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Thank You Mario Draghi For The Best Year-To-Date Trade
'Don't Fight The Fed' is the mantra that is repeated day-in and day-out by so-called investment professionals around the world. In this world of extreme monetary policy and a market hungry for its next fix of fiat liquidity, this may well be the case - though even then, the actions are having less and less effect on both the real economy and market each time they roll the dice. However, it does seem that the ECB's approach to encumbrance as opposed to just unlimited printing is absolutely what should be faded. As we noted earlier, equity and credit markets have turned negative for 2012 now, but without doubt the cleanest and best performing trade of the first half of 2012 (and likely the git that will keep on giving) is the LTRO Stigma. With the spread between banks that took LTRO loans and those that did not now more than triple its early-February tights (and very close to record wides - with little or no excess collateral to revive LTRO3 hopes for those that need it), our recommendation back in early February to initiate this decompression strategy, calling out Draghi as a liar for disingenuous comments on the implicit encumbrance of the ECB's actions, has performed admirably (and we expect it to continue - though taking some profits up here and leaving a runner may well be warranted).
LTRO-facing banks now trade with an average spread of 386bps - the widest since late November - while non-LTRO-facing banks have been affected systemically but only trade just wide of 200bps - mid Jan levels)...
We also note that being short Spanish bonds has remained an excellent (if not bumpy) trade for the year - another Anti-Draghi we supposed.
Chart: Bloomberg
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Tyler, what's the final exit strategy?
Thanks.
Wait right there. A bus will be sent around to collect you.
ok?
barliman
I'm not in this trade. Just curious about the final gameplan.
Never hurts to learn from someone who is doing it well.
Ok ...
We could go back and forth about the final gameplan vs the FINAL final gameplan vs the Final FINAL final gameplan vs the Final FINAL final spam gameplan ....
... but I am already bored by typing all of those words.
Markets are down today. Many expect markets to be up tomorrow because of the FaceBook IPO ... so if the markets are down tomorrow despite that ... there might be the start of some real PANIC selling. (Pick the weapon of mass destruction of YOUR choice in that case ... Reverse triple negative ETF, short AAPL, short S&P, etc)
Many here believe we are going to see DJIA < 10,000 and/or S&P 500 < 1,000 and then Bernanke kicks in QE3.
If he does and then the markets fall? Well, then it get's really interesting ... but we still are not at the endgame.
My view is the ChairSatan is keeping his powder dry until the EU/euro crumbles or China shoves $ 1 trillion USD in Treasuries up his ass to bail out their banks. Then he will be highly motivated moneky and will start flinging QE3 in all directions ... but we still are not at the endgame.
Are you seeing a pattern here yet?
barliman
Lol, thanks barliman.
I was just concerned the end of this trade but your pov is appreciated.
I agree with your view BTW.
Well I predict Ben can't wait 5% much less spx 1,000 because the boys are getting margin calls as we speak.
He really is a pos. what responsible person guns the market for no reason and then let it crater time and time again. Really bull markets track up with 2-3-% down drafts.
This isn't a bull market in the text book sense. It fucking ridiculous
Ben has no choice but to wait.
The issue is not whether somebody is getting margin calls OR if the markets are down 20% ...
The issue is what happens when the EU/euro capsizes ...
When that happens, the global economy is going to see a contraction unlike anything that has ever happened before.
barliman
The Final Exit Strategy : you buy paper, you get burned.
Hello
<- ---Trash Here
"Silver and Gold = MonkeyHammered
USD = longest rally since 1985
Tim/Ben = 100
Goons = 0
Don't fuck with the Fed.
MF"
Trash?
Why bother to trash an idiot?
barliman
he's my love T_T
Civis Mundi bitchez!
"Wait! Wait! ....
... it's not the contagious form of leprosy !!!"
<sigh>
barliman
I really would like to know whether Draghi and his brain trust really did not think that such a stigma would eventually take place or whether they assumed such a thing would happen but just kicked the can down the road in sheer desperation.
And ....
... what would be the difference either way?
Any plan that involves "going over a cliff" is open to a ton of improvement.
barliman
mario = fed surrogate. Period.
The fed hasnt fought for three or 4 weeks now
Anyone levered long is about to get committed waiting, and waiting..... Or blow up.
Ben knows how to fuck his friends too!!
Funny,
Can’t decide if the “git” that keeps on giving was a typo or an inspired pun.
Either way very apposite.