Buy Spain! And don’t sell Italy.

Let’s continue on yesterday’s line of reasoning against fear on Grexit yes or no.

In Alphaville’s Long Room interaction space, this is the most popular post now:

Go long Europe risk

Posted by NothingButValue on May 15 22:14.

European stocks are trading at extremely attractive historical valuations.  Assuming you’re an investor with a longer time horizon (say 5-10 years) and you can ignore continued volatility, Europe is now a strong buy.  Let’s take three large markets:

  1. Italy: the market capitalization of equities/GDP (one of Buffett’s favorite metrics for the US equity market) is roughly 22%.  Recent (last 10-15 years) normalized average is around 40%.  That’s 85% upside.  This measure in Italy has bottom roughly at 15% historically.  So you’ve got 31% downside.  That’s 2.8 upside/downside, a great risk/reward.
  2. France: mktcap/GDP of 45% vs. average of 77%, for 42% upside.  Historical downside is 17%.
  3. Spain: mktcap/GDP of 33% vs. average of 83%, for 155% upside.  Historical downside is 14%.  Spain is clearly priced for a depression.  When the unemployment rate in a country gets close to 25% (i.e. Great Depression levels), pretty much everything bad is already known.

Sure, everything can get worse for a while.  Europe may even break up.  That won’t reduce the long term fundamental earning power of the companies making up these indexes, be that in euros, marks, or liras.  They will adjust, and rebound.  At these valuations, a huge amount of bad news is already priced in.

So, while upside/downside are around 2.5 in Italy and France, it’s worth 11 in Spain. BUY SPAIN is a safe suggestion. Besides keeping in mind the Sovereign Crisis rule no-1: for some time in the past and the near future, in general shares are safer and increasing value more than bonds. But Spain shares do it better!

Published in: on May 17, 2012 at 9:49 am  Leave a Comment  
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€ break-up scenarios

Here’s a 50 pp document by Nomura (various authors), I got from the Long Room area of alphaville – ft. In an interesting Section: financial weapons of mass destruction:-)


“Currency Risk in the Eurozone:

Accounting for break-up and redomination risk”

Published in: on January 6, 2012 at 6:50 pm  Leave a Comment  
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A Pulitzer for an inquiry into Wall St. Subcrimes


1st time a group of stories not published in print won a #PulitzerPrize for journalism: @niemanlab

While Denmark’s Doma wins 1st word restaurant title by the British Restaurant Mag, @ProPublica it’s champagen for the 2nd consecutive Pulitzer entering the house. This year (and for the first time ever a pure digital media affair) the winners are @Jake_Bernstein & @eisingerj > Due to:

 As the housing market started to fade, bankers and hedge funds scrambled for ways to maintain the lavish bonuses and profits they had become so accustomed to, repackaging mortgages in complex securities called collateralized debt obligations. The booming CDO market masked how weak the housing market was, and exacerbated its collapse.

Namely focusing upon this HF, Magnetar:

The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going

by Jesse Eisinger and Jake Bernstein, ProPublica – April 9


 Senate report on the origins of the financial crisis cites our investigations:

Their results strongly support a strict and strong regulation, by showing how Austrian or neoclassical, neoliberal self-regulation JUST DOES NOT EXST.

Banks’ Self-Dealing Super-Charged Financial Crisis

by Jake Bernstein and Jesse Eisinger
ProPublica, Aug. 26, 2010, 10:09 p.m.

As investors left the market in the run-up to the meltdown, Wall Street created fake demand, increasing their bonuses — and ultimately making the crisis worse.

All the best to ProPublica, a new kind of professional digital media, and the two laureates.

Published in: on April 19, 2011 at 1:04 pm  Leave a Comment  
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Hell Street plunging again in devil’s bubblesmoke…-)

DID WALL STRETS TURN AGAIN TO A HELL STREET, or never stopped to be hellish?


A tale of  W street and the W recession


New post: Equities: Reaching The Danger Zone /Monday 12 April, 5 pm GRT

Look at this elementary graph, that you can easily redo yourself on the 1st page of today’s wsj oL, even without being a subscriber – as I must be professionally.

Well, not only the bigger share of the dead bubble appeared in Wall Street, much more than in the RoW (Europe, BRICS and Japan: aggregated and implicit here, in the difference between the two curves – SIMPLICITY and SYNTHESIS matter, for a 1st look).

