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5s10s On Deutsche, Goldman, Morgan Stanley Invert
The full blown curve inversion that is taking the PIIGS by storm is slowly coming to a TBTF near you. As the chart below shows, the 5s/10s in CDS curves for the most prominent banks are now inverted, while the bulk of them are flat at best. Should the ongoing pounding in GS stock continue, look for flatness to slowly creep to the 4, 3, 2 and 1 Year marks.
chart courtesy of Credit Trader
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if Goldman wants to go private as it was rumored early on the year is it possible that this little scandal plays on their favor (lowering the share price they have to pay)?
+1, this would be brilliant.
GS stock crashes, buys market cap for pennies, go private, out-from-under most SEC control, and they can later go public again for huge cash-out (again).
That would be brilliant. Who knows, maybe towards the end they do a reverse repo, moving assets off the books to lower the stock further.
Could be, but it seems they may be discounting "jail time" and "banned for life" from the Securities industry as part of the MBO strategy.
One could only hope.
To hell with Jail time , Hang'em High
He...Heh...Heeeh... Faustian deals with the Fed are not so easily unwound.
Actually it's the other way around, Faustian deals with GOLDMAN SACHS isn't easy to unwind. I think without the Goldman Sachs and PIMCOS and others in the US, we wouldn't be able to keep our economy going via debt instead of manufacturing. The govt. needed ways to get more money without taxing for their "empire". So they go to these companies and others in order to facilitate the sideways ponzi scheme that we have been doing. Think about it, why hasn't Moody downgraded US debt and/or Munibonds. Extreme pressure from everybody in the Western banking world (it's okay if its a small country or another one, but NOT the US). Also they need these companies to cover for the state, and do things for the good of the country (if you don't believe me, then look at banks that didn't want the TARP forced to take the money in order to act as cover for a few of the banks (Citibank, Goldman etc.)).
Private business and media is essentially at the beck and call of the govt. in many ways. They lay it out on the line by saying it's your patriotic duty to do this, and if not then we will blame you for the implosion. There's an old saying if you owe a bank 100,000 dollars its your problem, if you owe it 100,000,000 dollars it's both your problems. The govt. needs private business to help facilitate economic or political agendas. Private business needs govt. to protect them and look the other way on certain things (wonder why SEC until this Recession was out to lunch, insiders said that they were told to stand down on certain companies and individuals and not for others).
While we may see some individual names get hit, they are specific and not macro in regards to affecting the markets. The days of a GS or C moving the market are gone. Now we are focused on earnings and fundamentals. And once again, as we saw with CAT, there is more strength then even the most optimistic economists imagined.
In a word: PUKE!
harry, i will try and get zh members to chip in for a seeing eye dog and a hearing aid so you can get caught up to 2010 market numbers. Oh , and beware of tipping islands
Graham and Dodd both rolled over in their graves.
Are you insane or are you really this stupid.
Both?
the banks will lead. Bernanke himself said his whole thesis of being able to reflate the economy was contingent on a sound banking system, thats why so much money went to keeping them 'solvent'. If they break, start looking for the end of the miracle rally.
60% of our GDP is in the Banking industry. If they break, we got bigger problems than a market correction to worry about.
I agree absolutely, and over the longer term I'd say its 'when' they break, not 'if'. I was talking here much shorter term. Credit market telegraphs where the bank stocks are going and they'll telegraph where the rest of the market goes.
isn't 60% of our GDP in the banking industry the issue?
Yes, but it's what historically happens to late-stage empires. Happened to Britain 100 years ago, the Dutch before them, Spanish before them, Romans as well. At some point people decide its easier to stop making stuff and start lending accumulated capital to others. Eventually this results in the end of the empire.
We dont need no friggen banks.
Sure why not Harry as every points left go point right at something else that points to optimism.....forget about those old banks and lets buy riskier small caps right?
No, I'm pointing toward reality. Look at GS today, down over 4 bucks and the market /ES up almost 2 pts. There is money streaming into buy equities and it will continue. The money simply rotates out of banks into other sectors as it has been through this entire rally.
You mean you're pointing at stock market reality which is completely detached from the 'other' real reality...of which you seem oblivious or incapable of perceiving.
Of course you're perfectly right, money keeps streaming in the buy side, the question is who's money is it?
PD's money perhaps generously given by uncle Ben and some small change by the latest suckers to be drawn in the end stage of the shell game?
Oh we need banks all right. Just dont need these camoflauged hedge funds masquerading as banks. We need banks where the deposits are 100% safe, ATMs, checking and wire transfer services. They should be run by the B-students from accounting and paid accordingly. Then the best and brightest will have to find other things to do.
I am a bit puzzled Dresdner Bank AG does not exist anymore... Its now Commerzbank AG...
What's a TBTF worth without its prop trading desk ??