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The Pain In Spain Is Mainly, Well, Everywhere

Tyler Durden's picture



From Peter Tchir of TF Market Advisors

The Pain In Spain Is Mainly, Well, Everywhere




The reality is Greece is largely noise.  Greece will eventually leave the Eurozone, but not this month.  The hardliners inside Greece will realize they need some time to organize.  The markets will have spooked the hardliners outside of Greece that they should play nice for a little bit, because forcing Greece out now won’t do them any good whatsoever.

With Greece largely a sideshow at this stage, the attention is really focused on Spain and Italy.  The fact that Greece might lead the way out of the Euro is having a big impact on these countries.  That realization combined with the already obvious problems at the sovereign and bank level caused markets to sell off.  The Spanish 10 year bond is back above 6%, dropping 20 bps today, which is a significant move.  As we wrote about last Friday, there are no natural buyers, so this move occurred in an illiquid market.  There is more room to run, but moves in Spanish and Italian bonds are already starting to have a less direct impact on stocks than they did earlier in the morning.

I don’t think we will see a serious rebound in Spanish and Italian yields until the ECB intervenes.  They will need to step up and draw a proverbial line in the sand.  My guess is that won’t occur until 6.25% on the Spanish 10 year.  Once they do step in, watch out a big gap better on the bonds.  Just as there are no natural buyers, there will be no natural sellers.  The shorts will want to cover.  No one who is short is going to want to fight the ECB, at least not on their first day of purchases, so they will become buyers themselves.  The dealers will sell what little inventory they have to the ECB and will do everything they can to drive up prices and get the best execution possible on their small positions.  No Spanish or Italian bank is going to sell their inventory for a loss.  They might not be adding, but they sure as heck aren’t selling.

The first hint of ECB purchases will be a major “risk on” signal.  I don’t think we get it yet, but once we get actual purchases, or even a good rumor of purchases, I would expect 10 year bonds to gap up a point, CDS to tighten by 30 bps or more, and stocks in Spain to do a quick 2% bounce.  It will happen quickly, but I really think the ECB has too many skeletons of its own making to jump in just yet.  A bit more pain in the bond markets is still coming, but it will have less of a knock-on effect on stocks than the gap to 6% had.


Finally remember this presentation? Yeah... It was right.



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Wed, 05/09/2012 - 09:36 | 2409657 GetZeeGold
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What a freakin minute here.....wasn't going green suppose to save them?


Wed, 05/09/2012 - 10:12 | 2409786 Chief KnocAHoma
Chief KnocAHoma's picture

Can you say Trojan Horse? In line with unstated and non-official US foreign policy, TPTB on our shores are determined to not allow any region to rise and form a power base.

Those libtard Eurotrash socialist thought they could rival the fucking dollar...hah! We said we'll see about that... then doctored the books to get greece into your party and sold you a bunch of fucking worthless mortgages.

So what we blew up the rest of the World, at least we didn't allow anyone to rise to challenge us... so take that bitches.


Wed, 05/09/2012 - 09:37 | 2409660 4shzl
4shzl's picture

Spain, shmain.  CA's economy is larger than Spain and this where we are:

SACRAMENTO – State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in April, showing monthly revenues came in $2.44 billion below (-20.2 percent) the latest projections contained in the Governor's proposed 2012-13 Budget.

"The task of crafting a credibly-balanced budget has been made more difficult by a nine-month revenue shortfall of $3.5 billion," said Chiang. "Without a timely, financeable budget plan, the State will be unable to access the working capital needed to pay its bills later this year."

The greater part of the April shortfall was caused by personal income tax receipts, which came in $1.96 billion below (-21.5 percent) projections. Sales taxes were also down by $445.8 million (-54.4 percent). Corporate taxes were also down, coming in $142.7 million (-9.3 percent) below projections.

Year-to-date through April, total revenues were down $3.5 billion (-5.1 percent) from estimates in the Governor’s proposed budget. Leading that disparity was income tax, down $2.7 billion (-6.2 percent). Sales tax missed estimates by $411 million (-2.7 percent), and corporate tax receipts were down $464 million (-7.0 percent).

