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European Bloodbath As Merkel Won't Go Dutch

Tyler Durden's picture


Equity, credit, and sovereigns all ugly. Merkel's unequivocal comment on her nation's unwillingness to 'share' burdens and slap the proverbial cheek of Monsieur Hollande, Italy's banking union looking for more 'aid', Spain actually asking for their bailout, Greece 'avoiding' reality, and Cyprus pulling the 'China rescue plan' last ditch retort to market angst; but apart from that, things are dismal in Europe. Italy down over 4% and Spain almost as bad on the day as every major equity index is well into the red. Italian banks monkey-hammered down 6/7.5% and halted a number of times. Investment grade credit outperformed (though was notably wider) as financials (subs and seniors), XOver, and stocks are plummeted to 11-day lows. After breaking below the pre-Spanish bailout levels on Friday, Spain and Italy 10Y are now 20-40bps wider with Italy and Spain 5Y CDS notably wider and well over 500bps. Notably the short-end of the Italian and Spanish curves underperformed significantly (curves flattened): 2Y BTPs +57bps vs 10Y +21bps - biggest flattening in 6 months!; 2Y SPG +37bps vs 10Y +17bps. Europe's VIX snapped back above 27% (and we note that our EU-US Vol compression trade is moving well in our favor). EURUSD has been smacked lower by over 80pips ending under 1.25 once again.

Stocks and credit down hard led by financials...

and Italian banks leading the dump today...

and Italian 2s10s plunged (flattened) by the most in over 6 months today...

we can only imagine what this is doing to LTRO-bound Italian banks that took up Sarkozy's idiotic symbiotic carry trade. (as 2Y ITA shows below post LTRO)

Charts: Bloomberg


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Mon, 06/25/2012 - 11:55 | Link to Comment vmromk
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Mon, 06/25/2012 - 11:57 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Got silver?

Mon, 06/25/2012 - 12:15 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

@ Mr L H

+ 1

Sure do, silver and gold.  Helps me sleep better at night.

US$ themselves might even start getting scarce if we have RBS freeze-ups here.  That's why you need to have CA$H on hand as well.  Three months worth of expenses.

Mon, 06/25/2012 - 12:27 | Link to Comment Tirpitz
Tirpitz's picture

Or trading pitchforks for potatoes. Long pitchforks!

Mon, 06/25/2012 - 12:48 | Link to Comment Bastiat
Bastiat's picture

Three months of cash on hand? Isn't it illegal to be solvent?

Mon, 06/25/2012 - 15:01 | Link to Comment odatruf
odatruf's picture

You mean it won't be ok to liberate what we need at that point?


Mon, 06/25/2012 - 11:55 | Link to Comment spekulatn
Mon, 06/25/2012 - 11:55 | Link to Comment The Swedish Chef
The Swedish Chef's picture

And the (probably massive) down grade of Spanish banks hasn´t even been released yet... I´m looking forward to another epic sell fest tomorrow. 

Mon, 06/25/2012 - 11:55 | Link to Comment PaperBear
PaperBear's picture

Gold is not tanking and silver ticks up.

Mon, 06/25/2012 - 11:55 | Link to Comment bdc63
bdc63's picture

Germany is leaving the Euro.  They aren't even trying to hide it anymore.

Mon, 06/25/2012 - 11:56 | Link to Comment LawsofPhysics
LawsofPhysics's picture

There you go, plus one for you sir.

Mon, 06/25/2012 - 12:25 | Link to Comment Tirpitz
Tirpitz's picture

Can't imgine the maggots moving voluntarily out of the fat cheese.

Mon, 06/25/2012 - 12:38 | Link to Comment Fips_OnTheSpot
Fips_OnTheSpot's picture

Not before rollin Schaeuble failed to gain superpower (ESM) in Bruxelles.

Mon, 06/25/2012 - 11:56 | Link to Comment LawsofPhysics
LawsofPhysics's picture

It's just paper burning, fuck paper promises and the paper-pushers.  Let it burn, and let's find out precisely what the real value of everyone's labor really is, fucking bring it.  Got physical?

In the absence of any rule of laws and contracts, possession is the fucking law.  Time for the world to re-learn what wealth really is.  Bring it.

Mon, 06/25/2012 - 13:12 | Link to Comment TNTARG
TNTARG's picture

I've been saying this for weeks: let's reprice.

