The squeeze on Italy

kevsta said:
ECB did calm the markets.
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The article is just a broad view lacking specific dates and events. It's Goldman Sachs who feeds the media with news the firm can use. Dow is up right now by 250 points and the Wednesday losses has been covered. Why? Not because of ECB.
Stocks were surging near session highs Friday as U.S. consumer sentiment improved and Italy and Greece showed signs that they were back on the path of fiscal austerity.
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http://money.msn.com/market-news/post.aspx?post=740b7031-81a2-4674-a6b0-4322e26df3f4

Of course, neither Italy nor Greece showed any signs of fiscal austerity, coz those signs can be deteced only over a period of time much longer than one day - Friday in particular. But Goldman Sachs loves making more than anyone else, so according to GS, Italy and Greece had this morning only a half a donut for breakfast with no coffee. Lols.
The lovely firm can fool anyone anytime, as it is apparent.
 
whoops, sell sell sell

As IFR reports, "European banks are planning to dump more of the €300bn they own in Italian government debt, as they seek to pre-empt a worsening of the region’s debt crisis and avoid crippling writedowns – a move that could scupper the European Central Bank’s efforts to bring down soaring
yields.

Still reeling from heavy losses on money they lent to Greece, lenders are keen not to make the same mistake twice. Then, under the pressure of governments and a hope that credit default swaps would protect them against heavy losses, they held on until it was too late to sell."

And for our European readers who may be wondering who the dumb money will be as this tsellnami unleashes, we have one word: you. "With the ECB providing a bid for Italian bonds that might not otherwise exist, board members at some of Europe’s largest bank say now is the time to accelerate disposals.

Many are also reversing long-standing policies of buying into new Italian bond issues, denying Rome an important base of support." And there you have your explanation for today's action - yet another headfake to get the idiot money foaming at the mouths while the insolvent banks quietly dump everything, sending the EURUSD once again higher as EUR repatriation resumes, this time with feeling.
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with regards to whats driving stocks currently, candlesticks are the DJI, the black overlaid line is EURUSD.

looks pretty clear to me? with the comparatively massive size of Forex compared to stocks, its not going to be tail wagging the dog is it?
 

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kevsta said:
nothing to do with the 650bps round trip of the EURUSD, down, and then back up again, then?

GS are not responsible for everything, before it happens, I promise you ;)
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I know. Goldman Sachs is partly responsible for things that don't happen at all, but it's in the interest of the firm that some media will cover the bogus stories that involve esoteric insights into the financial market engine.

There are hundreds of online market analysts who offer "insider look" into the financial markets. But my benchmark is simple: If you don't call the bell at NYSE one day ahead and be right +/- 0.2% 3 trading days out of 5, then you know crap and I go back to Snow White and the Seven Dwarfs. Period.
 
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there are many ways of trading amigo, and a whole world outside of the Dow :)

it seems to me you have a very US-centric view.

Contagion continues to spread, France's bond spread climbing, Hungary melting down, with large (mortgage) debt to Switzerland denominated in CHF.

lets how the EURCHF central bank peg (intervention) holds up to mounting meltdown pressure..

I am thinking long CHF from EUR might be an explosive win, sometime soon.
 
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frAAAnce

markets have bypassed ratings agency opinion and gone ahead and effected a downgrade on the Europonzi bailout plan, the EFSF.

The EFSF Is Already Trading As AA+, Or Why The French AAA Rating No Longer Matters

Following the S&P "technical glitch" on Thursday which sent out a bizarre notice to a few subscribers notifying that a rating action on France is imminent, FrAAAnce is up in arms and demanding S&P blood. The reason: as everyone knows by now, the sanctity of the Eurozone is now contingent on those three A letters more than any other variable, because without said rating, France becomes ineligible for EFSF funding purposes (at any rating less than AAA), the EFSF's sole 'pristine' backer becomes Germany, and sends the EFSF yield curve into a tailspin, as it glaringly painfully obvious that Germany alone can't fund the trillions needed to preserve the Eurozone and purchase rolling Italian and other PIIGS debt. Yet one look at the yield curve of the EFSF as it already stand confirms that the market is not waiting for S&P, Moody's or any other rating agency, as it is now just a matter of time
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anything to do with this 5 star Ponzi behaviour I wonder :)

European Ponzi Goes Full Retard As EFSF Found To Monetize... Itself

We have long mocked and ridiculed the Fed for being the ultimate ponzi instrument: after all, why worry, when your central bank will buy up almost three trillion in US paper in about 2 years (a very comforting fact for US politicians who never have to fear that those trillions in new porkbills, pardon fiscal stimulus programs, may end up without funding).

