French debt downgraded

Hey guys,

So here we are, france got downgraded, among with other countries (Austria and slovakia).

Whats the playbook for monday? Im thinking of shorting the CAC and the major french banks on monday's opening (BNP, SocGen and Credit Agricole). Think of any other equities that might suffer from the downgrade appart from banks and mutual funds?

Also, due to this french downgrade, does that mean that the ESFS would be possibly downgraded too since the efsf is mainly supported by french and german debt and is structured a bit like a CDO...?? If yes, then shit is about to hit the fan BIG TIME.

Comments (23)

Jan 13, 2012 - 12:05pm
Something Creative, what's your opinion? Comment below:
Edmundo Braverman:
Bernankey:
Easy on the trigger. The news hasnt come out yet.

Dude, if it's on Twitter, it's reality.

This ^

"It is hard to fail, but it is worse never to have tried to succeed." Theodore Roosevelt
Jan 13, 2012 - 12:13pm
mhurricane, what's your opinion? Comment below:

It's a good list to short, but as others have said, the news has not been finalized yet. Also, ETFs that have heavy allocation to French exposure would be good, too. Ticker: EWQ

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Best Response
Jan 13, 2012 - 12:24pm
16rl, what's your opinion? Comment below:

Yes, indeed France and the other countries are not yet downgraded, but its everywhere in french media and Euronews. I mean, we have been expecting this downgrade since months, but we all said that the rating agencies didn't have the balls to do it, just like for US debt... its bound to happen.

According to les echos, the "possible downgrade news" will be given at 22h30 in France, just after the US market closes. I tell you, when news has to be released on a Friday evening when all the market are closed, something big is about to be released in the wild...

What do you guys think about the comment on the EFSF ?

Here are two links about the possible downgrade:

http://www.euronews.net/2012/01/13/sp-to-cut-some-euro-zone-countries-ratings/

http://www.lesechos.fr/economie-politique/monde/actu/0201841233930-la-france-va-etre-degradee-d-un-cran-par-s-p-274903.php

Jan 13, 2012 - 1:21pm
Flake, what's your opinion? Comment below:

Don't blow your load just yet.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
Jan 13, 2012 - 1:38pm
Bernankey, what's your opinion? Comment below:
shorttheworld:
yeah go ahead and short right after the open when al lthe other funds are panic selling at the same time, making a huge imbalance and making the stocks open much lower (assuming theyre anything like American stocks) -- after which theyll bounce from considerably and squeeze you out.

I agree that they'll open lower on poor market sentiment...but i dont think funds are going to panic...unless the vast majority of funds holding French debt are under stipulations that it has to be AAA rated.

S&P and Moodys are worthless.

Jan 13, 2012 - 4:31pm
anon56, what's your opinion? Comment below:

It's now confirmed...

Bloomberg:

BREAKING NEWS FRANCE, ITALY RATINGS CUT BY S&P; PORTUGAL CUT TO JUNK

BBC:

http://www.bbc.co.uk/news/business-16552623

Jan 13, 2012 - 7:24pm
Flake, what's your opinion? Comment below:
go.with.the.flow:
loadzz away ..pshhhh
Yayyy.
Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
Jan 14, 2012 - 2:05am
Walkerr, what's your opinion? Comment below:

I remember reading an article stating that France has 426 billion of italian debt when Italian interest crossed the barrier of 7%. I don't think there was much confidence (apart from the french people themselves) after those news items.

Is it really going to a big collapse next week? I have a hard time believing it will...

Jan 14, 2012 - 10:19am
West Coast rainmaker, what's your opinion? Comment below:

I am more concerned about possible contagion throughout the rest of the Eurozone than France itself. The calm achieved in Europe is so fragile that this event could easily cause a yield spike for the PIGS as investors flee European debt.

France is a global country, with large, interconnected banks. These banks are already having a hard time meeting the new capitalization requirements; this can't help.

Jan 14, 2012 - 5:04pm
El_Mono, what's your opinion? Comment below:

I wouldnt be so fast as to short french banks, I think the downgrade is somewhat priced already. I would expect a rebound towards the end of the week, I would buy some monday and tuesday wating for that to happen, but that is just me :D.

Valor is of no service, chance rules all, and the bravest often fall by the hands of cowards. - Tacitus Dr. Nick Riviera: Hey, don't worry. You don't have to make up stories here. Save that for court!
Jan 14, 2012 - 7:23pm
Something Creative, what's your opinion? Comment below:

What do you think every clown with an Etrade account is thinking right now? That all euro bank stocks are going to plummet as a result of something everyone already knew was going to happen. So they are going to try to be smarter than the actual HF's, traders, etc, and go short. Big money will watch it come in and then squeeze the fuck out of them when the short interest pops enough and they all scramble to cover. If it happens, I go levered long on any dip Monday and get a nice vacation out of it by the end of the week.

"It is hard to fail, but it is worse never to have tried to succeed." Theodore Roosevelt
  • 1
Jan 16, 2012 - 1:09pm
Flake, what's your opinion? Comment below:
Something Creative:
What do you think every clown with an Etrade account is thinking right now? That all euro bank stocks are going to plummet as a result of something everyone already knew was going to happen. So they are going to try to be smarter than the actual HF's, traders, etc, and go short. Big money will watch it come in and then squeeze the fuck out of them when the short interest pops enough and they all scramble to cover. If it happens, I go levered long on any dip Monday and get a nice vacation out of it by the end of the week.

When in doubt...do the opposite of what retail investors are doing.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
  • 2
Jan 14, 2012 - 9:31pm
tdr34, what's your opinion? Comment below:

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