Lots of headlines coming out regarding the European Union stress test results. Here's a summary so far of what's been announced. The Committee of European Banking Supervisors that ran the tests said that of 91 banks tested, seven failed. Every German bank passed except the one real estate entity singled out by rumors this past week. Even the Landesbanken passed. All four French banks that were tested passed. All four Portuguese banks that were tested passed. All five Italian banks passed. Five Spanish cajas failed, while all of its commercial banks passed. One Greek bank failed. Results so far have come in pretty much as leaked. Tier 1 capital estimates for all the banks were released, showing what would happen under alternative scenarios. CEBS said that the seven banks that failed had an overall Tier 1 capital shortfall of €3.5 billion, and that it assumed €67.2 billion of losses under the "sovereign shock" scenario. These assumptions strike us as incredibly low and suggest that the stress tests really weren't that stressful. As we noted earlier, calculating the impact of various scenario haircuts is made all the more troublesome if banking books are not included in the exercise. No news yet there regarding this issue. We will continue to sift through the headlines. The euro has traded choppily since the news stream began at noon, but remains down on the day vs. the dollar. Our gut reaction is that the stress tests have failed to alleviate market concerns about the banking system's vulnerability to sovereign default risk in the periphery. We will continue to sift through the news, which is made all the more difficult by the fact that each bank and each national authority has released statements regarding the tests.