Italy Goes The Full Monti
It was just a little footnote to the LTRO announcement. Just a little statement that 40 billion of the collateral received by the ECB was newly issued, newly guaranteed Italian debt. The more I think about it, the more uncomfortable I get. The ECB claims they have 40 billion of Italian government bonds on their […]
A Funny Thing Happened On The Way To The LTRO
I’ve taken some comfort with the LTRO. While it won’t solve the sovereign debt crisis, or even provide much direct benefit, it does help the banks. It helps the banks manage their balance sheet and is a clear sign that the ECB takes its role of lender of last resort to banks very seriously. That […]
I Am Confused….(Soon To Be Restated To Bemused)
Somehow the revisions to home sales don’t affect how many months of supply there is? I guess so, but that does seem like a stretch. What I’m more curious about is the starts and permits numbers. Yesterday the market celebrated 685k starts and 681k permits. We thought we were running at existing home sales of […]
Carry, LTRO, Data, And VIX
Once again we seem to have a discrepancy between what “credit” people think and what “equity” and “FX” people think. The broad market rallied strongly today, at least in part because of the LTRO. On one thing, everyone agrees, the take up rate will be high. There will be strong demand for the LTRO. What […]
(BN) Einhorn Trades Swaps for Shorts When Betting on Sovereign Debt
The ECB has had a focus on stopping the CDS market from working. They have looked at Naked CDS bans. They have floated rumors about selling CDS. They worked hard to avoid triggering CDS on Greece. The EU has always been against short selling. They like to ban short selling on stocks. For whatever reason, […]
JEF vs MS
I’m not sure there is much left in this trade. If Europe deteriorates, we could see JEF trade through MS, especially since MS is likely to have a large loss this quarter (some DVA give back, settlement with MBIA, and typical problems of all investment banks), but if Europe does indeed convince everyone it has some solution, MS will benefit […]
What The TF Is Up With LTRO?
So the market has completely latched on to the idea that LTRO is back-door QE. Does this make any sense and can it even work? So banks can borrow money for up to 3 years from the ECB. They can buy sovereign bonds with that money. Those bonds would be posted as collateral at the […]
You Want The Truth? You CAN Handle The Truth!
I’m not sure exactly when it happened, but Europe has finally starting dealing in the truth. Draghi can’t point out the limits of sovereign debt purchases often enough. The EU, usually happy to let completely false rumor after false rumor to drive the markets, took the time to quash the idea of EFSF and ESM […]
JEF
Decent earnings, but more importantly, they took leverage down from 12.9x to 9.9x. The combination of decent (not great) profitability coupled with significant balance sheet reduction should take some pressure off the shares. We had hoped they might have done the release earlier in the month, but this is very much in line with what […]
The Corzine Trade vs French Downgrade
Today it seemed that the market latched on to the idea of the Corzine trade as being the new bazooka. Banks would borrow lots of money from the ECB to buy sovereigns. It certainly seemed to be the case this morning when 3-year and in PIIGS bonds rallied hard. There are several flaws with this […]