EU money centers are rallying into the results, DB up 6%. I am a limit short on ES at 1101, 02, 04 on the results. Expecting a bear-reversal on index tomorrow, regardless of the timing on the release.
Market Owl believes the stress test is a buy the rumor sell the news event. http://marketowl.blogspot.com/
Timing looks to be at 12pm Eastern time. I think results should be pretty much in line what many are expecting.
I was talking to a guy at BNP today who stated that there will be very little info to be released other than the tier1 capital ratios. Rumors of large shorts into the EU close today by GLG, usual suspects. Nobody really believes the tests are legit. I think it's setup for a nice bull spike and long tail on the release. I'll try to fill and TP at 1080. Unlikely to reach my first trigger at 1101, so probably academic.
We'll see... FWIW, I have heard all sorts of speculation about how transparent they will be. Most importantly, my understanding is that they couldn't figure out the answer to the question themselves. Apparently, the finance ministers had a call today to decide what to disclose and how. I am somewhat skeptical, but who knows, they might not disappoint tomorrow. Moreover, I am getting a sense that a lot of disappointment is priced in already.
The more they talk their book, the less comfortable I am being long. When the IMF comments I know a short is in order. Anyway, I want to be paid for it, so I will wait, patiently.
Makes sense... From the conversations I have had, it seems the point of the exercise is mainly to make Spain look OK and take the heat off the sovereign. So I'd guess they make the Cajas look good at the expense of the Landesbanken (which are dead anyways). What that does to the mkt, I have no idea.
My guess is the momo will fade as soon as the realization sinks-in that banks will be failing under a flat EU GDP, let alone the -3% scenario. There will be nowhere to hide once the capital ratios and conditions are made public. The failures to come in Q4 will expose the test and the test-takers.