Rajoy tried to assert some confidence in Spain this morning (#Fail) but the realization of the potential for fraud tape-bombs being everywhere in Europe's financial and political elite appears to be pricing in. All five of Italy's largest banks are halted currently (all down 8-12% from Friday's open) as the broad stock markets continue to sink (despite short-selling bans - so don't blame them nasty bearish speculators). Even more dramatic is the blow-out in European financial credit spreads. The Subordinated financials spread has been on the rise from the first day of 2013 - and has now seen its biggest 3-week loss in over 14 months! There is a way to play this trend in the US...
- *UBI BANCA HALTED AFTER FALLING 4.6% IN MILAN :UBI IM
- *MEDIOBANCA SHRS HALTED AFTER FALLING 4.9% IN MILAN :MB IM
- *BANCO POP SHRS HALTED AFTER FALLING 5% IN MILAN :BP IM
- *UNICREDIT SHRS HALTED AFTER FALLING 7.4% IN MILAN :UCG IM
- *INTESA SHRS HALTED AFTER FALLING 4.9% IN MILAN :ISP IM
European sub financials have smashed wider all year - biggest loss in 14 months
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with Spanish stocks plunging back to bonds reality (and EUR still disconnected)...
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as Spanish bond spreads start to decompress from a previous unreality...
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all of which has happened post-LTRO as that free-money may just have had the effect we said...
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as Italian Bank stocks (all banned from short-selling) continue to plunge...
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and if you want to play this trend - EUFN (the US-based European Financial ETF) has not pulled lower (yet) as risk increased in Europe...
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Charts: Bloomberg