The CDS Traders' Verdict Is In - UK In Deep Shit... As Are France And Deutschland

Tyler Durden's picture

Portugal... Spain...Greece...these are all last week's news based on CDS trading patterns. Indeed, this week saw the biggest trade unwinds of all top 1000 CDS entities (including all corporates) precisely in these three names. As the PIIGS implosion is finally being appreciated by everyone and their grandmother, the "speculators" are booking massive profits: the net cover/rerisking in Portugal and Spain was a massive $500 million net notional unwinds in each in the week ended April 30. Also known as taking profits. Greece and Ireland were also in the top 5, so as we have repeatedly claimed, the market will no longer make the news in Club Med. So where will it? No surprise there - the UK, France and Germany. The smartest money in the world is now actively betting the core of the eurozone is where the next CDS blow up will take place. With a stunning $630 million, $558 million and $370 million in net notional derisking, France, UK and Germany are the top three most active recipients in negative bets in the prior week, not just in sovereigns but in all names. The greatest non-sovereign derisker in the last week? Goldman Sachs, with $175 million. Nuff said. Yet a tangent on the UK: last week the UK saw $443 million in net notional derisking.  This week the number is even higher: $558 million. There is now over $1 billion in net risky bets made that the UK may not last. And Zero Hedge's outside bet to be the first core country to blow up, thanks to its massive PIIGS exposure, France, finally made the top spot in net derisking, with $629 million in net notional, or 189 contracts. The smart money is now massively betting that Europe's core is done for; as the PIIGS have demonstrated, the blow out in spreads for the core trifecta can not be far behind.

Top 10 deriskers:

Top 10 reriskers:

All sovereign names:

Source: DTCC

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Belrev's picture

Dast ist fantastish. Down with the New World Order. Down with Globalism. Long live nation states. FREEDOM IS COMING!!!

Missing_Link's picture


The sooner the failed globalist experiment dies, the better.

B9K9's picture

The power-elite aren't going down without a fight. Since we're dealing with chess-masters, it would behoove one to consider that CBs are funding the hedgies to drive CDS spreads. Why would they do such a thing? Because CBs need political cover (ie national security) in order to justify public sector debt saturation & currency devaluation.

Recall the interview with Hendry & Stiglitz; Stiglitz was adamant that the US need never default. And it's true - as long as the Fed has political support, the US need never default. Consider this - what if the Fed was audited, Goldie pled guilty, and the whole kit & caboodle was revealed to be one massive fraud...and no one cared? In fact, what if there was a popular uprising to turn on the printing presses full bore!

Oil prices would then spike you say? Well then, take the oil; after all, we need it! That's why our military is over there, isn't it? You can see where this is going - complete moral breakdown as the empire teeters on the edge.

Either this was the most devious plan ever concocted or it's all just a massive hoocoodanode. We have written documents dating back thousands of years warning that these exact series of events would occur if we chose to engage in usury. How did we come to base our entire global economy on an unsustainable credit-money system that requires exponential growth just to stay even or face losing one's collateral? Why did we not heed these ancient warnings?

SWRichmond's picture

...what if there was a popular uprising to turn on the printing presses full bore!

My wariness of this distinct possibility is why I keep a ton of cash.  I remain convinced that there will be a prolonged deflation to force the middle class to liquidate everything they own, leaving them jobless and destitute and resulting in your scenario above.  Then we will have printing, and all will chant god bless the central bankers, and then they will blow it all up (the currency).

Edit: we said it was gonna be a fun week...

Richard Weed's picture

Fun week...?

This is fun ---> and now for something completely different...

jeff montanye's picture

ditto but i'm a hardcore katie couric fan.

jdrose1985's picture

This has been a fantastic week so far!

Been waiting for it a while now (since late last fall). Never the type to say ""i told you so", but it is rewarding to see things go a certain way which I prepared for although it required me to step out of my comfort zone (sold Au + Ag) in order to be in a position to capitalize upon the giant liquidation you speak of, SWR.

