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Europe Turning Ugly

Tyler Durden's picture





 

In the past 30 minutes, Europe has turned downright ugly, with short-term Bunds soaring to a record 140.64, and weakness creeping across the peripherals, as the realization that not only was the Spanish bond auction unsustainable, but also a French downgrade rumor once again making its way (the source of this is a Citi note by Michael Saunders who said that it is likely that Moody's will follow S&P, and put the French Aaa rating on review for possible downgrade by the autumn, after the country's supplementary budget is formalized). The result is a sudden and swift slide in the EURUSD to 1.3070 or the LOD. Here are some of the other recent surprising developments in the aftermath of what the propaganda machine wants to spin as a "successful" Spanish bond auction.

Some of the other developments in the past 30 or so minutes, via BBG:

  • German Bund June Contract Rises 0.2 Percent to Record 140.64
  • French-German 10-Yr Yield Spread Widens to Most Since Jan. 10
  • Italian 10-Yr Bonds Extend Decline; Yield Up 11bps at 5.59%
  • Spanish Stocks Slump to Day’s Low; Oil, Gold, Bond Yields Drop
  • Spanish 10-Yr Bonds Extend Drop; Yields 8bps Higher at 5.90%
  • Spanish 2-Yr Notes Extend Decline; Yields Rise 4bps to 3.46%
  • Spanish Stocks Slump to Day’s Low; Oil, Gold, Bond Yields Drop

Reality is slowly starting to come back. Remember: Europe needs Spanish bond yields at 7.0% or higher, because that is the only catalyst to activate LTRO 3 and to get the ECB back in the game, which all banks in the world desperately need now that the IMF is woefully incapable of securing the funding needed for the "giant firewall".

European sovereign spreads look very reminiscent of last week, rally on a 'simple' bill auction then sell-off on reality...

 

 


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Thu, 04/19/2012 - 08:02 | Link to Comment maxmad
maxmad's picture

Collapse LTRO wont work, bitchez!

Thu, 04/19/2012 - 08:07 | Link to Comment French Frog
French Frog's picture

Will you please stop calling us 'ugly'

;-)

Thu, 04/19/2012 - 08:26 | Link to Comment disabledvet
disabledvet's picture

how 'bout froggy then? girls like frogs you know. "they kiss them." at least..."so i'm told."

Thu, 04/19/2012 - 08:37 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Geez......and everything seemed to be going so great.

 

Had it fixed just the other day.

 

Thu, 04/19/2012 - 09:03 | Link to Comment SAT 800
SAT 800's picture

Never; you're ugly, you talk funny, and you smell like garlic. Well, this must be the place to anounce that my recent Treasury Bond Short was a bust; I got punished for 600$/contract. I suppose alll the nervous nellies in EuroLand are buying these "safe haven" coupons. Grrr.

Thu, 04/19/2012 - 08:38 | Link to Comment Nussi34
Nussi34's picture

Europe needs those pussies at the ECB ditched and reinstitute national currencies again! WTF is wrong with all these people, FX rates solve all problems, no central planning needed.

Thu, 04/19/2012 - 08:03 | Link to Comment GerritB
GerritB's picture

QE3 + LTRO3 before end of april i guess...

Thu, 04/19/2012 - 08:06 | Link to Comment Gordon Freeman
Gordon Freeman's picture

Nah--markets haven't felt anywhere close to enough pain...

Thu, 04/19/2012 - 08:17 | Link to Comment DormRoom
DormRoom's picture

And there in lies the rub.  Youths are in pain. 50% youth unemployment in Greece & Spain. 25% youth unemployment in the US.  High student loan delinquencies.  45 Americans on foodstamps.  US Real Disposable income per capital hasn't increased in over 30 months.  There is a lot of pain, which the market doesn't reflect.

 

But the markets are broken.  It's a false signal.  You can't trust it.

Thu, 04/19/2012 - 08:38 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

The youth are young.....just have them naw their arm off. It will surely grow back in time.

 

Thu, 04/19/2012 - 08:51 | Link to Comment JPM Hater001
JPM Hater001's picture

It's the 45 on food stamps killing us...

