Weekend Rumormill Fails To Gain Traction As French, German And Belgian CDS Hit All Time Wides

Tyler Durden's picture

While this morning's bout of ridiculous volatility, especially in precious metals, may be briefly over (but certainly not for long) after gold has surged by nearly $100 from overnight lows, the economic weakness persists despite what the futures are saying. As usual European liquidity is at the forefront, with 3M USD Libor rising per usual and every single day for the third straight month in a row, this time from 0.360% to 0.363%, leading to new all time wides in German, French and Belgian CDS to 111 (+3), 201 (+4) and 301 (+6) respectively, which no matter how hard the /ES frontrunning and momentum machines can try, there is little that can be done to dissuade the market that French banks will soon be in need of a full blown bailout.

Also, while we don't know yet how much in PIIGS bonds the EFSF bought last week (TBD shortly), or how much was borrowed from the FRBNY's swap lines, we do know that French banks, notably SocGen and BNP, were once again responsible for the deterioration in the interbank lending market, rising to 0.39% and 0.40%.

As usual the great white hope of the weekend, that the EFSF would be expanded to E2-3 trillion was roundly rejected after German Finance Ministry spokesman Martin Kotthaus told reporters at a regular press conference that the "German government sees no need to expand the EFSF, and reject leveraging the fund." This is not the first time this rumor has been refuted. Which means we expect the FT to come out with a brand spanking new rumor that the, wait for it, EFSF would be expanded, some time before either Europe or the US closes. In the meantime, expect the market to process this latest set of news and drop eventually.

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Josephine29's picture

As markets thrash around and look for a sense of direction it is becoming clear that the plan is to bail out the banks one more time. Except as pointed out below one bank that needs a bail out may be unexpected by many...

Plans for Greek default may cripple both the European Central Bank and the IMF



covert's picture

why not just let the banks fail and sink? the economy would rebalance itself out.



Robslob's picture

And que a 20 point S&P futures rally...

Oh regional Indian's picture

it's totally nutty, disconnected. Asia is a sea of red and Europe a sea of green?


Imagine those with inside information..... volatility like this....but it also tells me that the rubber-band could snap anytime now. Too much swinging around and I don't mean the topcallingtroll variety.


Weird World, Getting Weirder....

Boilermaker's picture

Time to gas the shit out of the futures!!!  WHEEEEEE

yabs's picture

equity markets love it though

french banks are up 8 percent

I am sick of this circus

just crash and be done with it

KlausK's picture

Ah, all these cynics. Now that PMs went down a little everything is well! The bubble bursted and we will live in a thriving economy happily ever after.

financeguru500's picture

Pssh, who cares about the economy. It's football season WOO!

/sarc off

TradingJoe's picture

Will fade, be sold, S&P will drop below 1000 this week! It's all engineered to get the big boys out! And not to forget them month/quarter end bonuses, someone has to collect those, eh?!

bigdumbnugly's picture

is it an odd even thing as far as the validity of a rumor to the amount of times it is refuted?   or maybe it's cumulative?

if odd, even - does odd mean its on or does even mean that?

if cumulative - how many times before its considered a done deal?

Tense INDIAN's picture

but CDS never cared about rumours last few weeks too...so why should it now.......its all about equities....

UK debt marsh's picture

German Constitutional Court has effectively ruled that any new substantive move towards new or additional funds with whatever initials, must be subject to a referendum.  Will never pass.  Germans can't do it.

If the French contributed to such a fund, it gets added to their own debt, and bang goes their Triple-A rating, so end of fund.  French can't do it

Eurozone Debt:GDP will be around 88% collectively by year-end, with Germany and France both individually already over 80%.

There is no solution to the problem, because the problem is a dilemma, for which there are only painful outcomes.

Hence entirely rational can-kicking, hoping that something may "turn up".


aleph0's picture

" must be subject to a referendum. Will never pass. "

.... or the Ac'Counting will be "mark to model" !