I want to be able to fund the demand for cash when the ATM's shut down, okay. Nothing more.

Hopefully I time it well. If we just go straight to hyperinflation I held enough metal to skim by and then some. It won't matter at that point as the suburbs become death traps and I'm fishing somewhere on a body of water in the northwest.

Enjoy the next 18 months. I will be ;)

Anton LaVey's picture

[...] sold Au + Ag in order to be in a position to capitalize upon the giant liquidation you speak of

Printing press = (hyper) inflation. Enjoy your monopoly money while it still has some value, my friend.

And, just to make sure we understand each other: I also have tons of cash. But I will never sell my "Au + Ag" as you put it.



jdrose1985's picture

And, just to make sure we understand each other: I also have tons of cash. But I will never sell my "Au + Ag" as you put it.

So what exactly do you plan on doing with it besides lodging it firmly beside where your head is planted?

I admit my ignorance by asking what the reasoning is behind owning something you will never sell unless it is a capital good or an interest bearing asset.

SWRichmond's picture

Capital can be lent.  Duh.

Sabremesh's picture

My wariness of this distinct possibility (a popular uprising to turn on the printing presses full bore) is why I keep a ton of cash.

I can see you've really thought this one through! 

lsbumblebee's picture

He lives worst who commits the greatest crimes, and who, being the most unjust of men, succeeds in escaping rebuke or correction or punishment.



jeff montanye's picture

the explanation of inexplicable success is unsolved crime.  balzac

Canucklehead's picture

"...Oil prices would then spike you say? Well then, take the oil; after all, we need it! That's why our military is over there, isn't it?..."

Ain't going to happen.

The basic premise of your argument is you need to get someone else to do your "work" for you.

I think the question to ask is "Where is the brass ring in all of this?"

Society has evolved to the point where a good idiot savant can make a good living and have a reasonable life.  When tough times hit, community counts.

Richard Weed's picture

Hey B-Rev,

Lay off of The New Order... they are responsible for some of the best music to have ever come out of the Free World.

hedgeless_horseman's picture

A New WORLD Order, per Ministry:

I'm in love with our potential for threat
Open fire 'cause I love you to death
Sky high, with a heartache of stone
You never see me 'cause I'm always alone

I'm in love with our potential dissent
I'll buy the torch if you can pay for the rent
Fly it high with the good book in hand
We're all in love with the promised land

I'm in love with a malicious intent
You can take it but you don't know yet
A truer love was never yet to be found
I've seen the sunset through the eyes of the crowd

Richard Weed's picture

N.W.O. is good... but I still prefer The New Order...

abalone's picture

I second that I'll be listening to 'ruined in a day' all the way down

ambrosiac's picture


Are we being led into Joy Divisions though.



"...over $1 billion in net risky bets made that the UK may not last"


Or maybe, bets that others will bet the UK may not last.


Adam Neira's picture

Ian Curtis is to music what Van Gogh is to art.

Pure crystalline genius.


Tense INDIAN's picture

u should rather thank the TAVISTOCK institute for all the major mUSIC thats come out ; to break up traditional societes....

Adam Neira's picture

I always thought Bizarre Love Triangle was about a polyamorous geometry professor gone wrong. Someone unplugged my jukebox many years ago and I haven't been able to get another flavour. To cut a long story short I was attacked by a flock of seagulls whilst standing on a beach with a gun in my hand. Vienna means nothing to me.

Hephasteus's picture

I think I saw that geometry professor fighting a particle man the other day.

lsbumblebee's picture

I disagree. This is the New World Order. Thanks to the Central Banks, nation states are failing. That is Globalism.

Grappa's picture

Here here.

We are nothing but slaves.

Al Huxley's picture

Its fun when the shit hits the fan if you're prepared. I've been enjoying some massive profits lately on my short positions (after two months of severe pain due to jumping the gun on this).

