Goldman Murders Muppets, Tells Them To Stay Long Spanish, Italian Bonds

Tyler Durden's picture


Curious just how we were 100% certain that the June 29 summit was an epic disaster, in addition to the obvious? Because in a note from that morning we said the following: "Below is Goldman's quick take on the E-Tarp MOU (completely detail-free, but who needs details when one has money-growing trees) announced late last night. In summary: "We recommend being long an equally-weighted basket of benchmark 5-year Spanish, Irish and Italian government bonds, currently yielding 5.9% on average, for a target of 4.5% and tight stop loss on a close at 6.5%." By now we hope it is clear that when Goldman's clients are buying a security, it means its prop desk is selling the same security to clients." Sure enough, its prop desk was selling, and selling, and selling. Since then Spain and Italy have blown out, and only the strange tightening in Ireland has prevented yet another stop loss from the squid which is now known for cremating clients more than anything else. The stop loss is certainly not far: the basket is now at 6.20%, and has just 30 bps to go until yet another batch of Goldman clients is slaughtered. Which is now only a matter of time - Goldman just told its clients it has a little more of its 5 Year exposure left to sell, and then it will be done. Of course by then another muppet murder scene will have to be cordoned off.

From Goldman's Francesco Garzarelli:

Trading in Thin Markets

Translating these considerations into an investment strategy has been admittedly difficult and contentious, given the prevailing pessimism and caution, and very thin markets.

We have observed in previous notes that the co-movement in EMU bonds has been looser this year, providing interesting entry points into trades within the area. More broadly, however, the extremely low levels of yields in AAA issuers (relative to macro fundamentals) can be traced back to the shifts in demand that are taking place within the fixed income universe in response to the displacements originating from the Euro area as a whole. Hence, a macro view on US Treasuries or German Bunds can be invalidated by changes in expectations on the policy reaction of Euro area authorities (we seldom find ourselves discussing GDP or inflation outlook in meetings with investors, as the discussion is dominated by considerations on the political economy of the crisis).

A few weeks ago, we recommended going long an equally-weighted portfolio of 5-year government bonds of Italy, Spain and Ireland. The trade is now slightly in the red relative to where we initiated our recommendation (6.20%, from 5.96%), reflecting the sell-off in Spain. Nevertheless, in addition to fitting with our more strategic views expressed above, we still like the position, for the following reasons.

First, the increase in short-dated yields in the south of the Euro area creates a problem for the transmission of monetary policy. We doubt that the ECB is insensitive to this and would view measures directed at supporting the private nonfinancial sector as more likely. In turn, these should help the government sector and lead to a decline in short-term rates.

Second, Spain and Italy are large government bond markets (their combined float is close to US$3trillion). We are of the view that the policy preference is to keep these markets open, rather than have these issuers become shut out of the primary market and unable to return, as is the case for the program countries now (although Ireland and Portugal are trying to re-activate some primary issuance). As we said since the start of last year, the intermediate-to-long maturities for both issuers are hard to invest in until some clarity is provided on how the debt overhang will ultimately be addressed. As said above, we expect some combination of EFSF/ESM intervention, and ECB assistance.

Recommended Tactical Trading Views

The following trading ideas from the Global Markets Group reflect shorter-term views, which may differ from the longer-term ‘structural’ positions included in our ‘Top Trades’ list further below.

On Rates:

  1. Stay long an equally-weighted basket of benchmark 5-yr Spanish, Irish, and Italian government bonds opened at 5.96% on 29 June 2012, with a target of 4.5% and stop on a close above 6.5% now at 6.20%.
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Tue, 07/24/2012 - 06:57 | 2644894 hugovanderbubble
hugovanderbubble's picture

Goldman Sucks¡




Long CANADIAN 2-5 yrs

Long SWISS 5yrs

Tue, 07/24/2012 - 06:58 | 2644896 GetZeeGold
GetZeeGold's picture



Stay in the bond pool Muppets....we'll let you know when It's time to come out.


