Europe Gets It

Tyler Durden's picture

Via Peter Tchir of TF Market Advisors

The stock market seems to be the last group still buying into the Europe "gets it" argument.

What has Europe done:

- Instituted short selling bans on as many products as possible
- Instituted new rules to let the EU pick and choose when to use rating agencies
- Redefined "prudent risk reducing bond sale" into "attack on a country"
- an ECB rate cut, that only showed Trichet wasn't wrong to leave rates alone since it had absolutely zero impact on sovereign debt yields (and may be part of the reason we are getting the renewed sell-off, since it signaled fear)
- Got people to start thinking about what it would mean to leave the Euro or the EU
- Overthrew the government in two countries and put in "technocrats" who seem to have limited support - not that surprising since no one voted for them

What Europe hasn't done (that they were supposed to):

- Leveraged EFSF - a 7 page idea sheet with no typos is about the extent of it
- IIF voluntary EFSF backed 50% NPV reducing haircut for Greece - nada
- More IMF money - not so much (though the BRIC countries may take on bigger quotas - probably because the US and EU are running out of money)- BRIC direct support - not yet, but on the other hand, since Regling hasn't had a real product to offer, they might yet come in on something

What Europe hasn't done, and wasn't in the plans:

- Massive printing of money by the ECB, this now seems expected by everyone, yet was not part of the plan and there are lots of good reasons not to do it, and if the politicians care more about this year's bonus pool, they may actually resist this demand and try and figure out a solution, that while short term painful, has a real chance of long term success.

The credit markets now seem to be fully diverging from equities, and offer more opportunities here than stocks.  In credit, Europe is starting to look attractive versus the US.  Sovereign credit looks better than bank credit in Europe.  High Yield may not be bad here, but we think HYG/JNK definitely got ahead of themselves at these prices.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Spitzer's picture

everyone gets it. If piling into the bond bubble is "getting it "

CPL's picture

With the dismissal of OWS.


Everyone is now going to get it.  Period.

redpill's picture

OT: Ron Paul now in a 4-way tie for first in Iowa

To all the people who have said he would never have a chance of winning a primary or caucus, now is the time to admit you were wrong and get behind the only liberty candidate in the field. It's still an uphill battle against the big banks, the military industrial complex, and the tidal waves of disinformation from left & right, but he's right there at the top, and with more conviction from his supporters than the other candidates.

fourchan's picture

LOL! notice how the media outlets dont have public opinion polls after the debates any more,

or should i say after ron paul took 73% of the vote after the first one.

Buck Johnson's picture

So they haven't did the 50% "voluntary" cut that they said they would.  Probably CDS holders and the bond holders themselves said that they would run to the issuers and and get the CDS insurance on these bonds and that's what scared them to forget about this along with other things.  Printing is a jump ball if it will be done or not.  Germany really doesn't want it because they know where it leads and they will bearing the brunt along with other big countries.  And won't this go specifically against the EU and ECB charter for countries that they can't print/buy bonds (same thing).  This is getting better and better as the days go along.

stopcpdotcom's picture

The new Head of the UK Civil Service is Kerslake.

Kerslake is a TOTAL arsehole:

edmondantes's picture

Credit is attractive .... you mean lending to Italy for 10 years at 7% or France at 3.66% (!!!!!) is a super opportunity...  I think you will soon have an even more attractive opportunity to lend to Italy at 25%...


GeneMarchbanks's picture

I think he meant corporate bonds... HYG/JNK. Debt market.

disabledvet's picture

"Go ahead. Make my day."

YesWeKahn's picture

Nasdaq bubble II is ahead.

gjp's picture

II?  It feels like XX by now ... insane, Pavlov's slobbering dogs know no other place to hunt.

devo's picture

Is it possible for an individual investor to buy European debt?

(not that I want to; just curious if it's possible to buy those bonds directly)

CPL's picture

Sure just wait six months. 


You can buy them on the roll in twelve packs.

Mister Ponzi's picture

There are some retail bonds where the minimum amount to invest is 1,000 Euro and the minimum increment is also 1,000 Euro. However, the vast majority of European corporate bonds has a minimum amount to invest of 50,000 Euro. So, for an individual investor, it is hardly possible to set up a diversified portfolio. The reason for this relatively large minimum piece, by the way, is ironically a European Union regulation that requires companies to publish a lot of additional information on bonds issued in retail size - so many companies do not issue them.

An advantage of European credits over US corporate bonds is IMHO that European senior bonds are in general not callable, so there is no risk involved that the duration you implement in your portfolio may vary with market conditions.

Dr. Engali's picture

The stock market is diverging because its the easiest to manipulate. Joe six pack doesn't see the credit markets.

Corn1945's picture

I'm amazed that this guy's stuff is repeatedly posted here.

He literally says nothing of value.

Manthong's picture

Seems to be reasonable reality checks to me, but the market does not seem to fit well with reality.

