Worldwide Markets Collapse Following Italian Bond Margin Hike
The much dreaded LCH margin hike came and went and while initially the market participants thought it was just a joke as nothing bad is ever allowed to happen anymore in these neverneverland markets, a few hours later the realization that this is all too real has finally dawned. The result is an epic bloodbath everywhere, but nowhere more so than in Europe, where one can kiss Italian bonds goodbye, and shortly French too, as the bond vigilantes demand that the ECB print now or else. Visually this is presented as follows: a 30 point drop in the ES, an unseen collapse in Italian bonds, and an explosion in the French-Bund spread. And since nobody can demonize CDS any more, we expect Europe to make selling sovereign bonds illegal next.
ES:
BTPs price:
France-Bund spread:
Commentary from Bloomberg:
- LCH Clearnet SA increased charge levied on clients to trade Italian government bonds {FIFW NSN LUE2U16S972B <go>}
- With Berlusconi expected to resign after approval of austerity measures, market left to wonder whether new government can alter trajectory of debt crisis
- Italian 10-yr spread to Germany +74bps to record 543bps, 2-yr spread +80bps to record 694bps
- Spanish French yield to Germany spreads significantly wider; with 2- and 10-yr spreads for both countries at records
- European equity bourses, U.S. futures all down significantly, 1.6% to 3.3%
- German bond yields down modestly, 2-6bps, while Treasury yields down 0.1 to 10bps, with 10-yr testing below 2.0%
- US$, yen outperforming significantly in generalized risk aversion
And some thoughts from RBS:
- LCH’s increase in initial margin calls on Italian govt bonds will likely hit Italian banks the hardest, Adam Cole, strategist at RBC, writes in note.
- Move will make using BTPs as collateral to raise cash in repo mkts more expensive
- LCH’s move anticipated for some time though still sufficient to push spreads to record levels, outright yields to new highs
- Berlusconi’s resignation diluted by lack of clarity
- Possibilities range from technocrat govt (most mkt positive) to new elections (most negative)
Bottom line: it turns out that pushing back reality indefinitely always comes back to bite you in the ass eventually.
(16 votes)
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Long time comin'
Rome Riot Cam?
It's days like these why I hold FAZ. Nothing like a good defense against fraudulent stock markets and crappy economic policies born out of desperation and stupidity.
Good Citizens of Metropolis!
Look on the bright side.
At least we aren't getting hit by the commet!
And the price of dog food is going down.
We can still feed our families.
http://fucklloydblankfein.blogspot.com
Sovereigns are the new subprime
The Chinese central bank is loading up on gold. Are you?
http://seekingalpha.com/article/305766-following-the-big-money-to-gold
this is good for war too...
Yes... for the last 44 years... but I'm only a transitory gold buyer.
Cain screws up the race card for bammy..
Good for you, FAZ up ~8% in pre.
Poor robo. He thought banks were a momo trade yesterday.
ATTENTION ALL PLANETS OF THE SOLAR FEDERATION! WE HAVE ASSUMED CONTROL!!
2112 = Best album ever!
Personally, I sold BLK...and bought TZA last night at the close.
Remember Larry Fink's comments about a month ago: "Make them buy equities." I'm sure he was also in the crowd saying, "US exposure to European debt is manageable." Uh huh. Of course, just three days ago we had Reuters confirm that BLK had been buying Italian debt.
Larry Fink better hope that accounting does not come back into style any time soon.
Counterparty Risk.
Mother Fucking Global.
Good luck.
Note to self: Bring motorcycle helmet to riot.
Bread helmets for everyone! http://www.motifake.com/bread-helmets-bread-egypt-protest-stupid-helmet-demotivational-posters-133956.html
And buy your peanut butter and jelly now while you can still afford it...
Peanut butter and jelly padding!
This decline will only be a one-day aberration. Once the Italian bondholders clear up their margin hikes, and the world's leaders step in with their ingenious plans, the market will continue its rally into Christmas. No need to worry. BTFD.
I think you'll find the market is long on bullshit and short on suckers.
Please - go right in, your BTFD in Italian debt - I mean it's cheap - therefore it must be good value!!
deleted
OT: OBAMA’S NEW ‘CHRISTMAS TREE TAX’
sometimes the easiest trade can be the hardest trade. Eur 1.15 first target here's hoping. Now that Italy 10 yr has well passed the point of no return for thier bond yeilds 7% and no CDS to protect anyone buying it (making it an untouchable) we have two options print or default either one leads to a much much lower Euro. That being said will cover half my position on a close above 1.371 and will live to fight another day.
EUR to parity with the USD. It is even a more worthless piece of paper. The US can learn something. A populace run by corrupt bankers who allow their citizens to do nothing leads to nothing but bankruptcy.
This is like one of those horrible limit problems from first year calculus...is there anything we can cancel out between the two monotonically declining geometric series?
Both series are being swamped by the large 'Stupidity' series involved...:>D
agreed. this trade has taken more resolve than any I've ever attempted.
Is this a great f'n country, or what?
Gave you a + Schmuck Raker... even though I am leaning toward the 'or what'. :)
Ho! Ho! Ho!