Tue, 07/24/2012 - 07:02 | 2644899 Ghordius
Ghordius's picture

it does sound a bit like "don't worry, we know that the ECB is going to help. wink, wink." the fact that the Holy Vampire Squid still has clients is a wonderful testimony to human greed... getzeephyz, getzeegold...

Tue, 07/24/2012 - 07:05 | 2644908 malikai
malikai's picture

The last time I asked the obvious question "Where do they find these suckers?" I received the answer OPM. But I mean, come on. Even OPM has limits.. For fuck's sake, you can't lose every trade and still have clients, can you?

Did I pick the wrong line of work?

Tue, 07/24/2012 - 07:10 | 2644926 GetZeeGold
GetZeeGold's picture



"Where do they find these suckers?"


They smiled at us.....dressed nicely......and said buy this crap.


So we did.....believe it or not.


Tue, 07/24/2012 - 07:12 | 2644933 EscapeKey
EscapeKey's picture

"We combine your money and our experience, and make it our money and your experience."

Tue, 07/24/2012 - 07:17 | 2644938 malikai
malikai's picture


Tue, 07/24/2012 - 07:51 | 2644989 old naughty
old naughty's picture

They chained th exits from the outside.

Perfect crime !

Tue, 07/24/2012 - 11:27 | 2645533 Bananamerican
Bananamerican's picture

"where do they find them?"

Nursing Homes

members of the Fukushima Tanning Society

members of the Young Republicans ("It’s cool to be Republican!™")

Educator Pension systems

Bernie Madoff's old client pool....

Texans and Californians


Tue, 07/24/2012 - 07:18 | 2644940 GetZeeGold
GetZeeGold's picture



I stand in the presence of brilliance.


Tue, 07/24/2012 - 07:25 | 2644941 ihedgemyhedges
ihedgemyhedges's picture

Since this whole scene is getting so ugly, I gotta add some beauty to balance this out.........A little Lauren Lyster to start the morning.  You're welcome gents............!

Tue, 07/24/2012 - 09:07 | 2645149 Confundido
Confundido's picture

hmmm Lauren Lyster....

Tue, 07/24/2012 - 07:20 | 2644945 Short Memories
Short Memories's picture

Anonymous should be taking goldmans site down shouldn't then if they are are a real group fighting for muppet rights?

Tue, 07/24/2012 - 07:26 | 2644955 Muppet of the U...
Muppet of the Universe's picture

they could have stopped all of this and tanked the nyse.  they could have launched us into the stone age and launched the reset now, as opposed to painfully later on.  hackers these days are concerned with becoming the new rich/elite.  they control the future and they aren't concerned with carrying the idiots anymore.  it seems no one does.  the idiots aren't just on their own, they are loathed.

Tue, 07/24/2012 - 07:40 | 2644967 malikai
malikai's picture


The reason Anonymous hasn't "hacked the planet" to save us all from the banksters is because it's a CIA honeypot.

Tue, 07/24/2012 - 07:42 | 2644973 TWSceptic
Tue, 07/24/2012 - 07:33 | 2644959 dannyboy
dannyboy's picture

Be funny if they get the muppets to hold these bonds all the way till PSI.

I mean the next summit will solve everyting, trust me.

Tue, 07/24/2012 - 07:19 | 2644942 Muppet of the U...
Muppet of the Universe's picture

In order of:


shortselling everything

the bernank put



Tue, 07/24/2012 - 08:34 | 2645054 MillionDollarBoner_
MillionDollarBoner_'s picture

The Bond Pool = Muppet Soup !;o)

Tue, 07/24/2012 - 07:45 | 2644981 stocktivity
stocktivity's picture

Why hasn't a single congressman investigated Goldman's rigging? oh wait...Goldman contributes money to their re-election stash so all these congressmen are prostitutes of Goldman. Never mind...rally on....until the printing stops and the can can't be kicked anymore, It's all Bullshit!

Tue, 07/24/2012 - 08:20 | 2644991 GetZeeGold
GetZeeGold's picture



I don't think Clint Eastwood would even attempt that......seems crazy.


