As Final EFSF Details Emerge, German FinMin Says Bail Out Fund Won't Halt Crisis

Some final details are coming out from Europe this evening on the EFSF structure, size, and funding. We provided a framework for understanding the entity this morning, along with some views on just how successful it would (or would not) be. EFSF CEO Regling stated that various approaches will be used simultaneously, providing the entity with more funding flexibility, which is odd since in the next breath he notes the decision to tap the short-dated debt markets in December (seems with all that flexibility you might want to go a little further out). The current lending capacity is EUR 440bn, and they expect a 20-30% partial protection approach meaning they could theoretically leverage around EUR 250bn by around 3-4x. What is most ironic is German FinMin Schaeuble's comments, via The Telegraph, that "although Europe desperately needed a fund "capable of action", plans for the EFSF were too "intricate and complex" for investors to understand", further noting that the fund won't stem the debt crisis.

 

 

Standard And Poors Reviews 37 Global Banks, Downgrades Bulk - Full List Attached

Bank of America now precisely at $5.00 following an after hours downgrade from A to A-. We note that BofA's CDS widened 10bps today while MER CDS widened 18bps and notably wider (we haven't seen runs post downgrade) and we wonder how this will impact the firm's huge derivative book which was recently moved to the Bank's higher rated, and deposit backed unit for its better rating support. In fact, following such a drastic action, it is quite likely that derivatives units across the board will see counterparties scrambling to demand a far greater cash cushion for fears of the same downgrade waterfalls that took down AIG and MF Global.

Financials Stumble Amid Average Volume Range Day

UPDATE: The S&P downgrade after-hours of the major financials is dragging ES lower and more in line with medium-term CONTEXT. BAC lost $5 momentarily.
Bank Of America and Morgan Stanley closed today down around 7% from the 0931ET tick yesterday with BofA managing to defend the $5 Maginot Line once again - though closing almost at their lows. Tech and Financials were the worst sectors of the day (and the only sectors with negative performance) as Energy outperformed dragged by a war-premium-driven Oil price that crossed $100 intraday but ended just shy of it (up 2.5% from its intraday lows). After some early vol, FX markets trod water post the European close, practically unchanged on the day (and DXY -0.7% on the week) as equity markets once again outperformed credit in their illusory manner (though IG and HY did rally some on the day). Correlations continue to deteriorate across a broad basket of risk assets as TSY yields oscillated up and then down and then up into the close but it was Oil and AUDJPY's trend up that supported ES more than anything today.

S&P Cuts Credit Ratings On 37 Global Banks

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Gold Daily and Silver Weekly Charts - S&P Downgrades the Credit of Most Big US Banks After the Bell

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SP 500 and NDX Futures Daily Charts - Bank of America And Citi Credit Ratings Cut After the Bell

Guest Post: Banks Must Change - But Not Like You Think

Why do Banks remain such lousy investments?

1. Is the revenue model fundamentally broken? 
2. Is the capital model fundamentally broken? 
3. Is the risk model fundamentally broken?
4. Is the compensation model fundamentally broken?
5. None of the above?
6. All of the above?

Do I REALLY have to give you the answers to these questions?

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 29/11/11

Submitted by RANSquawk Video on 11/29/2011 - 16:17 ETC RANSquawk

Interactive Timeline Of The 2011 Eurozone Crisis

Looking back at the year it is amazing to think that just how much has already happened in the year that was, and still has at least one month left, unless of course the accountants have something to say about it and the calendar is cut short by a month or so to allign with Jefferies Fiscal Year End. Hopefully without jinxing any fireworks, we present one of the best lookbacks at what has transpired in Europe, courtesy of this interactive timeline from Reuters. Also hopefully without spoiling too much, here is the not so surprising ending - the Titanic sinks in the end.

Hackers Take Down Portuguese Parliament Website

Update: It appears that Portugal is fighting a valiant battle, with the site back on and off intermitently.
LulzSec, which had been missing lately from the mainstream news, has struck again, this time with the site of the Portuguese Parliament. It is unclear just how the Portuguese pissed off the hacker collective, but as they say in trading floors when they want to get that pesky salesman off the line pronto "it is what it is." Link to a DDOSed Parliamento.pt here.

RBS Pays $1.9 Million To Learn The Difference Between "Discount" And "Price"

Today's ISDA settlement auction process for the Dynegy CDS credit event offers some perspective on the smartest of the smart of our dealer community. Bloomberg notes that RBS was forced to pay a $1.9mm penalty for massively missing the inside bid-offer at the initial auction. In our humble opinion, it would appear that the CDS trading desk got their math wrong and posted a discount (1-R) instead of the Price they were willing to trade the deliverable bonds at. Their 29.5/31.5 bid/offer would invert to a much more reasonable 68.5/70.5 perfectly straddling the $69.5 initial midpoint of the auction. We suspect the RBS pink slips were flying rather fast on this mathematical error... Although since the BLS also works on a 1-R basis, this means that initial jobless claims will be one less for the week.

It's Official: Obama Is Now The Worst American President As His Approval Rating Plunges Far Below Carter's

We doubt many will be surprised by the latest presidential polling update from Gallup, and certainly not the record nearly 50 million Americans on foodstamps, but here it is nonetheless, from US News: "President Obama's slow ride down Gallup's daily presidential job approval index has finally passed below Jimmy Carter, earning Obama the worst job approval rating of any president at this stage of his term in modern political history. Since March, Obama's job approval rating has hovered above Carter's, considered among the 20th century's worst presidents, but today Obama's punctured Carter's dismal job approval line. On their comparison chart, Gallup put Obama's job approval rating at 43 percent compared to Carter's 51 percent." One can only imagine what would happen to Obama's ratings if indeed the Iranian hostage situation escalated and the president was forced to get involved, in addition to oil spiking to "doomsday" levels of course as Pimco's worst case predicts: "Back in 1979, Carter was far below Obama until the Iran hostage crisis, eerily being duplicated in Tehran today with Iranian protesters storming the British embassy. The early days of the crisis helped Carter's ratings, though his failure to win the release of captured Americans, coupled with a bad economy, led to his defeat by Ronald Reagan in 1980." And while some may say this is merely a one time blip, a longer-term average shows otherwise: "Gallup finds that Obama's overall job approval rating so far has averaged 49 percent. Only three former presidents have had a worse average rating at this stage: Carter, Ford, and Harry S. Truman. Only Truman won re-election in an anti-Congress campaign that Obama's team is using as a model." On the other hand, neither Ford nor Carter has such erudite opponents as Herman "I did not sleep with those 999 women" Cain.

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