressive posture, they may easily come to question the sustainability of the weaker AAAs.

 

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Sun, 08/07/2011 - 11:46 | 1532650 Ahmeexnal
Ahmeexnal's picture

Panic? Silly sheeple.

Soetoro is calm, playing golf.

Sun, 08/07/2011 - 11:48 | 1532655 I am Jobe
I am Jobe's picture

The war has begun. Take cover. Let the games begin.

 

Sun, 08/07/2011 - 11:50 | 1532665 bania
bania's picture

i predict dow up end of week

Sun, 08/07/2011 - 11:51 | 1532671 bania
bania's picture

and down in terms of gold

Sun, 08/07/2011 - 12:13 | 1532753 wisefool
wisefool's picture

Yup. Directors for S&P were on the american broadcast network shows. Takes 8-12 years to get the AAA back.

This is going to be the rah, rah, new american moon shot. being the first country to regain its AAA in less than 8 years. The establishment will co-opt Ron pauls message, but to do so they are going to have to give him more and more time at the microphone. Despite what John "I paid 11% taxes on my tens of millions of income before those tea partiers got wind of it, and now we need to stop letting them get press coverage and take away thier right to vote" Kerry says. "Warren Buffet is a freind of mine, he pays a similar tax rate. Another freind of mine is John "we will kills the little hobbitseeeiees .... yes we wills .... then we getseses our precioussss two party system back ...... " McCain.

Again, this is going to be framed as Americas new moon shot. This one will actually be faked, but will still make better television than DWTS or american Idle.

Sun, 08/07/2011 - 12:19 | 1532782 EhKnowKneeMass
EhKnowKneeMass's picture

Forget end of week. Don't be surprised if it ends green tomorrow. They will throw everything at it to prove that this downgrade does not matter. Matter of fact, do not be surprised if there is some surprise news release just before the market open that make the market have an orgasm. Those who are preparing for a huge down day tomorrow, be afraid, be very afraid. They will throw the kitchen sink at it to prove to the people that everything is well. After all, as long as the people are asleep they can continue with their party; only when the people awake do they need to be concerned of their actions. And based on everything I am seeing, they don't have to worry for another 200 years or so. 

Sun, 08/07/2011 - 12:59 | 1532939 KowPie
KowPie's picture

"...as long as the people are asleep they can continue with their party..."

 

Nail on the head. I've spoken with a dozen different people over the weekend asking their opinion on the downgrade (some I knew personally, some just new casual conversation in a public setting) and the few of them had a clue about it phrased it as "Oh yea, the debt thing. The government took care of that." (paraphrased). They don't have a clue and when it comes it will hit them like a hooker cleaning out their wallet in the middle of the night.

Sun, 08/07/2011 - 13:08 | 1532970 tao400
tao400's picture

Dude, I can see you don't use hookers. They don't wait till the middle of the night. They don't even stay till the middle of the night. You pay per hour and within that time you get something in your drink that knocks you out then they steal your money. Just had two friends in Vegas wake up the next day and all the money was gone. All they got was a hand job and they weren't even sure if they came.

Sun, 08/07/2011 - 13:30 | 1533057 chubbar
chubbar's picture

Christ, sounds like my wife is working vegas, WTF?

Sun, 08/07/2011 - 11:53 | 1532679 WineSorbet
WineSorbet's picture

So, will WW III be blamed on S&P?  I betcha it will be.

Sun, 08/07/2011 - 11:58 | 1532685 alexwest
alexwest's picture

cant believe this fucker does keep on yupping about so- called err and even didnt mentioned that it cant be right that debt/gdp ratio (excl state/local) is under 80% in 2011..

http://www.treasury.gov/connect/blog/Pages/Just-the-Facts-SPs-2-Trillion...

eahc time i read this shit I wonder DOES ANYBODY IN WHOLE WORLD PAYS FOR THAT SHIT called research from banks/brokers..????

what an asshole, no wonder banks in USA are so fucked up
alx

###
The original S&P downgrade contained a USD2trn calculation error. After correcting they chose to downgrade anyway, focusing on the poor political process and the likelihood that debt to GDP keeps rising beyond the middle of the decade. The S&P error and limited re-examination may serve to diminish slightly the credibility of the downgrade in FX markets. Both the casualness of the S&P mistake and the ease with which US policymakers
##

alx

Sun, 08/07/2011 - 12:21 | 1532795 Smiddywesson
Smiddywesson's picture

Casual S&P Bitchez

Sun, 08/07/2011 - 12:00 | 1532696 silvertrain
silvertrain's picture

Be prepared for the banning of short sales, that is if you can acually log into your trading account...

