The T Report: Lessons From Sisyphus
Markets are reacting somewhat positively to the Greek elections. The Euro is performing well, hitting 1.2714 as I write. I think the move in the Euro and the muted reaction in U.S. stocks are both good signs that there is a nice base developing. The key will be what Europe does next. We have seen […]
Who is Greece Scheduled to Pay?
This is our best estimate of Greek Principal and Interest payments currently scheduled. We did not include T-bills, so the total debt included in the calculations was €272 billion. The loans had the least amount of information, but the one loan was quarterly at Euribor + 300 stepping up to 400 after 2013. The other […]
The Merkozy Contagion Diet: Before and After Photos
BEFORE However many summits later and after so many efforts to erect “firewalls” and reduce contagion risk, here is what a steady diet of Merkozy financial planning has done. AFTER Special thanks to Vitaly Fiks for this. Our ability to use graphics is limited, but I think this gets the […]
The Weekly T Report: The Fed and Falling Knives and EUROPE
Why should the Fed catch a falling knife? Every trader is told not to catch a falling knife. The image is clear, reaching out your hand and being cut by a blade, and then the blade clattering to the floor, with nothing to show for your effort but a bloody hand. Without a doubt, traders […]
The T Report: Banco de Ponzi
Ok, I’m bored of basically saying the same thing and you are probably bored of hearing and reading the same thing, so let’s do something different. Let’s prove that solvency = liquidity. Yes, I am that bored today. I’m nervous about being long, but my thesis that Germany finally did the work on what a […]
EFSF and ESM Funding Explained in Detail – Why Italy is Ok with it
There is so much confusion about the ESM or EFSF funding costs. How it works, how it affects countries, etc. Here is how it works. €1 Billion of EFSF Borrowing The EFSF sells bonds to the market. They have already issued €109 billion of bonds, so they are a meaningful issuer and buyers at this […]
The T Report: A Risk-Meh Morning
Credit Markets Mixed: Spitaly vs Corporates The first thing most people are noticing today is the weakness in Spanish and Italian bond yields. Spanish and Italian CDS are both wider as well. There is a lot of talk about what it means to hit 7% on 10 year bond yields. For Portugal, Ireland, and Greece […]
One Sided Balance Sheet and Solvenquidity
One Sided Balance Sheets I’m seeing a lot of negative headlines about how much more debt Spain is adding. How much subordination there is going to be for existing creditors. That is in spite of a lack of detail. I’m not here to cheerlead this deal, but at the same time, falling prey to the […]
Spanish Bond Subordination: Some Possibilities Analyzed
This is a rough approximation of the Kingdom of Spain’s €730 billion of sovereign debt as it currently stands. The ECB’s SMP holdings have no legal standing to be senior, yet as we saw in Greece were treated as senior. I assume the number is around €50 billion and is all in government bonds. T-Bills, […]
Spain: Nothing and Everything. Details Examined.
Change of Attitude or One More Last Minute Plea Bargain? On a standalone basis, the deal announced yesterday does relatively little for Europe. It once again looks like a last ditch attempt to cobble together something to appease the markets. It relies on ESM which hasn’t yet been set up. It lends to the FROB […]