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European Credit Refuses To Take The Blue Pill

Tyler Durden's picture


After an almost incessant rally off Thanksgiving Day lows, European financials are seeing a quite notable divergence in their performance over the last two days. Dispersion has risen across all of credit with financial credit spreads widening significantly as both broad stocks and specifically the European financial stocks trade sideways to higher. This is the most significant divergence between credit and equity for the financials in Europe since that rally began and was then extended via LTRO hopes. Perhaps the reality of implicit LTRO subordination as increasing amounts of collateral (backing the entire capital structure of the banks) is being priced into the much more sensitive and quick to react credit markets as stocks just can't shake the momentum extravaganza.

Charts: Bloomberg


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Thu, 02/09/2012 - 12:21 | 2141981 Mongo
Mongo's picture

So chicken still tastes like chicken? no?

Thu, 02/09/2012 - 12:30 | 2142059 Dr. Engali
Dr. Engali's picture

No it tatses like tastee wheat.

Thu, 02/09/2012 - 12:33 | 2142090 Sudden Debt
Sudden Debt's picture

Like the Greeks would say: "It might be rabit, it might be cat but if you have to ask, you can't afford it"

Thu, 02/09/2012 - 12:20 | 2142006 LawsofPhysics
LawsofPhysics's picture

Winning!  Hedge accordingly.

Thu, 02/09/2012 - 12:22 | 2142010 hedgeless_horseman
hedgeless_horseman's picture



How could equity trading desks possibly ramp up bids as they sell?  How could banks possibly manipulate their own stock price in today's highly regulated markets?  That's just crazy talk. 


Thu, 02/09/2012 - 12:24 | 2142022 Village Smithy
Village Smithy's picture

That is the magic of HFT.

Thu, 02/09/2012 - 12:26 | 2142035 Conman
Conman's picture

Seems the algos are only set to BTFD these days. Same thing every day. Look at that V all the way down all the way up.

Thu, 02/09/2012 - 12:22 | 2142013 SheepDog-One
SheepDog-One's picture

Somethings going to blow up here, big time.

Thu, 02/09/2012 - 12:27 | 2142046 Dr. Engali
Dr. Engali's picture

I think it's my head from waiting for that "any moment now" debt implosion.

Thu, 02/09/2012 - 12:35 | 2142101 EyeQ
EyeQ's picture

Sheepdog - when is it going to blow - I can't wait much longer - everyday I think today is the day - but no - the markets keep going higher- the balloon is getting bigger and bigger but when will it POP !!!!


Thu, 02/09/2012 - 12:41 | 2142139 SheepDog-One
SheepDog-One's picture

Yea quite possibly it may also be my head that explodes first from seeing this clown show every day.

Thu, 02/09/2012 - 12:23 | 2142018 fourchan
fourchan's picture

no panic, the banking theft machine is working perfectly,

silently stealing the savings of the world and enslaving the worlds citizens.


Thu, 02/09/2012 - 12:25 | 2142029 Burr's 2nd Shot
Burr's 2nd Shot's picture

Since CDS contracts are soon to be proven worthless (see Greece, et al), you don't need to pay attention to the credit markets anymore. 

Thu, 02/09/2012 - 14:22 | 2142786 paint it red ca...
paint it red call it hell's picture

If I had half a Qualified Investor's brain, I would be liquidating my position with any and all hedge funds. God only knows their debt exposure or how they are leveraged into it with CDS's as risk mangaement...... Remaining hedge fund clientele may not be remain qualified to be Qualified for much longer.

Thu, 02/09/2012 - 12:32 | 2142085 scatterbrains
scatterbrains's picture

and in the background noise what happens when gasoline (UGA) reaches the current levels, or at least in the last 2 prior instances...

Thu, 02/09/2012 - 12:49 | 2142189 scatterbrains
scatterbrains's picture

I should add the drain effect on discretionary spending triggers primary swings higher in TLT or at least in the last 2 instances...

Thu, 02/09/2012 - 13:17 | 2142381 Dermasolarapate...
Dermasolarapaterraphatrima's picture

"Banks shall not take a loss"

That's rule #1

Thu, 02/09/2012 - 13:42 | 2142556 slewie the pi-rat
slewie the pi-rat's picture

dickBove took it?

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