That said, I'd rather lose my shirt on my short positions than have what I think is going to happen actually happen.  This system sucks, and the way the elite are destroying the general population sucks, but when it breaks down, the alternative is going to be a lot worse.

the.spear's picture

you might not see it now. but maybe the alternative might just be a lot better.

Anton LaVey's picture

Hmmm... Last time we got that kind of worldwide financial dislocation, we also found ourselves with 50 - 70 million dead people, gas chambers and entire countries devastated, not to mention two atomic attacks on civilians.

I am sorry, but I have to respectfully disagree: it's highly possible the alternative to the current system is going to be much, much, much worse.

Edna R. Rider's picture

Are you saying it was a good trade but the trade is over and is being unwound?  Seems that way to me.  The market has the attention span of a 4-year-old and appears to shift in about 5-10 days stretches from bullish everything is coming up roses to bearish every country will default.

THE DORK OF CORK's picture

If the Euro reaches parity with the dollar, US corporate profits will disappear down a sinkhole as most of their revenue comes from overseas with a very substantial part of that from Europe.

The PPT will be unable to stop that ship from sinking no matter how many bilge pumps are working.

Welcome to The Great Depression 2.0

AnAnonymous's picture

Especially when US goods prices come higher in Euros than they do in USD.

Quick example: a good sold $100 in the US was sold €110 in Eurozone; this when a Euro bought 1.5 USD.

As the US need to export, them able to raise nominal prices is doubtful.

It seems that Europe's support in the US global military hegemony effort is no longer that easy to maintain.

drwells's picture

The neverending torrent of great, and free, content from this site, with which I cannot even keep up, continues to amaze me. Even my other favorite finance blogs tend to reuse a lot of stuff that was seen here first. Many thanks to the posters and commenters both.

tkoski6600's picture

Agreed.  This is one of my favorite watering holes.

DoChenRollingBearing's picture

I agree as well.  I spend more time here than is healthy...

Anton LaVey's picture

Reminds me of what someone said about fried bacon: "I know it's horribly unhealthy... but it's SO GOOD!".

Tense INDIAN's picture

this is simply the most exciting site on the NET.

Adam Neira's picture

Higher cognitive functions are stimulated by new bits of information. Curiosity is the first step to wisdom. Truth is currently pouring into the zeitgeist in divine waves. The process now is unstoppable. How people interpret and relate to the concept of time at the moment is fascinating. Time and space are reaching a critical point. Those with the luxury of time to contemplate the current nature of the world are going to be forced to accept responsibility for what happens. The myopic concerns of pure materialism are being trumped by a higher force. ZH serves a valid purpose...

Rider's picture

Dear God please let us get rid of the Euro.

IQ 145's picture

 As prayed nightly by Greek Citizens, and German Citizens. 

Grappa's picture

I simply cannot understand that the Greece government, that allegedly owns €300 bil worth of property, businesses etc. needs any kind of a bailout? (,s01=1....)

Selling that property and privaticizing and voila no problem. Now, what we have is another way to rob other people blind.

alt-shift-x's picture

for the germans i can confirm that ... Focus money title this week "Ich will meine D-Mark zurück"


"I want my D-Mark back"

sushi's picture

Not going to be pleasant borrowing at 8% to lend to rioting Greeks at 5%. In fact it is downright STUPID. Ouzo On!!

lilimarlene1's picture

2010: The Summer of Shove

Wily Wonka's picture

Will someone just answer one easy question?

Who is going to buy the net new US treasury debt issued of $1,000,000,000,000 (1 trillion) per year? This is the debt needed to be issued just for the deficit spending according to Obama himself!!!! And this is most likely a low number because it assumes around 4% GDP growth. 


Not to mention that the average US debt obligation is now under 4 years. This just adds to the fire.

trav7777's picture

I can't figure that out either.

And WE are a flight to "quality"?  That's fucking absurd.  I mean how much of our GDP is completely bogus?

The US is eyes-deep in it too.