Market Snapshot: Reaction To Trichet - We Are Not Impressed

Tyler Durden's picture

Out of the gate, credit and equity markets seemed happy that Trichet was offering CBPP2 and a Euro-TLGP II program in Oct/Dec but that quickly subsided (what no rate cut?) as rather surprisingly the market realized for itself - with little cajoling from us - that while short-term roll risk was reduced, capital still remains a 'problem' as the seemingly known (haircuts/exposures) unknowns and we assume unknown unknowns (contagion impact) remain tangible and this does nothing solve the underlying problem of insolvency. We were pleasantly taken aback by this reaction (and not in a Schadenfreude manner) but more simply that the market is 'getting it' - kicking the can by extending more and more credit (as Peter Tchir alluded to earlier) simply has its limits - and perhaps we are there.

Stocks and spreads are well below their starting point (of Trichet's speech) and have dropped notably from the mid-speech euphoria. FX market saw EUR weakness pretty much straightaway but it was AUD that weakened the most (as carry was unwound). EURUSD is about 0.33% weaker so far but JPY remains unch...

Chart: Bloomberg

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buzzsaw99's picture

why is he giving a speech about the future when he is leaving? the next guy will do whatever the maggots want him to do.

wombats's picture

GS rules the world.  I read that on ZH.

Popo's picture

..And the only way to create an up-day on the market is to trash your currency.

SheepDog-One's picture

I heard 'GS rules the world' from Allesio on a BBC interview that shocked, SHOCKED, everyone apparently.

The media called him in to find out just who this 'madman' Allesio was, and what book he was pushing with such an outrageous statement, obviously only intended to draw attention to himself.

GS rules the world? Well that cant be.

Spitzer's picture

Its not that simple.

The Germans rule the Euro, they don't like to print.

buzzsaw99's picture

watch how fast they print if douche or comerz get into trouble.

riley martini's picture

 Look how well it worked inthe USA as angry protestors gather in the streets of every major city. Record poverty , unemployment , corruption , wealth transefer to the fascist.

Schmuck Raker's picture

why is he giving a speech about the future when there isn't one?


Johnny Lawrence's picture

OT: Hopefully this will make a ZH headline:

In an interview with the Wall Street Journal posted Wednesday, the up-and-coming GOP 2012 contender and former CEO of Godfather's Pizza summed up his bewilderment about recent demonstrations on Wall Street.

"Don't blame Wall Street," Cain said. "Don't blame the big banks. If you don't have a job and you're not rich, blame yourself."

Allowing the banks had a "big part" in the 2008 economic crisis, the candidate, who's known for his bombast and has been rising in national polls pointed out, "We're in 2011, okay?"

"When I was growing up I was blessed to have had parents. That didn't teach me to be jealous of anybody and didn't teach me to be jealous of somebody," Cain explained.

"It is not a person's fault because they succeeded. It is a person's fault if they failed. And so this is why I don't understand these demonstrations and what is it that they're looking for."

HelluvaEngineer's picture

Yeah, he's a shill for the Fed.

He is the former chairman and CEO of Godfather's Pizza and a former deputy chairman (1992–94) and chairman (1995–96) of the board of directors of the Federal Reserve Bank of Kansas City.

pods's picture

Oh that is going to go over well.  

wang's picture

Cain will end up as veep - I thought his calling the protesters Anti American to be a very informed comment (informed by his bankster past and present)


Herman Cain, Former Kansas City Fed Bank chair

riley martini's picture

 The Wall Strret  journal is a fascist rag for fascist propaganda . Their finest propaganda is what a great deal TARP and the Wall Street bailouts were for America . The Wall Street Journal thinks it was great idea to transfer $ trillion to Wall Street sums up the state of corporate journalims in America.

Finnykins's picture

Heard that we are at the limit too many times. But happy if it is coming. Never suprised by how long they can manage this circus of kicking the can.

Sambo's picture

DAX just turned red.

Peter Pan's picture

Can someone please explain something to me?

The 16 signatories to the EFSF plus the ECB have about 10,856 tonnes of gold according to Wikipedia. At a 1234 Euro price per oz this translates to 430 billion euro.

Why isn't this capital utilised to re-capitalise those insolvent banks at no interest cost given that the gold is just sitting there.

By utilised I do not mean selling it, but rather issuing paper backed by this gold to each bank, preferably as redeemable shares.

I would love to hear why the gold cannot be used (and possibly substantially revalued) so as to plug a few other holes as well.

Can someone tell me where my logic is wrong? (Assuming the gold does exist) 

pods's picture

Your logic is correct.

But their power resides in their ability to issue debt.  Debt is capital to them.  

Debt is control.

And they do NOT want to give up any control.


Motley Fool's picture

Now, now. Hands off the endgame. That's for later.

Phillycheesesteak's picture

I don't understand everything that is said on here, but this site is fantastic. Just fucking fantastic.

Zonker's picture

Up we go - Market loves it and the new V bottom!

Dapper Dan's picture

There are maggots on my squid! 

Now take those away and bring us those melted cheese sandwich appetizers you talked me out of!


SheepDog-One's picture

Theyre not impressed by Trichet? Well what do they expect he can deliver them? What did the banks want to hear, that he will created $100 trillion out of think air for them? Just pure idiocy.

jdelano's picture

I'm genuinely suprised how little reaction there has been to the delaying of the next tranche of Greek aid. Has it occured to anyone else that this is actually a huge tell as to what the plan is?  It seems incredibly obvious to me that they are just trying to stall until dollar liquidity is in place.  

When the pool is cold, what do you do?  You dip a toe in to guage how bad it is.  Then you slowly lower in the whole foot.  Then the toe of the other foot.  You take a step or two maybe, cringing as the cold creeps up past your knees.  Then you stand there a while thinking, "eh, this is gonna suck." Then eventually you get self-consious about standing there like an idiot and say fuck it, time to take the plunge.  

I think we're getting very close to plunge time.  

milanitaly's picture

He wanted to say: the financial world is totally fucked

TradingJoe's picture

how about them 3:30 - 3:45 ramp up rumors, eh?!?!

Belarus's picture

and perhaps we are there.

A bit the markets begin their climb. Expect shorts to panic buy into the close with Algo's doing the routing.

SheepDog-One's picture

Right, there always seems to be endless shorts to squeeze for daily market pumps...I dont believe it.

riley martini's picture

Watch for 10:00 POMO pump and the PPT manipulation nothing gives you confidence like a corrupt controled maket, well not market exchange is probably better.

jdelano's picture

they've done it two days in a row and everyone expects it now.  Wouldn't be suprised to see a reverse fucking today--crash into the close. 

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