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European Banks Battered As Reality Sets In
As Europe opened last night markets were very weak with Sovereigns gapping dramatically wider and equity and credit markets under pressure. Just as in the last few days in Europe though, early weakness has been tempered by a modest belief that the ECB will save us all if it gets bad enough. Today was a little different - as we noted it appeared the ECB was starting to play chicken a little more vocally and while equity, credit, and sovereigns rallied in their usual way off the open - there was one critical difference - financials did not. Early on it was clear that many traders were looking to place the short-financials, long-sovereign credit trade, this implicitly forced LTRO-encumbered banks to underperform (as Greek, Italian, and Spanish banks were crushed in stocks and spreads) moving the LTRO Stigma wider still - back near record wides (and subordinated spreads starting to decompress from senior again). The EURUSD was choppy but once the ECB headlines hit and rumors swirled of more bank runs, cessation of support, and capital controls, it fell back below 1.2700 once again (only to surge a little into the Europe day-session close - back to unch. Treasuries and Bunds were in lockstep - leaking higher in yield as the technical support for sovereigns came in (not from the ECB but via our financials-sovereign spreads arb) but this gave way into the close as risk asset weakness dragged yields lower in Germany. US equities faded into the Europe close (as normal) ending back at a balanced VWAP, with EU financial stocks down over 1% on average, and EU stocks overall down around 0.75% (BE500).
LTRO Stigma widened still further as financials underperformed - led by LTRO-encumbered banks...
but sovereigns rallied from early weakness as the financials vs sovereigns trade was the dominant technical - keep watching this as it will inevitably lead to sovereign weakness in a vicious circular manner...
Subordinated spreads have finally started to leak wider relative to senior spreads with today seeing that increase...
Charts: Bloomberg
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Any word on the 50 Euro ATM limit? Is it only a rumor or really occurringin Athens? If true... watch out!! This will certainly make things speed up, not slow down!!
And keep ye eyes on the LIEBOAR
It depends what you mean by "battered" Tyler. As a moral subjectivist, I don't necessarily accept that losing money is a bad thing. It could just as well be good. Everything is relative.
Does that apply to Banks?
No. Banks losing money is immoral...
Happy Ponzi MDB!!
good example of moral subjectivity : the happiest bird in the world on that subjective scale; the DOdo! Can't beat a dead species for being in eternal bliss.
Terry Hillson is on CNBS...says JPM a buy??? WTF??
Of course, so is Facebook and JCPenny.... LMAO
CNBC told me to buy unsecured Greek Bonds using leverage , what do you reckon 'Risk on'?
Epic image on Bloomberg...
http://www.bloomberg.com/image/iK.Qjmmry9xg.jpg
Why bother cleaning off the "blood?" Me thinks there will be a lot more of that as things heat up and the ouzo stops flowing...
Speaking of ouzo... drinking a shot of the warm stuff right now ... Mextaxa ouzo
Heard that rumor on CNBC, but they were quick to say we don't know for sure- which tells me it is true. Plus, it just sounds like something they would do.
Reality is a hallucination brought on by lack of alcohol.
I've recently quit drinking completely and this statement very much holds true.
+1
Starting to get interesting. And the one eyed bandit leading the blind, the dollar, rallies. It will be the last one on the trash heap. But it will take its place in the midst of all the garbage as the smell permeates all fiat currencies.
As in any abusive relationship ...
... there is always the potential for the abuser to wake up and find themselves in a burning bed.
European banks? It couldn't happen to a more deserving group of pricks.
barliman
The "Collapse" everyone's been speaking about for over 4yrs now. Well, it's started. Lock & load people. It's going to be a very bumpy ride.
It only gets BITTER from here...
I still have faith in the can kicking.
Reality, it is a BITCH!
Wait 'till Amerika realizes that Reality TV is far different than Economic Reality...... Uffta
http://youtu.be/-6YMov3fYvs
niff said
AAPL should just takeover Europe
From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007
It all started with the big crisis of 1929. The American economy reached a deadlock because of its social "pathogenesis"; a deadlock that led it to economic crisis in a different - faster- pace than the rest of the industrial forces of that time. Important decisions had to be made - mostly social - and the Whites didn't like that, especially the Whites' rulers, the Anglo-Saxons. The USA society had to either be homogenized and "forget" about racism against black people or find itself in a permanent deadlock that would threaten it with social uprising. If they didn't equate the black working people with their white colleagues so that there wouldn’t be an issue with the salaries that threatened the national currency, they couldn't avoid reactions and all that goes with it.
The problem which began as social but was turning into economic was simple. As long as the economy functioned adequately and the Blacks worked and asserted what they deserved for their work, the white employers had to "fund" the white working force with extra money because of their skin color. To avoid complaints from a white worker who received the same salary with his black colleague, the employers had no choice but to give them more money. The demands of the Blacks were used as an excuse by the Whites to demand more and everything ended up in the same pocket, since they were under the same employ. The problem that arose from this "strange" tactic was that the increased takings of the "superior" White employers were seeking outlet in investments and that threatened the capital. Having higher salaries, they bought more houses; they bought stocks and so on.
www.eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html
Authored by Panagiotis Traianou