[quote]
it turns out that pushing back reality indefinitely always comes back to bite you in the ass eventually. [/quote]
Translation: Ayn Rand was right!
One of the few bright spots in the Michigan economy (X-mas trees), and Obamao has to screw that up.
There should be a $10 tax on landfill-clogging Chinese-made plastic Christmas trees.
A tax to promote Christmas trees? You can't make this shit up!
Chicago is one hell of a city. The only other place you could find corruption this bad is in NJ.
You can't tax a religion unless of course words are spoken from the pulpit that politicians don't like. Sound Familiar? (Think prewar Germany)
Sadly, that's not entirely true. New Orleans, for example.
And of course, Washington. The gang there still wears "constitution clothes," which covers some of their corruption, but the city oozes it.
Oceans of other people's money + nameless bureaucrats = incurable corruption.
Its a HOLIDAY TREE TAX.
Which reminds me -- time to put the XMas lights up outside on the spruce tree. What a barbaric waste of tree sap to cut down a tree and drag it into yer house -- why not just get some pine-scent air spray, and an artificial tree instead?
There you go. 6% is now history. 7% is now taken. All these NUMBers. NUMBers. Still, Italy is safe. Very safe. Vatican back-stop safe.
What is happening to Spanish Debt? Is Santander sweating?
Europe will finally slide on Spain.
ORI
Paying Attention
what does the Vatican have to do with modern history? What do your brains have in common with your opinion...? these questions have the same answer.
Well Rasko, from your comment, you sound like you would bleat when you speak.
Bleat, get it? Keep believing your sanitized version of history. It will, like the last line of thsi article, come and bite you in the ass.
Do a little Google search: Vatican Broken Cross for starters. Or don't. You sound like a conformist.
ORI
as opposed to your secret (made up) history that has no connection to anything that ever really happened?
There was a time when the Pope raised armies and fought wars on his own dime. That time has long passed.
Trav, when you've finished about 5 books on the topic, get back to me.
There is real history and there is consensus, victor written history.
ORI
http://www.youtube.com/watch?feature=player_detailpage&v=NeP_AUAFXgY
What books would you recommend, ORI?
How about your top 5 on this topic?
How about starting with one....
http://www.catholicvoice.co.uk/brokencross/
And here : http://arcticbeacon.com/books/Almanac_of_Evil.pdf
If you can wrap yoru head around them....then....many many more. But only if you were serious.
ORI
I'm of the opinion that the age of kali will end in 2012, what do you think?
The Roman (empire, Darth Vader, Emperor Palatine, etc) have Nothing to do with so-called modern history.
Don't look at the laurel wreath borber on the UN seal or any of the gazillion other places it is. Don't let the symbolism harm your preconception of who runs this joint.
:)
Reality is threatening.
I've always been bugged by the fasces on the back of FDR dimes.
"From many, one" indeed...(as in, "and then there were...").
Yes. Walk around Congress (also many monuments of DC) and you'll be much more bugged. Looks like freekin Rome.
And how about "In God We Trust" on the back of the dollar bill of all places?!
You obviously have NO idea what the Vatican is ALWAYS AND FOREVER up to! It doesn't involve "sacraments", and it is NOT good!
it's nothing but a big collection of child molestors.
You morons have been reading too much Da Vinci code bullshit and watching tribe-authored movies that ALWAYS place the catholics at the the epicenter of every sinister conspiracy. This stuff is really projection.
Was gonna defend you, Trav. Until you brought my priest into this.
You wish you knew how to quit the Padre.
http://www.thenewamerican.com/world-mainmenu-26/europe-mainmenu-35/9530-vatican-council-calls-for-world-government-central-bank
Let em go.. Takes the heat of the evil joooo zionists for a few minutes , right trav..
Need more slosh.
If halving the leverage can cause this, LONG WAY DOWN, when the real shit hits.
Somebody will resign (Greek agriculture minister) and market's going to soar
EFSF II bitchez! GO BIG OR GO HOME!!
more numbers, more numbers
goin' long numbers
bitchez
Clearly, this calls for a US Emergency Broadcast Test around 2PM today to steady the markets ;-)
hehehe... nmewn... If ECB is going to print, make that PRINT, how much more will Ben print to weaken the dollar against the Euro?
Or, is the POTUS plan to 'double exports within five years' now on the back burner? Or, was the POTUS plan all bs from jump street?
My opinion... POTUS plan bs from jump street.
If all the digital debt in the world were converted to $20 bills we would all need 4 wheel drives cause the entire land mass would be ass deep in them. :)
lol...I'm off to watch this new digital train wreck from work...gotta stop and get more poporn though.
Take care.
the potus "plan"??? It was just some shit that he pulled out of his black ass that sounded good. There is no fucking plan. How the fuck is the president going to double exports, does he fucking run factories and businesses and shit?
The idiots of this nation have invested the president with magical powers in their name
The idiots of this nation have invested the president with magical powers in their name
Hey, it's still a lot better for them than facing reality!
Gonna be a bitch when the self-delusion stops working.
They've been "practicing" all night! Others up in the wee hours verified what I experienced at 5 am.
They are obviously nervous they will not push the right button!