It's halftime in don't try to be heroic until the last 2 minutes of the 4th quarter.....plenty of time left but don't expect any help from Congress......cause that's just not going to happen.


Tue, 07/24/2012 - 06:57 | 2644895 Troy Ounce
Troy Ounce's picture


There are no pills against stupidity, my fellow Muppets.

Tue, 07/24/2012 - 07:00 | 2644898 GetZeeGold
GetZeeGold's picture



Do you suppose I can get a refund for this bottle in that case?


I knew that snake-oil salesman looked shifty.


Tue, 07/24/2012 - 07:04 | 2644907 Herman Van Rompuy
Herman Van Rompuy's picture

I take offense to that statement.

My products are of the highest quality.

Furthermore you couldn´t find a more trustworthy induvidual than me in the world, and the same goes for my pals Barosso, Bennie and Christy.

Tue, 07/24/2012 - 07:09 | 2644924 LeBalance
LeBalance's picture


Come and eat your Brussels Sprouts!

There's a good lad!

Tue, 07/24/2012 - 07:19 | 2644943 Ghordius
Ghordius's picture

dear your excellency our most exalted President of the European Council,

I know that your products are of the highest quality.

First, your job is to be our non-voting primus inter pares in the Council. Your non-votes are of premier quality.

Second, your job is also to be the most useless president of history. This, you do wonderfully, in fact you don't start wars, don't send soldiers, don't do anything of worth. Well done! I appreciate that, keep up the good work!

Third, your job is to give a human face to the Council - this unknown-in-the-Anglosphere body that ultimately governs the EU. Your face is perfect for this. Let it be known in all realms that we europeans like our politicians uglyness! Your second-in-command, the Baroness, is a good match to you.

Fourth, I really loved it when the Council last met and gave you a job. Wonderful! Everyone in the Council is a frigging Head of Government and has full staffed ministries at their command, but they gave you homework and you wrote the most useless half a page like the good puppet you are.

Herman Van Rompuy, I'd like to thank you. With you on the helm, we have achieved what we wanted: an EU president utterly devoid of power.

As soon as the crisis is over, we'll give you a medal and scrap your office.

Tue, 07/24/2012 - 07:23 | 2644950 disabledvet
disabledvet's picture

that's not very nice. Does he have personal band that blares "Hail to the Chief" where ever he goes?

Tue, 07/24/2012 - 07:36 | 2644962 Ghordius
Ghordius's picture

cool video, thanks. no, but if he begs we might give him one. but seriously, he is a hero.

every politician wants to have power and is willing to bear the blame that goes with it. He is willing to bear the blame for non-power.

seriously underappreciated

we europeans have the best presidency ever. all hail the Clown-in-Chief!


if we do give him a hymn, it should rhyme with procrastinate

Tue, 07/24/2012 - 08:12 | 2645024 i-dog
i-dog's picture

I'll give the central planners one thing: Rumpy-pumpy was an excellent choice to put an innocuous face on an evil empire! Even Big Ears, across the pond, gets people all fired up -- notwithstanding that he has spent more time on the golf course than most of his subjects have spent at actual jobs.

Nice redirection, in your previous post, BTW....

Tue, 07/24/2012 - 11:30 | 2645509 Ghordius
Ghordius's picture

the EU is not an empire, it's one flank of the empire. unless you are trying to argue that the US and the Greater Commonwealth is just a jumble of pastures full of the most peaceful sheep of all times

which post? or, better, which redirection?


btw, I've found an earlier "in defence of Herman Achille" I have done in March, here 2229617 , there I wrote:


...then you haven't met Jan Peter Balkenendethe Dutch gentlemen who voted on behalf of the Netherlands for Rompuy, who is something like the permanent secretary of the Council, official title: "President of the European Council".

look it up

it's a one-country one-vote and the person has to be: 1) boring, 2) experienced (it has to be a former Prime Minister) and it has to have the 3) trust of the heads of governments who meet and form the European Council, that is nothing more than a bloody summit of governments.