Well, as it turns out those wily veteran bankers from across the Atlantic have just one upped America yet again. According to the Telegraph, the abysmal, and barely successful, 3 EUR billion issuance of EFSF bonds (which was originally supposed to be 10 EUR billion, on its very very gradual climb to 1 EUR trillion) had one more very curious feature to it, aside from confirming that it is Dead On Arrival as expected.

It turns out that in addition to being the most convoluted and complex creation ever conceived by JPM which is advising Europe on coming up with structured finance products that are so complex nobody will ask any questions and will automatically assume someone else has done the homework, it is also the quintessential ponzi instrument.

The Telegraph reports that the already reduced 3 EUR billion "target was only met after the EFSF resorted to buying up several hundred million euros worth of the bonds." You read that right: in its first bond issuance since its transformation to the European Bank/Soveriegn Bailout Swiss Army Knife, the EFSF not only failed to raise a minimum token amount, but also had to... buy its own bonds.
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the market grows weary of their continual BS, this is not going to end well.
 
kevsta said:
haha funny we were just discussing vampire market tactics, we can watch an example live and see how it pans out :)

http://www.zerohedge.com/news/goldman-issues-140-price-target-eurusd

Goldman Issues 1.40 Price Target On EURUSD

this is the technical perspective.

http://www.oftwominds.com/blognov11/euro-stock-crash11-11.html
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haha too easy, short EUR at 1.3780, 80bps in 2 hours (awake time, some sleeping too).

time to cash in the digital tax tokens and convert them to real money
 


the countdown has started. or "will this time be different"?
 
kevsta said:
haha funny we were just discussing vampire market tactics, we can watch an example live and see how it pans out :)

http://www.zerohedge.com/news/goldman-issues-140-price-target-eurusd

Goldman Issues 1.40 Price Target On EURUSD

this is the technical perspective.

http://www.oftwominds.com/blognov11/euro-stock-crash11-11.html
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lol, so predictable, I bailed way too early, never have been very good at letting winners run.

Goldman ('s clients) Under 100 pips From Being Stopped Out On EURUSD In 24 Hours, As Expected

On Friday, when we learned about Goldman's latest FX recommendation which said to "go long EUR/$ with a narrow stop at 1.35 for an initial target of 1.40 (currently at 1.3715)", we said: "Time to sell the EURUSD with both hands and feet, not to mention with MF Global-type leverage: that uber-contrarian FX indicator, Goldman's Thomas Stolper, who has not had a notable call correct in the past 2 years, just came out with a long EURUSD call, calling for a 1.40 target and a 1.35 stop loss. Yes, this means Goldman is now selling EURUSD until 1.40 and will begin buying it at 1.35. As a reminder here is how Stolper's last EUR/$ recommendation ended."

Sure enough, 24 hours later, Goldman is under 100 pips from being stopped out: at last check the EURUSD just touched on 1.3596.
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GS trade stopped out :)

GS prop desk wins again..

Goldman Stolpers Clients Again As EURUSD Breaches 1.3500, Squid Stopped Out On Friday EURUSD Trade Reco

Well, it didn't take one day... It took a whopping two days for our always contrarian call to do the opposite of what Goldman said on Friday, to materialize.

As we said on Friday afternoon, "Time to sell the EURUSD with both hands and feet, not to mention with MF Global-type leverage: that uber-contrarian FX indicator, Goldman's Thomas Stolper, who has not had a notable call correct in the past 2 years, just came out with a long EURUSD call, calling for a 1.40 target and a 1.35 stop loss. Yes, this means Goldman is now selling EURUSD until 1.40 and will begin buying it at 1.35."

48 hours later Goldman's clients lose big, Goldman's flow desk wins, and anyone who agreed with our traditional cynicism made several thousand pips assuming the proper use of MF type leverage.
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Italy’s Leader Unveils Radical Austerity Measures

ROME — Telling Italians that the fate of their country and the euro was at stake, Prime Minister Mario Monti unveiled a radical and ambitious package of spending cuts and tax increases on Sunday, including deeply unpopular moves like raising the country’s retirement age.

The measures are meant to slash the cost of government, combat tax evasion and step up economic growth, so the country can eliminate its budget deficit by 2013. Mr. Monti took the steps in an emergency decree, which means they will take effect before he presents them to Parliament for formal approval.
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Hope it works.
 
