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Companies buying back their own shares has “consistently been the largest source of US equity demand.” Without them, “demand for shares would fall dramatically.” Too painful to even imagine.

Goldman Sachs asked a nerve-racking question and came up with an equally nerve-racking answer: What would happen to stocks “in a world without buybacks.” Because buybacks are a huge deal.

In the fourth quarter 2018, share repurchases soared 62.8% from a year earlier to a record $223 billion, beating the prior quarterly record set in the third quarter last year, of $204 billion, according to S&P Dow Jones Indices on March 25. It was the fourth quarterly record in a row, the longest such streak in the 20 years of the data. For the whole year 2018, share buybacks soared 55% year-over-year to a record $806 billion, beating the prior record of $589 billion set in 2007 by a blistering 37%!

Share buybacks had already peaked in 2015 and ticked down in 2016 and 2017. Then the tax reform act became effective on January 1, 2018, and share buybacks skyrocketed.

The record buybacks in Q4 came even as stock prices declined on average 5.3%, according to S&P Down Jones Indices. On some bad days during the quarter, corporations were about the only ones left buying their shares.

For the year 2018, these were the top super-duper buyback queens:

Apple: $74.2 billion
Oracle: $29.3 billion
Wells Fargo $21.0 billion
Microsoft: $16.3 billion
Merck: $9.1 billion

But who, outside of corporations buying back their own shares, was buying shares? Goldman Sachs strategists answered this question in a report cited by Bloomberg, that used data from the Federal Reserve to determine “net US equity demand.” These are the largest investor categories other than corporate buybacks, five-year totals:

Foreign investors shed $234 billion.
Pension funds shed $901 billion, possibly to keep asset-class allocations on target as share prices soared.
Stock mutual funds shed $217 billion.
Life insurers added 61 billion
Households added $223 billion.

…click on the above link to read the rest of the article…

U.S. Shale’s Glory Days Are Numbered

October 17, 2018

U.S. Shale’s Glory Days Are Numbered

There are some early signs that the U.S. shale industry is starting to show its age, with depletion rates on the rise.

A study from Wood Mackenzie found that some wells in the Permian Wolfcamp were suffering from decline rates at or above 15 percent after five years, much higher than the 5 to 10 percent originally anticipated. “If you were expecting a well to hit the normal 6 or 8 percent after five years, and you start seeing a 12 percent decline, this becomes more of a reserves issue than an economics issue,” said R.T. Dukes, a director at industry consultant Wood Mackenzie Ltd., according to Bloomberg. As a result, “you have to grow activity year over year, or it gets harder and harder to offset declines.”

Moreover, shale wells fizzle out much faster than major offshore oil fields, which is significant because the boom in shale drilling over the past few years means that there is more depletion in absolute terms than ever before. A slowdown in drilling will mean that depletion starts to become a serious problem.

A separate study from Goldman Sachs takes a deep look at whether or not the shale industry is starting to see the effects of age. The investment bank says the average life span for “the most transformative areas of global oil supply” is between 7 and 15 years.

Examples of these rapid growth periods include the USSR in the 1960s-1970s, Mexico and the North Sea in the late 1970s-1980s, Venezuela’s heavy oil production in the 1990s, Brazil in the early 2000s, and U.S. shale and Canada’s oil sands in the 2010s. Each had their period in the limelight, but ultimately many of them plateaued and entered an extended period of decline, though some suffering steeper declines than others. Supply Soars

…click on the above link to read the rest of the article…

Fed Inspector Turned Whistleblower Reveals System Rigged For Goldman Sachs

October 12, 2018

Fed Inspector Turned Whistleblower Reveals System Rigged For Goldman Sachs

Five years after we first reported on the “Goldman whistleblower” at the NY Fed, Carmen Segarra, the former bank examiner is out with a new book based on more than 46 hours of secret recordings.

“Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street” is a 340-page exposé which vastly expands on the breadcrumbs Segarra has been dropping since word of her recordings first came to light, according to the New York Post.

Segarra was a former bank examiner who looked into Goldman Sachs for the Federal Reserve Bank of New York, and claims she got fired in 2012 after making too much noise about Goldman’s alleged conflicts.

The New York Fed has often been blasted for its lackadaisical approach to overseeing banks leading up to the 2008 financial crisis. Its last president, William Dudley, was named in 2009 after spending 21 years at Goldman. But Segarra’s book claims that the problem persisted for years after the crisis, with regulators happy to act on the banks’ behalf.

