Fraaance to become Fraa+nce

DSAbug · Jan 13, 2012

That's the current talk this morning. EU sources are reporting that the loss of France's AAA is imminent. Causing S&P to sell of 1.2%.. Gold to sell off 15 bucks.. Dollar jumped 1%.

Honestly, this reaction isn't warranted IMO because by now the market should have priced it in. It's practically been a certainty for a while but that doesn't stop people from reacting to the news.

The timing was pretty much perfect for me because I put some hedges on yesterday with HDGE and shorted some GDX because i thought the market was up on air (and they always hit the miners with the market). It seemed to me like we just needed some sort of catalyst to give us some down days and we got it this morning... I am guessing this lasts through Tuesday (Monday we are off) but I am going to be nimble. It's entirely possible they clean up the market and if that happens i'll cover.

pmbug · Jan 13, 2012

I award you 5 internet points for the awesome thread title.

ancona · Jan 13, 2012

Italy got whacked down to BBB, and Greek bondholders have stopped negotiations for now.....to reflect. I wonder if this is the weekend all hell breaks loose, and Greece starts to print up Drachmas for re-issue?

Should at least make for some interesting blog posts on ZH.

DSAbug · Jan 13, 2012

PMBug said:
I award you 5 internet points for the awesome thread title.

Yeah but you didn't like it.. lol

@ancona

Well.. the good news is they didn't hit Ireland.

I think the reaction has been pretty muted in all honesty. SPY was down substantially more earlier in the session. Clearly much of the downgrade has been mentally absorbed by market participants. Sell the rumor buy the fact? Or maybe it's the 3 Fed members talking about QE3?

What I do think this does is shift the focus on "what's next" which can't be good for those who are part of the record short interest in the Euro.. The market itself looks pretty vulnerable right now but QE obviously can change that. I covered 1/2 my GDX short and added to my HDGE. It's a much better product than SDS.

pmbug · Jan 13, 2012

dereksatkinson said:
Yeah but you didn't like it.. lol

Sure I did. You can't prove otherwise. ffftt:

A French downgrade was once talked about as a nuclear kink in the EU deal (forcing Germany to end the charade). We shall see if it plays out that way.

DSAbug · Jan 13, 2012

PMBug said:
A French downgrade was once talked about as a nuclear kink in the EU deal (forcing Germany to end the charade). We shall see if it plays out that way.

Are you watching this market? lol A whole new charade!

ancona · Jan 13, 2012

Geez......that's it? All that hot air about Armageddon if Europe gets downgraded. So, I guess it doesn't matter what the agencies say? What the fuck.......over?

DSAbug · Jan 13, 2012

Tyler on zerohedge just tweeted...

Net non-commercial EUR shorts soar by 12% to -155,195 in week Jan 10, new all time record

pmbug · Jan 13, 2012

dereksatkinson said:
Are you watching this market?...

I must confess that I'm not. I'm on the computer all day, but I'm busy with other things - I'm not a trader so I don't watch the numbers that closely.

vox · Jan 13, 2012

Had several downgrades:

-France was downgraded from AAA to AA+

-Austria was downgraded from AAA to AA+

-Italy was downgraded two more levels from A to BBB+

-Spain was downgraded two more levels

-Portugal was downgraded two more levels

-Cyprus was downgraded two more levels

-Malta was downgraded one level

-Slovakia was downgraded one level

-Slovenia was downgraded one level

Wheeeeeeeeeee....

DoChenRollingBearing · Jan 13, 2012

I wonder... If anything much will happen after the next few days. Remember that after a few days after OUR downgrade that nothing much happened.

I think they can keep kicking the can longer than most people expect. It sure has taken a LONG TIME from 2007 (Bear Stearns hedge funds xcollapse) to now.

DSAbug · Jan 13, 2012

It's priced in..

I'd actually be preparing for the dollar to get much weaker as odd as it sounds.. Way too many people are short the euro. All it's going to take is raising margin requirements and you'll see the Euro rise.

rblong2us · Jan 14, 2012

everything the 'fringe bloggers' predict seems to happen eventually.

Think the gap between the prediction and the event is the time it takes to create enough bullshit and management of expectations, so that it seems like a non event when it happens.

Only select and occasional poo particles are allowed through but
'the systems backing up captain, she canna hold much more'

pmbug · Jan 14, 2012

dereksatkinson said:
...
I'd actually be preparing for the dollar to get much weaker as odd as it sounds.. Way too many people are short the euro. All it's going to take is raising margin requirements and you'll see the Euro rise.