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kevsta said:
what do you mean by "works"?

  1. calms the bond markets?
  2. corrects the country's long term fiscal imbalances
  3. doesnt cause rioting and unrest

all of the above?
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All of the above. Not claiming that it will work, just hoping that it does.

see Greece for answer.
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Italy is not Greece.

nb there is now not a single elected official in the Italian cabinet.

"democracy has been hijacked" - see Nigel Farrage interview, starts at 00.45sec
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Extreme circumstances call for extreme measures.

Personally, I think that the Europeans should agree to let the ECB play a larger role in bailing out the the distressed countries. Inflation is not what they should be focused on right now. It's like worrying about not running up your water bill when your house is on fire.
 
Puppycow said:
All of the above. Not claiming that it will work, just hoping that it does.
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In an ideal world I would agree with you, but this is far from an ideal world, and it won't. Only massive debt repudiation and write downs will work long term, everything else is just time wasting.

Puppycow said:
Italy is not Greece.
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this is actually pretty funny, please don't misunderstand me, I am not mocking you, but this a very standard line politicians have been using, and there is a long line of them, let me see if I can get them in rough order..

  • "Greece is not Argentina"
  • "Ireland is not Greece"
  • "Portugal is not Ireland"
  • "Spain is not Portugal"
  • "Italy is not Spain"

all the way up to "The US is not Europe" and "The EFSF is not an illegal pyramid scheme etc. in fact ZH put it so much better than I can

If there is one thing one can say about the insolvent European continent is that despite everything, it is a bastion of truth, and a knight of see-thru disclosure.

After all, who can forget such brutally honest statements as "Greece will not default", or the follow ups: "Ireland is not Greece", "Portugal is not Ireland", "Spain is not Portugal", "Italy is fine", "Italy has turned down money from the IMF", "The IMF has never offered any money to Italy", and then the old standbys, "the ECB will not be a lender of last resort", "the EFSF will use 4-5x leverage", wait, make that "the EFSF will use 3-4x leverage", and last but not least, "Europe is not America" and "it is all the fault of evil CDS speculators."
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:D

dont get your hopes up too much amigo.

ps

Extreme circumstances call for extreme measures.
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pretty sure Hitler was saying the same kinds of things in the 30's.
 
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Puppycow said:
Personally, I think that the Europeans should agree to let the ECB play a larger role in bailing out the the distressed countries. Inflation is not what they should be focused on right now. It's like worrying about not running up your water bill when your house is on fire.
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The problem is not only inflation. It's the willingness (or the lack of it) of the distressed countries to make tough decisions, if they know ECB will bail them out anyway. Suddenly these countries are in no hurry of raising taxes/making steep cuts/getting their economies in condition. A prime example was Italy this summer, when their 10y bond yields hit 6%. ECB came to the rescue, and the yields lowered to 5%. And suddenly Italy forgot all the promised measures they already had suggested to get their ecomony in shape. Politicians are not willing to make steep cuts and worsen the standards of living of their own citizens, unless they absolutely are forced to, because these measures are killing their public support and the support of their parties in the process, and lead to growing public anger and perhaps riots (Greece) and general strikes (Greece, Portugal).

If there was an easy solution to this crisis, it would have been made ages ago. But there is not.
 
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ref said:
The problem is not only inflation. It's the willingness (or the lack of it) of the distressed countries to make tough decisions, if they know ECB will bail them out anyway. Suddenly these countries are in no hurry of raising taxes/making steep cuts/getting their economies in condition. A prime example was Italy this summer, when their 10y bond yields hit 6%. ECB came to the rescue, and the yields lowered to 5%. And suddenly Italy forgot all the promised measures they already had suggested to get their ecomony in shape. Politicians are not willing to make steep cuts and worsen the standards of living of their own citizens, unless they absolutely are forced to, because these measures are killing their public support and the support of their parties in the process, and lead to growing public anger and perhaps riots (Greece) and general strikes (Greece, Portugal).

If there was an easy solution to this crisis, it would have been made ages ago. But there is not.
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exactly. the problem countries are / will come to realize that they are holding the cards by holding rest of the world to ransom, see Greece coming back to renegotiate their agreed haircuts from 50% to higher, shortly to be followed by the others, Ireland wondering why they are suffering heavy austerity with no haircuts, etc etc..

there is only one credible way out, the only arguments are about who takes the inevitable losses, bondholders or taxpayers
 
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