But, since from the 2009 policy-driven rallys, devil’s smokes reappear again at Hell St.; much before a recovery of Mean St. I don’t think there is any  serious debate about the fact that AT LEAST Hell\Wall St. is already in a new bubble: with all the self-evident, dramatic implications of such a tenet. The analytical-policy complex debate (where perspectives, schools and interpretations of the empirical facts necessarily diverge, before looking for a new convergence focus and a relative ricomposition of the profession) is about how much such a New Bubble is a matter of “CONGIUNTURA o STRUTTURA”, SR or LR in its very nature – i.e. the relevant dynamic forces behind this unsustainable model: of overvaluation of Western assets, at the price of a permanent Eastern overgrowth. My position is that the LR bubble is evident, and actually was never fully dried up; while we are about to enter also an additional SR one, starting from some asset markets. La musica  non cambia.

A lot of work for the world  Obamas, their teams and 1st of all the invisible college of CBs that saved us from another 1929\31 – until now. At a price.

According to the two distinct (but a bit overlapping: GLI ESTREMI SI TOCCANO SEMPRE) Austrian and post-Schumpeterian (evolutionary) schools: AT THE PRICE of  repressing the “Invisible Foot” who makes room for a New Wave of innovations and their bundles. No foot, no room.

As for the congiuntura, there are all the usual caveats about the VWL (VolksWagenLite) shapes of the recession in the different macro-regions of the world, and 20 days ago I listened to such an interesting breakfast time (03/25/2010 09:34) twitting as:

@zerohedge New post: Is Something Big In The Market Coming?“.

The twitting and the post were introducing to an acute FINALE by David Rosenberg (Breakfast_with_Dave_032510.pdf), concluding that markets are signalling turnarounds

And lastly, there is no V-recovery anywhere, except in the Fed-prodded stock market.

Even that bastion might not be firm for longer. In fact, today at early dawn here in Verona, the same little Spring bird awakes me via TweetDeck sounds to tell me:


IMF Prepares For Cataclysm, Expands Backup Facility By Half A Trillion For “Contribution To Global Financial Stability”

With linguistic determinism, the philosophical WordPress blog cracking process distills down here such a nice continuation: the-gates-of-hell-open!!!

… what if the demons from Hell decided to enter Wall Street and other business sectors so as to better manipulate and corrupt society? And thus Hell, Inc. was born.

We are at a more ground level here, and we are looking at the devils in the markets details.

Italian banks in sofferenza

Mr Profumo of arrogance is more and more under attack – and here’s why. His performance is awful:

a) he survived the East Europe catastrophe CERTAINLY not for his merit but only because of  undeserved EXTERNALITIES: the enormous collective, international effort in favour of the EE transitional economies – mainly due to IMF, versus the EU apathy and Angela Merkel’s suicide policy;

b) perspectives are no good at all; a huge power conflict (not just the usual one with Fondazioni: e.g., today’s suggests that even the Lybian Vice-President is getting nervous) is on, against his usual, monocratic UniCredit restructuring model; which just IGNORES WH’APPENED  IN ONE OF THE MOST ACUTE CRISES  in the history of Capitalisms. It only cares about power centralization and growth WITHOUT profits. Fordism from the past Millennium…

IN SUM, “Alex Hyperego Perfume of Arrogance”  is so Superman’s Hyper-Ego that he’s dull; he just doesn’t perceive the deeply changing environment.

In synthesis:

Reproduced from

Published in: on April 10, 2010 at 12:22 pm  Leave a Comment  
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zerohedge: 3rd max p/e growth

We reproduce the top part of today’s Tyler Durden post in Zero

No comment.: it’s perfect and self-contained!

Current Market Move Is Third Biggest PE Multiple Expansion Recorded In Shortest Time Ever

Submitted by Tyler Durden on 09/02/2009 22:04 -0500

EPS PE Multiple

Some historical observations: while readers may continue scratching their heads over just what the causes may have been for the torrid 5 month rally we have witnessed, two main things distinguish it among the last ten recessions stretching all the way back to 1953:

While the S&P has increased by 50% to the (to date) peak, it has done so on a -6% decline in actual EPS, implying the rally has been one of PE expansion, 66% to be precise. As the chart below demonstrates this is the third largest recorded PE expansion in history, with only the 72% PE expansion recorded in 1982 and the 78% in 1974 surpassing the current market.
Yet, what is unique about this market, is that while both 1974 and 1982 achieved their move higher in about a year (11 months for the trough to peak PE move in 1982, 16 for 1974), the S&P has hit its current PE peak a mere 5 months after the trough. This is an unprecedented record in the history of US recessions, and demonstrates just how much of a push influence Obama’s stimulus and Bernanke’s QE have had on the PE multiple alone, if not on actual EPS.
Another observation is that at a 19.9x PE through the current market peak, the market is almost 3x turns more expensive compared to the historical peak PE average of 17.1x, and was cheaper at the peak than just the recessions of 1961 (22.7x), and 1990 (21.6x). Any claims that the market is cheap at current earnings are outright lies.

