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Financial CDS Spreads Explode
The bloodbath in fin CDS is even worse than what is going on in equities. Bank of America is currently at the widest it has been in 2010.The latest rack is provided below, and the LTM 5 year Sr CDS spread is charted below.
- Bank of America Corp. 196.50 184.5 +12.00
- Citigroup Inc 163.50 162.5 +1.00
- Capital One Bank 101.50 96.5 +5.00
- Capital One Financial Corp. 137.50 135.5 +2.00
- JP Morgan Chase & Co. 95.50 90.5 +5.00
- Wells Fargo & Company 125.50 118.0 +7.50
Yet the biggest bloodbath continues to take place in woefully underreserved HR Block, which is certainly not too big to fail, and which was about 30 bps wider on the day, now at 720/691. On the chart below, HRB's spread is on the right axis. Will the little tax preparer that almost could be the first casulaty that sets off the TARP 2 starter pistol?
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Debt been way ahead of poos fer a while, time to settle up
720/691...what a coincidence that was my last blood pressure reading
I know what you mean; my anxiety level has spiked over the last few weeks. I think it's because I have an OCD-like urge to read EVERYTHING on ZH. It's bad for anxiety, but I can't just not know (i.e. I don't want to pay the price in ignorance by not reading ZH).
I'm like a moth to the flame. This place is awesome . . . and awful.
It's the emetic that keeps you coming back for more but never fills you up for some reason?
Hear ya - I used to gravitate to Minyanville, but now even they're sort of wishy washy compared to ZH.
You get filled with anxiety?
I've been getting angrier and angrier. If I were the Hulk, I'd be towering over Washington by now. HULK SMASH!
Sadly, I'm not, so I just eat the rage. One of these days, I might just shit revolution. Or blood. Maybe both. I need a drink.
tm, '
Past rage, now more of like an expectant Father, in the waiting room.
The waiting is the killer, WHATEVER is going to happen, I want it to come now.Not later, NOW.
Like the Dad to be. Except sans any happiness.
If anyone could have told me my country tis of thee, could get this screwed SO fast, by so many things, I would have sworn they were on LSD.
Every hour it's a new crisis, not little stuff.
BIG shit.
Any moment I expect the advent of ANTICHRIST.
This stage is set for Him now.
"Roll Out the Barrel..."
Melting, melting
The equity mkts are the size of a thumbnail, the bond mkts are the size of our whole body. The bonds are screaming Dive, Dive, Dive.
The mini-bitches will soon follow.
Yet the biggest bloodbath continues to take place in woefully underreserved HR Block, which is certainly not too big to fail, and which was about 30 bps wider on the day, now at 720/691.
http://www.cnbc.com/id/39719719
"While H&R Block is not exactly in a growth industry, the company did announce an acquisition last week — a deal for 2SS Holdings valued at $287.5 million. But the reason for the sell-off is really about mortgage put-back exposure from its days as owner of Option One Mortgage Corporation. H&R Block sold “Option One” (now called "Sand Canyon Corp.") back in April 2008 to American Home Mortgage Servicing, an affiliate of WL Ross & Co. for approximately $1.3 billion. But the exposure lives on."
Because HRB is precisely NOT TBTF--that makes its CDS "spread 'em" more than a secure, TBTF Bank of the Commune.
H&R Block has about $33B in potential exposure due to Option One, which was one of the top subprime originators in the boom. They have reserved $188M for potential losses. They already calculated loss for putbacks to be 50-60%.
So they are projecting that 1% of the loans will be put back to them. Any number greater than that, and they will be under serious pressure.
Richard Breeden, ex-treasury secretary, as Chairman of H&R Block, is going to take some painful losses here.
Thanks. Was wondering what that was about. Have to wonder if they aren't TBTF though. If they go under, that threatens tax revenues. Forcing J6P to decipher 1040EZ might be a threat to national security.
In any case, time to go long on popcorn.
“We don’t ever plan to buy another mortgage again, at least as long as I have anything to say about it,”
H&R Block CEO Richard Breeden Sept 4 2008
Eric King's head must be exploding also...
Outright carnage in the XAU today.
And bonds of every stripe, along with GOOG, AAPL, BIDU, etc. were "unfazed" through it all.
Some quality miners to be had, 10% off. He's likely backing up the truck.
Something tells us with a 18 month prior cost basis, Eric King is not too concerned with minute candle charts, unlike momo day traders.
Yes and the outright madness of $ strength and PM weakness today. As if there was ever any doubt, the Fed will continue manufacturing money to infinity.
+1330
Robo Might as well be Robo Prechter. He's going to go to his grave fighting a surging gold price.
I do remember saying a week or so ago to watch the 210 range on XAU as last time it had trouble here was July of 2008. Not saying we have a complete breakdown as even with today's action it is still within the uptrend... just be cautious.
2 0 0 8
Well, what'll it be, over easy or scrambled Mr. Dumpty? Milestones
Paging Wadell & Reed, paging Wadell & Reed. Please put in your sell order now.
Might I conclude my BAC calls won't be my best trades of the year?
Well I would say as good as my JPM puts.
Why on earth would either of you even get close to banking stocks/options? That's like betting Al Capone will survive his small case of Syphilis!
No worries BAC set aside $872m to cover mortgae repurchases for Q3. That’s $376 million less than the $1.25 billion set aside during the second quarter.
Nothing to see here ;).
Huge hits after hours:
ISRG
JNPR
CREE
YHOO
There will be no TARP 2!!! The banks have had two years to repair their balance sheets. If they didn't do it, then it's time for the banks to pay the piper.
Like Hank Paulson told Dick Fuld, you had your chance to save Lehman and you didn't take advantage of it. There will be no bailout. It's time for you to go!
Agree. Feddies are going to have to get super creative on how they "help" out the banks this time. Everyone is watching and it will be political suicide at this point to help out a bank anymore. Can only use that bullet once.
Gotta agree. The election is a game changer, at least for the next lil while.
Tyler: "TARP 2 starter pistol"
Victor: "There will be no TARP 2!!! "
Announcing Post Election Lame Duck Congress:
Dodd/Frank TARP2: "Troubled Assholes Re-Looting Program"
By Dec. 1st... The Amerikan Sheeple will take it....
As Sam Spade said to Cairo: "When you're slapped, you'll take it and like it..."
with tainted assets
they're all exposed
their spreads are widening
the taxpayer's hosed
What kind of a fucked up economy allows a retail tax return preparation company to participate in a non-trivial way in the credit markets?
Hey, the free market is free enough to let you hang yourself, other freedoms -- not so much.
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Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic.
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