The State ended last fiscal year with a cash deficit of $8.2 billion. The combined current-year cash deficit stands at $19.2 billion. Those deficits are being covered with $12.8 billion of internal borrowing (temporary loans from special funds) and $6.4 billion of external borrowing.

Where's our IMF rescue?  Where's our ECB or LTRO?

Wed, 05/09/2012 - 09:46 | 2409697 kridkrid
kridkrid's picture

The numbers there are remarkable.  The wheels are quite literally coming off.  Some numbers are easy to fudge... GDP, unemployment, CPI... but the "rubber meets the road" numbers... not so much.  Tax receipts... rubber meet road... or fly meet windshield.

Death is everywhere
There are flies on the windscreen
For a start
Reminding us
We could be torn apart

Death is everywhere
There are lambs for the slaughter
Waiting to die
And I can sense
The hours slipping by

Wed, 05/09/2012 - 09:50 | 2409715 GetZeeGold
GetZeeGold's picture



Appropriate theme music inserted here.



Wed, 05/09/2012 - 09:55 | 2409740 kridkrid
kridkrid's picture

If the world does end, I'm partial to this theme music...


Wed, 05/09/2012 - 10:16 | 2409793 Dr. Engali
Dr. Engali's picture

   +300    One of my favorite pieces....and a good movie too.

Wed, 05/09/2012 - 10:43 | 2409913 Buckaroo Banzai
Buckaroo Banzai's picture

Holy shit-- sales tax confiscations down by 54%???? That is an implosion.

Wed, 05/09/2012 - 09:56 | 2409745 Quintus
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"Some numbers are easy to fudge... GDP, unemployment, CPI... but the "rubber meets the road" numbers... not so much."


Correct.  A good accountant can create fake profit for you without too much effort, but faking cashflow is much, much harder.

Not all numbers should be trusted equally.

Wed, 05/09/2012 - 10:28 | 2409757 kridkrid
kridkrid's picture

And it's not by accident that the macro numbers we sheeple are fed are the big ones that are easy to fudge.  Remarkable.

Wed, 05/09/2012 - 10:52 | 2409947 cranky-old-geezer
cranky-old-geezer's picture



The numbers there are remarkable.  The wheels are quite literally coming off.

Same thing happening across America and Europe, economy slowly collapsing, proven by dropping income tax revenues, dropping sales tax revenues, the real numbers they can't spin to make things look good.

Anyone have a chart of federal income tax revenue since '08?   Steep downward slope I would guess.


Wed, 05/09/2012 - 13:57 | 2410567 Thomas Anderson
Thomas Anderson's picture

California needs to overhaul it's State Constitution to end the legislative deadlock, and gradually phase out or have some sort of check and balance to counter bad voter decisions on Propositions.  With direct democracy Propositions, voter's will tend to vote out of selfish interest over sound policy, or become influenced by special interest ads.  Limit propositions to laws, not taxation/spending.  Hard to argue in striping power away from the individual and reducing their liberty and voting rights that have been enjoyed for their entire lives.  California would be best served as a Republic controlled by the legislature with simple majority to pass spending/tax bills, and reduce the Ancient Athens style of direct democracy.  Maybe one day we can experiment and find a system where direct democracy will work not only in a state but on a national level as well.

Wed, 05/09/2012 - 09:47 | 2409701 GeneMarchbanks
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'Where's our IMF rescue?  Where's our ECB or LTRO?'

Firstly, you have the FED. Secondly, I'm sure Pete can tie that story in with Spain. He is very talented.

Wed, 05/09/2012 - 09:53 | 2409736 Leopold B. Scotch
Leopold B. Scotch's picture

Yes... And it is the Fed that feeds the IMF anyway.

Wed, 05/09/2012 - 09:47 | 2409707 midgetrannyporn
midgetrannyporn's picture

California doesn't matter, only Wall Street matters.

Wed, 05/09/2012 - 13:46 | 2410508 Oh regional Indian
Oh regional Indian's picture

California is the Garden of Eden.

It's where the AAPL tree grew.