At this point hope is exhausted (in the form of the PE multiple having plateaued), and any further gains will all have to come from an actual improvement in earnings. Yet for that to happen, more than just overhead will have to be cut: actual revenues will need to increase. However, with the record amount of slack still in the system, and the under investment in corporate CapEx, the probability of revenue growth at this point (and this EPS growth) is slim to none.


Published in: on September 3, 2009 at 4:21 am  Leave a Comment  

Subcrime-2 is paneuropean. Attila returns!

We have this blogpost IN ITALIAN, where we reifly argue why and how a  Paneuropean Subcrime-2 is already on the move, and no one else can stop it, TOO LATE. A number of quite interesting consequences, in a von Hayek Angel sense:

an Angel comes to make you pay your wrongdoings, and also those of the Prime and Finance Ministers, or CEO that came before and believed in so called “neo-liberal” (where liberty has no room) bullshits and irresponsibility,  or “bonanzas” and bubbles.

Austria and Sweden, in the West, will be killed by the Eastern Tsunami; they earned mountains of extra-profits, “bonanza” from the transition to capitalism in their neighbour countries. Now they’ll lose everything, and much more than that.

UniCredit is already a re-nationalised Bank (a Guinness: its Credito Italiano component, will have been rescued in both Great Depressions: 1934 and 2009). Aready,  in the market expectations,  otherwise its Friday closure would not have been  but epsilon.

– Let us bet, on InTrade and elsewere, about the parity  € = $ before … (I wan’t tell you my bet date, but I already gave you here A LOT of info, and based ON FUNDAMENTALS; better: ON DYNAMIC ATTRACTORS; as for the date, monitor InTrade, ’cause I move some small capitals on those future markets, and I might make critical mass…).

INCIPIT of the last grapes-of-wrath post:

Svelato il Mistero di Scilla e Cariddi: perché non si fa il Ponte, e  non è solo colpa di Profumo.


1- TEMA.

Erano partiti, i Grandi Banchieri Oligopolisti di Austria, Italia e Svezia in testa, alla conquista dei confini est dell’Impero Europeo. Si sono fatti concorrenza oligopolistica della peggior specie  a botte di credito facile: E  FU SUBCRIME-2, quello tutto pan-europeo. Effetto Frontiera Far East Europe.
Noi lo sapevamo da anni come andava a finire, sia all’Est che nelle Banche Vetero-Fordiste e Ribollite dell’Ovest (quelle che hanno legato a quel sasso che rotola  il loro Destino), e:
1) l’incoscienza di Mr. Profumo ci ha sempre fatto tanta tenerezza (una volta ho provato  anche a dirglielo, eravamo in Assindustria a Vicenza, ma lui non mi ha capito ed ha tirato dritto);
2) l’allegria con cui TUTTA l’Europa sta precipitando nel burrone, insieme sapendolo e senza  saperlo, è molto Pirandelliana. La Merkel sta per essere sbalzata di sella solo perché c’è la crisi (il VERO motivo per cui Mc Cain non ha fermato Obama) e si comporta di conseguenza (decidendo le cose  pro domo sua). Non c’è un solo uomo politico in tutta Europa, che pensi all’Europa. NON UNO SOLO: se ora affonda, ed era comunque inevitabile date le premesse, se lo merita.
Come facevamo a saperlo?  Elementare, Engels. Da una traccia d’indagine nei racconti ironici  e divertiti di Marx, specie nelle corrispondenze con Engels sul Tribune (più vive dei suoi Ricardismi teorici, che spesso sbagliano premesse e conclusioni): di  volta in volta, Frontiere  alimentano i cicli espansivi.

Ed il sistema  più instabile che fu mai creato, funambolizza così la sua lunga durata.

2B optimistic: this is the beginning of the end


March 2, 2009

The Dow Jones Industrial Average dropped by 300 points to end below the 6800 mark for the first time in nearly 12 years, as a broad-based selloff seized the markets, sending shares lower in every sector. The S&P 500 briefly dropped below 700 for the first time since October 1996 before ending just at that level amid across-the-board declines, including drops of more than 6% in basic materials, energy, financial and industrial sectors. The Nasdaq Composite Index fell 4%.

For more information, see:



Yesterday, sent by the Aparecida no one is keen to listen to anymore,  the Angelo della Vendetta started  cutting some heads and share values, but it was only the beginnig of  the end. The necessary “Visible Foot” freeing markets from lame ducks (the von Hayek – and  – Schumpeter, neo Austrian Foot) has just started kicking off, and will have a couple of years of hard work ahead. The ecomomic “curtain wall” has not yet come down: then the neoAustrain Angel will have no pity, not even for her country of origin (Austria); it will be CEE (Central East Europe) Tsunami soon, and little will stay alive in Western Europe, after her mission.

