French Downgrade – Even More Likely Than Yesterday
First Moody’s and now Fitch are coming out with negative comments about the summit. That provides mores more air cover for S&P to downgrade France 1 notch. Normally I don’t care that much about ratings (they are a lagging indicator) except when they can create forced selling. I didn’t think cutting the US ratings would […]
Will The US De-Couple? Or Is It Time To Re-Couple?
Maybe, but not in the way everyone seems to think. Haven’t we already decoupled? YTD stock returns in the US are 0% for the S&P and Nasdaq, and the Buffet owned DJIA is actually up 5%. Euro Stoxx 50 is -18% YTD with Germany outperforming and Italy underperforming (it is basically the same performance whether […]
Nothing New To Add To What We Have Already Said
We continue to focus on confirmation that ECB won’t print, which will weigh on the market, and negative rating actions, which could be very bad if France gets hit. The IMF may pull off a surprise if it gets some new non European money, but that hope is also diminishing. Rather than going into more […]
Harry Potter, Twilight, And The EU
Neither Harry Porter nor the Twilight series felt that one movie could bring proper closure, so both did the “final movie” in 2 parts. The EU has adopted that tradition and is already pushing the focus to the next Summit in March which really will be the grand finale. They also seem to have stolen […]
Basis Unwind Or The BSC Trade?
(BN) BNP Paribas Sold $2 Billion Swaps on France, EBA Says (1) This is the headline of the story below. Is this the basis unwind we predicted after the October 27th summit where banks were going to be forced to restructure debt without triggering CDS? (It hasn’t happened yet, but that’s another story). So if […]
A Couple Quick Points…
The ESM primer is useful to read, but it is far less impressive than the headline would make you believe. On central bank loans to the IMF back to the countries, is that a ploy so that the IMF can get seniority over existing bondholders and gain direct control over budgets? I’ve been confused why […]
ESM – A Primer: Not So Big, And Not So “Paid-In”
So the ESM is going to be implemented ahead of schedule. Or at least that is the current plan, although it seems that Finland is insisting that it retains unanimous voting and most (all?) countries still need to ratify it. The ECB will oversee the ESM and EFSF, which is good as they have more […]
Post Summit Rally Fatigue?
The deal seems a disappointment on almost every level and still needs approvals – UK out. Finland expressing concerns. The ECB has confirmed what they said yesterday. This agreement does not turn on the printing press (any more than it is already doing). Rating agencies likely to be underwhelmed. Countries will still be on watch […]
The Good Old Euro Basis Swap
The good old Euro Basis Swap. We are back to where we closed last week. In the meantime we will have lots of headlines today as every leader takes their best shot at talking up the latest “bailout” which seems very underwhelming.
Put Some Lipstick On This Pig And Sell It – The EU Statement
Markets initially sold off across the board but have recovered somewhat this morning. Credit is weaker across the board with MAIN, SOVX, and FINS all wider on the day. Financials are underperforming and adding to yesterday’s losses and are back to their widest levels of the day. Italian and Spanish bonds are lower again. Italian […]
