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European Weakness Spreads And Accelerates
European equity prices fell for the third day in a row and pulled back near six week lows, breaking below the 50DMA for the first time since it crossed above on 1/16. Today's drop was the largest in three weeks as Italian banks were halted (and Spanish banks sold hard), plunging their most in over three months and back at levels not seen since mid January. Most Italian banks are down 9-11% in March but BMPS is down over 24% as Italian sovereign yields start to come unhinged again (ironically a day after Monti announced the crisis was over). 10Y BTPs broke back below last Friday's lows (the moment the ECB stepped in last time to save the day) up over 5.2% yield - catching up to CDS levels (and ITA spreads are +23bps on the week). Spain is also weak (+15bps on the week) and heading for 3 month highs in its yields. Since the CDS roll (March 20th), the sell-off has accelerated with equity and credit markets tracking lower together (as opposed to the last few months where credit underperforms and then snaps back higher). We discussed the LTRO Stigma trade earlier and that has continued sliding notably wider today as LTRO-encumbered banks hugely underperform. We suspect hedges (sovereign credit, financial credit, and equity) placed early in the year for the 3/20 Greece event (among other things) have run off and now managers are reducing risk in real terms (selling) as opposed to replacing hedges which is why the uber-supported markets of Italy and Spain are losing the battle now. Lastly, Europe's VIX is its richest relative to US VIX since the rally began, jumping dramatically today.
The BE500 (Bloomberg's broad European equity index) dropped for 3 days in a row and the most today in 3 weeks - near 2 month lows...
Italian bonds have struggled notably in the last few weeks. Today saw us re-test the lows from Friday when the ECB came in-like-Flynn to save the day...no sign of them this time...
And implicitly (given that they are increasingly integrated with their government and entirely behooven to the MtM risk of the Sarkozy carry trade...Italian banks have been crushed this month (and the last few days even more so)...
Spanish banks were also weak today (and have been for a week or two) - how long before we hear a short-selling ban reinstated?
And since the CDS roll on March 20th, credit and equity markets have plunged notably in sync...
And finally Europe's VIX (V2X) has risen notably relative to the US VIX (lower pane) with a big jump today in the differential (now near its largest differential - and ratio - since the rally began in November). During this time, each push in V2X has led a push in VIX so perhaps a higher VIX is warranted or more specifically long VIX, Short V2X...
Charts: Bloomberg
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BA-BA-BA-BOOM!
What is the difference between Whores and Banksters?
A whore will give you what you paid for. You go to a Bankster to get f@cked.
Whores actually gives interest, even if it is only fake
SPX was two points away from testing the MA(20) in the morning. If the afternoon brings in more selling (rather than an illusion-driven rally), we could break below.
Meanwhile, the House and Senate have both unanimously passed The National Scream at a Disabled Person Act.
my friend's sister makes $74/hr on the computer. She has been out of a job for seven months but last month her check was $17871 just working on the computer for a few hours. Read more on this site .... http://bit.ly/wYpMrv
Another perfect Goldma...I mean, Monti contrarian play.
Greece. Then Portugal and Ireland. If they can't ring fence them, next is Spain -- a BIG problem. If Italy were to go after that, then France goes, then we wait for the financial tsunami to hit our shores.
Gold.
Bought the VIX at 15, why isn't this index at 50+? I am sensing another "europe is saved" headline, crap.
Bah, this report must be fake...
Europe is invinceable. Why else would the Fed start buying thier debt?
Don't they have algo's in Europe to manipulate the markets higher? What's wrong with those people?
just like a cancer
Housing no better, sales to Europe about to slow down. One clown ass recovery coming right up.
T-1 before shills start the QE3 rumors...
VIX futures > backwardation > say bye as stopped out the day before VIX pick-up > return to last time you figures buying a VIX turbo during months the b*tch was around 14-15... and go again and again, all for a gain... Long live leverage for the fools...
It's the "Tyrannts on parade" show. Hell. with just a little salt and pepper for seasoning, you can actually enjoy them in a good hearty stew!
At least now I understand how the Italian bond yields recovered. Gadhafi fortune + 100x leverage = economic recovery...now, go back to sleep people...everything fine on this side of the pond.
http://www.theglobeandmail.com/report-on-business/top-business-stories/i...
Put a ringfence around the gallows.
As I recall, Robottrader predicted that European financials would be the top performing sector this year.
I haven't seen Robottrader recently. What happened to him? I enjoyed his posts even though I didn't necessarily agree with them.
Actually he's been absolutely right on that call. Which probably explains why he doesn't come around here anymore. I'm only here cuz of all the girls. And the fact that I'm a stud-muffin.
Yes, they did get a nice boost from LTRO. But we still have 9 long months to go before the year is done.
Actually I was just making fun of his habit of coming on and bashing gold whenever it had a down day. And when it went up, he would be nowhere to be found.
http://confoundedinterest.wordpress.com/2012/03/29/initial-jobless-claims-employment-stagnation-u-s-spain-italy-and-france/
Look at unemployment in Europe versus the US. And look at the stagnation of employment to population in the US. We are NOT recovering in the true sense of the word, and Europe is worsening.