Thu, 04/19/2012 - 08:18 | Link to Comment HD
HD's picture

G-Man: Prepare for unforeseen consequences

Thu, 04/19/2012 - 08:39 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

.....and thus the term "unforeseen".

 

Thu, 04/19/2012 - 08:28 | Link to Comment jus_lite_reading
jus_lite_reading's picture

QE3 is coming... make no mistake about it. That said, the global ponzi has just begun unwinding.

Thu, 04/19/2012 - 08:08 | Link to Comment Quintus
Quintus's picture

It would certainly be very convenient for something to blow up in Europe so that the Fed can get busy handing out free money again while blaming 'Europe' for the whole thing.  'Not our fault....matters beyond our control....no choice but to take extraordinary measures to prevent systemic risk spreading from Europe...etc...etc..'

Thu, 04/19/2012 - 08:06 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

We need failure, so that we ensure even more failure in the future.

Thu, 04/19/2012 - 08:48 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Failure will not be tolerated.....here.....have a participation trophy.

 

Thu, 04/19/2012 - 08:05 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

'Remember: Europe needs Spanish bond yields at 7.0% or higher, because that is the only catalyst to activate LTRO 3 and to get the ECB back in the game, which all banks in the world desperately need now that the IMF is woefully incapable of securing the funding needed for the "giant firewall".'

IMF is irrelevant at this point, the biggest laughing stock of the BWIs. LTRO 3 is no guarantee and it's more likely any bond moves here are politically driven seeing how elections are the topic.

Thu, 04/19/2012 - 08:10 | Link to Comment Ghordius
Ghordius's picture

"Remember: Europe needs Spanish bond yields at 7.0% or higher, because that is the only catalyst to activate LTRO 3 and to get the ECB back in the game, which all banks in the world desperately need now that the IMF is woefully incapable of securing the funding needed for the "giant firewall""

Please also remember that there are a lot of derivatives bets around that cash in and make nice banksters' bonuses if the yields go higher than 7%... ban that hideous stuff, start with CDSs

upppsss, I did it again! hemmm.... gold, bitchez? ;-) no kidding, just buy every month phyz, it's called "saving" in barbarous languages

Thu, 04/19/2012 - 08:28 | Link to Comment disabledvet
disabledvet's picture

you NEED a bond market. And you NEED it NOW.

Thu, 04/19/2012 - 11:33 | Link to Comment Ghordius
Ghordius's picture

you have to admit that bonds markets are slightly older than derivatives, though

bond yields are supposed to contain the risk-reward component

Thu, 04/19/2012 - 08:29 | Link to Comment SeverinSlade
SeverinSlade's picture

Wait, what?  What's this "save" term you speak of?  Why does anyone need to save when they can just put it on a credit card and pay it later?

Thu, 04/19/2012 - 08:08 | Link to Comment Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

No Fitch France Fowngrade?... Outlook negative. Inlook positive.

Thu, 04/19/2012 - 08:10 | Link to Comment Croatian Patriot
Croatian Patriot's picture

All banks dreaming the same dream

http://www.youtube.com/watch?v=OaiSHcHM0PA

Thu, 04/19/2012 - 08:09 | Link to Comment williambanzai7
williambanzai7's picture

TACTIQUE POLITIQUE

Thu, 04/19/2012 - 08:20 | Link to Comment Mae Kadoodie
Mae Kadoodie's picture

Secret Service?

Thu, 04/19/2012 - 08:51 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Stiffed again!

 

What do you mean you can't pay.....you work for rich gringo President!

 

Thu, 04/19/2012 - 08:31 | Link to Comment LMAO
LMAO's picture

Banzai, Why TF is the old bag with her Louis Vuitton missing from this pic.?

From the O.P.

....now that the IMF is woefully incapable of securing the funding needed for the "giant firewall"

Well partially true.....The Norwegians at the hand of Sigbjørn Johnsen have already pledged to fill up the old bags' handbag with 6 billion SDR.

You gotta luv these Norwegian politicians for supporting these financial criminals and handing over taxpayers cash.

Please, do join us to help in our effort to save a racketeering banking cartel.

