1. As expected a short term bottom around TG as astro patterns suggest a very short term benign phase of 2-3 days. Right after that the climax is even closing in towards early DEC , hence more selling pressure and new lows.
SPXis heading towards the 1100 and DAX 5000, interesting is that all asset classes are selling off now as margin calls keep flowing in with sovereign bonds rising in interest rates even Bunds have joined as non EU entities are dropping BUNDs and Euros alltogether.
A huge climax sell of into DEC in stocks is due and the torch will be passed to America soon by mid DEC as geopolitical risk are sk- rocketing with Russians on DEFCON level now and Syria extremely hot trigger point for a second Cuba Pigbay event . Israel is making a lot of noise about Iran and todays New Moon will even raise the tension as it is in a T-square to Mars and Neptun/Chiron. which implies military aggression but no real action but enough to feed Angst within already scared investors.
Hungary,Portugal are officially Junk now and the banks are losing big time money on a daily basis – that is extremely crucial as by all means they are bankrupt and need a capital infusion 0f a few hundred billions right away just to cover the losses and the ECB has in actual market prices lost about one hundred billion but they can pretend they hold it til the end of the days and not mark anything down.
If only we had known that the EFSF was nothing but the latest Chinese reverse merger IPO gimmick, dependent entirely on market conditions for its success, we probably would have sold even more euros to Thomas Stolper. Alas, despite all the pomp and circumstance of last month’s European summit announcementwhen the 50% Greek debt haircut (which has a snowball’s chance in hell of passing) was accompanied by vague promises of a 4-5x leveraging of the EFSF’s €440 billion, it now appears that our original skepticism was well-founded. Because according to the latest news out of the FT, the EFSF won’t get 4-5x leverage. Nope. It will, in fact be lucky if it can be doubled, which however kills the whole point as it needs to be well over €1 trillion to even exist. From the FT: “A plan to boost the firepower of the eurozone’s €440bn rescue fund could deliver as little as half what the bloc’s leaders had hoped for because of a sharp deterioration in market conditions over the past month,according to several senior eurozone government officials.” Well what do you know. Next we will learn that when the EFSF denied it was an outright pyramid scheme, and was buying its own bonds, it was actually kidding. Either way, as it currently stands, there is no bailout in place for Europe whatsoever, as the ECB’s demands for a fallback to the ECB are now moot. Furthermore, once the market realizes there is no even implicit backstop to the trillions in debt rollover over the next several years, it will dump sovereign bonds with even more gusto, pushing Europe into an even deeper funding crisis, which in turn will make bond repayment even more impossible, which will send prices even lower, and so on. There is a reason they call it a toxic debt spiral.
Citing uncertainty over the country’s ability to meet ‘austerity’ targets and its rising susceptibility to external shocks – given its heavy reliance on external investors –Moody’s just downgraded Hungary to Junk Ba1 (with a negative outlook). With its 10Y yield currently at 9%, only 190bps wider than Italy, we thought it somewhat ironic that Hungary’s average 10Y yield from SEP09 to SEP11 was 7.2% – almost exactly where Italy finds itself trading currently.