Europe Brings Out The "Capital Controls" Bazooka

Here we go:

• EU SOURCES HAVE DISCUSSED IMPOSING CAPITAL CONTROLS AS WORST CASE SCENARIO IF GREECE LEAVES EUROZONE - RTRS
• IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING - EU SOURCES - RTRS

In other words, that money you thought you had... You don't really have it. We can only hope this message was not meant to restore confidence and prevent future bank runs. Because if Europe wanted a continental bank run, it may have just gotten one.

This is getting scary very fast.

 

Cue Hyperinflation In 5... 4... 3...

This pretty much says it all:

• BOE'S POSEN SAYS TIME FOR CENTRAL BANKS, INCLUDING BOE, TO BUY PRIVATE ASSETS
• POSEN SAYS BUYING PRIVATE-SECTOR ASSETS WOULD HELP ECONOMY

Buy... Real... Assets... Now...

 

 

So Much For The "Bailout"

Spain's bank bailout bought a few months of liquidity, but at what cost? Well, the cost can be seen perfectly on the chart below, which shows Spanish and Italian sovereign bond spreads literally exploding.

Schauble Wants ESM To Be Used Over EFSF For Spanish Bailout

... And what Germany wants, Germany gets. Sorry Spanish bondholders.

Spanish CDS Storms Above 600bps

Spanish 5Y CDS broke back above 600bps (just shy of their record 603bps level) and 35bps wider of their intrday low spread from 5 hours ago. Spanish 10Y yields are over 50bps wider/higher than their intraday lows just after the open in Europe. Italy also just broke 550bps. EURUSD is almost unch now.

Europe Scrambling To Avoid Subordination Threat

It just gets more and more mind-numbing by the moment.The latest from Europe, which earlier confirmed that ESM loans would get preferred creditor status:

• SPANISH BANK RECAPITALIZATION LIKELY TO BE IN EFSF BONDS, SIMILAR TO GREEK RECAPITALIZATION - EU OFFICIAL
• EUROZONE MONEY FOR SPANISH BANK RECAP COULD COME FROM EFSF TO AVOID THE ESM'S PREFERRED CREDITOR PROBLEM - EU OFFICIAL
• SPANISH BAILOUT COULD LATER BE TAKEN OVER BY THE ESM, BUT EXTENDED LOANS WOULD NOT BECOME SENIOR TO OTHER DEBT

Nothing like figuring out your hare-brained bailout attempt was a failure from the beginning. Ok: Here are the problems with this band aid:

1. Unfunded
2. Temporary, and eventually will be replaced by the ESM. Markets can, luckily, still discount.
3. Negative pledge issue still exists as Finland made all too clear. Countries will demand extra security interest while under EFSF regime and until ESM priming comes in play.

Ball is in your court Europe.

Futures Red As Reality Returns: Bailout Half-Life Now Laughable

After opening and surging to up 18 pts last night (to within a tick of its 200DMA), S&P 500 e-mini futures (ES) have faded the entire gain (just as we said last night) with ES now red. European financial credit is wider on the day. EURUSD has given most of its gains back and Italian and Spanish sovereign bond yields/spreads are considerably wider on the day. US major financials have turned red after opening significantly higher. Swiss 2Y rates are at new record lows at -34bps as the USD has strengthened from 0.8% lower to only 0.15% lower now - which is having an incremental impact on Gold, Silver, and Oil - all plunging at the US day session open. So apart from all that, what did the EUR100bn of #Spailout do for all of us?




BTFD... (buy the F---ing dips)...Keep Stacking...

Visualizing China's Voracious Appetite For Gold

 

 

 

And Another Spanish Bond Long

 

 

Is Cyprus Next On The Bailout Train?

