Who's the new Kerviel?

UBS coming out with a potential shocker this morning  before European markets open. A rogue trader has entered into unauthorized trades leading to an estimated $2bn loss. While a similar story at SocGen lead to some serious panick in financial markets, the future happily continues it's rally. Obviously the newsflow might lead to a Q3 loss.

UBS opened down as much as 10%, but joins the recovery trading only 6% lower

Greece stays in.. for now

A Greek government spokesman has leaked out that Greece remains in the Euro. Apparently Merkel and Sarkozy in accordance with Papandreou have decided to not throw Greece out yet, most likely has bank recapitalization plans have not been completed yet in the Eurozone core.

The official statement:
"Greece is an integral part of the Euro area and recent decisions to meet budget targets will help shield the economy" It is getting pathetic

China to rule the world

After buying massive amounts of US treasury debt, buying Greece infrastructure and buing all availabe natural resources across Africa, China has decided to buy bonds of Eurozone-troubled nations, read Italy.
let the party continue! Any crisis or possible headwinds ahead in the global economy will just be solved by China providing unlimited support to the global ponzi scheme

3 Reasons to rally 3%

1. Moody's is downgrading Credit Agricole and Societe Generale this morning as French lenders have Eur 57bn exposure to Greece. Additionally the banks have also own subsidiaries in Greece which have been reporting losses
2. ECB lends about USD600mn to two unidentified European banks for a week at 1.1% as the banks couldn't access the USD market anymore
3. Depositors are massively withdrawing savings with European banks. It is not just Greece (19%) and Ireland (40%) which saw massive deposit outflows, France and Germany saw deposits shrinking rapidly as well.

RollerCoaster Continuous

French bans opened down sharply this morning again after renewed concerns about access to funding after Moody's threat to downgrade the French financial sector.
SocGen traded 14.5 euro this morning down 7% but completely reversed the losses to a 10% gain, trading around 17 euros in Paris after CEO Frederic Oudea told the exposure to periphery euro zone bonds is low and SocGen's liquidity situaiton is comfortable

Despite today's massive intra-day rally SocGen lost over 60% of its market cap as of the first of July when it closed around 42 euro.

Meanwhile in Europe

Italy somehow managed to sell EUR 4bn in 5-year bonds at a 5.6% yield amidst renewed concerns that Greece is boing bankrupt any time. Despite that Italy has already covered for about 70% of its 2011 financing needs it still needs to issue over 60bn in the remainder of 2011 to cover its budget deficit it meed bond redemptions.

In the meanwhile Italian officials are in talks with Chinese counterparts about potential investments in Italian bonds and strategic companies

The market is not happy. 10-year yields rising 17bps at the moment to 5.7%

Here we go again

SocGen and all other French banks falling again by some 10% today after losing more than halve of their value already during this calendar year.
The company's reaction? The usual program of job cuts and selling of non-core assets is being pulled out. Write-downs own questionable governemnt debt? Nah, lets trust the internal calculations over market prices

Read more on
http://www.bloomberg.com/news/2011-09-12/societe-generale-to-sell-eu4-billion-in-assets-by-2013.html

Bye Bye SocGen

The market has decided to hammer out SocGen for good reasons.
Europe's most exposed PIGS bank loses over 7% again today in Paris reaching new Lehman lows. Shares have been trading at Eur 140 only in 2007 before settling around 18 euros today on renewed concerns about Greece and the overall European debt crisis.

Supposably CG has about 50bn in capital on 1.1tn in assets giving a massive 22x leverage. Apparently the market doesn't buy it as it values the equity around 15bn.

While the banksters don't mark-to-market, the market will

Goodbye Trichet, welcome easening

After yesterday's rather amusing ECB press conference, which happned to be Trichet's last the market is looking forward to the actions of the new president, Italy's Marco Draghi.
Trichet laid the perfect groundwork for more easening by warning the lower growth is the threat, not higher inflation, implying that Draghi's first action could be lowering rates.

While praised for his hawkish attitude, has the core of Europe gotten its president its deserved, or will further austerity measures in Italy end the legacy of Trichet?

Read more on
http://www.bloomberg.com/news/2011-09-08/trichet-clears-the-decks-for-draghi-to-use-all-tools-in-ecb-box.html

Suggestions please!

This morning IMF managing director Christine Lagarde said governments and policy makers must take action to support the recovery, as growth risk are more of a concern compared to inflation. Policy makers should consider "unconventional" measures in making sure economic growth will not slow down.
HIghly indebted consumers and European governments have massively reduced the scope for any effective action to tackle a slowdown. So question to you Ms. Lagarde, what would be these measures?

