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’Edwards: Going bust and ECB QE
What’s come over über bear Albert Edwards? The day after Europe’s leaders reached a deal (of sorts) to tackle the region’s sovereign debt crisis the SG strategist is relatively chipper:
I have minimal confidence that governments can turn this around within the confines of the eurozone project.
(Mis)pricing the UK
Has the bond market got it right when it comes to the UK?
On Tuesday, Lex investigated why the UK can raise debt at substantially cheaper levels than its eurozone counterparts, in particular France.
The continuing mystery of US banks’ European exposure
Europe may or may not be saved but Q3 earnings releases by US banks suggest they’re content with their exposure to the continent.
We looked at the methodology behind exposure disclosure in this post.
Breaking: Europe is saved! Actually, wait…
Well, you’ve heard of the FT effect, what about the Guardian effect?
“Breaking” on Tuesday afternoon New York time, reports of a €2,000bn deal between Germany and France to augment the EFSF, save the euro,
French bond blow-out, chart du jour [updated]
Things that happened in 1992:
Bill Clinton was elected US President
Queen Elizabeth II had an annus horribilis
The Maastricht Treaty creating the modern EU was signed
Britain and Italy crashed out of ERM (the former forever)
And it is fair to say that in those troubled ERM days,
Eventually, French Spreads Fail (E.F.S.F.) — redux
Some nasty bond moves in the eurozone sovereign debt “senior tranche” at pixel time (also in CDS — chart via Markit)…
(DBR – Germany, FRTR – France, BELG – Belgium, UKIN – United Kingdom, included for solidarité)
Ten-year French government bonds have finally gone and done it – trading more than 100bps wider than German debt.
Undexia
DJ: DEXIA CEO: BANK TO REMAIN PUBLICLY TRADED
Update — speaking of zombies… Interesting to note that the €90bn 2011 edition of Dexia’s state guarantee bears a term of 10 years. The €150bn 2008 version guaranteed debt with a maximum maturity of three years.
Dexia garantie (encore) [updated]
RTRS-FRENCH, BELGIAN GOVTS, WITH CEN BANKS WILL TAKE ALL NECESSARY MEASURES TO SAFEGUARD DEXIA SA ACCOUNT HOLDERS, CREDITORS -FRENCH MIN
RTRS-BELGIUM AND FRANCE WILL GUARANTEE DEXIA’S FINANCING -FINMIN STATEMENT
(Chart via Scott Barber of Reuters)
There is already a patchwork of state guarantees within Dexia’s capital structure but this new statement is an important move.
Dexia en chute encore, encore
What’s French for penny dreadful?
(Centime horrifique? — Ed.)
Related links:
Crisis-hit Dexia running out of time – FT
Dexia en chute encore – FT Alphaville
Dexia en chute encore
Sauver le financement des collectivités, oui, sauver le soldat Dexia, non!
…Or Dexia, getting in trouble, again.
There’s a meeting between the French and Belgian finance ministers on Monday about its future,
Siemens in knots
Oh no no, of course we didn’t take cash out of a French bank!
RTRS-SIEMENS BANK SAYS FT REPORT THAT IT TOOK MONEY OUT OF FRENCH BANK AND DEPOSITED IT WITH ECB IS FACTUALLY NOT CORRECT
Oh, er, maybe we did or maybe we didn’t!
RTRS-SIEMENS GROUP SPOKESMAN DECLINES TO COMMENT ON FT REPORT THAT COMPANY SHIFTED FUNDS FROM FRENCH BANK TO ECB
Oh,
Merkozy on, Merkozy off (updated ad nauseam)
Markets are/were rallying!
EURO EXTENDS GAINS, HITS SESSION VERSUS DOLLAR OF $1.3710
RTRS-EURO HITS SESSION HIGH VS STERLING OF 86.58 PENCE
On news that Germany and France are/were riding to the rescue:
BNP Paribas on BNP Paribas
We’re not sure if we’ve ever heard of a bank doing anything like this before. Ever. But here it is. Presenting BNP Paribas on BNP Paribas:
(Click image above for full FAQ or see here)
Includes details on funding,
E-bonds can work
Eurobonds, e-bonds, common sovereign debt issuance or whatever you want to call them are widely regarded as the solution to the Eurozone crisis. No less an authority that George Soros told us so this week.
Le poison de la rumeur
Predictable really.
The investigation into the Societe Generale sell-off looks like it could quickly descend into farce.
Over the weekend Le Monde was forced to defend itself — in a front page comment no less — against accusations that a 12-part fictional series titled,
Short-selling fairies
Charts via short-selling information specialists Data Explorers, incorporating a gauge of securities lending in both the financials currently subject to the short-selling bans, and in their markets.
Compare and contrast:
Will the short-selling ban come up short?
After a day of speculation and disagreement ESMA on Thursday evening announced “harmonised regulatory action” to ban short-selling of financials in Spain, France, Belgium and Italy. As signs of weakness go,
A CDS basis “pain trade”
There is much speculation of short-selling bans in one or more European equity markets at pixel time. An old fear in the credit and fixed income markets trading the sovereigns, of course. An old fear with a deeply ironic effect on sovereign CDS at the moment…
Funding stress in Euroland, continued
SocGen CDS is still sticking out like a sore thumb even if the equity panic is over for now. Up 37bps to 371bps on Thursday — whereas Credit Agricole swaps have fallen according to Markit.
So, Nomura’s European banks equity analyst Jon Peace,
Farewell G7 AAA’s
As rumours (scurrilous, nonsense – Ed.) swirl in the market of a French rating downgrade, Citigroup’s chief economist Willem Buiter is considering a much bigger issue – a world without any AAA G7 sovereigns.
Mon dieu – Emergency Markets Live
Join us a couple of minutes for another emergency session on the latest market convulsions — with particular emphasis on La République.
The distressed euro, via French (and German) CDS
The ECB managed to reduce Spanish and Italian borrowing costs on Monday. But both French and German yields rose, and CDS widened. France was apparently one of the most heavily traded sovereign CDS on Monday.
ECB promises decisive action [updated]
Standby. It’s another Sunday night eurozone special.
This time the ECB is preparing to use its big bazooka.
Via Reuters:
ECB CONFERENCE CALL FINISHED, STATEMENT TO BE ISSUED SHORTLY – EURO ZONE MONETARY SOURCE
EURO SYSTEM HAS DECIDED TO RESPOND DECISIVELY ON MARKETS TO CRISIS – EURO ZONE MONETARY SOURCE
ECB CONFERENCE CALL CAREFULLY CONSIDERED SITUATION IN ITALY,
Eventually, French Spreads Fail (E.F.S.F.)
Or — when markets really do go straight to the senior tranche.
Everyone seems to be waking up to the record spread between French bonds and Bunds at the moment. Having risen in July, it’s reached another record eurozone high on Wednesday of 81bps.
How to value a Greek bond like a CDO
There are two fun things about BNP Paribas’ €534m Greek bond impairment (sat right at the top of its second-quarter results press release…)
First, less than half of the bank’s total gross Greek bond exposure is subject to the impairment provision because of the debt not being eligible for the IIF bond offer,