Mon, 06/25/2012 - 11:57 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It's beginning to look at lot like Christmas everywhere you go.

Mon, 06/25/2012 - 12:00 | Link to Comment Alea Iactaest
Alea Iactaest's picture

Last Thursday was almost completely red on my screen. Today I'm seeing PMs and Fertilizer up, along w US Bonds and everything else is getting fried. Divergences to be trusted?

Mon, 06/25/2012 - 11:59 | Link to Comment tahoebumsmith
tahoebumsmith's picture

The global ponzi is running out of rhetoric... It's capitulation time bitchez, the Zombies are finally starting to eat each others faces.

Mon, 06/25/2012 - 12:20 | Link to Comment Tirpitz
Tirpitz's picture

But first they bite our lower backsides.

Mon, 06/25/2012 - 12:01 | Link to Comment disabledvet
disabledvet's picture

What was that line in "The Razor's Edge"? "Phuck them...and learn to say it as well."

Mon, 06/25/2012 - 12:52 | Link to Comment Bastiat
Bastiat's picture

Don't remember that one in the movie or book.

Mon, 06/25/2012 - 12:04 | Link to Comment El Oregonian
El Oregonian's picture

Tie a millstone around that euro neck and drop it into the proverbial ocean.

Mon, 06/25/2012 - 12:21 | Link to Comment Tirpitz
Tirpitz's picture

Ocean of debt, that is. I've heard they still subscribe to the idea of the Titanic being unsinkable.

Mon, 06/25/2012 - 12:06 | Link to Comment bugs_
bugs_'s picture

two thousand zero zero party over, out of time

Mon, 06/25/2012 - 12:08 | Link to Comment luckylongshot
luckylongshot's picture

An unstoppable force, that has been deferred for decades by totally insane levels of debt, finally gets to overpower what our politicians claimed was an immovable object.

Mon, 06/25/2012 - 12:23 | Link to Comment Tirpitz
Tirpitz's picture

Paying off the entire debt would have come far cheaper than the ongoing hidden bank bailouts.

Mon, 06/25/2012 - 12:08 | Link to Comment ebworthen
ebworthen's picture

Kill the banks, kill the banks, kill the banks...

Mon, 06/25/2012 - 12:09 | Link to Comment slackrabbit
slackrabbit's picture

lol just now on bbc, they are blaming greece!

Mon, 06/25/2012 - 12:10 | Link to Comment pleseus
pleseus's picture

Europe seems like a sinking ship with no solution.

Mon, 06/25/2012 - 12:29 | Link to Comment Tirpitz
Tirpitz's picture

What they lack in direction, they try to make up in speed.

Mon, 06/25/2012 - 12:39 | Link to Comment bdc63
bdc63's picture

Europe IS a sinking ship with no solution.

Mon, 06/25/2012 - 12:12 | Link to Comment Al Huxley
Al Huxley's picture

I wouldn't worry Europe - after all, it's not necessary to actually DO anything, as long as you're sincere in your desire to TALK about doing something.

Mon, 06/25/2012 - 12:24 | Link to Comment GovernmentMule
GovernmentMule's picture

A quantum duh moment prior to the reset button being pressed.

Mon, 06/25/2012 - 12:53 | Link to Comment Bastiat
Bastiat's picture

+1 for "quantum duh!"

Mon, 06/25/2012 - 12:26 | Link to Comment duckarooni
duckarooni's picture

Kill the poor, form a corporation, process the bodies sell it as spinach and launch the IPO after three years innit. Use teeth as collateral.

(attb)A project for a new US demagogarie 2007 Schedule 3 (II/I pts 3-17)

Mon, 06/25/2012 - 12:34 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

fibrulating fibonaccies batman!

it's risk0ff! 

Mon, 06/25/2012 - 13:43 | Link to Comment DutchR
DutchR's picture

Are We going ourselves, I wonder.

Mon, 06/25/2012 - 13:51 | Link to Comment earleflorida
earleflorida's picture

New News (   ), that's getting 'reality`old' with a delectable aging process of elimination, that only the "Master Chess Players" could fathom as the 'sandglass clock' quietly, shrills... 'checkmate!


Mon, 06/25/2012 - 14:53 | Link to Comment q99x2
q99x2's picture

Getting kind of late to start a war to skirt the issues. But, not for China. Wait a minute has the US shipped war making to China yet. Hey there's still an opportunity for you you globalist MF'ers.

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