20120617-214920.jpgGood morning

The headlines:

  1. The Giant Moody’s Credit Rating Downgrade.

    Link: Bye bye Credit Suisse.

    So Moody’s downgraded 15 global banks yesterday. All the banks got cut by one or two levels. Except for Credit Suisse – which got properly hit with a three-level downgrade.

    And the market reacted with what-is-coming-to-be-typical disdain: stock prices went up.

    The cost to insure Morgan Stanley’s debt actually dropped. So did Bank of America’s. And Goldman Sachs’.

    So either the market finds Moody’s irrelevant because the market has already acted. Or the market finds Moody’s irrelevant because the market thinks that they’re wrong.

    Either way.

  2. China’s crude purchases from Iran soar.

    Link: rude crude dude.

    35% higher in June than in April. The reason for the rebound is the resolution of a pricing dispute between the two countries in the first quarter.

    But the Chinese are definitely ignoring the US pressure. The official Chinese Foreign Ministry position: “China’s importing oil from Iran is fair and reasonable and does not hurt the interests of the international community or violate relevant Security Council resolutions”.

    Of course – the last bit about Security Council resolutions is a bit of a circular argument. China has a right of veto – so it’s highly unlikely that it would have voted itself into violation.

    I think it’s good that someone is standing up to the US. Just, you know, to balance things. And I dare the US to stop taking Chinese money come July 1. That’ll leave it a bit short when it has to roll more debt, eh*?

  3. BlueMountain helping JP Morgan unwind.

    Link: how do you eat a whale?

    “I guess one piece at a time; but core blimey – the whale is as big as a mountain! We feel blue now”.

    And that’s how you do it – you team up with someone to buy the off-setting trades that you need**, and then you buy those offsetting trades from them.

    That is: you get someone to help you carve the carcass into smaller pieces. Sneakily. Because the guys holding the knives are watching you constantly, hoping to see you swallow it whole.

  4. There’s this hedge fund that’s bullish on Greece.

    Link: Last Hedge Fund Standing – but for how long?

    His name is George Elliot. And he’s buying Greek stocks. The fund is Naftilia’s Greek Opportunity Fund.

    The Athens Stock Exchange has fallen 88% since 2007. Is that really a justifiable plunge?

    Give that man an ouzo.

    And then give him your money.

    Because the big investors? They can’t hit Greece yet. It would make their portfolios too volatile. But hedge funds? Well there’s not too much restriction there.

    The point is: the best returns are made during times of crisis. To follow the money you must follow the crisis.

  5. Italians ignore new tax.

    Link: That Berlusconi character is still a pain.

    At the heart of the Monti austerity plan, there is a new real estate levy on primary residences. In the new budget, it’s intended to raise about €10 billion – about a third of the new revenue measures in said budget.

    There was one such levy once upon a time, but it was scrapped four years ago by the Berlusconi party-party guy. So now Italians have gotten used to not paying it – despite the fact that Italy is the only large Euro-region country without one.

    And given the level of protest, it looks like they have no plans to restart paying it now.

  6. Senate passes agricultural bill.

    Link: to save $24 billion or something.

    Over 12 years. That’s $2 billion a year.


    The cut in direct payments to growers is being offset by expanded insurance programs.

    But a 0.2% reduction in the deficit is the statistical equivalent of “not significantly different to zero”.

    Do more. Do a lot more.

That’s all for now.
Have a good day.
*Of the $15 trillion of US government debt, a third is held by foreign investors – and just over $1 trillion of it is held by China.
**Because if you bought them yourself, the market would realise what you’re doing, and seize up. Then you’re suddenly making bigger losses than you would have under normal market conditions.