Sun, 08/07/2011 - 12:04 | 1532713 Fazzie
Fazzie's picture

 You can log in, but only orders to buy more Nflx or APPL will make it thru.

Sun, 08/07/2011 - 12:05 | 1532718 caerus
caerus's picture

or lulu

Sun, 08/07/2011 - 12:02 | 1532700 Fazzie
Fazzie's picture

It seems all the EU braniacs and movers and shakers are enjoying summer vacations on taxpayer expense. I guess they plan to "fix" Italy and Spain with their blackberries and I-phones not letting the economic collapse of the globe interfere with their quality time.

Sun, 08/07/2011 - 12:03 | 1532712 caerus
caerus's picture

bullish...oh yeah.../sarc

Sun, 08/07/2011 - 12:04 | 1532715 falga
falga's picture

Liquidity issues this week...JUST like 2008 and 1987 Will put banks and countries over brink....world is not really struggling with inflation but fear of asset deflation because consumers aren't consuming because they are justifiably worried about the massive debts all around them....

Sun, 08/07/2011 - 12:05 | 1532719 Boilermaker
Boilermaker's picture

I'm holding a large position short the CRE REITs and the IYR.  It's paid off huge the last 5 days (FINALLY!) and brought me back in the black for the year.

They should seriously collapse further with jacked up interest rates. 

Anyone have any educated / informed thoughts?

Sun, 08/07/2011 - 12:34 | 1532841 Sisyphus
Sisyphus's picture


I will tell you something about IYR and REITs. There is this one private investment firm that should have gone belly up based on its bet on an automative company. That private investment firm made up all its losses and regained all its investors by betting solely on REITs. And that investment firm has a deep foothold in the government. Once you ascertain the name of that investment firm and can fathom how much connected it is, my recommendation to you is to close your shorts. They have a bigger stake on hand and will destroy everybody who stands on their way. Best of luck with your bet. Be careful out there.

Sun, 08/07/2011 - 12:53 | 1532918 Boilermaker
Boilermaker's picture

I hear you.  It's been blatantly jacked up with a rip-the-face-off-of-the-shorts message for 2 years now.

However, how do they escape the interest rate issue?  Also, I suspect that their should be epic margin calls on the longs.  Likewise, it's the sector with the farthest to fall since it's been propped up at such high levels.  Of course, that depends on *if* GS needs to liquidate the position to slam it into other nooks and crannies.

I'll tell you one thing.  I wouldn't do it again.  They are so rigged it's nauseating.

Sun, 08/07/2011 - 12:53 | 1532919 Boilermaker
Boilermaker's picture

I hear you.  It's been blatantly jacked up with a rip-the-face-off-of-the-shorts message for 2 years now.

However, how do they escape the interest rate issue?  Also, I suspect that their should be epic margin calls on the longs.  Likewise, it's the sector with the farthest to fall since it's been propped up at such high levels.  Of course, that depends on *if* GS needs to liquidate the position to slam it into other nooks and crannies.

I'll tell you one thing.  I wouldn't do it again.  They are so rigged it's nauseating.

Sun, 08/07/2011 - 12:58 | 1532935 Cdad
Cdad's picture

I disagree entirely.  One firm will not be able to hold up against the fact that, Street wide, these RIETs are the most over owned segment of the market.  Those who have been hiding there and collecting dividends will sell the hardest, converting to harvesting capital appreciation.  The RIETs and the consumer discretionary sector will be the most vulnerable.

Other areas of the market, including basic material stocks that have been absolutely decimated in the last week, will probably bounce as the greater "machine" tries to hold the S&P in some semblance of balance, and in anticipation of some sort of inflationary move from the Fed.

I suspect the S&P will print its low of the day in the futures market, and will probably rise from that low for Monday.  However, it will be a matter of where in the market you are...and RIETs is NOT a place I'd want to be.  

Sun, 08/07/2011 - 12:07 | 1532724 alien-IQ
alien-IQ's picture

What if:

1) QE 3 gets announced which leads to...

2) Fitch and Moody's downgrading US which leads to...

3) Instant reversal of QE market effect coupled with...

4) USD going into freefall along with the market...

Gloomy picture? Perhaps.

Out of the realm of possibility? I don't think so...

Sun, 08/07/2011 - 12:25 | 1532804 meatball
meatball's picture

That's my dream come true!

Sun, 08/07/2011 - 12:11 | 1532751 alien-IQ
alien-IQ's picture

It's on like donkey Kong:

Tel Aviv exchange halts trade after 6% fall

JERUSALEM — Trading on Israel's Tel Aviv stock exchange was temporarily halted on Sunday after share prices fell six percent at the open on news of a US credit rating downgrade, public radio reported.

http://www.google.com/hostednews/afp/article/ALeqM5iC3k64YdFzgdQExBScexr...

