In the broad market we witnessed the divergence between reality and the market manifest itself in a broad selloff on FRI. The jobs report beat expectations but in the upside down world of bad news is good news, good news is terrible because the Fed has no choice but to raise rates. All this angst over a quarter of a point. The key to understanding is not to look at one day in the market. What you should be focusing on, is the divergence in policy approaches in the world's biggest economies. When all the world's markets were setting new highs, everyone was pulling in the same direction..loosening monetary policy by cutting interest rates or doing QE. Today you have a major divergence as the US and England are tightening while Europe and China are loosening. The rest world is still stuck in the QE stage.
The problem is that the only dog that matters in this little divergence is the US dollar. You have to understand that 90% of world trade is denominated in dollars and 80% of all international loans by the corporate sector have to be paid back in dollars. As the dollar becomes stronger, commodity prices weaken because importers can't afford to carry inventory in their warehouses and pay interest on expensive dollar denominated loans. So they liquidate inventory and buy LESS. Prices drop because demand drops. The suppliers still need to pay off their debts in rapidly appreciating dollars so they produce even more of the commodity to sell which drives the price even lower. Just look at the charts for lumber, oil, or copper. The higher the price of the dollar the more urgent it becomes to pay off your loan. This explains what is happening in oil. Along the way a whole bunch of firms go BK, our exporters get crushed and people lose their jobs.
World markets are starting to diverge. The FTSE has put in a triple top and has rolled over while the DAX and Nikkei are making new highs. We may have one more rally before we join the FTSE. The spring will not be pretty.
The subprime issue is deeper than just funding drying up for perspective buyers. The DOJ has an ongoing investigation into the securitization of subprime auto loans which started in July, 2014. Look for the results of that to be made public this summer with indictments and fines. The Cliffs Notes on the investigation is that the banks packaged up the subprime loans and sold them to yield starved pension funds. The only problem was that in the prospectus they described the lending standards they used in making the loans. Or let me rephrase that. The prospectus described the lending standards the banks were supposed to use, not the lax standards they actually used which is why some of them are imploding. Anyway, it is securities fraud at its best. The problem for the auto industry and SIRI is that when the report is released the funding for subprime loans will dry up and so will new car sales in that segment of the market.
One of the more interesting divergences in SIRI commentating market is that while I have written a dozen articles about subprime lending there hasn't been one mention of it over at SA where it is a steady beat of glowing positive articles.
Speaking about divergences and SIRI, did anyone catch the article put out by D Bank when it initiated coverage on SIRI with a $4.00 price target and a hold on the stock? The bank seems to see a pattern of slowing growth for the company which is what we have been saying for a while. What D failed to recognize is that the extension of paid trial subs from 6 months to a year is masking the real slow down in sub growth. At some point that will catch up with the company. The conversion rate falling to 40% is the sign of the underlying problem.
On a brighter note SIRI hit a new recovery high of $4.04, which it promptly gave up. As WW noted. SIRI's timing was impeccable. The new loan being announced on the day of poor auto sales. The question is whether the breakout on Mon was by those who knew about TU announcement.
Everywhere you look in the world and the market things are diverging from the normal or the expected. It is the new normal and the unintended consequences of QE. It is just that no one understands the underlying causes of the problems. So we use old explanations to explain the new problems.
Last week I ended my post by saying sarcastically that auto sales were expected to be up 8.9% because even in the face of terrible weather people went out to buy new cars, at least according to the pundits. TU brought a different story as sales were up only 5%. Everyone trotted out the weather excuse but the weather was a "known, known" as Donald Rumsfeld used to say and should have been taken into consideration in making the 8.9% projection. Something deeper is going on under the surface, but no one wants you to know about it.
I started to write about the inherent problems of subprime lending in the auto market in July and its consequences are now manifesting themselves.
Last month I told you that more than 8% of the subprime loans made in Q1 2014 were in default by the third quarter of 2014. That stat caught the eyes of bank regulators and the Office of the Comptroller of the Currency (OCC) sent out a warning to all the national banks it regulates. In Feb. the Director and Asst. Director used speeches to warn of the dangers and compared the problems to subprime lending in housing. At least one bank got the message. Wells Fargo was the second largest provider of subprime loans to the new car market. 48% of its new car loans were subprime. In mid Feb. it said it would cut that back to 10%. It is likely that the cutback in subprime funding had a greater impact on sales than the weather but no one even mentioned it as a reason. We will see how Mar. plays out and whether the true reason for the slow down in sales makes it into the press. Anyone have a guess which bank is the largest subprime lender in the US.