“We want [Goldman] to feel pain, but not too much,” her boss — who goes by the pseudonym Connor O’Sullivan in the book — told her, Segarra claims. –NY Post

The recordings were made over a seven month period while Segarra worked at the New York Fed. Neither Goldman nor the NY Fed have disputed the authenticity of the tapes.

Central to allegations of shady reglulation was a 2012 deal in which energy giant Kinder Morgan would acquire rival El Paso Corp. for $21.1 billion – a deal which Goldman advised both sides of, while “its lead banker advising El Paso, Steve Daniel, owned $340,000 in Kinder Morgan stock” according to the Post.

That didn’t matter to newly minted CEO David Solomon, who took over for Lloyd Blankfein last week.

…click on the above link to read the rest of the article…

Wednesday’s Rout Was An 8-Sigma Event: The 5th Largest Tail Event In History

October 12, 2018

Wednesday’s Rout Was An 8-Sigma Event: The 5th Largest Tail Event In History

With markets in rebound mode today, the sellside’s fascination with Wednesday’s sharp, unexpected selloff continues.

In the latest “hot take” on Wednesday’s dramatic drop, Goldman’s derivatives strategist Rocky Fishman takes on a different approach to the Wednesday rout, looking at it in terms of pre-event realized vol (of 6.4%), and notes that in this context, “Wednesday’s 3.3% SPX selloff naively represents an 8-standard deviation event, the 5th-largest tail event in the index’s 90-year history, as 6.4% annualized vol implies a 40bp one-standard deviation trading day; instead the drop was more than 330 bps.

As Fishman adds, what makes the drop unique is that most of the top events of this severity, and listed in the chart above, “have often had a clear, dramatic, catalyst (1987 crash, Eisenhower heart attack, Korean war, large M&A event breakup).”

Part of the reason this week’s volatility looks like a tail event is that realized volatility had been surprisingly low prior to Wednesday: the five least-volatile quarters for the SPX over the past 20 years were Q1/2/3/4 of 2017, and Q3 of 2018.

For Goldman, the Wednesday spike is reminiscent of the Feb. 27, 2007’s China-led selloff, “which marked the end of an extended low-vol period.”

That said, Fishman also notes that mathematical tail events have been more common recently, almost as if central bank tinkering with markets has broken them, To wit, “five of the top 20 one-day highest-standard deviation moves (comparing the SPX selloff with ex-ante realized vol) since 1929 have happened in 2016-8.”

Fishman then shift focus to the VIX, which while not as violent as the February record spike, “was also the 25th-largest one-day VIX spike on record.”

…click on the above link to read the rest of the article…

How Will The Surge In Oil Prices Impact US GDP: One Bank Answers

October 4, 2018

How Will The Surge In Oil Prices Impact US GDP: One Bank Answers

Back in late 2014, when oil prices tumbled after the OPEC “thanksgiving massacre“, the conventional narrative was that dropping oil prices were a boon for the economy as they resulted in lower gas prices and thus greater discretionary income. The stark reality emerged quickly, however, once US corporations halted capex spending, resulting in a mini-recession for business investment coupled with dozens of shale bankruptcies.

Fast forward 4 years when Brent oil prices are trading back near $85/barrel, their highest level since October 2014, right before they tumbled. And with the “lower oil is beneficial for GDP” narrative discredited, following the recent rally, questions about the economic impact of oil prices have resurfaced, among them: have higher oil prices contributed to the upside surprises to 2018 growth via higher energy capex, as Chairman Powell suggested last week? Can US shale further ramp up production when capacity constraints are looming? Do higher energy prices still exert a meaningful drag on consumer spending and boost core inflation in an era of increased energy efficiency?

This is an analysis that Goldman conducted this week, and found that higher oil prices have had a neutral impact on GDP growth so far this year with a -0.25pp contribution from lower real consumption roughly offset by a +0.25pp contribution from higher energy capital spending. However, if oil prices remain at their current level the net growth contribution will decline to -0.1pp to -0.2pp in 2018Q4 and 2019H1.

The key reason is that while higher oil prices will remain a steady drag on consumption growth, the boost to energy capex is likely to shrink as the shale industry runs into transportation capacity constraints. It is only in 2019 H2 that the eventual arrival of new pipelines will likely trigger a re-acceleration of energy capital spending.