 

Regards,

Norway, saviour of the universe and protector of bankster frauds.

Thu, 04/19/2012 - 08:23 | Link to Comment Peter Pan
Peter Pan's picture

LTRO3 is nothing more than water (liquidity) being added to a bucket full of holes. Once the water runs out you are back to square one plus you have lost your water and created a mess from the leakage.

Will they wake up in time to understand that the structural issues of unemployment and over indebtedness need to be addressed or will they sink Atlantis under a constant tide of liquidity?

Thu, 04/19/2012 - 08:29 | Link to Comment SeverinSlade
SeverinSlade's picture

Will they wake up in time to understand that the structural issues of unemployment and over indebtedness need to be addressed or will they sink Atlantis under a constant tide of liquidity?

 

That's like trying to get an Obamanoid to admit that their fearless Comrade Constitutional Scholar has repeatedly violated his oath and committed high treason.  It ain't gonna happen.

Thu, 04/19/2012 - 09:11 | Link to Comment zx12r
zx12r's picture

And even though he has done everything conceivable to stifle any economic recovery, the obama-zombies will all vote for him again.

Thu, 04/19/2012 - 08:25 | Link to Comment SeverinSlade
SeverinSlade's picture

Obviously the world doesn't need the IMF, but with the bizarro world's logic, how can ANYONE justify the need for the IMF?  With Lagarde walking around LITERALLY panhandling, wouldn't it be more efficient for sovereigns just to write a check to sovereigns in need?

Guess I can answer my own question though.  The central planners love unnecessary bureaucrats and red tape. 

Thu, 04/19/2012 - 08:24 | Link to Comment Jack Sheet
Jack Sheet's picture

The most amusing aspect is that the Bunds won't be paid back either. It's all other people's money, as in "pension funds".

Thu, 04/19/2012 - 08:34 | Link to Comment disabledvet
disabledvet's picture

i'm not a holder myself (been "cutting back" as they say) but that would be a BIG deal if that were to happen. "the gift that keeps giving"...also known heretofor as "Chickencoopology" (or "stooping" in the local parlance) or "how to turn those 5,000 towering monstrosities in New York into something useful finally." We'll throw in Chicago, Boston, Atlanta, Houston, Los Angeles (ah, SHINY AND NEW NO LESS!), Seattle,...did i miss any? I'm going short the price of chicken...and long their population bitchez!

Thu, 04/19/2012 - 09:00 | Link to Comment Jack Sheet
Jack Sheet's picture

You can play safe with the "tagesanleihe" a sort of money market-type Bund debt instrument with daily withdrawal, but you can't invest more than €250000 per person and day and it currently yields 0.2%. It's my guess that the longer running debt instruments (10-30y) will be subject to paying out a lot less than 100% principal when Germany has bailed out the PIIGS.

Thu, 04/19/2012 - 08:29 | Link to Comment TeeC
TeeC's picture

'downright ugly' - hmm, seems a bit loaded. we're down -0.5% on stoxx 50.

Thu, 04/19/2012 - 08:33 | Link to Comment BandGap
BandGap's picture

Who would want to participate in this craziness?

Thu, 04/19/2012 - 08:39 | Link to Comment EvlTheCat
EvlTheCat's picture

People with tattoos, evidently.

Thu, 04/19/2012 - 08:35 | Link to Comment Roland99
Roland99's picture

Looking better now. Markets love to hear about bad U.S. employment numbers. US futures going up now, too.

 

Thu, 04/19/2012 - 08:41 | Link to Comment Randall Cabot
Randall Cabot's picture

 Marketwatch disappeared IBEX from its Europe list today. IBEX has been on that list forever but since it is cratering today MW doesn't want to spook anybody so they just removed it.

http://www.marketwatch.com/   

 

FTSE 100   

 

/quotes/zigman/3173262 5,779 +34 +0.59%

 

 

CAC 40   

 

/quotes/zigman/3173214 3,227 -13 -0.41%

 

 

DAX   

 

/quotes/zigman/2380246 6,722 -10 -0.15%

 

 

FTSE MIB  

 

/quotes/zigman/1482176 14,491 -89 -0.61%

 

 

GlobalDow  

 

1,925 -4 -0.20%

 

 

Thu, 04/19/2012 - 09:11 | Link to Comment Roland99
Roland99's picture

doesn't surprise me.

