Loans Versus Bonds Relative Value: Week of August 13
Submitted by Tyler Durden on 08/18/2009 - 08:17
When last week we said "look for loans to trade as wide as US CDS, with bonds squeezed to nano bps over zero" we thought we were kidding. We were wrong. Last week the across the board tightening continued, with the loan universe positioned exactly at 400 bps, an 11 bps tightening from the prior week, while bond tightened by 28bps to 733 bps. Yet while there were the rubber band movements tighter across several high beta bond names such as Select Medical and Aeroflex which screamed much tighter and took the index in, for the first time a more substantial widening was also notived, that of FDC bonds going wider by 150bps.
Frontrunning: August 18
Submitted by Tyler Durden on 08/18/2009 - 07:47- PPI down 0.9%, Core down 0.1%, more than forecast - Byron Wien: "most certainly last month of deflation" (Bloomberg)
- July housing starts of 581,000 down 1.0% versus June 587,000 (Bloomberg)
- CIT second-quarter loss narrows, posts reserves for bad loans (Bloomberg)
- UK inflation is presumably high as booze, video game and DVD prices rise, a sure sign "recession eases" (Bloomberg)
- Democrats urge Obama to keep government-run health-care option (Bloomberg)
Daily Highlights: 8.18.09
Submitted by Tyler Durden on 08/18/2009 - 07:20- Accident at Russian hydroelectric plant kills at least 12 workers, up to 64 missing.
- Asian stock markets mostly lower Tuesday, metals and energy stocks weaker.
- China shares rebound after sharp slump, but investors uneasy about earnings.
- Economy is still not out of the woods: Germany's Central Bank.
- Fed, Treasury extended the TALF into next year.
- German investor confidence rose sharply in Aug. per closely watched ZEW survey.
OpEx Max Pain
Submitted by Tyler Durden on 08/17/2009 - 23:55
We closed at OpEx max pain. If SPY moves sideways right into Friday 4pm, the market will prove to be a vicious sadist, to which masochistic traders return day after day, begging for more. Of course, one assumes the Chinese bubble doesn't implode first.
Monthly TIC Data Observations
Submitted by Tyler Durden on 08/17/2009 - 21:20
In order to attempt filling a recent vacuum in public TIC data aggregation and analysis, Zero Hedge is starting a monthly TIC report, highlighting the notable disclosures by the Treasury International Capital System.
The CFTC Is Seeking Your Feedback
Submitted by Tyler Durden on 08/17/2009 - 19:35Today, the CFTC announced that it is seeking public comments on whether the Carbon Financial Instrument listed for trading by the Chicago Climate Exchange performs a significant price discovery function. As the CFTC has lately faced substantial public scrutiny over the potential abuse of its marketplace, it is prudent to carefully evaluate the impact of yet another market that may be abused by several key players.
Q2 2009 Corporate Defaults More Than Double 2008 Total
Submitted by Tyler Durden on 08/17/2009 - 17:33The second quarter of 2009 set a new record for the number of corporate defaults, with 82 non-financial events of default, consisting of 16 names in media and entertainment, 15 in autos and 15 in natural resources, according to a new report published by S&P. The total amount of defaulted debt was $254 billion, far larger than the $102 billion spread among 69 defaults in all of 2008.
Daily Credit Summary: August 17 - Ch Ch Ch Changes
Submitted by Tyler Durden on 08/17/2009 - 16:39Spreads were broadly wider in the US as all the indices deteriorated (with HY underperforming IG once again as both reached 3-4 week wides but IG maintained a very tight range like stocks while HY slipped all day). Indices generally outperformed intrinsics with skews widening in general as IG's skew decompressed as the index beat intrinsics (HY-IG and IG hedge technicals holding IG back), HVOL underperformed but narrowed the skew, ExHVOL outperformed pushing the skew wider, XO's skew increased as the index outperformed, and HY's skew widened as it underperformed. (The HY-IG differential is a better indeication of risk aversion currently than IG since technicals are holding IG back and we note thios would imply a higher VIX and 950 S&P give or take - given empirical levels).
Robert Prechter On The Dollar
Submitted by Tyler Durden on 08/17/2009 - 15:33The founder of Elliott Wave International shares his perspectives.
High Yield Getting Reacquainted With Gravity
Submitted by Tyler Durden on 08/17/2009 - 15:30
HY 12 doesn't believe in this rangebound mumbojumbo - credit traders have to really earn their living. Speaking of, when will "liquidity providers" also get involved in this product and start trading amongst themselves.
SPY Tag Ends
Submitted by Tyler Durden on 08/17/2009 - 15:11
Is there any reason why markets are still open between 10am and 3:30pm?
Financials Losing Their Leadershipness
Submitted by Tyler Durden on 08/17/2009 - 14:43
No growthyness in the XFL... Or at least today. Hey, wasn't Guaranty supposed to have some press release or another today?
Sergey Aleynikov Seeks Dismissal Of Case
Submitted by Tyler Durden on 08/17/2009 - 13:54Bloomberg reporting that Sergey Aleynikov wants a dismissal of his criminal case. Whether or not Goldman, which woke the FBI at 3 am to get on the case stat, will agree with his view is a different view.
Fed July Loan Officer Survey - Crunch Continues
Submitted by Tyler Durden on 08/17/2009 - 13:11Too bad small and medium businesses aren't CCC-rated, 6x levered, recent LBOs: they would have no problem obtaining 7% financing. As it stands now, though, good luck.
Readers' Digest To File For Bankruptcy
Submitted by Tyler Durden on 08/17/2009 - 12:14In a jarring reminder that hope does not pay scheduled interest payments, Readers' Digest announced it is about to file for bankruptcy. And since bondholders don't accept hope in lieu of cash, the company announced that not only would it not make its $27 million coupon payment but that it would undergo a prearranged Chapter 11 process in which its secured lenders would end up owning the company concurrent with a 75% haircut in their holdings.