…click on the above link to read the rest of the article…

Goldman Warns Of A Default Wave As $1.3 Trillion In Debt Is Set To Mature

September 23, 2018

Goldman Warns Of A Default Wave As $1.3 Trillion In Debt Is Set To Mature

Ten years after the Lehman bankruptcy, the financial elite is obsessed with what will send the world spiraling into the next financial crisis. And with household debt relatively tame by historical standards (excluding student loans, which however will likely be forgiven at some point in the future), mortgage debt nowhere near the relative levels of 2007, the most likely catalyst to emerge is corporate debt. Indeed, in a NYT op-ed penned by Morgan Stanley’s, Ruchir Sharma, the bank’s chief global strategist made the claim that “when the American markets start feeling it, the results are likely be very different from 2008 — corporate meltdowns rather than mortgage defaults, and bond and pension funds affected before big investment banks.”

But what would be the trigger for said corporate meltdown?

According to a new report from Goldman Sachs, the most likely precipitating factor would be rising interest rates which after the next major round of debt rollovers over the next several years in an environment of rising rates would push corporate cash flows low enough that debt can no longer be serviced effectively.

* * *

While low rates in the past decade have been a boon to capital markets, pushing yield-starved investors into stocks, a dangerous side-effect of this decade of rate repression has been companies eagerly taking advantage of low rates to more than double their debt levels since 2007. And, like many homeowners, companies have also been able to take advantage of lower borrowing rates to drive their average interest costs lower each year this cycle…. until now.

According to Goldman, based on the company’s forecasts, 2018 is likely to be the first year that the average interest expense is expected to tick higher, even if modestly.

…click on the above link to read the rest of the article…

Global Economic Warning: “A Day Of Reckoning Is Coming”

September 10, 2018

Global Economic Warning: “A Day Of Reckoning Is Coming”

The world is awash in debt – some $233 Trillion is currently outstanding on a global scale. And though stock markets have seen unprecedented growth in recent years, cracks have started to appear. Just this week analysts at Goldman Sachs warned that a crash is coming, a sentiment echoed by JP Morgan Chase, which recently said that the next economic collapse could very realistically lead to social unrest and chaos on the streets of America that has “not been seen in half a century.”

Patrick Donnelly, a director at Harvest Gold Corp, suggests that it won’t be long now. In an interview with SGT Report Donnelly warns that the day of reckoning is rapidly approaching:

Countries like Greece are teetering… and that’s just a tiny little country… it’s going to take them 75 years to climb out of their debt…

You look at a country like Canada, the United States or China… the amount of debt is just staggering…

…For these tech stocks, the valuations we’ve seen… the multiples they trade at are ridiculous.

The markets are supposed to be rational… but the markets are totally irrational.

It’s frightening… there’s going to be a day of reckoning…

Watch Full interview:

(Watch at Youtube)

There’s no question that what goes up must come down, and given that stock market growth over the last decade has been fueled not by revenue and profit, but by central bank money printing, the coming crash will send shockwaves across the globe.

The crash of 2008 will look like a small correction compared to what’s coming next.

And when the bottom finally falls out amid panic selling unlike anything we’ve ever witnessed before, Donnelly says that capital will begin to flow into historical safe haven assets of last resort.

…click on the above link to read the rest of the article…

These 4 Charts Show How World Trade Has Collapsed In Just One Year

August 30, 2018

These 4 Charts Show How World Trade Has Collapsed In Just One Year

Lately, nothing seems able to shake Wall Street’s bullish attitude.

Investors and the mainstream continue to still ignore the worsening trade war – which is evolving into a currency war – with China.

But since early May – we at Palisade have maintained that there’s going to be a worldwide earnings recession sometime in summer 2019. . .

I haven’t been shy writing about this topic – and if you haven’t read my thesis of why I think this yet, you can check it out here – and here.

If you looked at the markets enthusiasm today – and share prices – you’d think I was dead wrong.

But if you look between the lines – things are getting even worse for global corporations.

Goldman Sachs recently published some damning data that only bolsters my global earnings recession hypothesis. . .

To summarize: world trade has continually declined since early 2017 – long before the trade war talks – and the recent data only suggests this trend is worsening.

The U.S. Dollar has rallied significantly since March of this year – after declining nearly 15% between January 2017 and February 2018.

This paired with the Federal Reserve’s tightening has created chaos for the emerging markets and their currencies throughout much of 2018.

And yet, instead of weaker currencies boosting foreign exports, things have only worsened since. This signals that there’s a deceleration in world wide demand.

