Presenting The Real Impact Of US Stress Test Transparency

Far be it from us to reflect Schadenfreude here but at the time of the squeezefest leading up to and after the announcement of the lipstick-on-a-pig US Stress Tests in mid-March, when CDS were remaining wide and hardly budged, we questioned the reality of the assumptions and the lack of contagion comprehension. Most critically, in the 4 months since that wondrous day when all was proved great in the world of US banking, the major financials are down a stupendous 25% on average with Wells Fargo taking over the mantle of least used bed-pan in the E-Coli ward - at an unimpressive unchanged since 3/13.


Equity performance of the major US financials since the Fed's Stress Tests...on average -25%

and CDS remain notably less sanguine that stocks (though the latter have caught down to that reality and remained in sync for the last six weeks or so)... with CDS 75bps wider on average since the Stress Tests were announced...


Charts: Bloomberg


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