Belgium, France, Italy, Spain Overrule European Regulator, To Impose Standalone Short-Selling Bans

Stop the presses. Barely did we have time to report that European regulators failed to impose a coordinated short selling ban, that Bloomberg reports that the countries most impact by the market plunge are about to impose standalone short-selling bans. These are Belgium, Italy, Spain and France. In other words, it really is on and the 2008 Lehman PTSD flashbacks may now resume. Until we get a headline that says it isn't. The rescue of the Borsa Italian is now more schizophrenic than that of Greece. As a reminder, in the previous post the FT quoted Abraham Lioui, a professor at the Edhec business school in France, who said “It is the worst thing to do right now. This would signal to the market there may be something fundamentally bad that is happening."  He is correct. Something is fundamentally very wrong and about to break.

Official Statement From Spanish Regulator On 15 Day Financial Short Selling Ban, Which Also Includes OTC Derivatives

Just as in the case of France, here is the official statement from the Comision Nactional de Marcado de Valores, disclosing the Spanish 15 day prohibition on shorting stock. The banks impacted are Banca Cívica, S.A., Banco Bilbao Vizcaya Argentaria, S.A., Banco de Sabadell, S.A., Banco de Valencia, S.A., Banco Español de Crédito, S.A., Banco Pastor, S.A. Banco Popular Español, S.A., Banco Santander, S.A., Bankia, S.A., Bankinter, S.A., Caixabank, S.A., Caja de Ahorros del Mediterráneo, Grupo Catalana de Occidente S.A., Mapfre, S.A., Bolsas y Mercados Españoles, S.A., Renta 4 Servicios de Inversion, S.A. Unlike Frace, Spain has also explicitly banned not only short cash transactions, but also any position in OTC derivatives "which involves creating a net short position, or increasing an existing one." Next and last: the Italian statement, as frankly nobody cares about Waffles.

Official Statement From French Regulator On 15 Day Financial Short Selling Ban

The 15 day short selling ban (which appears to include all shorts, not just naked ones), includes the following names: April Group, Axa, BNP Paribas, CIC, CNP Assurances, Crédit Agricole, Euler Hermès, Natixis, Paris Ré, Scor, Société Générale. Now we wonder if the French AMF is also aware that one can just as easily create identical synthetic shorts by buying puts and selling calls or maybe nobody in the French regulatory body has graduated beyond cash products and into derivatives.

 

Back To Square Minus 1: Regulators Fail To Agree On Short-Selling Ban

The latest iteration of the "rip your face off rally" was fun while it lasted. And now, it is, once again, about to be replaced with the "face your rip off" version, after the FT reported that European regulators have failed to agree on a coordinated short-selling ban, "leaving France and other advocates of the curbs considering unilateral action to stem the recent sharp falls in share prices." This means that the last ditch effort to prevent the daily wipeout in the FTSE MIB has now been pulled off the table, and all those who otherwise would have been forced to cover their halted futures positions as cash soared, will now sit pretty and wait for the market to come to them. It also means that while Europe could have potentially stood united, if even for a few more days, divided it will fall. But not all is lost: there is a potential loophole, and if the Borsa opens limit down, it may well be the final recourse: "The new European Union market regulator, Esma, is trying to co-ordinate action by national regulators and more conversations could take place today. A Thursday evening conference call was unable to reach unanimity." That, however, now appears like a long shot.

 

 

-635; +430; -520 ; +423

When one sees a chart such as the one below, what can one say but... Bull Market! And "Fed-generated Price Stability" of course. For the first time in history, the Dow has moved up and down by over 400 points. And in the last 5 minutes we see a 20 point drop in ES. All in a day's work for schizophrenics. And now, we are all reminded yet again that Europe still exists, as do its markets, and tomorrow should be a truly fantastic day for "The Price Stability."

 

 

I Don’t Think, The European Countries Deserve Their Ratings

Jim Rogers Blog - 4 hours ago

The U.S. has been downgraded and countries like the UK have very high debt will have to be downgraded too. You can’t have the UK as triple ‘A’ and the US as not a triple ‘A’. You need to be asking S&P or Moody’s why they haven’t got around doing that. I don’t think, the European countries deserve their ratings. - *in Economic Times* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomber... more » 

Jefferson County Commissioner Says Chapter 9 Vote Chances 50-50 Ahead Of Vote Tomorrow

Some headlines to ponder as Jefferson Country's standstill expires tomorrow and the vote on whether to file Chapter 9 finally arrives:

• JEFFERSON COUNTY CH. 9 VOTE CHANCES `50-50,' COMMISSIONER SAYS
• ALABAMA COUNTY CONSIDERING BANKRUPTCY VOTE IN MEETING TOMORROW

A bankruptcy filing will certainly be spun as bullish to quite bullish.

With Bank Of America Stock Up 9%, Its CDS Is...

...35 points wider: the highest since April 6, 2009. But fear not - credit has a reputation of being always wrong, while equities (especially short covering squeezes) are always right.

Intraday Volume Observations

When it comes to market internals, one can listen to Bob Pisani telling us that today's upside market move is on heavy volume or one can literally look at the facts.

Guest Post: The New Market Leverage

Mark to market and monthly hedge fund returns are the new leverage.  So many of the old measures or guides to "leverage" in the system are just outdated.  You can get some stock exchange data on net margin, but how useful is that when so many ETF's exist.  If people are margining SH (inverse SPY), what does being margined mean?  Similarly, there is always talk about "cash on hand".  Don't worry about the markets are sitting on so much cash.  People still want to look at the VIX and say it has predictive value.  It is a co-incident indicator.  No one puts on hedges when the market is moving direction.  The single most important driver is monthly return.

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