 

Thu, 04/19/2012 - 10:09 | Link to Comment Roland99
Roland99's picture

they have it back now.  IBEX is at 6,994 now.

 

Thu, 04/19/2012 - 08:45 | Link to Comment Tom Green Swedish
Tom Green Swedish's picture

Its cool to not pay your loans in Italy Spain Greece and the rest of Eastern Europe. They just want money no strings attached. I have experienced this first hand. They ask you for money and never pay it back. They are so pathetic and think they are entitled to BMW's and everything else hardworking people have. And when they don't get it they throw temper tantrums like little babies and wreck things. Somebody take it all away from these  babies. They are jacking up the entire world economy. We do not need these worthless fools. They have almost nothing to contribute yet they want the lifestyle of those who do.

 

If I was the ECB or IMF or whoever is in the market to buy their bonds I would not buy any of them and cut my losses immediately. Doesn't matter how high the interest is. They will not and cannot pay the money back. It's that simple. If they were going to pay it back we wouldn't have this problem now would we? This is their culture. They are theives and liars. What should happen is they should default all their assets over to the banks now and end it. Are the banks, etc really that stupid?

 

Now they want 3.8 trillion dollars?  The USA foreign debt isn't even that high. Give me a break. What will they want next?

Thu, 04/19/2012 - 08:47 | Link to Comment Sandmann
Sandmann's picture

they are entitled to BMW's

 

I thought BMW was an 'aspirational motor car' and noone paid Cash but  leased it or took a 10-year note. Isn't that having a sense of entitlement  ?

Tue, 07/10/2012 - 01:20 | Link to Comment ndrewoods
ndrewoods's picture

That is what I thought as well. No one pays for BMW accessories in cash but as installment or lease is the only possible way that I can think of.

Thu, 04/19/2012 - 09:25 | Link to Comment Dapper Dan
Dapper Dan's picture

Every week,  for as long as I can remember,  a story like this (below) is run by a media outlet, radio, news paper, t.v. or internet, somewhere in the US, always with the word Nazis or Hitler in it.

474-year-old painting stolen by Nazis given to owner's heirs

By Ian Johnston, msnbc.com

TALLAHASSEE, Fla. -- A painting – nearly five centuries old and worth millions - that was taken by the Nazis in World War II has been returned to the heirs of its original Jewish owner by U.S. officials.

  http://usnews.msnbc.msn.com/_news/2012/04/19/11281560-474-year-old-painting-stolen-by-nazis-given-to-owners-heirs?lite   

If you want you can monitor this yourself, just check the CPS WIRE resource site, (50) news sites linked    on their main page.      http://cpswire.com/ie/index.html  

Last week was the "John Demjanjuk is found guilty for his involvement in thousands of deaths at a Nazi death camp" story,

The week before, " Nazi Party Registers Washington Lobbyist" HuffPost, http://www.huffingtonpost.com/2012/04/13/nazi-party-washington-lobbyist_n_1424151.html

before that, "

ARTSBEAT; Two Volumes Surface Detailing Nazi Looting By RANDY KENNEDY Published: March 28, 2012

http://query.nytimes.com/gst/fullpage.html?res=9D07E3DB133CF93BA15750C0A9649D8B63&ref=nazipoliciestowardjewsandminorities

any thoughts why?

 

Thu, 04/19/2012 - 10:31 | Link to Comment Lednbrass
Lednbrass's picture

I dunno, why does every third movie out of Hollywood involve Nazis?

Why do we have Holocaust memorials at taxpayer expense here in a  country that did not lose any people in it or have anything to do with commiting it in any way?

My guess would be that some powerful people consider it very much in their interests to keep hammering it down everyones throat. If I didnt know better and wasnt certain our beloved overlords would never do such a thing, I would think we were being very heavily conditioned here in the land of the free and home of the brave.