Wed, 05/09/2012 - 09:47 | 2409708 Cole Younger
Cole Younger's picture

"Where's our IMF rescue?  Where's our ECB or LTRO?"


where is the austerity plan? Where's the cuts in spending?

California officially has 11% is likely allot higher..People and business's are leaving the state..Don't sweat it though, Face Book IPO will save the day...

Wed, 05/09/2012 - 10:04 | 2409761 GMadScientist
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"It included $12.5 billion in spending cuts, with a 10 percent cut in take-home pay for some state employees and deep reductions in social services. "

STFU, stupid.

Wed, 05/09/2012 - 10:31 | 2409862 Cole Younger
Cole Younger's picture

It's not enough obviously...They can cut government employee's off the pay roll permanately and get rid of the social programs alltogether. Enforcement in immigration laws would save the state 11 billion a year in incaceration, schools, and medical...

Wed, 05/09/2012 - 10:40 | 2409901 GCT
GCT's picture

Cole you forget the voters in California got what they voted for.  Moonbeam set this system up when he was governor last time.  I did not vote for him then and now I no longer live there.  Best decision I ever made leaving a great state that is now a third world country.

Wed, 05/09/2012 - 11:37 | 2410124 donsluck
donsluck's picture

Dear GCT, the weather is GREAT. There is skiing, surfing, backpacking, birds singing in February. We don't miss you. The biggest problem with CA is too many people. Once again, we don't miss you.

Wed, 05/09/2012 - 12:27 | 2410246 cbxer55
cbxer55's picture

CA ranked #50, the worst for its business atmosphere. So not only are people pulling up and leaving, so are businesses. CA has held that distinctive position for seven years running. ;-)

Bet you don't miss them either, huh asshat. Texas ranked #1 for its business atmosphere, for 8 consecutive years. Want to guess where business that leaves CA goes. And here in OK, we rank #11. Boeing just moved a big part of their business here last year, some 500 high-paid people. Most of them moved here with the business. Some did not. Good luck to them.

I lived in CA for 26 years. Do not miss it at all. Most especially when here, every day, I can legally pack a sidearm. Good luck with that in Commiefornia.

Wed, 05/09/2012 - 11:03 | 2409992 GMadScientist
GMadScientist's picture

They could ramp up taxes on a small handful of large multinationals in CA and close the budget gap at a whim; look at the historical percentage of the tax base that comes from corps over the last 20 years.

The slop-jockey bond-pushers of the CA Repugnicant party doing favors for their golf buddies have had a "vested interest" over the last decade too. Never met a bond measure they didn't like (and front-run, tax-free).

Wake's not the powerless Mexican you should be worrying about, slick.


Wed, 05/09/2012 - 12:12 | 2410216 blunderdog
blunderdog's picture

    Enforcement in immigration laws would save the state 11 billion a year in incaceration, schools, and medical...

Yeah, that virtually-impossible "enforcement" is free, right? 

Wed, 05/09/2012 - 13:32 | 2410463 Thomas Anderson
Thomas Anderson's picture

I can now breath a sigh of relief thanks to FB and their generous tax contribution of a nickel a year for the foreseeable future.

Wed, 05/09/2012 - 09:51 | 2409719 Gene Parmesan
Gene Parmesan's picture

Don't worry - the federal taxpayers will inevitably be there to pick CA up off its worthless ass as needed.

Wed, 05/09/2012 - 11:15 | 2410050 unununium
unununium's picture

More of those federal dollars and dead soldiers come from California than any other state.

Wed, 05/09/2012 - 09:51 | 2409720 youngman
youngman's picture

Sales tax revenues was a big miss...54.4%....that does not sound like the consumer is back and spending....or is it the black market....I feel sorry for Chiang.....he will be BBQ´d....

Wed, 05/09/2012 - 12:12 | 2410214 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

Or they're not paying sales tax on online purchases.

Wed, 05/09/2012 - 09:54 | 2409731 bshirley1968
bshirley1968's picture

You can bet Obama and Ben are pumping dollars into California through various channels, or that cesspool would have already gone down the drain.

What a frickin' JOKE!  Shame a state as great as CA can't get some real leadership.  We will never know how great CA could have been because it became infested with cockroaches and other parasites.

