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Thursday, May 06, 2010

Italian Bonds And The Dow

Lalalala. That was quite some ride. Pretty much most financial services hung up there. Bloomberg now has a statement up:
The Dow Jones Industrial Average posted its biggest intraday loss since the market crash of 1987, the euro slid to a 14-month low and yields on Greek, Spanish and Italian bonds surged on concern European leaders aren’t doing enough to stem the region’s debt crisis.
When I say "financial shock" I MEAN financial shock.

As predicted, Trichet's performance is not inspiring confidence. Article on US corporate bonds and the whole shebang:
The ECB seems more concerned about cracks to its credibility than cracks to monetary union,” said Christoph Rieger, co-head of fixed-income strategy at Commerzbank AG in Frankfurt. “This approach can be considered consistent with the ECB’s principles. But it risks that the market will still force the ECB’s hand before long.”
Possibly the ECB should not have said that it hadn't even discussed buying government bonds. That's just a thought, because who believes those Greek bonds the ECB is taking as collateral will return the full value? I can just imagine what interbank lending's going to look like in a bit.

Sooner or later, someone's got to ante up, and pretty obviously the Greeks won't be. I'm figuring -35~40% on those bonds. -10% on Italian bonds? As for Portugal, who cares? I'm going to be 49 this summer, and when I was in high Portugal was a financial basket case. Some things never change.

Anyone got info on what Italian bonds are doing? That's the one to watch. We'll leave the UK out of it for now because they are voting, and they aren't Euro anyway. Oil wasn't doing so hot this morning either; everyone's running for the door. Any door!

Because this represents a huge money loss, we can kind of bet that oil will correct downward further.

"Oil wasn't doing so hot this morning either; everyone's running for the door. Any door!"

Hot? Doors? D'oh!

At this rate it's going to take a couple of hours to get everyone down. So, I would suggest that those of us with stout hearts and trim waistlines start using the stairs. - Senator Parker, The Towering Inferno, 1974

Ladies & Gentlemen, I'm sorry. You'll have to move back into the promenade room, and we'll be taking you down by the scenic elevator. Now these express elevators can be activated by fire, and with the probability of short circuits, the cars might stop on the floor where the fire is. So please, we'll use the scenic elevator. It's over here. - James Duncan, The Towering Inferno, 1974
the great unwind continues with the FX and credit markets showing the power of international money flows.
What a day - complete with competing rumors, a nasty Friday of trading to come, no answers and one huge Treasury leap.
One small step for Greece, one giant leap for US Treasuries!
Who Struck John,

92% of the astronauts we put on the moon were born during The Great Depression, so at least we've got that going for us. ;)
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