Thu, 04/19/2012 - 14:04 | Link to Comment smiler03
smiler03's picture

I would imagine that there are thousands of Jews in the US who lost relatives in the Holocaust. In addition the Holocaust is globally recognised as something terrible that should not be forgotten.

My 2 cents worth anyway.

Thu, 04/19/2012 - 09:41 | Link to Comment BurningFuld
BurningFuld's picture

As a politician if you hand over all the taxpayers money the Banksters have a very very good job waiting for you when you are done raping and pillaging your country.

Thu, 04/19/2012 - 11:30 | Link to Comment goldfish1
goldfish1's picture
Spain's king apologises for jetting off to shoot elephants

Unprecedented apology for lavish trip taken during Spain's economic crisis comes after pressure from politicians

http://www.guardian.co.uk/world/2012/apr/18/spain-king-apologises-shooti...

 

Fukk these fukktards.

Thu, 04/19/2012 - 19:10 | Link to Comment dizzyfingers
dizzyfingers's picture

Traders Strike at the CME Posted by Ann Barnhardt - April 17, AD 2012 8:56 PM MST There was a strike by Eurodollar floor traders at the Chicago Mercantile Exchange (actually inside the Chicago Board of Trade building) on Friday. The Eurodollar pit traders walked out for over an hour and met (utterly fruitlessly) with CME honchos over "block trades" which are basically a money-laundering scheme, which the CME executives gleefully permit and encourage. These "block trades" are totally destroying what very little integrity is left in the markets on the execution level, and the Eurodollar locals walked out on Friday. Chicago Sun-Times story here. Block trades are large-volume trades that are "executed" completely outside of the market, with zero competition, but still clear and are printed just like any other trade. The Eurodollar futures traders were enraged by a huge block trade in the Eurodollar options on Thursday. Here's the problem. Let's say a given instrument is trading at a price of 100. The bid is 99 and the ask is 101. These block trades can go through at, say, 97. So all of a sudden, there is a reported trade at 97. Other market participants may have had buy orders in at 99 and 98 . . . but they aren't filled. That's a huge problem. If the market trades THROUGH your price, you should get a fill, right? Not anymore. The CME is now saying that people can do these "block trades" and cheat everyone else in the market out of fills that they deserve. Why do I call this money laundering? Well, the BUYER in the block trade now has this instrument at a price of 97, and the rest of the market is trading at 100 (99bid at 101ask). He can start selling his "block traded" 97 position immediately. And what of the guy who SOLD at 97 on the block trade? Why would he intentionally sell BELOW the market when there are open, legit bids at 99? Well, he is essentially GIFTING those two ticks to the buyer. Kids, that's money laundering. Stone cold. And the CME knows it, is complicit in it, and vigorously defends the practice. Their excuse is that "if we don't do it, some other exchange will." In other words, honesty and integrity be damned. We just want our exchange fees. As a broker, how do you explain to your client, who had buy orders in at 99 and 98 why they didn't get a fill, even though there was a huge volume trade well through their price? You can't, because there is no rational explanation for criminal unfairness and fraud. Gentlemen, you know that this is never, ever going to get better. It is only ever going to get worse. The markets are dead. You can't trade in a marketplace where there is zero integrity. You need to walk out - permanently - now. If you don't act preemptively and hang around in an environment that is now utterly and completely criminal, YOU WILL EVENTUALLY LOSE EVERYTHING. They will eventually drain you dry. Gather your chips, cash them out now, and go home. Leave the dead to bury the dead. **The Eurodollar is, by far, one of the most heavily traded contracts at the CME, with the E-mini S&P being the only contract that has higher volume, so this walkout is very serious. The Eurodollar is not to be confused with the Euro Currency. The Eurodollar is an interest rate instrument. It is defined as any time deposit in U.S. dollars held in a bank outside of the U.S. Years ago, Eurodollars referred to US dollars held in European banks, but over the years the term expanded to mean US dollars in ANY non-US bank. So, US dollars held on time deposit in a Tokyo bank are "Eurodollars." Now, the prefix "Euro" refers to any deposit held outside its home country. So, for example, Japanese Yen held in a bank in South Africa are "Euroyen". Euro Currency held in a bank in Australia are "Euroeuros."

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