If you guessed the SPANISH BANK, Santander then you get a gold star.
The market has a way of ignoring unpleasant facts. If the Chinese economy was so strong in Q4 and was about to hit its 7.4% GDP number why did the Chinese central back have to lower interest rates in November to stimulate the economy? Things are great in China. Yesterday, on a Saturday, the Chinese lowered interest rates again. The bulls say that means more stimulus so stock prices are headed higher. The bears say it shows the Chinese GDP numbers are fake. Oil prices have fallen 50% while Chinese GDP grew at 7.4% in Q4. That makes perfect sense as long as you don't think about it.
We always miss the warning signs. In Jan. there was no new high in the market. The first month since late 2012 without a new high. Ignore it, we had new highs last week. There is an old Dow theory that says new highs in the Dow should be confirmed by new highs in the Dow Transportation Index. During the new highs in late Dec. and the ones last week there was no new highs in the Transportation Index. This is curious since oil prices were falling which should increase profits in transportation. The bulls say ignore it. It is an old theory and transportation is an old technology. Charles Dow is rolling over in his grave. It is a negative divergence that can't be explained.
The S&P traded over a 17 point spread last week. That is almost impossible in a non holiday week. SIRI mimicked the S&P and traded between 3.85 and 3.91 for most of the week. The bulls say stimulus from the Chinese and the ECB QE will propel the market higher. The Duke has his eye on March 16, which is the day the pension money flows into the market. Every thing else is window dressing and maybe the true story will unfold after that date.
Feb. new car sales this week. Apparently, everyone ignored the storms and went out to buy a new car. The comparisons become harder in Mar because C began giving them away in Mar 2014 when they announced their IPO. That will be the test.
In the US we do things entirely differently. Rather than relying on one guy's estimates of how hard those yak are working and their growth rate, we employ a whole army of people in Washington to imput millions of bits of data into super computers that will crank out an accurate GDP number. Like China, we know that the whole world is waiting breathlessly for the number, so about a month after the close of the quarter the government publishes what it calls a "flash GDP number". The flash number is total garbage since the government rounds everything up and assumes a optimistic projection on all the data it hasn't received as yet. The flash GDP is always too high but as soon as it is announced all the pundits say look how great the economy is doing so buy the market. Anyway, the flash GDP for Q4 was 2.6% growth. Since we know that number is total fiction the government tells everyone that there will be three revisions. We got the first revision this week to 4th Q GDP and everyone knew it was going to be bad. The economists have figured out how to play the game so they said it could be revised down to 1.8%. Of course, the government couldn't admit the numbers were that far off so it only revised the number down to 2.2%. The pundits on CNBC said see, things aren't as bad as people thought and there is no other place to put your money so buy the market. We will get a second revision at the end of March and GDP will fall to 2.0%. The economists will say ignore the number. Christmas fell during the winter months this year which explains why sales were down. The numbers for Q1 are showing improvement so Q4 is now meaningless. Buy the market. At the end of April we will get final GDP numbers that will show growth at 1.8% for Q4. No one will care because the government will report Q1 grew at 2.8% and we will be starting the process all over again. Buy the market. Things are improving.
Over in the corner the Chinese are laughing asking, why didn't they just lie back in Jan.?
There is no clearer indication of the demise of western technology than the way China and the USA report report GDP. The reports are awaited with breathless anticipation by investors and economists throughout the world because they show the health of the world's economy and therefore are one of the driving forces for stock markets.
So let's see how both countries go about assembling this vital data. China is a vast country and some of the western provinces are 5,000 miles from the capital. In these provinces there are more yaks than people and most of the population under 30 has left to work in sweatshops making Apple components. The only industrial development taking place is the new field the yaks plowed on someone's abandoned farm that was seized by his neighbor.
