Global Macro Trading Journal

Quote from m22au:

Commerzbank
RBS
LYG
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Did you select them by going through the stress tests and seeing which ones are the most exposed to probable haircuts?
Looking at the tests it doesn't seem that RBS is very exposed. Their main exposure is Italy but if my math is correct, it's not even 20% of their Tier 1 capital
 
Quote from Daal:

Did you select them by going through the stress tests and seeing which ones are the most exposed to probable haircuts?
Looking at the tests it doesn't seem that RBS is very exposed. Their main exposure is Italy but if my math is correct, it's not even 20% of their Tier 1 capital
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As far as LYG goes. I can't find anything troubling in the stress tests in terms of sov exposures. Are they exposed to banks that are exposed to sov haircuts?
 
CBK is required to raise 2.93 billion EUR by 30 June.

http://www.bloomberg.com/news/2011-...-require-eu106-billion-in-capital-table-.html

Also looking at the chart it was a strong underperformer versus other European banks in the first 3 weeks of October.

RBS and LYG - strong underperformance versus other European banks from 30 October onwards.

LYG: CEO taking medical leave.

Also RBS and LYG (like CBK) won't get squeezed higher as much as other Eurozone banks if there is some positive news.
 
Quote from m22au:



Also RBS and LYG (like CBK) won't get squeezed higher as much as other Eurozone banks if there is some positive news.
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Are you sure about that?In my experience that ones that goes down the most tend to squeeze the most(ala FNM FRE), that is unless their existence is under threat

I didn't look at the stress tests in detail bank by bank before but I did this morning. My conclusion is that if you want to make money shorting the banks you will have to have a high confidence in a prediction of haircuts of Portugal, Ireland and Italy and short the banks of THAT country you are making the prediction on. The obviously insolvent banks have mostly gone bust by now

There might be a case of shorting Mafin Popular Bank in the ride to $0. Its not a play I'm a fan of but I know that you like that so you might want to take a look at that
 
Quote from Daal:

Are you sure about that?In my experience that ones that goes down the most tend to squeeze the most(ala FNM FRE), that is unless their existence is under threat

I didn't look at the stress tests in detail bank by bank before but I did this morning. My conclusion is that if you want to make money shorting the banks you will have to have a high confidence in a prediction of haircuts of Portugal, Ireland and Italy and short the banks of THAT country you are making the prediction on. The obviously insolvent banks have mostly gone bust by now

There might be a case of shorting Mafin Popular Bank in the ride to $0. Its not a play I'm a fan of but I know that you like that so you might want to take a look at that
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I agree that the ones that go down the most tend to squeeze the most. However RBS and LYG are probably more of a play on the UK rather than Europe. If you look at these two, they squeezed higher on Thursday 27 October with every other bank, but on Friday 28 October they fell quite hard.

My interpretation: people quickly realised that the Greece "news" didn't really change things for RBS and LYG that much because they're not part of the Eurozone.

CBK: marketcap 7.1 billion versus 2.9 billion capital raise mandated. But for all we know it might need more than that in the future if (when) Greek debt gets written down by more than just 50%.

And if Germany does something to "fix" Italy, this would be long-term bearish for CBK, because it would hurt Germany.

Anyway - you can ignore all my fundamental analysis and just trade them off the chart. CBK, RBS and LYG are all much weaker than stronger European banks (eg. DB) and US banks (eg. JPM WFC and US regional banks).
 
Quote from m22au:

I agree that the ones that go down the most tend to squeeze the most. However RBS and LYG are probably more of a play on the UK rather than Europe. If you look at these two, they squeezed higher on Thursday 27 October with every other bank, but on Friday 28 October they fell quite hard.

My interpretation: people quickly realised that the Greece "news" didn't really change things for RBS and LYG that much because they're not part of the Eurozone.

CBK: marketcap 7.1 billion versus 2.9 billion capital raise mandated. But for all we know it might need more than that in the future if (when) Greek debt gets written down by more than just 50%.

And if Germany does something to "fix" Italy, this would be long-term bearish for CBK, because it would hurt Germany.
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But aren't you factoring in that the depressed stock price of CBK already expects some dillution?

I like shorting financials in 2 cases
-A bit after you believe they are peaking(Say Jan 2008)
-When they are going to $0

I'm not a fan of shorting a already depressed financial if I don't think it will go to $0 on liquidity problems
 
Quote from Daal:

But aren't you factoring in that the depressed stock price of CBK already expects some dillution?

I like shorting financials in 2 cases
-A bit after you believe they are peaking(Say Jan 2008)
-When they are going to $0

I'm not a fan of shorting a already depressed financial if I don't think it will go to $0 on liquidity problems
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My view is slightly different - yes the 2.9 billion capital raise is known, but often stocks in this type of situation will remain weak until the capital raising is done. Good recent examples of this are B P Di Milano

http://www.bloomberg.com/apps/quote?ticker=PMI:IM
which actually fell below its rights offering price of 0.30 EUR.

and also LNKD, which was weak in the last 2 weeks, due to the pricing of a secondary offering, and today's lockup expiry.

I'm happy to remain short CBK at this level, because the capital raising is not yet done.

And even when it gets done, it might need another capital raising if/when its Greek debt is marked down by more than 50%
 
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