Sun, 08/07/2011 - 12:45 | 1532877 jkruffin
jkruffin's picture

Let's see, since that exchange was closed Thurs and Friday, it was playing catch up to the 500 point DOW decline on Thursday.....I wouldn't put my eggs in one basket betting that the Isreal market was a seer of the future....

Sun, 08/07/2011 - 12:53 | 1532912 alien-IQ
alien-IQ's picture

yeah. you're right. it's gonna be fine.

as soon as futures trading opens, you should go all in and balls deep with long /ES positions. no doubt you'll do just fuckin great.

good luck.

Sun, 08/07/2011 - 12:15 | 1532766 UglyTimes
UglyTimes's picture

The problem with investing in the remaining AAAs like AUD, CAD and SEK is that even though their financials might look sound at the first glance, they are basically the only countries in the developped world left with huge housing bubbles. On a longer term though the AUD and CAD may look attractive thanks to the huge natural reserves. But Sweden?? Please they have nothing but the highest taxes in the world, an extremely over-leveraged household-sector, and banks with giant exposure towards Baltic countries. When the housing bubble finally bursts in Sweden, the debt to GDP in Sweden will sky-rocket from 40% to the north of 100%. I would short them all against the US dollar. Or better short them against Gold!!

Sun, 08/07/2011 - 14:09 | 1533244 Flakmeister
Flakmeister's picture

Your understanding of Sweden is somewhat lacking....

Sun, 08/07/2011 - 15:24 | 1533520 UglyTimes
UglyTimes's picture

Oh really? I am Swedish and live in Sweden.. We have a history of devaluing our currency further than US. The only currencies in Europe worth considering against the USD is NOK and CHF. There are "analysts" recommending buying SEK (Schiff is one of them) against the USD, stating that US housing bubble etc would implode.. But have these analysts even been to Sweden? Sweden has a far worse leveraged house hold sector than the US. When the SHTF I do not want to be in any currency, where the country may impose capital controls. The Swedish housing bubble will probably implode this autumn, and when it does the USD can run up to 9-12 SEK. The EUR to 12. Yeah, and the CHF will probably be at 14 at that moment.

Sun, 08/07/2011 - 15:38 | 1533593 Flakmeister
Flakmeister's picture

I never implied going long SEK, only implied that Sweden as a country and a place to live was in a lot better shape than most.

Sun, 08/07/2011 - 16:07 | 1533702 UglyTimes
UglyTimes's picture

Perhaps at the moment! But it will get worse...

Sun, 08/07/2011 - 12:24 | 1532799 dow2000
dow2000's picture

Does anyone else see this as very convenient move by TPTB in the US to finally push Europe over the cliff in the global currency race to the bottom?  S&P cuts the USAA rating precisely when Europe is fighting to put out fire across it's union.  Ahhhh the sweet smell of currency warfare...  Would appreciate any additional views on this theory?

Sun, 08/07/2011 - 12:33 | 1532830 wisefool
wisefool's picture

Of course. plausible deniability. Now the US can not bail out europe. Downgrading USA is like a criminal shooting himself after a crime to show that he is too injured to have been the victor, and is now too weak put up resistance, and can not help catch the real killer OJ Simpson style.

China wins.

Sun, 08/07/2011 - 12:31 | 1532818 oldmanagain
oldmanagain's picture

It is doubtful that the 600+ trillion derivatives are  owned by the masses.

The math is daunting, if the ratio of margin is 30 to 1, doesn't take much to tank to zero worth for that 1/30th.  Even at the old 10-1, things go south quick.

For those into corporate profit margins, minor shifts to the downside are amplified. Sometimes a few percentage points in reduced income disrupts the equilibrium and produces losses rather than just small downtick in earnings.

It is the leverage factor, contraction of same that is now the battle.  And the world has tried to flood it away, particularly, and rightly so, the USA. A severe contraction would be so swift at current ratios that the world is treading on keyboard strokes. Humans reaction is always thru a filter of ignorance as complete knowledge is impossible.

My hunch is that many will want to contract their risk. (This includes some shorts) That the boat is overloaded, crowded, and has been for some time.  

The news is really not news, everyone knows the debt is parabolic.  It is just that this may mean the game is over.