Wed, 05/09/2012 - 09:52 | 2409732 Global Hunter
Global Hunter's picture

those shortfalls are HUGE, yikes.

Wed, 05/09/2012 - 09:56 | 2409741 cossack55
cossack55's picture

To answer your question, they are all in Greece, Italy, Spain, France, UK, Ireland, and the Portos.

Wed, 05/09/2012 - 10:10 | 2409776 azzhatter
azzhatter's picture

We don't need no steeenking budgets

Wed, 05/09/2012 - 10:15 | 2409791 Chief KnocAHoma
Chief KnocAHoma's picture

Fucking blue state... idiots.

Wed, 05/09/2012 - 11:27 | 2410089 WillyGroper
WillyGroper's picture

blue/red, what's the difference?

Wed, 05/09/2012 - 11:38 | 2410130 donsluck
donsluck's picture

Blue states provide taxes, red states spend 'em (and whine incessantly about too many taxes). Idiots indeed.

Wed, 05/09/2012 - 10:27 | 2409837 Sauk Leader
Sauk Leader's picture

I read an article about why people hate california. some fun stats, but the quotes from Californians have the reason.

“No one knows anything about Delaware. No one has a clue about Wyoming – but everyone knows California,” said Dowell Myers, a professor of policy planning and demography at the University of Southern California. “Its visibility is really high.”

There’s some good news for California — at least if you’re a female Democrat. Women were less likely than men to rate California as unfavorable, and there was a massive partisan gap. Democrats love California; Republicans can’t stand it. The opposite is true of Texas.

“I’m sure that for a lot of purple America the extra red Texas and blue California may seem a little far out there,” said Roger Salazar, a political consultant in California.

But whatever the reason, most Californians took the news that their state was the least popular in stride.

“They’re just jealous,” Salazar said.


Wed, 05/09/2012 - 10:48 | 2409925 Buckaroo Banzai
Buckaroo Banzai's picture

"There’s some good news for California — at least if you’re a female Democrat."

"Good news"-- that's rich. Is there a more clueless, insane, or dangerous species than liberal american females?

Wed, 05/09/2012 - 11:41 | 2410134 donsluck
donsluck's picture

Get laid much?

Wed, 05/09/2012 - 15:26 | 2410987 Cathartes Aura
Cathartes Aura's picture

Christian Conservative Zionist men perhaps?

y'know, the ones who make the wars happen?  or their counterparts in the financial class?  or their overlords in the globalist camp?

sheesh, you're clueless arent't you. . .

Wed, 05/09/2012 - 13:52 | 2410541 Chief KnocAHoma
Chief KnocAHoma's picture


Wed, 05/09/2012 - 10:31 | 2409869 jez
jez's picture

Those deficits are being covered with $12.8 billion of internal borrowing (temporary loans from special funds) and $6.4 billion of external borrowing.


Who the hell is lending $6.4 billion to these clowns? They can't manage money, their budgets and projections are toilet paper, they dig themselves deeper in the hole every day. I wouldn't lend 'em a cent, I don't care what collateral they're offering.


Where's our IMF rescue?  Where's our ECB or LTRO?


Indeed. For that matter, where is your self-sufficiency?

Wed, 05/09/2012 - 10:48 | 2409931 Buckaroo Banzai
Buckaroo Banzai's picture

Who is funding these clowns? Criminals. California municipal bonds are a wonderful money-laundering vehicle.

Wed, 05/09/2012 - 10:44 | 2409915 markar
markar's picture

No worries. Facebook IPO will produce $billions for the state coffers.

Wed, 05/09/2012 - 11:07 | 2410015 ElvisDog
ElvisDog's picture

monthly revenues came in $2.44 billion below (-20.2 percent) the latest projections

Hah, that's funny, because every single, fucking time the actual revenue comes in (unexpectedly) under projections. CA is going to be one interesting petri dish when the tax increases don't raise revenue anymore and real cuts have to be made. It's going to be education unions vs health unions vs police/firefighters vs transfer payments to immigrants. Bring on the Octagon....

Wed, 05/09/2012 - 09:37 | 2409665 francis_sawyer
francis_sawyer's picture

Not everybody gets to be Audrey Hepburn...