TankWolf's picture

12:02 Dealers' CDS coverage doesnt' seem to match Greek exposure, and max. amount dealers could collect on Greek CDS is 4.1bln

12:04 Combined Greek sovereign exposure to French banking system trio is 6.6bln


Tyler any ideas what the real exposure from the big three in France is to Greek debt?

AUD's picture

Not ridiculous at all. Antal Fekete at least has long predicted such an outcome to the twilight of irredeemable debt.

Tyler Durden's picture

Everyone who has a semi functioning frontal lobe has predicted it. That does not make it unridiculous.

LongSoupLine's picture

I believe this is frontal lobe funtions combined with hippocampus (memory formation, classifying information, long-term memory)

Plus, have you seen this?!  A secret Wall Street, Fed, Treasury, CME, SEC and CFTC surgical procedure has been uncovered!!  http://www.monkeyspit.net/sites/brain/

Cassandra Syndrome's picture

Ireland is printing Punts and preparing to leave the Euro, probably in 6 weeks time

Diplodicus Rex's picture

Can you please provide a link for that?

Cassandra Syndrome's picture

I heard the first rumours a couple of months ago from someone who was involved in the logistics. I dismissed them at the time. But I have heard from separate sources since and it has been whispered in the local media in the past 2 weeks.

Despite all the spinning, behind the scenes in Dublin Plan B must surely be ready. Even as the IMF was giving us a clean bill of health, dark rumours were circulating in financial circles that the Central Bank was secretly printing its own Irish pound notes.

They might be prudent to do so. Plan B is undoubtedly already hatched down in the vaults of Merrion Street. First Greece, then Ireland, next Spain and finally Italy spells Armageddon, even to the optimists.

Next stop, France. The French sovereign debt may not be as scary as others but France is hopelessly exposed to Greek and Italian banks. If they sink or are forced to burden share , the mighty France could be the next domino to tumble.

Back home, Noonan seems speared to a tree in Merrion Street, oozing optimism as the Continent collapses. This weekend the euro is in mortal danger. But Ireland is supposedly doing just fine.



The Finance Minister denied the rumour when directly asked in Parliament last week



However, it is now probable that within 6 weeks, the Punt will be re-introduced, along with other countries in the Eurozone bringing back their old currencies. 

It adds up, that in the event of a country leaving the Eurozone that there would be a lot of behind the scene, closed doors activities for a number of months to ensure stability on the inevitable day that an announcement is made public. 

Oh regional Indian's picture

Wow, that is pretty crazy. All the out-liers will fall off first then.

What is Spain upto? Too quiet ont he Spanish front.


Boilermaker's picture

The over / under for the open will be 30 SPX handles.

Any suckers want the under??

Nate H's picture

where are the periphery CDS (portugal, etc.)?

KingOfMilwaukee's picture

Fails to gain traction? The FTSE is up 500 and all markets are up. Gold continues to do poorly and was down to 1549.

I love this site but it does get tedious when it refuses to admit it was wrong. Just 3 weeks ago when gold was at 1913 it proclaimed 2500 was a few weeks away. More like 1500!! And don't give me any BS about margin hikes and the rest. All commodities are down.


It would be nice is among the 24/7 flood of the world coming to an end the powers that be could admit when they were flat out WRONG.

Robslob's picture

Welcome new guy (KingOfMilwaukee) on your 3rd week here at ZH.

We have seen many shills come and go.

We always see more of you when our PMs get smacked down by coordinated margin hikes near contract expiration.

The upside is you always leave shortly after...hope the Obama "Paid to Post for America" program is covering food expense.

PS You guys should be a little less preDICKtable and create an ID months out so your spam seems a little more authentic.

EvlTheCat's picture

""hope the Obama "Paid to Post for America" program is covering food expense.""

You do mean SNAP, right?

KingOfMilwaukee's picture

I've been reading this site for over a year and there were password problems that kept me from posting, you los(er.) 


