Tuesday, December 06, 2011
There used to be an advert in UK for the TSB (a nice old-fashioned bank, pre short-term money days, now part of Lloyds) which went: "The bank that likes to say... YES".
My how times have changed. Now every time S&P open their mouths TMM think their advert should be "S&P, the ratings agency that likes to say... Fuck you".
This morning we woke to the Econo-lovvies (media folk with pretence to financial reportage) on the Radio and TV wetting themselves over the latest S&P downgrades. We were expecting to see flames on the horizon as we approached the City. Not surprisingly the world is still alive despite some quanto-suits stating the obvious. TMM, however would like to look at it through rose tinted specs as a S+P negative watch on core Europe serves to (i) force Germany/Netherlands/Finland off their high ground, (ii) exerts more pressure on policymakers into Thursday/Friday - which can only be a good thing, and (iii) irritatingly, means that UK economic policy is yet again validated, remaining the only "large" country with a AAA not on negative watch. Whowuddathoughtit. Finally (iv) We've seen this movie before in August and the World did not end - there is no shock value now.
But if a AAA rating is going to be as rare as a bull in a zero hedge shop, then as Alphaville point out, its going to make Basle III a touch difficult for the banks as they rush into the small amount that is left. TMM find it most ironic that the UK deficit ends up being funded by European bank capital at ludicrously low rates all because of Global regulation.
With everything resting on the outcome of this week's meetings there is really little else left to say. TMM, as noted in yesterdays comments, threw some VaR behind their "no-commentometer" and bought some risk correlators on the London open.