 

 

 

Sun, 08/07/2011 - 12:32 | 1532832 weltvermesser
weltvermesser's picture

Country

Guarantee 

Commitments

EUR (millions)

Kingdom of Belgium 15,292.18

Federal Republic of Germany 119,390.07

Ireland 7,002.40 

Kingdom of Spain 52,352.51 

French Republic 89,657.45

Italian Republic 78,784.72

Republic of Cyprus 863.09

Grand Duchy of Luxembourg 1,101.39

Republic of Malta 398.44

Kingdom of the Netherlands 25,143.58

Republic of Austria 12,241.43

Portuguese Republic 11,035.38

Republic of Slovenia 2,072.92

Slovak Republic 4,371.54

Republic of Finland 7,905.20

Hellenic Republic 12,387.70

Total Guarantee Commitments 440,000.00

 

Italic = won`t be able to contribute, will soon be banruot themselfs. the only question is if merkel will under pressure from other countries to publish the secret about her involvemnt with the STASI still be willing to bail out and loose all german money through this. 

google "IM ERIKA" - many think that this was Merkels Code Name for working with the STASI at the kommunist DDR.

 

 

Sun, 08/07/2011 - 12:41 | 1532864 jkruffin
jkruffin's picture

You guys are panicking for nothng.....ECB will buy Italian bonds...problem solved.....next country please......stock markets soar!

Sun, 08/07/2011 - 12:58 | 1532930 alien-IQ
alien-IQ's picture

and how exactly does that scenario conclude with "problem solved"?

why do I get the feeling that you're sitting on a shitload of long positions and all your posts are really designed to keep you from jumping out the window? (AKA self delusion)

Sun, 08/07/2011 - 12:46 | 1532882 The Limerick King
The Limerick King's picture

.

.

The market collapse has begun

The world's greatest ponzi is done

As has been foretold

Buy guns, beans and gold

If I were a Banker, I'd run!

 

Sun, 08/07/2011 - 13:28 | 1533052 wandstrasse
wandstrasse's picture

If I were a Banker, I'd run!

this would be kind of a good bankrun.

Sun, 08/07/2011 - 12:53 | 1532920 automato
automato's picture

The bottom line is if you subscribe to belief in "Animal Spirits", then WE ARE SCREWED! You can try and talk your way out but losing AAA is the absolute WORST thing that could ever happen in a Universe where "Animal Spirits" are the paradigm. It is the economic equivalent of a stockbroker jumping to his death from a Wall Street window. So everyone, everywhere better hope and pray that Keynes was an idiot.

Sun, 08/07/2011 - 13:19 | 1533012 russwinter
russwinter's picture

The big risk of any serious Trioka bailout of italy will be a downgrade of France. The only way to stem this now is a big debt haricut and wiping out the bondholders and shareholders of the most exposed banks.  Shifting the burden to banksters instead of people and governments is the first step toward healing.

http://www.wallstreetexaminer.com/blogs/winter/?p=4143

Sun, 08/07/2011 - 13:37 | 1533080 treemagnet
treemagnet's picture

Hey asshole bankers, analysts, and worthless elites....if you're reading this, I'm smiling and I know you're not.  And we both know why.  My advice, start drinking heavily.  Tick tock, tick tock.

Sun, 08/07/2011 - 14:11 | 1533247 gkm
gkm's picture

Now's the time to get aggressively short?  Uh no.  Manage your shorts?  Yes.

Sun, 08/07/2011 - 14:37 | 1533359 Nage42
Nage42's picture

I think there will be a lot of traders on Monday trying to "manage their shorts" Where I read that as trying to hold it in as the nauseating stress stomach cramps begin.

Wonder if there will be a palatable smell of bile and bilge on the trading floor. If you're walking Wall St., keep your eyes up, beware of falling... bankers.

Sun, 08/07/2011 - 14:41 | 1533386 Flakmeister
Flakmeister's picture

I love the phrase "puke moment".... I have had a few and they ain't fun... Me thinks that they will be very common at trading desks around the world this week...

Sun, 08/07/2011 - 14:33 | 1533340 Nage42
Nage42's picture

Keep in mind, if you've got a hankering for spanking the wanking banker in his swanky pad... they armed themselves back in 2009 anticipating a reaction. I'm sure they're as amazed as I am that it's taken 2 years for people to figure it out that Joe Public gone dun' got his cheese stole'd

http://www.bloomberg.com/news/2009-12-03/arming-goldman-sachs-with-pisto...

Sun, 08/07/2011 - 14:42 | 1533389 High Plains Drifter
High Plains Drifter's picture

hear that robo and leo.

Sun, 08/07/2011 - 16:30 | 1533787 DollarDive
DollarDive's picture

It's intersting to note that the 2Trn dollar mistake, as mentioned by the Treasury is really only a $2trl error based on a 10 year time horizon.  On a 3-5 year horizon, it's only 345bln.  I'm sure that the government wanted to use the $trn # as it had more shock and awe to discredit SP.  SP knows the numbers are all bullshit anyways.  They're holding firm.  They should be downgraded even more.  Government should take AA+ and LIKE IT.

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