I am Libertarian and my economics are Austrian and I am 100% gold for 3 years. So go f yourself and stop thinking you know anything about me you pos.

LongSoupLine's picture

wow, achieving royality in Milwaukee must have a pretty low bar...

KingOfMilwaukee's picture

Of course. Have you ever been to Milwaukee's airport?

LongSoupLine's picture

lol...yes! (I was being funny btw...well, trying to be funny at least)

Robslob's picture



Wow...password problems for over a year? Kinda says it all right there...?


"I love this site but it does get tedious when it refuses to admit it was wrong. Just 3 weeks ago when gold was at 1913 it proclaimed 2500 was a few weeks away. More like 1500!! And don't give me any BS about margin hikes and the rest. All commodities are down."


" I am Libertarian and my economics are Austrian and I am 100% gold for 3 years. So go f yourself and stop thinking you know anything about me you pos."


And yes, we know you...and all the others like you...

KingOfMilwaukee's picture

Unlike you, who seems to be fearful of any idea that does not fit into your rather small world, I am capable of accepting that ZH was flat out wrong on its prediction of "2500 gold within weeks" and at the same time be quite happy that I have been 100% gold since 2008. I, unlike you, do not feel the need to only think in a one dimensional way to keep myself from needing meds and questioning myself. I have something you do not... conviction.

philipdybel's picture

OMG, I've been having the same password problems too!!!

Where it says "Password: *", do I type "password" -- or just make something up?

I'd really appreciate if Tyler or someone computer savvy would help me out with this one...

Dapper Dan's picture


Is it "normal" for gold to move $100.00 up or down in a 4hr time frame?

My poor grammar (not gramma) is well known on this site,

yours seems deliberate, also we don't spell out 'powers that be" we use PTB or TPTB.

KingOfMilwaukee's picture

I will catch on. I would change things now but I am too busy bashing Keynesians on HuffPo to change it.



D.O.D.'s picture

What's up with AAPL?  Anyone got any news, I would think that with the /es up, apple would be rocketing.. but au contraire mon fraire...

LookingWithAmazement's picture

Armageddon - gold down.

Rockfish's picture

Damn, fell asleep after watching football and bunch of beers missing that 1550 au. 

Kina's picture

Wow, markets are absolutely and totally fake. Grand manipulation extreme.



LongSoupLine's picture

Fake!?!?  get with it!  These are price discovering capitalist exchanges vital to our economic balance, prosperity and survival.

Fake?...lol...now if you'll excuse me, I have some real fighting to watch...you know...WWE.

toothpicker's picture

Short term gold is down. Good for us who know a game is more than one half

Zola's picture

Again troll posters on this site bashing gold. Probably dont own any, have no clue to value it and dont understand history or fractional leverage of gold claims. Useless to argue with these people. Let them sit in cash. Unfortunately when the shit hits the fan and the currency gets printed into oblivion, these kind of people always look to government to fix the problem and give us dictators or genocidal maniacs. 

PeterB's picture

Since when did this site become a strickly pro-gold site? Gold is merely a barometer of paranoia of which this site has plenty of. I'd suggest you turn some of yours into cash so that you don't end up a hypocrite govenment dependent

Kina's picture

Gold is merely a barometer of paranoia

Is why China, South Korea, Thailand, Russia, Paulson, Soros etc etc got into it...why central banks are net buyers and why TPTB take turns in trying to crush it???



phi-in-the-sky's picture

It's just a big misunderstanding BNP chief Pérebeau said: we can mark to model if we want to, it's in our culture. You fools lack culture.



DosZap's picture

Gold will be at or above $2k before year end..................

Don't believe me, ask JPM.

Gotta get the Defationary crap out of the way first.(or start printing like fools to KTC one more time to salvage it).

Crank up the presses.

unky's picture

No matter, the silver inventory of Germany largest dealer (proaurum) is now almost wiped out. Even no Maples anylonger.