Just take a look at the following charts. . .

If you study the growth of ‘global air and sea freight volumes’ year-over-year (YoY), there’s significant declines over the last 24 months – especially for air freight volume. It recently dipped into negative YoY growth.

Making matters worse – China’s economy has slowed down considerably the last couple of years. This no doubt has affected world trade.

But it’s not just China that’s seeing a slowdown in trade activity. . .

…click on the above link to read the rest of the article…

Goldman Warns Turkish Banks Will Be Wiped Out If Lira Hits 7.1

August 7, 2018

Goldman Warns Turkish Banks Will Be Wiped Out If Lira Hits 7.1

After its worst day in 10 years, the Turkish Lira’s early rebound is already starting to fade amid denied rumors of US officials predicting Lira’s demise, a record high yield at its bond auction, and Goldman warning of the collapse of Turkey’s financial system.

Turkey’s 10Y bond yield topped 20% for the first time ever and Turkey’s Treasury sold 539.7 million liras of 5Y debt today at 22.1% compound yield.

With tensions remaining high, the U.S. Embassy in Turkey has denied news in Turkish media that a U.S. official predicted the lira would weaken to 7 per dollar, calling the claim an entirely baseless “lie.” In two tweets, the Embassy said:

“Despite current tensions, the United States continues to be a solid friend and ally of Turkey. Our countries have a vibrant economic relationship.”

“For this reason, it is unfortunate and disturbing that an American official, who estimates that the U.S. dollar will be $7 TL, is completely unfounded and irresponsible in the Turkish media. It’s a fabricated and baseless lie.”

Well, they are right, it was not “officials” from the US government, it was “unofficials” from ~~Government~~ Goldman Sachs warns that further lira depreciation to 7.1 would erode all of Turkey’s banks’ excess capital.

Within the current backdrop, we view banks as being vulnerable to Turkish Lira depreciation given that it impacts:

(1) capital levels due to a meaningful portion of FC assets, which increase RWAs in local currency terms on Turkish Lira depreciation,

(2) asset quality and cost of risk, as Turkish Lira volatility can put stress on borrowers’ ability to repay as well as underlying collateral values. Moreover, Lira depreciation leads to higher provisioning requirements for FC NPLs, though banks are hedging this risk and can offset the impact through trading income.

…click on the above link to read the rest of the article…

Ignore Tariffs, According To Goldman This Is The Biggest Risk From A Global Trade War

July 21, 2018

Ignore Tariffs, According To Goldman This Is The Biggest Risk From A Global Trade War

One month ago, when previewing the potential fallout from an “all out” global trade war, which for simplicity’s sake many have equated with an across-the-board 10% tariff on all US imports and exports, we presented an analysis from Barclays, according to which the hit to 2018 EPS for S&P 500 companies would be ~11% and, thus, “completely offset the positive fiscal stimulus from tax reform.”

Furthermore, the impact on exporters which would be directly affected, would be 5%, while that on US companies that import finished goods or inputs would be higher, at roughly 6%. This, to Barclays, highlights the unintended consequences of imposing tariffs given the global nature of current supply chains.

Since then, trade tensions have only escalated at an alarming pace. In context, the US has already imposed tariffs on $79 billion of US imports and proposed tariffs on an additional $702 billion, with the combined $781 billion in targeted goods representing 27% of total US imports.

Reflecting this escalation in trade tensions, the Trade Policy Uncertainty Index recently notched its highest reading since 1994 around the time of NAFTA’s inception.

Adding fuel to the fire, in recent days all out currency war has also broken out following a sharp devaluation in the Yuan, which has tumbled at an annualized pace of 30%, far faster than during the 2015 devaluation…

… and eventually prompted Trump to also enter the fray, when he first complained about the Yuan “dropping like a rock” on a CNBC interview (coupled with some not so veiled suggestions against the Fed rate hiking ambitions), followed by vows to impose more tariffs and complaints about “illegal currency manipulation”, which have resulted in a rollercoaster move in the Yuan and, inversely, the dollar, and prompted Goldman to write that “trade war is evolving into currency war.”

…click on the above link to read the rest of the article…

Goldman: US-China Trade War Set To Worsen

July 11, 2018

Goldman: US-China Trade War Set To Worsen

Echoing the comments laid out last night by Standard Chartered’s Steven Englander, this morning Goldman Sachs doubled down on how the US-China trade war will progress in the near-future, warning that it expects the tensions to get worse, at least initially. Speaking to Bloomberg TV, Goldman’s co-head of EM and FX research, Kamakshya Trivedi, said that “we think that trade tensions will probably worsen before they get better.”