Wed, 05/09/2012 - 09:53 | 2409724 Ethics Gradient
Ethics Gradient's picture

Or Reggie Middleton or Hugh Hendry.

Wed, 05/09/2012 - 10:07 | 2409770 Cassandra Syndrome
Cassandra Syndrome's picture

Breakfast at Bernanky's?

Wed, 05/09/2012 - 09:40 | 2409674 fonzannoon
fonzannoon's picture

At the end Peter sounds just like every other junkie waiting for the next hit.

Wed, 05/09/2012 - 09:42 | 2409685 GeneMarchbanks
GeneMarchbanks's picture


Wed, 05/09/2012 - 09:42 | 2409684 Dr. Engali
Dr. Engali's picture


 "I don’t think we will see a serious rebound in Spanish and Italian yields until the ECB intervenes.  They will need to step up and draw a proverbial line in the sand. "


Didn't they draw a line in the sand on Greece? We see were that got them.

Wed, 05/09/2012 - 09:56 | 2409742 BandGap
BandGap's picture

Yep. And what kind of rebound do you get when money is literally printed out of thin air to prop up a failing system?

What were once vices are now habits. This kind of intervention would have gotten you some crazy looks if you talked about it when I started investing 30 years ago. Now, it's all "normal", everyone justifies utter bullshit moves to save a system just getting shittier and shittier, day by day. How much worse can it get for the man on the street?

Fuck it, the death spiral continues.

Wed, 05/09/2012 - 09:45 | 2409694 nodhannum
nodhannum's picture

What a garbage article.  Trying to front run central banks is what passes for investing these days.  Who will print, when will they print and how much they will print, is that it? The whole western world is one big AA meeting where the punchbowl has been spikes for 40 years and now no one can get the votes to do dry.  Ultimately it is either sober up or die.  Greece will be first and then when they are out from under, the others follow suit and pull an Iceland.  G_d bless those Icelanders!

Wed, 05/09/2012 - 09:49 | 2409717 centerline
centerline's picture

Yup.  Is sad.  And ironic that the behavior which created the mess is the same behavior that will accelerate it on the downside.

Wed, 05/09/2012 - 10:00 | 2409756 Ethics Gradient
Ethics Gradient's picture

I disagree. The game has been 'extend and pretend' for the past three years. Without things like LTRO, the gig would have been up already.

More than that, there's no endearing irony to anything the EU does. It's been the social, economic and political equivalent of a Dominic Strauss Kahn party; a cluster fornication resulting in court cases (although they're yet to happen).

Wed, 05/09/2012 - 11:44 | 2410141 donsluck
donsluck's picture

I plussed you, but only in sympathy. It's not a garbage article. It's all we have left. There is no "market", only front-running the CBs. Sorry.

Wed, 05/09/2012 - 09:47 | 2409703 tradewithdave
tradewithdave's picture

I think I just saw bitcoin's daddy:


Wed, 05/09/2012 - 09:48 | 2409709 tim73
tim73's picture

US States, GDP per capita
District of Columbia: 174500
California: 51914
Texas: 45940
New York: 57423
Florida: 40106
Massachusetts: 58108
Mississippi: 32967

It is about time for Washington, D.C. to leave those disgustingly lazy other Americans behind! District of Columbia must leave DOLLARZONE NOW before these lazy bums drag such a fine state down to their idiotic level!

Wed, 05/09/2012 - 09:50 | 2409722 MFL8240
MFL8240's picture

It appears that u understand excatly nothing about how GDP is caculated??

Wed, 05/09/2012 - 09:54 | 2409739 tim73
tim73's picture

Why California should quit the 'dollar zone':

It is so funny when you Americans seriously are suggesting Eurozone breakup based on productive differences when using the same logic against USA results in the same conclusion, even more so.

Wed, 05/09/2012 - 09:53 | 2409727 GeneMarchbanks
GeneMarchbanks's picture

Spain's fault. Dude you're not reading these articles properly.

