This page has been archived and commenting is disabled.
With LTRO Out Of The Picture, Portugal Is Back In Play - Bonds Sliding
As the ECB has stopped its SMP bond-buying and now the LTROs are all done (until the next one of course), Portuguese bond spreads have been increasing rapidly and post-LTRO today even more so. While broadly speaking European sovereign risk is modestly higher this week (and notably steeper across the curve) leaving funding costs still very high for most nations, Portugal has exploded over 100bps wider (and almost 70bps of that today post-LTRO) to back over 1200bps wider than Bunds. Only Italian bonds are better and even there they are leaking back to unch from pre-LTRO. Perhaps, shockingly, more debt did not solve the problem of too much debt and with growth and deficits being questioned in Ireland and Portugal (and Spain), it's clear the newly collateralized loan cash the banks have received won't be extended to the medium-term maturities in sovereign bonds.
It seems clear that the Portuguese banks just couldn't find enough collateral to be able to enact the hari-kari actions the Italians and Spanish are undertaking.
As with many other curves, the last two weeks have seen the risk being 'shoved' out the curve - which of course is where the sovereigns fund themselves and so does not help at all...
Chart: Bloomberg
- 6735 reads
- Printer-friendly version
- Send to friend
- advertisements -




Portugal meet Greece, you guys might have a few things in common...
NEXT! ....
Spain and Italy?
gonna find out how stupid it was letting greasy countries like greece issue bonds in euros.
I thought *buying* these bonds was the stupid part.
We also need a more inclusive regional economic description.
Forget PIIG's
Embarace the
Western
Exhaustingly
Indebted
Nonplused
Ecomonic
Regions
's
Actually Portugal has a lot in common with.....dumroll..China.
China has a Debt to GDP of around 90%, very similar gearing as Portugal:
Central Governt Debt: 16.3% of GDP
Ministry of Railways: 4.5% of GDP
China Development Banks and Policy Banks: 10% of GDP
Local Governments and Financing Vehicles: 20% of GDP
State Asset Management Companies: 7.5% of GDP
Source: SCMP Feb 24th 2012
"Perhaps, shockingly, more debt did not solve the problem of too much debt"
Yes, *shockingly*. I believe we'll find out what happens when even-more debt is added. That'll be the double-shockingly.
I think this amount of new debt loaded into the systems deserves a six pack salute with Shock Top
They told you LTRO was to ease pressure on sovereigns and you bought it. LTRO 1 made commodities and stocks rally. Look there but don´t look today. Come back in a month and tell me stocks and commodities haven´t rallied...
Nah, it's only 311 bil, that's chump change these days.
well..."did zero percent financing solve the problem of American indebtedness"? What? "No! It made it worse!" REALLY???? WELLL..."Thank God governments never overspend and are being responsible" then....
When in doubt, or if you detect the slightest whiff of financial trouble:
Buy AAPL
Buy Lululemon
Buy Under Armor
Buy Limited Brands
Buy Chipotle
Buy Select Comfort
Buy Starbucks
Buy U.S. Treasuries
Buy California Muni Bonds
Any questions????
yeah...one question....are you kidding? I know you have more "experience" than I but wouldn't want to give you a dime of my money to invest. ;-)
RobotTrader- are you really Cramer? >sarc
Yes. How many days should I ferment my mango mash in my secondary fermenter before I rack it?
about a week? ;-)
Yes.
How do I get out of this chickenshit outfit?
They are getting the hang of it in Europe. ECB shovels money to insolvent banks, they let Portuguese government debt tank, and then the insolvent banks come in and buy the crap cheaper. How hard is that? Great long-term plan.
Yep, another "Self-Reinforcing Feedback Loop"
The world's central banks are now the most profitable hedge funds in the world.
They manufacture their own crisis.
Then frightened investors drive down U.S. interest rates.
Banks borrow U.S. Dollars via swaps at zero cost.
Banks step in and buy the crappy debt and "stick save" the system.
Investors are overjoyed, ao fund managers step up and buy more consumer discretionary stocks.
Sovereign bond prices recover, central banks sell back to enterprising hedge funds, instant profits are made.
Then it is back to Step 1.
How easy is that?
Lather
Rinse
Repeat
Robo, you really need to take your shit show on the road....;-)
Seems to be the script up to now.
BUT the unscritpted ending is (oil @ 120+)(inflation @ 5%+)
What will the meme be next mnth?
Don't worry, Alan "I should be in butt-fuck prison" Shwartz of Bear Strearns is on CNBS saying everything's great....asshole.
I was watching too. They got all nastalgic about the good old days of MBSs (I kid you not). Then the CNBC crowd basically asked him where the next bubble would be, and his answer was I don't know but I'm on the lookout for it.
I can't believe one of the camera men didn't come over and bitch slap the mother fucker.
How does CNBC have any credibility when they bring on the former CEO of BS? Who's up next- Bernie Madoff
Thank you.
They lost me when I heard "Coming up on Squawk Box, the bull market is on....how high will it go..."
Idiots.
You ask this about an outfit that features Cramer, Kernen, Liesman, Pisani ...... ?! lol
I think I will personally issue some IOUs backed by the cash flows from Moneyswirth, Inc. I will then be taking those IOUs, and offer to purchase some Portugese Government bonds, using the aforementioined IOUs as collateral for my purchase. Trust me, Moneyswirth Inc. debt is good stuff.
This is pretty much how it works for central bankers amirite?
Why LTRO is out of picture, it will again come, LTRO N.0, this time with N B Euros, and save N no of soverign countries.... Let us all rally... No point in worrying about what will happen!
Meanwhile:
HA HA HA HA
Barroso "kiss of death"? =D
*BARROSO: PORTUGAL MAKING PROGRESS IN CHALLENGING CIRCUMSTANCES
*BARROSO SAYS PORTUGAL IS `ON TRACK' WITH REFORMS
And btw, hearing talk ECB is buying Portugal today. When you're losing you double... Good luck with that...
I like the word "Hari-Kari". It's a prefect word for 2012 economy.
Hari-Kari Bitchez!
I can see at least 40 explosive rallies over the next few months driven by headlines saying, "Progress made in Portuguese deal".
I've picked up a case of Quinta do Noval 1994 Vintage Port, and I'm just going to sip back and enjoy the show.
Yes Robot, it all seems to work as you say, until interest rates start up, and they will.
And Portugal is just a small country like Greece. Nothing to get upset about. Think small.
Nós não somos a Grécia!
According to Google, We're not Greece!
It's not about LTRO. It's about how any day now all of those default insurance contracts are about to go POOF!
"more debt did not solve the problem of too much debt "
Yeah but somebody forgot to tell the equties market, the past 3 months have been nothing but the mother of all short squeezes.
I'm out , the politicians and bankers have this market rigged (no cds trigger, unilaterally changing terms of contracts etc etc.)
Seems the only smart thing to do is sell VOLATILITY.
Ultro-2 is, among other things, a way for Italian and Spanish banks to put a bid on their home country debt.
Portugal not so much.
Whoops, LTRO 3 is called for
Do you mean "harakiri"?