Anyway in China the central government sets a goal of GDP growth at the beginning of the year and demands that all the provinces report within three weeks of the close of each calendar quarter. China always beats its own deadline and reports 20 days after the quarter ends. Last year they set a goal of increasing GDP by 7.4% and they hit the number. So let's say you are out West, you know 5,000 miles away from the capital. Just how do you measure the growth of yak furrows or even better what does GDP actually mean since all the farmers are under reporting the size of their crops to cheat on their taxes. Anyway, you are a Communist Party leader and you like your cushy job so the government wants 7.4% growth so you tell them the GDP grew 7.4%. It is not like anyone is coming out to check. The central government collects all these garbage numbers and proclaims that China grew 7.4% in 2014 Q4. Then every economist in the West proclaims that China remains the growth engine in the world and every pundit on CNBC says there will be a soft landing in China. Buy the market.
In the financial world the patterns repeated themselves as soon as the Greek drama was resolved. The algos rocketed us another all time high at 2110, just 65 points from the magic 2175 that I predicted. One of the commentators I follow on a daily basis immediately revised his year end forecast saying we would be at 2630 on the S&P by this date next year. For those of you who might be math challenged that is a 24.6% increase from the close on Fri. and he doesn't see a 10% correction in the S&P at any point in the next twelve months. Here is a hint as to his identity. His forecast was published yesterday morning. That is the kind of euphoria I was pointing to last week WW.
It matters little to most of the Street's prognosticators that Christmas sales were BELOW 2013, that the Jan rebound did not materialize, that Goldman just cut 1Q GDP due to the weather or that Jan. industrial production including autos fell. As the prognosticator said we are hiring 250,000 more people each month to sell less goods, the ECB is starting QE next month and the market has never gone down while we had an active QE going on, and besides where else are you gonna put your money. The pattern always repeats itself. The problem is deciphering which pattern...QE will save the day despite the fundamentals or the euphoria is always greatest before the bubble bursts.
SIRI has a pattern that few remember. In the third week after a run up post CC, the stock usually sells off back down to the breakout point. The third week doesn't official start until the 26th but it is never to early to give you a heads up. The stock is looking weak with a triple top at 3.91 and low volume. I got off three trades last week. Two on the long side and one on the short side on FRI. They pay the same on both sides. Last week I said the stock would bottom at 3.80. I was off a penny. We are now just as likely to see 3.71 as 3.99. Show the same patience as the fed and you will be rewarded with a good entry point.
Two weeks ago I predicted that Syriza was ready to take on the EU establishment and return to the Drachma. I thought that they had seen reality, that Greece could never repay the current debt and that an extension of the status quo was an extension of the depression that has gripped the country. My view was that this was the perfect time to explain to the Greek voters that things had to get worse, maybe much worse, before they could get better. During the negotiating process Syriza's approval rating went from 35% to almost 75%. They had the chance to pull this off, but in the end, like all politicians they sought to protect themselves. I could say that Fakeem folded like a cheap suit but he doesn't wear suits. It turns out Fakeem was just a fake.
One of the things you learn quickly in no limit is that if you are engaged in a bluff you have to be willing to fire that third bluff after the river card. If you are being bluffed you have to recognize the bluff early on and know that a good player is going to test your resolve and maybe your entire stack by a big bet on the river. If you aren't prepared to play it both ways then you shouldn't be playing the game.
So now Syriza will try to sell to its backers and the entire Greek nation that they actually got something out of all this. It is the pattern that politicians always follow after they fail to seize the moment and vote for self preservation over what was best for the country.
I harken back to a chapter in President Kennedy's Profiles in Courage dealing with the impeachment of President Andrew Johnson. Ten Democratic Congressman failed to vote for impeachment because they knew the country was more important than the trumped up charges. They all knew the consequences. None would ever be elected to public office again.
I doubt this is over. Greece is likely to move even further left in the search for a leader who really represents them.
Wow, while you were going short I went long from 3.83 on TU to a sale at 3.89 at about 15 minutes before the close on TU. No action today. Here is what I think is happening...a classic low volume short squeeze to make the amateur shorts cover.
Give it one more shot at 3.99. You will find that shorts are better set at 5, 9 or zero.. as in 3.89, 3.90 or 3.95. Shorting at other numbers are too risky. You will need to try it a couple of times to get the hang of it.
The SIRI CC call had an interesting bit of guidance that no one seemed to see. In Q4 the company reported revenue of 1.09B or an annualized revenue of 4.36B. Yet in 2015 the co. only projected 4.4B in revenue. That is an average of 1.1B per quarter. It is another way of saying revenue will be flat. That is not good but the market dismissed it as a conservative forecast. There is another way to explain it. It fits my explanation of the company giving long term low cost trials through the OEM's to mask a declining take rate. "No one cancels a free subscription". This is what bulked up sub growth. The churn rate stayed steady while the take rate declined. That chicken will also come home to roost some day. Time and Space.