Sounds like the metals are poised for take off (on a weakening dollar).

DSAbug · Jan 14, 2012

PMBug said:
Sounds like the metals are poised for take off (on a weakening dollar).

One would think... I'm just not entirely convince "now" is our time. I'm thinking we need more basing but we might at least bounce and consolidate.

mmerlinn · Jan 14, 2012

Honestly, this reaction isn't warranted IMO because by now the market should have priced it in. It's practically been a certainty for a while but that doesn't stop people from reacting to the news.

Typical Buy rumor, Sell fact reactions.

Sounds like the metals are poised for take off (on a weakening dollar).

Metals typically 'strengthen' in the first quarter of a new year.

Sold steel scrap yesterday. Price is $310 per ton at my door. Was $300 last week.

Will sell steel scrap again near end of March. Expect to get $450/$500 then.

pmbug · Nov 20, 2012

Moody's Investors Service has today downgraded France's government bond rating by one notch to Aa1 from Aaa. The outlook remains negative.

Today's rating action follows Moody's decision on 23 July 2012 to change to negative the outlooks on the Aaa ratings of Germany, Luxembourg and the Netherlands. At the time, Moody's also announced that it would assess France's Aaa sovereign rating and its outlook, which had been changed to negative on 13 February 2012, to determine the impact of the elevated risk of a Greek exit from the euro area, the growing likelihood of collective support for other euro area sovereigns and stalled economic growth. Today's rating action concludes this assessment.

Moody's decision to downgrade France's rating and maintain the negative outlook reflects the following key interrelated factors:

1.) France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.

2.) France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.

3.) The predictability of France's resilience to future euro area shocks is diminishing in view of the rising risks to economic growth, fiscal performance and cost of funding. France's exposure to peripheral Europe through its trade linkages and its banking system is disproportionately large, and its contingent obligations to support other euro area members have been increasing. Moreover, unlike other non-euro area sovereigns that carry similarly high ratings, France does not have access to a national central bank for the financing of its debt in the event of a market disruption.
...
In a related rating action, Moody's has also downgraded the ratings of Société de Financement de l'Economie Française (SFEF) and Société de Prise de Participation de l'État (SPPE) to Aa1 from Aaa. Furthermore, Moody's has affirmed the Prime-1 rating of SPPE's euro-denominated commercial paper programme. The outlooks on the ratings of the two entities remain negative. The senior debt instruments issued by the two entities are backed by unconditional and irrevocable guarantees from the French government.
...

More: http://www.moodys.com/research/Mood...rnment-bond-rating-to-Aa1-from-Aaa--PR_260071

DSAbug · Nov 20, 2012

Took them long enough...

rblong2us · Nov 20, 2012

DSAbug said:
Took them long enough...

All this year, if the OP is our first warning.
Plenty of time to get expectations sorted out then.

And the response to ever more crazy things happening seems to become more muted as time passes.
It seems like theyve conditioned everyone to simply shrug off the most outrageous events ............... :flail:

ancona · Nov 20, 2012

I'm not sure exactly how relevant this is from a macro perspective. Sure, they got gigged a little, but then again so did the USA, and bonds did nothing in response. I think that if all of the major ratings guys did it at the same time, and made it a meaningful drop, like two or three notches, then we might see some fireworks. Or, we could see France take them to court and sue them.

DSAbug · Nov 20, 2012

rblong2us said:
All this year, if the OP is our first warning.
Plenty of time to get expectations sorted out then.

And the response to ever more crazy things happening seems to become more muted as time passes.
It seems like theyve conditioned everyone to simply shrug off the most outrageous events ............... :flail:

Technically, it was expected going back to last summer/fall IIRC.

As for conditioning... Couldn't agree more and the market is in 100% agreement. The USD is barely up right now and is trading pretty weak. Could it be that we are starting to discount the NEXT event?

pmbug · Jul 12, 2013

Fitch is a little late to the party...

Fitch Ratings said on Friday it has downgraded France's credit rating to AA-plus from AAA, citing the high level of government indebtedness of the euro-zone nation. The outlook on the rating is stable. ... Fitch's announcement came well after the close of European stock markets. ...

http://www.marketwatch.com/story/france-downgraded-to-aa-from-aaa-by-fitch-ratings-2013-07-12

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