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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Mongo's picture

So chicken still tastes like chicken? no?

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"

LawsofPhysics's picture

Winning!  Hedge accordingly.

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. 


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.

SheepDog-One's picture

Somethings going to blow up here, big time.

Dr. Engali's picture

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

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 !!!!


SheepDog-One's picture

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

fourchan's picture

no panic, the banking theft machine is working perfectly,

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


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. 

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.

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...

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...

Dermasolarapaterraphatrima's picture

"Banks shall not take a loss"

That's rule #1

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