Corn1945's picture

Everyone knows the stock market has no connection to the health or performance of the companies on it. It's obvious at this point.

The market is only 17% below ALL TIME HIGHS when credit was flowing and unemployment was low. We are only down 17% with 9% unemployment (yeah right) and virtually no credit growth.

I don't need this guy to keep pointing out the obvious while taking no firm stand on anything.

samslaught's picture

maybe it's due to *real inflation.  Priced in Gold the market is still way down.  Oops.  What's obvious to some isn't obvious to others.

Potemkin Village Idiot's picture

Let's make it even more simple...

"Europe gets it... You get it... I get it... We all get it..."

Right in the keister...

s2man's picture

Market is down 40% since 2000, adjusted for inflation.

d00daa's picture

this isn't a trading blog you stupid fuck.

citrine's picture


With all due respect to your opinion, may I suggest that you thoroughly revise your definition of "value"? Twice.

Silver Pullet's picture

His post contains much more value than yours.

Dick Darlington's picture

Let's add this to the list of things that was supposed to be done but... And remember, ponzimaster Rehn gave yet another ultimatum on this and 24 hours to do it. Two weeks ago...

11-15 12:03: EU insists on written commitments on bailout from Greek leaders

Yesterday the greek opposition leader Samaras told EU-dictators he'll not sign anything.

Credebeeleetee, stabeeletee, prospeeretee!

Rat King's picture

How are his posts of no value?

He has shown great understanding of the CDS and credit markets. Moreover, he has actually put forth some concise ideas about what could be done in Europe working within the framework of not moving forward with a massive restructuring (which is basically him playing devils advocate because he seems to be clearly in the camp that write downs are what's required).


ebworthen's picture

France 10 year moving up into contagion zone.

Spain headed for 7%

Italy over 7%

Greece over 30%

"Problems?  I don't see any problems here, do you?"

falak pema's picture

ban the sham market. And borrow from the martians. They are more reasonable than these Oligarchic shills. Who are running to their own doom as they break their own ponzi creation : Privatise profit socialise debt until there is no more profit...which will ensure that there is no more debt. We are only talking about shit fiat. Not about human blood. So reset will come when we start thinking of saving human blood and start burning shit fiat for what it really is, shit fiat.

Big reset required where USD/EU hegemony goes to the gutter and we move from shit Mid East oil monolopy, MIC fed lobby, and shit western money to something more palatable. REquires original thinking. It'll come with the pain. On both sides of this shit pond called the Atlantic where there is a plastic island the size of Atlantide...we really suck worse than the tiny fish from piranha land. 

firstdivision's picture

QE3 coming tomorrow?  Massive short fund have to close? WTF is going on?

GeneMarchbanks's picture

You didn't think back-to-back red days would be allowed, did you?


hedgeless_horseman's picture



Greece is fixed (again)!!!!

Greek finance minister says new government to fully implement Oct 27 agreement

GeneMarchbanks's picture

Hate to say it hedgeless but Blankfiend called it. Good times are here to stay!

Something's gonna snap!

you enjoy myself's picture

really, i sometimes stand in awe of these ramp jobs.  we had yet another 20 point ES swing, the eur/usd is still down .01, EUR is literally about to implode any moment, and S&P is up 7?  on what, Evans' comments alone?

it almost feels like today was a front-running of the EUR close bounce, which itself is based on nothing.  this is getting really meta.


Ronaldo's picture

ok, what rumor just happened?  Market moves 1.5% in short order?

mynhair's picture

My bad.  Closed the reverse Stolper trade and moved the EUR up.

s2man's picture

You're manipulating the markets!  Shame on you.

Jim in MN's picture

'Europe Gets It'...


...Right in the nuts.  With a sledgehammer.

fonzanoon's picture

The rumor is if you are short this market your balls will be twisted until you are doubled over and screaming until your eyes pop out. If you think you are going to be positioned for the next big crash you are going to watch the numbers on your brokerage statement evaporate until you cry uncle and cover those shorts. Right after you do that what you think will happen may actually happen. Then again probably not. That has been my experience.

catch edge ghost's picture

Back up the truck and drop the hammer when the forge is hot to stay out of the kitchen with the big dogs still on the porch.

Long-John-Silver's picture

When do they make exchanging Gold and Silver for Euro's illegal?


freshkapital85's picture

Blankfein "the world will snap back and it will be a surprise and it will be faster than people think"

From bloomberg

slaughterer's picture

Depends on what "snap back" means.

Potemkin Village Idiot's picture

Men who live in ivory towers on private islands speak many wisdoms... 

dereksatkinson's picture

Anyone know why US bonds have sold off so much?


GeneMarchbanks's picture

What part of 'RISK ON' did you not understand?'

adr's picture

Whoo hoo, another mega swing day, EUROPE GETS IT!!!!  The answer is printing more money solves the problem of too much printed money!!!!

150+ Dow points in one hour. GO PONZI GO POZI GO!!!!