I personally think Herman Van Rumpuy fits perfectly, he has been voted to the Belgian Parliament, he has been chosen to head the Belgian Government and he can be trusted to keep his mouth mostly shut and not to do anything the Council does not want. Because his job is mostly not doing anything without consultation of the Council anyway.


Tue, 07/24/2012 - 07:33 | 2644960 smlbizman
smlbizman's picture

i dont even think  agent 86 would keep falling for the " old something on your shirt nose flick trick".....this many times

Tue, 07/24/2012 - 07:02 | 2644904 GetZeeGold
GetZeeGold's picture



I think we're past liberty......and pretty far down the path to tyranny......really sorry to be the one that had to tell you that.


Again.....really sorry.


Tue, 07/24/2012 - 07:14 | 2644936 EscapeKey
EscapeKey's picture

Depends on whose definition of the word "liberty" you consider...

Tue, 07/24/2012 - 08:04 | 2645015 falak pema
falak pema's picture

Liberty Valance! Hole in the head.

Tue, 07/24/2012 - 07:01 | 2644902 slaughterer
slaughterer's picture

I do not know anyone in the investing world that has taken advice from GS literally from 2007 onwards--for the obvious reasons.

Tue, 07/24/2012 - 07:05 | 2644910 Rick64
Rick64's picture

Goldman still has clients?

Tue, 07/24/2012 - 07:13 | 2644934 GetZeeGold
GetZeeGold's picture





Turns out PT Barnum was right.

Tue, 07/24/2012 - 07:06 | 2644911 Martin W
Martin W's picture

It should be a crime to cheat own clients

Tue, 07/24/2012 - 07:23 | 2644944 GetZeeGold
GetZeeGold's picture



Well....there are some laws against it....but they're never really enforced.


Tue, 07/24/2012 - 07:06 | 2644912 Silversem
Silversem's picture

It should be well known now that GS is only interested in ripping everybody off to pay for their own bonusses. I am just a small trader but i hate corrupted institutions like that!

Tue, 07/24/2012 - 07:33 | 2644952 LongSoupLine
LongSoupLine's picture

At this point, anyone still a Goldman-Sachs client, (and taking their advice), deserves what's coming to them.


With that, anything they do to fuck people and the "system" up the ass will be ignored.  They are teflon and, after all, are Government-Sachs.

Tue, 07/24/2012 - 10:10 | 2645289 TrainWreck1
TrainWreck1's picture

Out of curiosity, is there a list of Goldman's Top 10 clients?


Tue, 07/24/2012 - 07:06 | 2644915 LULZBank
LULZBank's picture

"We recommend being long an equally-weighted basket of benchmark 5-year Spanish, Irish and Italian government bonds,

Thats the same thing they kept telling Jon Corzine re: Greek bonds. LOL

Tue, 07/24/2012 - 07:31 | 2644958 GetZeeGold
GetZeeGold's picture



France is so beautiful this time of year. I think I'll be staying right here - Jon Corzine


Could you possibly spare a billion......I'm running a little low on loot?



Tue, 07/24/2012 - 08:02 | 2645013 falak pema
falak pema's picture

gee, nice chateau there! What's the wine cellar like?

Tue, 07/24/2012 - 08:10 | 2645021 GetZeeGold
GetZeeGold's picture



It's not bad actually....we spent a billion in renovations on it.


It didn't cost us a penny.....thanks.....whoever you are.

Tue, 07/24/2012 - 07:07 | 2644916 scatterbrains
scatterbrains's picture

Goldman has no clients. Only "private" public pension fund managers that are more then happy to permit Goldman to insert it's blood funnel in deep on a wink and promises of V.P. status at the firm for service well done after a few years. What clients?

Tue, 07/24/2012 - 07:08 | 2644920 KNiCKER
KNiCKER's picture

"I believe that banking institutions are more dangerous than standing armies... if the American People ever allow private banks to control the issue of currency... the banks and corporations that will grow up around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered." Thomas Jefferson, 1743-1826

Tue, 07/24/2012 - 07:08 | 2644922 Itch
Itch's picture

Here's an interesting do Goldman clients accumulate such wealth in the first place? They have to be a little bit on the soft side, right?

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