The spread between Corporate Bonds and Government Bonds are blowing out once again. As the risk for holding a corporate bond is perceived higher, the yields will often increase to entice buyers to holding a bond with the higher risk.
As the bond market is a snapshot of the wider credit market, large market moves downward seem probable in the next few weeks.
I thunk there is one more major bank in the good ole us of a that will fail!!!... not too far away neither.... and after the inevitable reaction... the yank tank may get the inside running in the G1. International Recovery Stakes.. aaahhh.. maybe more lemmings to the slaughter???.. now... who to short..
mmm :drink:...
Slainte
..............Kauri
Please don't let it be Citibank! Or all us IB users are screwed.
Anyone care to guess which big US bank could be next? Anyone worried about any? I'm worried about one, but i don't know if should be or not?
There are short patterns showing up everywhere again, i missed a few goodies last night but i'm loaded tonite!
Cheers,
CanOz
Ex-IMF economist sees large U.S. bank collapsing:
Kenneth Rogoff, the former chief economist of the International Monetary Fund, reportedly said Tuesday that a large U.S. bank will collapse in the next few months. "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," Rogoff told a conference in Singapore, according to a Reuters report.
Macbeth said:By the pricking of my thumbs,
Something wicked this way comes.
Looks like it.and I also wonder if Fred and Fan will go the way of Northern Rock????
Cheers
.............Kauri
What are the Russians up to here?
Looks like it.
What are the Russians up to here?
I wonder how going under will effect this cunning investment?
MOSCOW, Aug 19 (Reuters)
Russia is still buying debt issued by U.S. agencies Fannie Mae and Freddie Mac <FNM.N> <FRE.N> but on a smaller scale than before, Finance Minister Alexei Kudrin told reporters on Tuesday. Kudrin said the ministry considered other investments in its portfolio were currently riskier than Fannie Mae and Freddie Mac debt. Declining to be quoted directly, Kudrin added Russia would not have made a loss even if it had sold its entire holdings of bonds issued by the two U.S.
My guess is that equity holders will be wiped out and bondholders will be made whole. Why? Because so much of the debt is owned by foreign governments and it was bought on the understanding that it had the implicit backing of the US government. The US would have some very pissed off foreign governments to contend with if they wiped out bond holders.
If you look at the losses coming down the pike the equity is already worthless. That means the current share price is simpy a call option on the future.
I think the Treasury will step in and issue some kind of preference shares with their dutiful citizens money and nationalize these farcical instituitions once and for all.
Obviously Fannie and Freddie are toast. But if you want to see something scary, take a look at the CMBX spreads. It's not just that the junior tranches are over 3,000 bps (that's 30%, guys!), but some of the AA spreads went up 150bps just over the weekend.
http://markit.com/cmbx.jsp?Index=CMBX-NA-AA+4
It's a lottery now IMO.Just on the topic of possible bank failures. If we include investment banks I think Lehman could be history before any of the aforementioned banks.
Lehman in Deep Trouble
The gap between yields on two- and 10-year notes reached the widest in more than 10 weeks as investors favored shorter maturities, more sensitive to the Federal Reserve's interest- rate policy. Lehman Brothers Holdings Inc. may post $4 billion in writedowns when it reports fiscal third-quarter earnings, JPMorgan Chase & Co. analysts said.
Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined by as much as 20 percent, New York-based JPMorgan analysts led by Kenneth Worthington wrote in a report yesterday. Lehman, based in New York, has reported writedowns and credit losses of $8.2 billion in the past 12 months, according to Bloomberg data.
Just on the topic of possible bank failures. If we include investment banks I think Lehman could be history before any of the aforementioned banks.
I thunk there is one more major bank in the good ole us of a that will fail!!!... not too far away neither.... and after the inevitable reaction... the yank tank may get the inside running in the G1. International Recovery Stakes.. aaahhh.. maybe more lemmings to the slaughter???.. now... who to short..
mmm :drink:...
Slainte
..............Kauri
On the ABC midday news today this topic was mentioned though the news reader didn't mention a banks name specifically lots of video shots of Citi were shown. Whether or not they were trying to suggest something here I don't know.Just on the topic of possible bank failures. If we include investment banks I think Lehman could be history before any of the aforementioned banks.
Lehman in Deep Trouble
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