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The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
Bailout list
* Outright bond purchases from the ECB, to be sterilized
Very surprising move, which goes to show that the ECB is COMPLETLY unreliable on their public statements regarding their likely actions(Webber said this was 'too much' and the Council didnt even discuss this, I find that hard to believe, was Trichet lying?). If things dont improve they are going to cut rates down to 0.5% or 0.25%, it doesnt matter what they are saying
* 3m and 6m full-allotment LTROs
This was expected
* Reactivation of FX swap lines
This was expected
* â¬60 billion in cash from the European Commission, funded by bond sales
* â¬440 billion in loan guarantees, via pooled support of member governments
* Up to â¬220 billion from the IMF
This is sorta surprising, although they already made clear they are going to bail everyone out
* Outright bond purchases from the ECB, to be sterilized
Very surprising move, which goes to show that the ECB is COMPLETLY unreliable on their public statements regarding their likely actions(Webber said this was 'too much' and the Council didnt even discuss this, I find that hard to believe, was Trichet lying?). If things dont improve they are going to cut rates down to 0.5% or 0.25%, it doesnt matter what they are saying
* 3m and 6m full-allotment LTROs
This was expected
* Reactivation of FX swap lines
This was expected
* â¬60 billion in cash from the European Commission, funded by bond sales
* â¬440 billion in loan guarantees, via pooled support of member governments
* Up to â¬220 billion from the IMF
This is sorta surprising, although they already made clear they are going to bail everyone out
Quote from Debaser82:
Daal, if I may ask you:
Has this development changed your risk/award assessment towards risk assets the coming months and years in any way?
Cheers.
Not much, the losses will have to be taken, those moves are not addresing the structural issues. As I understand the bailouts are senior to existing debt. Although some of the ECB actions might suggest they are more willing to print more than the BOJ was(intervention is sterelized yet if deflation takes over they might very well balloon bank reserves even if Trichet swears under oath that 'I will not engage in QE to boost inflation measures' the day before). I dont want to be short risk for today and the coming days though
Time to exit that TED spread play.
Its certainly possible that USTs and German Bund yields will collapse if a new round of risk aversion starts soon. However, the message has been clear, they will pay for the bill of the EU crisis. IMF should get more US funds soon(that they probably need). So I cant help to be skeptical of the long gov debt at the long end trade
The spreads could blow out by the PIIGS bonds going down more than the bailout group bonds, or the bailout group could stay flat while the pigs fall. They could also rally but I find hard to be confident of a position there. I'm confident of the disinflation part of it but it remains to be seen how their bonds will do given that they saying they will pick up the check of the global sovereign debt crisis(Plus US states should start needing funds and bailouts soon)
The spreads could blow out by the PIIGS bonds going down more than the bailout group bonds, or the bailout group could stay flat while the pigs fall. They could also rally but I find hard to be confident of a position there. I'm confident of the disinflation part of it but it remains to be seen how their bonds will do given that they saying they will pick up the check of the global sovereign debt crisis(Plus US states should start needing funds and bailouts soon)