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European Stress Getting Progressively Worse As LTRO Boost A Distant Memory
The sad reality of an austerity induced slowdown in Europe and an ESFS/ESM as useful as a chocolate fire-guard seems to be creeping into risk asset premia across Europe (and implicitly the US). GGB2s are all trading back under EUR20 (that is 20% of par), Sovereign yields and spreads are leaking wider despite the best efforts of their respective banks to back-up-the-truck in the 'ultimate all-in trade' and the LTRO Stigma has reached record levels as LTRO-encumbered banks' credit spreads are the worst in over two months. Spanish sovereign spreads are back at early January levels and with Italian yields comfortably back over 5% and the bonds starting to reality-check back towards the much less sanguine CDS market. It seems apparent that much of the liquidity-fixing LTRO benefits are now being washed away as investors realize nothing has changed and in fact things are considerably worse now given encumbrance and subordination concerns and the increased contagion risk that the LTRO and the Sarkozy trade has created.
The LTRO Stigma is as high as it has ever been. LTRO-encumbered bank credit spreads are back to early January levels (while non-LTRO banks remain much more sanguine - less subordinated)...
GGB2s are all trading under 20% of par as the simple reality that nothing was fixed hits home...
And as pivot securities in Italy (broken 5% yields and bonds catching up to CDS)...
And Spain even worse as its sovereign risk premia (lower pane) reaches back to early January levels (and notably at the top of its 3 month channel)...
And this week has been ugly in general for European sovereigns - most especially the Italian and Spanish yields (which if they are in trouble the EFSFESM firewall simply cannot cope with), it seems the market is starting to test the political will in the Euro-area once again...
and while Portugal is better on the week quote notably - it is mostly related to the basis trade compression we talked about yesterday so do not read too much into it.
Charts: Bloomberg
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And boom goes the dynamite? Seems more like a flatline fizzle to me. Reminds me of Martin the Martian, "Where is the earth shattering boom?"
Here's Marvin to deliver the line himself:
http://youtu.be/QuUJfYcn3V4
Man this collateral is sooooo baked.
Ahh, Tyler. You never disappoint!
INSOLVENCY WITH LOTS OF MAKE-UP TO COVER THE UGLY FACE-TRUTH...USA,EUROPE,JAPAN...ALL BROKE ASS COUNTRIES, THE SITUATION IS NOT GETTING ANY BETTER, THE MORE WE WAIT THE WORST IT GETS. STOP KICKING THAT FUCKING CAN, YOU ARE NOT GOING ANYWHERE WITH THIS
Austerity or stimulus are irrelevant.
In the macro view things are only going to get worse - if they improve in the short-term it is only adding fuel to the fire. They will manage the downward slide so that there will be no point at which the public (as if they care) will become resolved to do something about it that might involve short-term discomfort.
Nothing will matter as long as those in control act only in thier own self-interest and live lives which are wholly apart from that of the mean. The problem is the system - the algorithm - is corrupt.
I think that the conservatives of the 80's an 90's thought that they would force fiscal responsibilty on the US by bankrupting it. Little did they know that we are so far gone that we would loan ourselves money to delay the day of reckoning - it's like when the addict kills his mother to get money to buy more drugs.
The point is: how can we best profit from it?
THE DEBT CANNOT BE PAID BACK, ONLY INFLATED OR DEFAULTED, BUT FOR SURE NOBODY HAS THE FACE OR BALLS TO DEFAULT(EXCEPT ICELAND...)AND WE ARE DOOMED WITH INFLATION, HARD TIMES, DEBASEMENT OF CURRENCIES, AND MIDDLE CLASS GET FUCKED FOR AQ GOOD DECADE TO COME HERE IN USA AND EUROPE FOR SURE.
WE ARE ALSO FACING THE BIGGEST REDISTRIBUTION OF WEALTH, A CURRENCY RESET OVERDUE(EVERY 30-40 YEARS ON AVERAGE, WE ARE ALREADY 40 AND 1/2 YEARS AFTER THE LAST ONE) AND FOOD AND ENERGY PRICES TO GO IN THE STRATOSPHERE...
THE ONLY WAY TO PROFIT,IMHO, IS GOLD AND SILVER, ENERGY AND FOOD, TILL THE NEXT ECONOMIC CYCLE, WHEN THE DOW/GOLD RATIO IS 1;1 SELL YOUR PM'S FOR THE NEXT WEALTH CYCLE, SELL YOUR SILVER FOR REAL ESTATE OR STOCKS...THAT WILL BE LIKE IN 2015LOL
They will kick that can as long as they can get people to play along. Consequences are only faced when there is absolutely no other alternative. Its human nature.
How about these non traded reits? Anyone watching these?
http://www.theglobeandmail.com/news/politics/conservatives-budget-to-reset-retirement-at-age-67/article2385085/
Conservatives' budget to reset retirement at age 67Join the fun:
http://annoyanidiot.blogspot.com/2012/03/picture-worth-over-billion-word-or.html
"Conservatives' budget to reset retirement at age 67" Hmmmm, I figured it would be in the 70's. To save Social Security, the age has to average with the death curve. The idea is not to pay or pay very little. The people that live past the average age of death are a burden on the system. Thats the way social security works. You may not like it, but it is what it is.
How does kicking the can help?? I guess maybe all the central bankers and sovereign leaders need time to get their underground bunkers stocked up before all the irate people that lost all their stocks and bonds come after them with pitchforks??
Check out the indexes (+crapple) do the bs razzle dazzle, what a fucking joke! Gas just hit 4.15 in my neck of the woods and its not looking back. How do people drive suv's, f250-350 trucks, and all out gass guzzlers anymore? How about someone who has to drive 30-50 miles each way to work everyday, their fucked!
Summit, summit, we need a summit.
For the love of God, somebody CALL A SUMMIT!!
Hold on.
Price of NEW Greek bonds is 20% of par = they are worth less than 10% of what par value of original bonds before it all went to shit was?
I wonder how far they'll let STD fall? Then a 5:1 reverse split ala NBG. Will history repeat itself?
[quote]It seems apparent that much of the liquidity-fixing LTRO benefits are now being washed away as investors realize nothing has changed and in fact things are considerably worse now given encumbrance and subordination concerns and the increased contagion risk that the LTRO and the Sarkozy trade has created.[/quote]
What? But we paid off all the Mastercard™ debt by charging it on our Visa(s)™; what could possibly be wrong now?