EAS: Everybody Absolutely Screwed
"Berlusconi’s resignation diluted by lack of clarity".
Bullshit. The idiots (MSM and Analyst community) pushed Silvio over the cliff in the HOPES that this is what the real money was focusing on.
This morning it turns out that they were WRONG.
Any clear thinking reality based human being could have told them that. It's just that simple.
CNN was running a headline at the bottom of the screen that Berlusconi had resigned as Italian PM this morning.
he promised to resign
if the austerity package goes trough
now he has an incentive to be very fast in "ramming through" a "very popular" austerity package
of course he'll be fast, what politician wants to be seen reneging promises?
particularly when the promises depend on a couple of hundred other politicians?
of course he'll be fast, what politician wants to be seen reneging promises?
particularly when the promises depend on a couple of hundred other politicians?
As a former Obama supporter allow me to answer that with "Obama."
http://www.youtube.com/watch?feature=player_detailpage&v=qaMkT1Dk6xQ
Are the markets finally figuring it out? Is the obfuscation finally being ignored as irrelevant?
CAN WE F*CKING GET ON WITH IT PLEASE?
It's still a train wreck... it's just happening in slow motion... but, it's still happening fast when measured in geologic time.
Big Panda and Big Bear still have some of the superlicious EuroBamboo to ship it. Personally, I think that their cage is full, but one never ever knows. Hint, watch the EUR/CHF. If they start heading for the door, it will be this exit :)
I'd be surprised if it wasn't commodities. They're getting burned by the Euro, have already been burned by the USD, so why would they take a chance on someone already debasing? Soon others will realize the "safety" of bonds in pure BS. And at that point everyone is going to look for something, anything with no counterparty risk. Most of us are holding onto that stuff like a fat kid holds onto his Halloween bucket.
unnecessarily slow dipping mechanism.....
one ring to rule them all
Mario Dracul
was he the one that signed those swaps with GS?
Am I the only one who remembers those? The rate and other swaps Italy had the Street manufacture to bring their deficits "under target" upon EU accession but which blew out their deficits about starting...now.
Italy is a nuclear timebomb. It was big news when it was disclosed and I guess they thought that shuffling some chairs in the government would make it all go away
It's only going to get worse. If anyone in their right mind thinks Spain is not going to follow Italy down the rathole they are lying or nuts. Start watching the yields on bonds for the banksters in Autria and France for a clue as to how quick this will implode.
And once they enforce no selling evaaaaaah in sovereign bonds, the next step is forced buying from your paycheck don't-ya-know of sovereign bonds. Easy payroll deduction for the cause. You want to support the cause don't you?
Tools.
http://vegasxau.blogspot.com
They'll just force all pension funds into Sovereign bonds. Much easier than a payroll deduction and much quicker too.
And people talk about Gold confiscation. Ha.
A lot of digits in pension funds, yes. But where are those digits? Stocks, corporate/muni bonds, REITS. Move those funds into USTs and crash the other markets, precisely the thing that TPTB are pulling out the stops to avoid.
I think Ben would personally shoot the SPX in the head if it were a choice between continuing to levitate stocks and funding the Treasury's ever-increasing bond sales.
At the moment, he can do both, but when the time comes to choose, only the Treasury market really matters.
What use is S&P 5000 when the government can't afford to keep the lights on?
They will do everything we can imagine as well as lots of things we can't.
Why take it from the pensions when you can print? Why pop the balloon when you can deflate it slowly? Slow siphoning is the name of the game here; that's what has kept the Fed in the game for a century.
If BB can print more cake whenever he wants, he can have his cake and eat it too. SPX, USTs, MBSs, you name it. Everything but the barbarous relic.
Which is why I sound like a broken record, I am tired of hearing it... This will take years Denninger and all the rest are wrong, hunger and only hunger will trigger this and by that time they will have asset stripped us completely.
Interesting read from Bill Bonner re the Italian economy... It's a point of honor among Italians to avoid paying taxes. Most transactions in cash... so not reflected in GDP... etc...
http://dailyreckoning.com/italian-debt-crisis-takes-center-stage/
The Italians (Romans) have seen a lot of bs tax collectors/laws in their time. Who knows Italian history better than Italians? They are doing what Americans should be doing. Pay in cash, avoid banks that pay zippo interest on savings.
At one point the Roman Empire made it illegal for Romans to renounce their citizenship to avoid confiscatory taxes. Wage and price controls were tried long ago. Modern Italians know how their taxes are wasted and have been wasted for a couple of thousand years.
And now you know why forfeiture laws were pushed through making it a crime to carry any "suspicious" amount of cash (which can be any amount). They even give most or all of it to the arresting officials department just so they have a dog in the hunt. They are desparately trying to get us to a cashless society and will discourage cash transactions to the maximum extent possible.
Unpatriotic ! You Americans know better....now wheres the fucking flag....time to wave it around a bit dont you think. ????
LOl... Yeah, they have been waving it for as long as I can remember and I am no spring chicken.
Whats that old saw about 'The Last Resort of a Despot Is Wrapping Self In Flag'... or something like that.
"Patriotism is the last refuge of a scoundrel!" De nada :>D