Wed, 05/09/2012 - 09:52 | 2409710 MFL8240
MFL8240's picture

2 years of lies, propoganda, deception, outright fraud have come to a head.  How do you like the lies by this administration to us fools who bieleived them?

Wed, 05/09/2012 - 09:50 | 2409716 williambanzai7
williambanzai7's picture

Imagine if casinos worked this way. Everyone would wind up in jail or with a horse head.

Wed, 05/09/2012 - 09:52 | 2409723 ZeroIQ
ZeroIQ's picture

When will this goddamn market crash? I'm seriously getting annoyed now.


Wed, 05/09/2012 - 09:52 | 2409728 MFL8240
MFL8240's picture

How does a market crash when it is being held up by printed confetti and con games from within? 

Wed, 05/09/2012 - 09:58 | 2409746 bshirley1968
bshirley1968's picture

The only "real" money left in this market are held in 401k's and the gov needs that to stay afloat so there is something there for them to confiscate.

Hard to sink styrofoam. 

Wed, 05/09/2012 - 10:11 | 2409780 GMadScientist
GMadScientist's picture

Parts of it crash daily. I think what you meant to ask was "when will this market stay crashed?".

Wed, 05/09/2012 - 09:52 | 2409726 chistletoe
chistletoe's picture

The Eurozone:



Last one out is a rotten egg!

Wed, 05/09/2012 - 09:54 | 2409730 Mercury
Mercury's picture

With Greece largely a sideshow at this stage, the attention is really focused on Spain and Italy.

Well, we may see some jockeying for first mover advantage...


Wed, 05/09/2012 - 09:53 | 2409733 rsnoble
rsnoble's picture

As usual, instead of doing the right thing the politicians are busy behind the scenes saving their own sorry asses and probaby doing everything they're telling everyone else not to.

People in the world have had it with these morons and are tired of playing the game and looks as if we all could come to agreeance at the same time. That's a big problem for them. Oh well, start loading the spaceships aimed straight for the sun.

Wed, 05/09/2012 - 09:58 | 2409751 Silversem
Silversem's picture

For all this misery there is only one remedy for the individual investor. Buy gold! or as the dutch say: goudbaren kopen.

The downfall in stocks can be profitably exploited by using cfd's. Only rampant inflation can push the stockmarkets higher longterm.

Wed, 05/09/2012 - 10:06 | 2409764 tim73
tim73's picture

"Spain’s debt-to-GDP balloons from 60% to 90% of GDP with regional and other debts"

USA has about 100 percent debt to GDP and rapidly rising and all foreseeable future fiscal liablities are somewhere north of 60 000 billion dollars at least. Spain lowered their government debt burden during last decade unlike USA.

"Spain has “zombie” banks with massive loans to developers and tohomeowners"

"Banks have not begun to realize losses and are vastly undercapitalized"

USA has zombie banks based on massive loans PLUS who knows what kind of liabilities from their fancy CDS, SIV etc etc games. All this is held together by dollar printing.

"Spain has the highest unemployment in the developed world, one of the highest overalldebt loads, and the most uncompetitive labor market in Europe"

Americans are not far behind, 70 percent GDP consumer economy when it should be more like 50 percent.

Wed, 05/09/2012 - 10:08 | 2409772 orangegeek
orangegeek's picture

Euro will stay. Eurozone will change.  Greece will make a nice province for Germany.  And so will Spain.

Wed, 05/09/2012 - 10:35 | 2409883 Snakeeyes
Snakeeyes's picture

No kidding.

Spain’s Pain Continues to Accelerate – Banks, Housing, Bad Loans, Unemployment, Nosediving GDP – Time for More Sangria!

Wed, 05/09/2012 - 11:07 | 2410007 HastyP
HastyP's picture

Yikes.... and away......

Wed, 05/09/2012 - 12:14 | 2410219 cranky-old-geezer
cranky-old-geezer's picture



As long as anyone lends money to California they'll go right on with this farce, ponzi scheme, whatever.

And "special funds" they're borrowing from?  Sounds like pension funds (state employees, teachers, police & fire, etc), probably like other states are doing (quietly).

California pension funds loading up with IOUs.  Sounds like social security trust fund, all the money gone, nothing but IOUs.

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