Greece gets it. Now Ireland gets it. Spain just got it. And now Cyprus is getting it. The 'it' being the desperate need by the core to hold the 'status quo' together implies much more strategic negotiating power for the periphery than anyone would want investors to know. As Greece's Syriza leader Alexis Tsipras has been saying from before the Greek election, this is a pan-European problem and renegotiating part or all of the bailout terms is far more open. As Bloomberg reports this morning, Cyprus' FinMin Vassis Chiarly said the nation should not be 'demonized' if it takes the choice of a bailout:

*SHIARLY: CYPRUS HASN'T RULED OUT EU BAILOUT OR THIRD PARTY LOAN

Confirming the constant ability of Europe's nation to state the obvious and understate the reality, Shiearly added, "the situation isn't as bas as presented by some" and do not wory Cypriots as 'it would be able to secure positive terms if it resorted to a bailout'.

Syriza Takes Advantage Of Spanish Bailout To Boost Its Winning Odds

On Saturday, when we discussed the impact of the Spanish bailout for other European countries, focusing on Ireland which had promptly requested a renegotiation of its own terms to match those of Spain, we noted that "Syriza's Tsipras should send a bottle of the finest champagne to de Guindos - he just won him the election." It appears that the leader of the Greek anti-bailout party wasted no time to capitalize precisely on just this.

EU Commission Confirms ESM Loan Will Have Senior Preferred Creditor Status

"Any aid that might come from the European Stability Mechanism, which is expected to start work next month, would enjoy a preferred creditor status second-only to the IMF, the spokesman confirmed."

"English Law; Negative Pledge" - How To Hedge A Spanish Bond Short

Now that the Spanish bond market has realized it has just been primed by senrio debt, the next steps are straight from our Subordination 101 walkthru. Which means sell Spanish local low bonds, go long English-law, preferably, those with a negative pledge. Of course, the presence of a negative pledge is precisely the loophole that will allow Finland, and soon others, to demand a security interest in the event of priming (such as an ESM-sourced loan) which at last check, is precisely what they are doing assuming the EFSF is used to temporarily source the loan until the ESM takes over. So here is a good example of a bond, courtesy of the Generalitat de Catalunya Euro Medium Term Note Programme, that one should hedge a general basket of local-law Spanish bond shorts.
 

 

Nobody Wants To Accept Austerity

Admin at Marc Faber Blog - 46 minutes ago

There is no resolution to the problem in Europe because no one wants to accept austerity. - *in Barron`s* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

 

In The News

Eric De Groot at Eric De Groot - 3 hours ago

The sovereign debt crisis is spreading across the periphery. It will turn inward soon. Headline: Italy stuck in deep economic recession MILAN (AP) -- Official statistics confirm that Italy's economy contracted by a quarterly rate of 0.8 percent in the first three months of the year, the worst contraction in three years. The painful recession keeps pressure on Premier Mario Monti's... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

Japan hails Spain lifeline as 'major first step'

Eric De Groot at Eric De Groot - 3 hours ago

More assurances of future stability through the mechanism of infinite liquidity (bailouts and debt). The 2007 up trend in the Japanese Yen failed in March 2012. The invisible hand which had accumulated the decline is beginning to distribute as past support is challenged as resistance. A major top in the Japanese Yen would mark continued progression of the sovereign debt crisis from the... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

Argentina loses a third of its dollar deposits

Eric De Groot at Eric De Groot - 3 hours ago

Very whacked out story...Bob.C Indeed, Bob The cleanest shirt in the laundry hamper have Argentinians rushing to withdrawal $100 million every day despite tightening currency controls that includes dollar sniffing dogs. Eric Headline: Argentina loses a third of its dollar deposits * Argentines reacting to foreign exchange restrictions * About $100 mln in dollars withdrawn... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

Gold Is Relatively Effective As A Currency

Admin at Marc Faber Blog - 3 hours ago

I am also warming to gold shares. Gold corrected to $1,522 last December from $1,921 in September. It rebounded to $1,795 in February and is back down around $1,600. The correction could last longer, but given that governments will print more money, gold is relatively effective as a currency. My preference is physical gold, but I would also own some gold shares, which have been decimated. - *in Business Insider* Related stocks and ETFs: SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Goldcorp (GG), Barrick Gold (ABX) *Marc Faber is an international investor known for his uncanny p... more » 

 

Politicians Buy Votes Debasing The Currency

Admin at Jim Rogers Blog - 4 hours ago

Excerpt from BBC Hard Talk. *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 Bloomberg and CNBC.*




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