On the other coast of the Atlantic, there is no reason for DJIA, now that 7000 is over, to land asymptotically or not towards 6000: still, the Western Actives would B by far over-valued, at 6000 (down from top 11,000).

a) DJIA passed yesterday, in a quantum jump below 6800 (My God!) the 7000 PSYCHOLOGICAL threshold of “depression”, i.e.  Wall Street finally cut the Gordian Node (FAQ: is this a deep recession or a depression? The latter. Now we know:

the answer, my friend,

is blowing in the East European wind.

For no apparent reason, in Wall Street: just ordinary administration – adjusting the e’s in the p/e ratios, to what one can reasonably guess for next Autumn, when all things that might have gone wrong, will have (Murphy’s Law, a secularised divulgation version of Greek Tragedy’s Destiny).

b) European, namely Italian banks are just disappearing, day after day from markets. This is no violation, as most people say (banks capitalisation below book value?), on the contrary: A STRICT APPLICATION OF THE FUNDAMENTALS. Such;

giant, monopolistic, hyper-speculative, anti-social, caparbiously authoritarian and highly inefficient with their personnel, vandalised by ignorant managers, enemies of the Territory where they just steal surplus value (no help to innovation, to anything) banks

should have never been born, as they did UNDER THE CRAZY, ANTI- ECONOMIC, MONOPOLISITIC CONCENTRATION WAVE of the New Economy, version 1 and 2, in the last two ABEs, Artificial Bubble Economies, 1993-2007.

Mr Profumo (legally and apparently the UniCredit CEO, still) is already at the job office to look for another place: but

FAQ – Who will hire such a crazy man, that ruined  in just one only stupid Ego trip three  healthy  banks full of Tradition (Cassa di Risparmio di Verona- Vicenza – Belluno- Ancona, Credito Italiano, and Banca di Roma)???

ANSWER: We want them back, our 3 banks, and we’ll get them before Summer. The Angel is working for Justice to triumph, on this Earth.

I knew in advance, but I did not want to disseminate pessimism: last week rally on Italian Banks was artificial, home made and effimero. A literal Tsunami is charging its batteries very speedy, then it will lead to the “SUBCRIME no.2 – The European version” Vendetta dell’Angelo Sterminatore (who appears to have occupied the soul of Angela Merkel, dictating her what she must do, in such a way as Destiny requires):

– 1. a default of the majority of the 10 CEE States unprotected by the Eurozone;

– 2. a national economy collapse, and consequent quasi-default or default of  the Austrian State (only by the immediate, direct consequences of CEE toxic credits, by applying a multiplier 2 to Dansk Bank scenario 3: Austria will lose 22% of its neutral GNP, this year; as we say below, with a multipler 3 it makes -33%; then self-reinforcing dynamics will carry on further the Visible Foot job);

-3.  the forthcoming closure, and “week-end X nationalisation” of the majority of large Continental European Banks (British Island ones are already kaputt: RBS is a Gordon Brown’s property, Barclays is 90% down in capitalization. from £90 to 8; Switzerland is  in search of diversifying out of Credit, which after all, ex post was not its natural Vocation; after weekend “X”, there will be an ephemeral rally on Swiss Banks, the  only private ones left, but it will not last long). More in:

– Dansk Bank Research last report, and continuous, daily information flow in their precious site, an Observatory on  € subcrime:

– and the interactive graphic ft representation of Dansk Bank’s € subcrime scenarios.

REFERENCES: go to last week’s euro_exposure_to_cee_230209 Dansk Bank Research impact study, put into a graph by the Financial Times. Please note:

a) Dansk Bank worst scenario (alike the Asian crisis 1997) will B the best one soon;

b) this report just estimates Banks’ sofferenze, i.e. the 1st round of money-real transmission mechanisms, and repeated positive feedback interactions (ping-pong like). The full impact is, as usual, larger by an order of magnitude, so that the Austrian GDP, e.g., (-11% according to the Report) might approximately and optimistically (multiply x 3) lose no less than 1/3 this year, as a CEE Subcrime full impact consequence. Being so close to Austrian borders as we are, is no health.