Trivedi also predicted that “we’ll see probably see more weakness in the renminbi” over the next three to six months, a prediction that certainly has proven accurate today, with the onshore Yuan sliding to the lowest level since August 2011.

“There’ll be more stability after that, thanks in part to China’s growth holding up ok”, according to the analyst who doesn’t think that Beijing will “treat the currency as a weapon, but some of the weakness so far won’t be unwelcome to Chinese policy makers.”

In a separate note, overnight Goldman economist Alec Phillips writes that the release of the list of $200BN in tariffs on Chinese imports “raises the probability that further tariffs will be implemented” adding that Goldman was somewhat taken aback by the timing of the announcement: ”

“We had expected that the next round of tariffs on $16bn in goods could be implemented by late August or early September, so the implementation of this next round of $200bn, if it happens, looks unlikely to occur until September at the earliest.”

Phillips also writes that networking equipment, computer components, and furniture would be the most heavily impacted imports in the newest round of tariffs. He adds that the list avoids consumer goods, including apparel more than Goldman had expected, while share of computer components, furniture affected is larger than anticipated.

…click on the above link to read the rest of the article…

“Truly Awful Numbers”: Lira Tumbles After Turkish Inflation Explodes Most In 15 Years

July 3, 2018

“Truly Awful Numbers”: Lira Tumbles After Turkish Inflation Explodes Most In 15 Years

Having stabilized modestly after its mid-June rout, which sent the Turkish Lira to a record low of 4.74 – on the re-election of president Erdogan of all things – overnight the TRY tumbled as much as 1.4% to 4.6813 after Turkey reported that headline inflation soared from +12.1%y/y in May to +15.4%y/y in June, significantly above the 13.9% y/y consensus expectations.

This was the worst inflation print since the runaway inflation days at the start of the century, and the highest since October 2003.

The monthly jump in inflation of 2.61%, was more than double the median Bloomberg estimate and higher than the highest est. of 1.8%.

As Goldman details, prices rose across the board: Food and nonalcoholic beverages inflation increased by 7.9pp to +18.9%yoy, on the back of a sharp rise in vegetable prices, and accounted for 1.8pp of the overall 3.3pp rise in the headline figure.

Core inflation also increased sharply, from +12.6%yoy in May to +14.6%yoy in June, above consensus expectations of +13.4%yoy. The rise in core inflation was broad-based with all major categories except education registering increases. Nevertheless, the sharp rises in the purchase of vehicle and telecommunication services categories were notable.

Understandable, currency traders were shocked at the print, which if anything is an underestimation of real price tendencies, and sent the Lira sliding to the lowest level against the USD since June 26.

In light of Erdogan’s recent comments, some of which have gone so far as suggesting the president may soon take over the rate-setting process himself making the Turkish Central Bank redundant, commentators were horrified at today’s data: commenting on the number, Medley Global EMEA analyst Nigel Rendell warned that “if policymakers react with only half-hearted measures, President Erdogan’s new term in office will quickly morph into a financial crisis”, quoted by Bloomberg.

…click on the above link to read the rest of the article…

OPEC “Deal” Ends With Output Confusion, Sets Stage For “Deal Unraveling”

June 23, 2018

OPEC “Deal” Ends With Output Confusion, Sets Stage For “Deal Unraveling”

Just 24 hours after OPEC appeared on the edge of splintering, Iran seemed to cave and in a deal that was described as a victory for everyone, OPEC member states and Russia provided a vague assurance they would boost output by striving to return to full compliance of the original production quotas as set in the 2016 Vienna production cut agreement.

As Goldman summarized in its post-mortem, “no further details were provided, including no country level allocation, no guidance for non-OPEC participants or timeline for the increase.” Furthermore, during the press conference following Friday’s deal, the one question which never got an explicit answer is how much output would be boosted by, with little clarity shed beyond “targeting full compliance at the group level”.

This suggests that there is room for countries with spare capacity to increase production above the individual quotas but also that such adjustments could not be resolved.

As a result, Goldman’s energy analyst Damien Courvalin said that he views today’s agreement “as masking disagreements within the group and a potential start to the unraveling of the deal, with core-OPEC and Russia looking to increase production but Iran opposing such an increase.”