Last week I told you the stock had a new trading range of 3.65 to 3.94. The low for the week was 3.67 and the high was 3.95 including the AH or 3.93 for the regular market. I missed the bottom by 2 cents and the top by a penny, either way. It is the best I can do on a Sunday morning.
I saw the usual stuff written about the pullback. At this point it is just Flabby doing his thing. Using the regular hours numbers, we moved a total of 26 cents last week. A 38.2% retracement is 10 cents. The top was 3.93 and 3.83 would be the retace. That is where we closed. A 50% retrace would take us to 3.80 and a 61.8% retrace would be 16 cents. 3.93 minus 16 cents is 3.77. If you don't recognize 3.77, it was the first high on the breakout before the correction back to 3.67. The move back to $3.80 is almost a given on TU morning. 3.77 is more problematic at this point. So far it is all standard Flabby and you should trade accordingly. The next move in SIRI is the 3.99-4.01 range where the stock becomes a short. As I said, we have four weeks, let's enjoy them.
As I mentioned a couple of weeks ago I read a couple of dozens articles a day that purport to offer some investment advice. Lately, I have found the comments attached to those articles of more interest than the articles themselves. I think we have all heard the famous quote from John Templeton that Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. New Year's always bring unbridled optimism, but in the past six weeks the comment section of articles have contained an enormous number of amateur bulls ridiculing bears and predicting never ending rallies to 2500 or 3000. You will find one written about me this morning and my $2.73 prediction on SIRI which I haven't changed. The euphoria bubble is never recognized until after the fact. It just needs some time and space to grow before it gets too big and explodes.
Someone wrote that Black Swans never really cause big market declines. The underlying reasons are already there and the Black Swan event is merely used as an excuse for the decline. Interesting theory. If you don't recognize it, it is the investment version of which came first, the chicken or the egg.
Speaking of chicken, I have some Greece to fry today. I liked all those rumors flying back and forth. I wonder if CNBC has removed the Greece fried egg from its face when it released the story about Greece capitulating and extending the bailout. If you missed the inside joke from Fakeem here it is. He suggested that the ECB just agree to buy all the newly issued Greek debt under its March QE program and the crisis would be solved. I thought I would die laughing over that one. The Greek thing will probably go down to the end of the month giving the market time and space to rally. The interesting thing is that the EU is actually thinking about giving Greece everything it wants but giving it a new name...super extend and pretend. If you ask for the ludicrous and actually get it, can you turn it down? We may find out.
Back in Dec. I predicted that the S&P was about to have a parabolic move to 2175 before beginning a steep decline. Most of you questioned The Duke's sanity and LR said he saw no reason for such a move. LR is right, there is no reason for such a move but the market left sanity behind about six months ago. So even though there was and is no reason for such a move the wave structure of the market said we needed one more rally before the decline could begin.
We all know happened then. The market promptly declined to 1982 in Jan. making that 2175 prediction look foolish. It happens to the best of us. But what the market was really doing was using up time and space. It wasn't quite ready to do its deed so it wasted a month but gave us a signal. January was the FIRST MONTH since the 2011 lows where the S&P didn't set a new all time high.
But one thing I did do correctly was to tell you we were headed back towards the all time high of 2093. The market needed a double top or nominal breakout of the ATH before the decline. Last week I told you we had achieved enough but the market gave us the nominal new high I have been predicting during the last six weeks. We are now at an inflection point. The problem is that we have not used up enough time and space.
If you have followed The Duke over the past few years, you know I preach the importance of 3/15 and 4/15. Those are the dates that billions pour into the market due to the pension contribution of corps on 3/15 and IRA contributions on 4/15. The larger contribution is 3/15 and it seems unlikely the boys would permit a decline before that date. So time and space gives us 4 more weeks and brings the inconceivable 2175 back into focus.
You misunderstood what I said. I said don't buy after the breakout...buy it before. I bought the day after I wrote the article as it recovered from 3.51. Sold at 3.74. Bought back at 3.71 and sold today at 3.79. Looks like a bad sale but so be it.
