Random notes from the cliffside

A few observations as the yield on the Spain 10-year gets to 6.3 percent (with the tesoro planning to auction 7 billion this week):

1). The equity trade to be in today is long Spanish banks/short German, Italian and French. At the time of writing it has turned 2 percent since Friday close. (SAN, BBVA vs. ACA, GLE, DBK, CBK, BNP, UCG, ISP - half to each group, equally weighted);

2). The euro refuses to credibly break below 1.40 to the US dollar. Although that may well be a comment on the relative nitwittery of political leadership. Merkel's truly bad, Zapatero and Berlusconi are hopeless fools and Sarkozy is simply missing in action, but nothing short of the regular parliamentary fisticuffs in the Ukraine compares with the United States congress;

3). The front month bund contract, calculated free of contango, can't seem to get above last summer's highs. Will anybody really want to be long the deutschmark at 2 euro-equivalent to the buck? We'll take the peseta, any day.

Along the usual lines of how difficult it is to actually extract information, beyond the trend of gossip, from the media... the lunchtime TVE news reporter from the Bolsa de Madrid had it (translated from memory) that 'the premium that investors had to pay to invest in Spanish debt had risen to 6.3 percent'. Magic realism.

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