Bloomberg’s Javier Blas confirmed as much, noting that Friday’s agreement was a “fudge in the time-honored tradition of OPEC, committing to boost output without saying which countries would increase or by how much” a fudge which gave every member – especially Iran which by endorsing a production boost would have been seen as effectively approving of Trump’s sanctions and allowing other states to take its market share – an “out” to save face, by sufficiently masking up the details so no explicit accusations of backtracking can be made.

Importantly, “it gives Saudi Arabia the flexibility to respond to disruptions at a time when U.S. sanctions on Iran and Venezuela threaten to throw the oil market into turmoil.”

…click on the above link to read the rest of the article…

Goldman: If Trump Wants To Win A Trade War, The Market Has To Crash

June 3, 2018

Goldman: If Trump Wants To Win A Trade War, The Market Has To Crash

Now that the Trump global trade war ceasefire is over with both allies (Canada, EU, Mexico) and adversaries (China), the hot takes are coming in, and none more exhaustive than a note by Goldman Sachs released overnight, in which economist Alec Phillips writes that less than two weeks after Steve Mnuchin declared that the “trade war is on hold,” a statement which China trade hawk Peter Navarro subsequently blasted as inaccurate, Trump’s policy has shifted substantially and “following trade announcements over the last few days, the trade war does not appear to be “on hold” but simply “on”, leaving even longtime observers of trade policy confused about the direction from here.”

So how should one try to make sense of Trump’s unique, confusing negotiating style? According to Goldman, at the start of the Trump Administration, “reciprocity” was the watchword guiding trade policy.

Since taking office the President has cited many examples of “unfair” trade policies where foreign tariffs are higher than US tariffs on the same product.

Trump made as much clear on Saturday when he tweeted that “The United States must, at long last, be treated fairly on Trade. If we charge a country ZERO to sell their goods, and they charge us 25, 50 or even 100 percent to sell ours, it is UNFAIR and can no longer be tolerated. That is not Free or Fair Trade, it is Stupid Trade!”

✔

The United States must, at long last, be treated fairly on Trade. If we charge a country ZERO to sell their goods, and they charge us 25, 50 or even 100 percent to sell ours, it is UNFAIR and can no longer be tolerated. That is not Free or Fair Trade, it is Stupid Trade!

1:51 PM – Jun 2, 2018

…click on the above link to read the rest of the article…

Italian Bonds Tumble, Triggering Goldman “Contagion” Level As Political Crisis Erupts In Spain

May 25, 2018

Italian Bonds Tumble, Triggering Goldman “Contagion” Level As Political Crisis Erupts In Spain

When it comes to the latest rout in Italian bonds, which has continued this morning sending the 10Y BTP yield beyond 2.40%, a level above which Morgan Stanley had predicted fresh BTP selling would emerge as a break would leave many bondholders, including domestic lenders with non-carry-adjusted losses…

… there has been just one question: when does the Italian turmoil spread to the rest of Europe?

One answer was presented yesterday by Goldman Sachs which explicitly defined the “worst-case” contagion threshold level, and said to keep a close eye on the BTP-Bund spread and specifically whether it moves beyond 200 bps.

Should spreads convincingly move above 200bp, systemic spill-overs into EMU assets and beyond would likely increase. Italian sovereign risk has stayed for the most part local so far. Indeed, the 10-year German Bund has failed to break below 50bp, and Spanish bonds have increased a meager 10bp from their lows. This is consistent with our long-standing expectation that Italy would not become a systemic event. That said, should BTP 10-year spreads head above 200bp, the spill-over effects onto other EMU sovereigns would likely intensify.

Well, as of this morning, the 200bps Bund-BTP level has been officially breached. So, if Goldman is right, it may be time to start panicking.

Ironically, almost as if on cue, just as the Italy-Germany spread was blowing out, a flashing red Bloomberg headline hit, confirming the market’s worst fears:

SPANISH SOCIALISTS REGISTER NO-CONFIDENCE MOTION AGAINST RAJOY.

This confirmed reports overnight that Spain’s biggest opposition party, the PSOE or Socialist Party, was pushing for a no-confidence motion again Spain’s unpopular prime minister. The no-confidence call follows the National Court ruling on Thursday that former Popular Party officials had operated an illegal slush fund, as a result of which nearly 30 people were sentenced to a total of 351 years in prison.

…click on the above link to read the rest of the article…

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