Last month I told you that we needed one more rally for the chart to resemble 2007. LR responded by saying he didn't see how that was possible given what was happening to oil prices. I agreed with his observation but this is the New Normal where fundamentals don't matter. So we managed to find another new story...the cut in oil rigs will decrease the production of oil someday and gas prices will go up. That is good for the American consumer right? So the market rallies. Makes as much sense as a debtor telling a lender I am BK and the lender telling the debtor take this new loan or I am going to set your house on fire.
Anyway, we moved from 1982 up to 2074 before everyone got scared to hold their position over the weekend. What I would like to see is for the rally to continue until we get a double top at 2093 or a nominal new high just above 2100. Then the chart would be perfect. But let me warn you that perfection in nature is rarely seen and the move back to 2074 was sufficient to meet all the technical requirements before the correction. From here on out, we are on borrowed time.
For its part the ECB and the EU are still playing the game under the old rules--Extend and Pretend. The EU and ECB can't admit that Greece can't pay it debt and write it off. First the pols in Germany and Finland would have to explain it to its citizens and get ready to collect their pensions. Second, it would blow a hole in the EU's and ECB's balance sheet requiring a recapitalization from the countries that just lost all the money not to mention that France, Spain and Italy can't meet their contributions requirements. Finally, populists movements in in those three countries will want the same deals. Read Euro breakup.
The two sides are playing two different games and from my point of view the EU and ECB are making all the mistakes. They want Greece to take the last 7.2B under the current program and Greece is saying we don't want it. Usually the debtor is begging the bank for money and the bank says no. Here the bank is saying take the money and the debtor is saying we don't want your friggin money. The world is upside down. The ECB predictably reacts by refusing to accept Greek bonds as collateral but leaves an ancillary (more expensive) way open for Greek banks to borrow. The message from the ECB, wise up or we will cut you off and you will go BK.
Fakeem's response, we are already BK. Syriza's political response, the EU does not respect the sovereign will of the Greek people. The EU then replies get a deal in place in 10 days or we will consider an ouster. Talk about backing yourself into a corner.
So this week Fakeem will present his plan. My guess is that the EU will reject it because that is what Fakeem wants. So what happens when the 2/16 deadline rolls around or when Greece defaults on an IMF loan? It is all contained, we are told.
I have read dozens of commentaries about Greece. The theories about what is happened between Syriza and the EU are all over the board. Greece is blackmailing the EU, Greece's leaders are too naive to know how to conduct affairs of state, the EU is playing chicken with Greece but will ultimately give in to protect the status quo. The theories are all over the board but I don't think anyone has it right.
Let's start with Syriza's election. The Greek electorate voted them into power because they promised to end the austerity program but the electorate wants the country to stay in the Euro. Syriza wants a debt write off and a renegotiation of the austerity program. These ideas are mutually exclusive since they depend on EU, ECB and IMF approval. Syriza already knew that debt write off was a nonstarter. But the first thing you do as a political party is get elected and then you sweat the details later.
The key to understanding the situation is to understand finance minister Yanis Varoufakis. You know that The Duke is going to love a guy who has U Fak Is in his last name. Anyway, you need to know a little bit about Mr. U Fake Em to understand the the story. It seems U Fake Em was last seen teaching at the U of Texas and has written books on Game Theory.
Game Theory happens to be at the heart of modern day poker as well as a staple of high level negotiations. Basically, it provides an explanation of the decisions people make in high stress situations.
Syriza's strategy seems simple to me. First they realize the Greece can never pay off its debt so a negotiated writeoff or outright default are the only solutions. But they will only default on the GOVT DEBT (EU, ECB,IMF) not the private debt since they want to go back to the market. They know they have to leave the Euro to become competitive but they want to be forced out. They can tell the electorate we tried everything but the EU rejected it all. Also, they will play the democracy card. The EU rejected your choice.
I saw a couple of comments on the board which said I wonder how Duke is going to explain this one. Apparently, these people haven't read me recently. Three weeks ago I said It was "obvious" that SIRI was preparing to break out of its old trading range. Last week I told you the correct way to play the breakout was to buy the stock before the CC or short it after the CC. In my case I bought 150,000 shares at 3.57 and sold them at 3.74. I attempted to short the stock at 3.79 after my sale but the stock failed to hit my target price before it corrected. If you bought the breakout at 3.67 and held, you have a nickel profit. That wasn't the correct play to play the game.
