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Frequent Contributor

EU Stress Tests

Only 7 of 91 EU banks tested failed the stress tests.  1 German, 1 Greek, and 5 Spanish.  Based on the criteria I'm surprised that any failed at all.  They only stress tested the trading book of the banks and not their sovereign debt holdings, which the banks claim they will hold to maturity (good luck on a defaulted bond).  Some of the stress tests were even conducted by the banks themselves.  An Irish bank said it needed over 2 billion but still passed the test, which makes little sense.  Euro very very choppy but as of this second still lower on the day and for the week.  It will be interesting to see an actual report and see if sovereign debt holdings are disclosed for each of the banks for the rest of the world to do its own more credible stress test.

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Re: EU Stress Tests

All of the women are good looking (at least plenty of them) and all of the banks are above average.

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Re: EU Stress Tests

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Re: EU Stress Tests

Hey, no problemo. We all know that centrally planned economies are the wave of the future.

 

I don't think  hard landing in China necessarily impacts grains directly- if they have a program to maintain stocks at a certain level they certainly have the money to do that for quite some time- although we never know exactly what they're doing (remember '94-'96).

 

I do think that it can really hit all the comms indirectly. Seems likely that at some point they quit building things until demand catches up and that should hit a lot of the other commodity complex hard. General flows away from commodities could weigh on grains more than many think, imho. But no way to know when or even if, although I can't see how it is avoided forever.

 

I can make an lesser degree wave count on the SP that would complete a double zig zag correction although another brief shot to new highs would make it look better (2 PM ET).

 

Another retest of the 200 MA in the NAZ.

 

best, h

 

 

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Re: EU Stress Tests

ECRI growth rate fell to -10.5 this week.  Which since it was started 50 years ago, a growth rate at or below -10 has accurately predicted a recession 100% of the time.  But even the creators of the index are downplaying its implication, even though they were touting it before when it predicted the Great Recession and the "recovery".  But now it's worthless.  Lots of data out the next two weeks that could make or break the market.

 

As far as the stress tests go, I'm sure with all sovereign debt disclosures (most of which are in the bank book and not the trading) that many will run their own stress tests and publish the real results.

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Re: EU Stress Tests

the sovereign debt problem is a nest of snakes in that it was, if you buy mine i will buy yours. the music is slowing. who knows how many chairs are left? somebody (or country) will be left holding the bag. and it doesnt contain cookies unless you introduce a mule into the equation. chinese proverb, may you live in interesting times! that about sums it up, as we are in uncharted waters on many frontsd7

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Re: EU Stress Tests

Kinda scary basically we're saying that if we pretend all sorts of things are, or aren't true, and then the stock market goes up, then the consumers gets confident and starts buying and borrowong then tax revenues pick ep etc. etc. and it's just that easy.

 

We can pretend that commercial RE loans aren't going bad on our banks' books (extend and pretend), or that state and municipal budgets aren't going to be a huge drag on the economy or, in the case of Europe that the populations of Club Med will put up with a decade or more of austerity without political fallout (so there's no sovereign risk).

 

We can do all those tihngs but I'm well nigh certain that most of those things that I list and others that I didn't become big problems.

 

Meanwhile, governments are doing all they can to promote these illusions, for obvious reasons, and you really can't blame because the only way out is to bouy financial markets and thus consumer sentiment and thus buying, borrowing and employment kick in.

 

Corps are cutting the fat one- some meth in the economy, almost no interest expense, employment costs cut to the bone. Earnings are good but how much better can they get without employment, housing etc. kicking in further? Ernings are by definition backward looking, most of the forward or present looking indicators aren't hopeful- ECRI lei, baltic dry, rail freight loadings, housing, employment.

 

I find these to be dmanabley difficult markets to trade. Like this spring, the tendency of markets is to slowly melt up behind all the happy talk. Then one day there is a story- Greece, Dubai, whatever and all the gain, and more, evaporates.

 

Think the same thing happens here (and financials are more than ever pertinent to commodities in the "all one market" world).

What's the story, and when? 

 

 Europe was well known but suddenly somehow it was a story. It may have been a bit like the subprime game in the US where the authorities began to realize they had a problem long before the blowup but chose to manage it into a particular timeframe.

 

Dubai caught almost everyone unaware and it was the beginning of the end of the dollar carry trade.

 

Anybody's guess, what and when. But it'll happen. In my view a reason to maintain a defensive posture on production.

 

Best, h

 

 

 

 

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Re: EU Stress Tests

And ? Things can appear bad and time goes by. People endlessly negativee have been for 40 yrs. Are we headed for a world class and wide depression ? Its possible or maybe not.

 

I don’t think euro bank stress tests affect corn or bean prices.

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Re: EU Stress Tests

 

Hardknox - w why does Greece matter? Its economy is tiny equal to 8 days of US economy. It matters because people who worry are people you want to buy from.

 

 

 

Other ideas?

 

 

 

Artifice

 

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Senior Contributor

Re: EU Stress Tests

so, are you buying art? greece is on sale!

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