Read more on
http://www.bloomberg.com/news/2011-09-09/lagarde-says-policy-makers-should-act-boldly-to-support-global-recovery.html

On what kind of drugs is Trichet?

How a boring Central Bank press conference can end hilarious!

http://insider.thomsonreuters.com/link.html?cn=share&cid=260559&shareToken=MzozNmI0MmFhZC1jYmU0LTRlYWQtYmI2Zi05Y2IxMDY3ZDFlMjI%3D

And here's the official next target miss

Greece's budget deficit for 2011 will be wider than agreed during the bailouts. Minister Chrysochoids said his country could fall behind the 7.6% target by a point or so.
Apparently the minister is not impressed with the threat of a 8 billion tranche being held back next month as the "Trojka" would like to see progress and reforms being done.
Earlier today it was announced that Greece's GDP fell 7.6% in the second quarter as austerity measures had a severe impact on the economy.

Read more on
http://www.reuters.com/article/2011/09/08/eurozone-greece-deficit-idUSL5E7K83FN20110908

Greece is falling of a cliff

The Greece economy continued to implode in the second quarter of 2011 as economic output fell a whopping 7.3% compared to last year. Combined with unemployment hitting new records of 16% this means that again fiscal targets are likely not to be met as the deficit will come in at 8-9%
After missing targets again, when will Europe finally get enough of lose promises and come up with the next "structural" solution??

Read more on
http://www.zerohedge.com/news/latest-greek-economic-collapse-means-country-will-soon-be-out-eurozone-or-bankrupt-or-both

Price stabeeletee

This afternoon we have witnessed the non-event called the ECB press conference. Price stabeleeletee is under cuntrol, but risks to growth are to the downside. Nothing new.
Still market is happy, why? "ECB stands ready to pump more cash into markets should that be required"

Trichets last trick

With the ECB's rate announcement due in 1 and a half hour what are we expecting?
The economists are going for an unch scenario while the most "optmisitic" economist already hope for a rate cut as early as today.
Lets forget about the interest rates for a sec, as the whole interbank liquidity has dried up. European banks stalling over 150bn in overnight cash witht the Central Bank as nobody is willing to lend to each other. Look for extra liquidity measures in Trichet's speech this afternoon as well as an approval over the latest Italian austerity measures.

In a widely anticipated move, the Italian Parlament yesterday night approved the new austerity package which is supposed to save E50bn in the coming 3 years. Still, the Chamber has to approve the measures.
Congrats Italy! The austerity measures are just about to make up the massive spike we have seen in the Italian 10-yr bonds over the last year, which means every Euro saved can be directly spend towards the increased cost of borrowing!

Read more on
http://news.yahoo.com/italy-austerity-plan-faces-senate-confidence-vote-115242686.html

A remarkable honest Ackermann

On of the most remarkable news facts this week must have been the comments by Deutsche Bank's CEO, Josef Ackermann. In a very contradictory statement, Ackermann said that he disagrees with IMF's Christine Lagarde who urged for a massive forced recapitalization of European Banks. On the other hand, if European banks were to mark-to-market their losses on sovereign debt a lot of banks would not survive.
Did this guy completely lose his mind, or is their some dangerous French-German political game going on?

Read more on
http://www.businessspectator.com.au/bs.nsf/Article/banks-banking-GFC-eurozone-Europe-IMF-Lagarde-Jose-pd20110906-LFB8B?OpenDocument&src=sph

Things are heating up in Italy

The Italian senate will vote in approximately half an hour from now on a widely criticised austertiy package. The package, aimed at calming down nervous financial markets include a higher VAT, an extension of the retirement age for women and a tax on high earnings.
Despite urgent calls from European leaders and comments made by the president of the ECB, Jean-Claude Trichet, the right-centered government also faces stiff opposition from home as union leaders have called for massive strikes and ten thousands of workers already hit the streets on recent days.

Read more on
http://uk.reuters.com/article/2011/09/07/uk-italy-austerity-idUKTRE7861X120110907

German Court fuels European equities rally

The German Constitutional Court in Karlsruhe decided this morning that Berlin's European rescue packages are deemed legal. Any future bailouts however require approval by a parliamentary panel. The decision is a rare victory for Chancellor Angela Merkel which came under signficant pressure over the last weeks as the European debt crisis intensified and even own party members openly criticized the pro-European attitude of the Chancellor.

Read more on
http://www.nytimes.com/2011/09/08/world/europe/08germany.html