The tip off that SIRI was going to breakout was all those 200-300 point down days back in Jan. The stock refused to have any meaningful correction which showed it had an underlying strength. I told the minnow in one of his posts about the upcoming breakout only to have the shorts laugh at me. Hope you enjoyed all those LOLs. The stock is now set to trade in a range of $3.65 to $3.94 until the whole market comes tumbling down.
You might want to consider reading what I write, rather than assuming you know what I am going to say.
The CC was another horrible presentation filled with evasive answers. There were two troubling numbers in the 10Q that seemed to escape everyone's attention. First. the conversion rate fell two points to 40 from 42. I can remember when the rate was 52 but it has continually fallen over the years. The company is now relying solely on the used car market for its growth which is not good. Growth will stall out when SIRI hits 25M self pay subs. It is a functions of numbers.
Second, the BB still has 1.7B left. This BB was announced in Mar. 2014. Despite all your thoughts, the company missed a great opportunity to buy cheap shares. It looks like it is wasting its FCF on shares. Now it gets to buy expensive shares for a while. I am sure you will tell me that is good too.
Well, I see that Yahoo has already censored Part 2 so I must have hit a nerve there. I wish they would send me some guidelines. Guys you have my email address.
Anyway, you all know I like to read the comics so you know that I read Wrongway's latest pontifications. Now you might wonder why he would appear in an E&P article but that should be obvious. A few year's back, you know before his $5.03 prediction, he actually got a few things right and now he is just pretending to know something about SIRI and figures at some point he will get something right again. In case you missed it, he recently outlined a 6 year price projection for the stock. You will be happy to know that SIRI will be selling for 4.80 to 6.00 next Jan and between 15.85 to 19.85 by Jan 2021. In addition, Wrongway sees no recessions in the next six years the S&P at 12,000 and the auto industry selling 35m cars a year in 2021. Finally, he informed us that he has given up his day job installing generator's and is working as an assistant to David Copperfield. He is working on a trick to levitate the whole market.
I see that it is CC time again and Freer is cutting and pasting his answers from the last CC. The CEO will just be referring everything to Freer so forget him. The good news is that SIRI will beat last year's 4th Q of 1 cent since the debt extinguishment in 2013 cut the Q by a penny. There is an outside chance that due to the buyback and less interest paid to the CBH, the company could hit the magic .0251 profit number and through rounding beat the Street. Either way if we get a breakout, I expect it to be shortlived. The only way to play is an investment now that is sold into the rally or a short after the rally. The one thing I wouldn't do is to buy the breakout. The chance of a false breakout in these market conditions is high.
Enjoy the SB and I guess you will never know what you missed in Part 2.
The problem with the E&P game is that not everyone understands the game or wants to play it. Last week's election of Syriza in Greece is just the early beginnings of a revolt to the E&P game. Greece is still BK. Six years of austerity have lead to a 25% decline in GDP and 26% in unemployment but no revival in the economy. The general feeling in Europe was that once Syriza was in power, they would learn to play the game. The troika dangled a 7.2B carrot in front of them and said you can have this money if you keep playing the E&P game that things are all right.
The problem for the Trioka is that Syriza actually understands economics. They realize that the 7.2B is just being funneled to Greece to pay off the interest and principal to Troika loans that are coming due in the spring. This is just an accounting scam that will assure the world that everything is all right while Greece's debt continues to grow and everyone can pray that things will get better someday. Syriza has this thing figured out. Greece's debt is back at 175% of GDP and it stands no chance of ever paying it off. When Greece forced the write down on its bondholders it forced the loss on private investors. All that has happened since is that the private loans have been replaced by public loans..EU, ECB and IMF and the economy is even less able to handle the debt load. This is where E&P comes in. Let's all pretend that it is okay and maybe the problem will fix itself.
Syriza has the correct approach. Let's confront the problem. We can't pay the debt so let's talk writeoff to a level where the debt is sustainable and the economy can grow. That makes sense but the EU has countered by saying that if Greece doesn't want to play E&P it will cut off the Greek banks from ECB funding. In this little game of chicken someone is going to blink. The EU and the ECB think they hold the winning hand. Sometimes in poker you underestimate your opponent and he puts you all in. I have a hunch that is going to happen.