Here on Earth – Follow Up
Spain has been at over 300bps since July. Already there are City Halls that cannot pay their bills, power companies are threatening to pull the plug on them and Catalonia is pulling out hospital beds to make ends meet (not to mention that they are planning on not paying doctor´s Xmas extra pay). Today 50,000 […]
Here on Earth
Here on Earth, we put mice in a cage and see how often they get shocked before they learn not to reach for the cheese. I wonder if there is some alternate universe where mice shout out “bad bank” and see how many times bankers hit the buy button before realizing there is no such […]
All for One and One for All!
Ignoring the knee-jerk reaction of stocks to rally 4% on the headlines that Dexia will be save and other banks will be recapitalized, it is worth thinking about what this really means and the next logical steps. For now I will not even focus on the fact that this was from a meeting of Finance […]
So much for being long…
Reverting back to short. The sell-off this morning felt overdone, in HYG in particular. We bounced on Bernanke, but it wasn’t with much conviction. Although BAC and MS bounced nicely off their lows, BAC hasn’t been able to get green on the day, although MS has, but barely. With such weak performance from ideal short […]
HYG and JNK – Catching up to reality…
It was just Friday morning that I wrote about high yield and how differently the “professional” market was trading compared to the “retail” market. HY17, the CDS index was trading at 88 at the time. It is trading at 84.5 right now, down 3.5 points. HYG was trading at almost 84, it got as low […]
Europe – Political Fabrications Instead of Economic Realities
The latest EFSF “collateral” package shows once again, just how wrong Europe has it. Dreams of Eurobonds should be relegated to the trash bin. Fantasies that EFSF will leverage itself up to save Europe should be discarded. The latest outcome of EFSF meetings should be enough to let everyone know that even the people with […]
I’m Pete and I’m Long. It’s been 36 days since I was long.
I have been very bearish. I fought some strong moves up. I argued why certain things wouldn’t work – and by certain things, I mean everything the politicians out of Europe said. I’m not planning on being long for long. On the other hand, rarely have the technicians been so right. They all have said […]
Curve Flattening In Credit – Never a Good Sign
The credit markets here are actually deteriorating and are showing signs that there is growing default concern, rather than just pressure to reduce risk. The red line is the ratio of BAC 5yr CDS vs 3yr CDS. It was the first curve to flatten. The dark blue line is the European XOVER index. As European […]
Once Again the Battle for 1,120 on SPX is raging…
The bulls are all pointing out that we are near the bottom of the trading range, that 1,120 has held multiple times and the economic data isn’t so horrible. The bears on the other hand can point to a myriad of problems that have the combination of not having been resolved, but too many investors […]
Morgan Stanley CDS – Is China Part of the Problem?
The move in Morgan Stanley CDS has been grabbing some attention. It has moved wider than any of the other banks. Its exposure to French banks in particular has been part of the reason. Potential hedging of counterparty exposure has also been listed as a reason. (Once again I can’t help but wonder why derivatives […]