A bubble graph of “the BBBubble”

Read carefully and .. meditate (COMPENSATION obviusly refer to top executive incentives). But, please (see previous post, below, in case of TEMPTATION), don’t hurry up to ANY scapegoat conclusion, pleeeeeeease: it’d be highly misleading, just a proto-antropoid RITE for the sake of changing nothing. And we are sincerely FED UP with scapegoat mechanisms (René Girard had explained it almost all, but perhaps this was useless, since we are still Sapiens doomed to repeat horrific rites  on and on- Le Sacré du Printemps, et c’est juste Printemps).

I cut and copy:

Tempting fate

Dare we put up a bubble chart? Apparently we do. From Zero Hedge.

Zero Hedge - Writedowns, leverage and compensation

Related links:

The Merrill bubble – Zero Hedge
Salaries from a bygone era – FT Alphaville

This entry was posted by Tracy Alloway on Wednesday, February 25th, 2009 at 13:55 and is filed under Capital markets.

apertura Tokyo?

The last  weekend was SO full of events. Samples:

– Sat’day, at the annual Forex meeting, min. Tremonti strategically innovated language; now, besides toxic there are radioactive financial products as well; they are riskier, but easier to detect if you want to (we decode so, the language creativity of the Minister so friendly with banks);

– Sunday in Berlin, the European summit confirmed that, as G20 started being useless at its 1st meeting last Nov. (see our post at the time), it will carry on even worst than that. First of all, they took an infinite list of engagements by March, we wonder what they are up to (perhaps they just delegated everything to the already established international committee coordinated by Mr Draghi – that’s the 1st reason why G20 is useless).

2nd: they don’t answer the FAQs. As prof. Masciandaro put it at “Focus Economia” (radio24) on Monday the 23rd:

FAQ 1. What is bank and what is not (the spread of shadow finance under a savage deregulation regime, allowing reguated banks to hide their risky biznezz in the shadow).

FAQ 2. Wh’happens when a bank becomes a State or para-State institution? The issue of credit becoming a field invaded by  political imperfect competition, with its fights and retaliations.

FAQ 3. Wh’happens to the entire, multi-authority commercial credit-finance-insurance control system, as the controller (State) becomes also the controlled instance (State Bank)? The required controlling agencies-system change, in order to guarantee, and re-establish independence of control.


Overnight markets: Weak start
Posted by Gwen Robinson on Feb 23 04:10.
Asian stocks were mixed on Monday, although technology and finance companies rose largely on speculation that the US government will raise its stake in Citigroup to ease the global financial crisis.  Futures on the US S&P500 Index rallied 1.2% following the Citi news, after the index dropped 1.1% on Friday.
Asian markets (Mon)
04:10am GMT
Nikkei  down 51.49 (-0.69%) to 7,364.89
Topix down 8.41 (-1.14%) 731.12
Hang Seng down 230.27 (1.81%) at 12,929.44


Asian Stocks, U.S. Futures Advance on Citigroup Speculation

By Shani Raja and Chan Tien Hin

Feb. 23 (Bloomberg) — Asian stocks and U.S. futures rose on optimism that the U.S. government will raise its stake in Citigroup Inc., reducing the risk of bank failures. Treasuries and the dollar fell.


Tokyo Falls on SFCG Bankruptcy; U.S. Futures Gain on Citigroup

SINGAPORE — Asian share markets were mixed Monday with the Nikkei lower as financial services company SFCG filed for bankruptcy protection, and some other indexes higher on hopes the U.S. government would secure the future of Citigroup.

U.S. stock futures rose 1% and Treasurys fell after people familiar said that Citigroup was in talks that could result in the U.S. government substantially expanding its ownership of the bank.


Mi veniva in mente una canzone, noi in coro in fondo al pullman, davanti don Rino (futuro Abate sulla cattedra di San Zeno, Verona), al ritorno delle gite di  Gioventù Studentesca.

L’ho appena ricalibrata – in primis da  monsignori a lorsignori. E’ la secolarizzazione …

E colapele – de’ lorsignori, – farem scarpelowcost ai – lavoratori …

sulle note di avanti o popolo.

Va nella linea, ormai certa (nel dibattito strisciante) di Politica Industriale in Occidente, di sbaraccare le varie Cattedrali Detroit /anzi, a momenti di liberarci delle loro macerie) e mettersi a fare anche qui del low cost manifatturiero, anche un po’ manuale, ma dev’essere sui generis. Appunto!

Ma  è una cruna di ago.

Bisogna costruire – con NUOVI supporti istituzionali di governance inter-regionale nel mondo, e qui casca l’asino –  un disegno sofisticato, demanding di DdL: lo accenna alla fine anche  un  rapporto Istituto Levy (gli eredi di Minsky, in senso proprio) di inizio anno:

Published in: on February 23, 2009 at 6:55 am  Leave a Comment  
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