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

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Sun, 08/07/2011 - 11:46 | 1532650 Ahmeexnal
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Panic? Silly sheeple.

Soetoro is calm, playing golf.

Sun, 08/07/2011 - 11:48 | 1532655 I am Jobe
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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
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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
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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
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" 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
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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
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Christ, sounds like my wife is working vegas, WTF?

Sun, 08/07/2011 - 11:53 | 1532679 WineSorbet
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So, will WW III be blamed on S&P?  I betcha it will be.

Sun, 08/07/2011 - 11:58 | 1532685 alexwest
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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..

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

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


Sun, 08/07/2011 - 12:21 | 1532795 Smiddywesson
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Casual S&P Bitchez

Sun, 08/07/2011 - 12:00 | 1532696 silvertrain
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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
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 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
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or lulu

Sun, 08/07/2011 - 12:02 | 1532700 Fazzie
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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
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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 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
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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
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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
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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
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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
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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
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That's my dream come true!

Sun, 08/07/2011 - 12:11 | 1532751 alien-IQ
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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.

Sun, 08/07/2011 - 12:45 | 1532877 jkruffin
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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
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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
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Your understanding of Sweden is somewhat lacking....

Sun, 08/07/2011 - 15:24 | 1533520 UglyTimes
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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
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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
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Perhaps at the moment! But it will get worse...

Sun, 08/07/2011 - 12:24 | 1532799 dow2000
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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
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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
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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
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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
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You guys are panicking for nothng.....ECB will buy Italian bonds...problem 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
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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
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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
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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.

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

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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