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Step Aside Egypt CDS.... Here Come The Saudi Contagion Vigilantes

Tyler Durden's picture




 

By now everyone knows that over the past few days, Egypt CDS has taken a hard right angle and has doubled from 200 bps to well over 400 bps (making it just slightly riskier than Illinois). And tomorrow Egypt risk will add another 80 or so basis points. No surprise there. What may surprise some, however, is that just like Egypt, Saudi CDS has also gone vertical. And with momentum chasers finally realizing that there is a direction other than tighter, expect the contagion vigilantes to do some serious damage here. If history is any precedent, there is a long way to go.

Egypt....

And Saudi Arabia

 

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Sun, 01/30/2011 - 20:39 | 918870 max2205
max2205's picture

Market popcorn fart so far in night trade

Sun, 01/30/2011 - 20:50 | 918905 rubearish10
rubearish10's picture

We must wait for ME Dawn. Going to bed early and up at 2am.

Sun, 01/30/2011 - 21:43 | 919008 bankonzhongguo
bankonzhongguo's picture

A thousand pardons for off topic, but did anyone see this UFO thing over the Dome of the Rock two days ago.

Just something for those Jesus/Mohammad freak day traders.

http://www.youtube.com/watch?v=7xvnBXW0giY&feature=related

Sun, 01/30/2011 - 22:15 | 919062 bunkermeatheadp...
bunkermeatheadprogeny's picture

Nope.  Sorry, I was too busy eating my soylent green taco from taco bell.

Sun, 01/30/2011 - 23:17 | 919190 bruinjoe93
bruinjoe93's picture

You add nothing to the discussion.

Sun, 01/30/2011 - 20:42 | 918877 Seasmoke
Seasmoke's picture

sure looks like its September 2008 all over again (maybe even worse !)

Sun, 01/30/2011 - 20:43 | 918878 IrrationalMan
IrrationalMan's picture

that opening in es was interesting.  10 point drop, but looks like ppt was working overtime as we are now seeing the usual 1 point surge followed no volume as it creeps higher. 

Sun, 01/30/2011 - 23:36 | 919233 HarryWanger
HarryWanger's picture

Markets will open lower then straight up from there. Egypt will drag on and investors will see as another Greece/Iran/etc. episode and it will be quickly forgotten buy lunchtime. Just the way it works these days. Futures don't seem to care.

Mon, 01/31/2011 - 01:10 | 919415 Sophist Economicus
Sophist Economicus's picture

Agreed.   All this nonsense about specs ramping up oil prices and grain commodities, ramming up the dollar and ignoring a historically overvalued market should be ignored.   Buy futures and sell volatility is the name of the game.   Everyone knows that hunches and following the herd is the key to riches...

Mon, 01/31/2011 - 06:27 | 919625 Ferg .
Ferg .'s picture

It appears that futures indeed do not care . Took a little plunge for about 30 minutes after the open last night and we've been melting up ever since . Drop has been erased and gains are being made . However , looking at the charts all this appears to be quite similar to the April/May top last year .

Sun, 01/30/2011 - 21:35 | 918990 Eric Cartman
Eric Cartman's picture

Middle East contagion bitchez!

Sun, 01/30/2011 - 20:51 | 918911 Yen Cross
Yen Cross's picture

Speaking of Credit Default Swaps. The Bund vs Spain, Portugal,Ireland, greece. The spreads going into Europe?

Sun, 01/30/2011 - 20:57 | 918930 YHC-FTSE
YHC-FTSE's picture

What did you expect? I guess the Saudis also read the article about them on ZH yesterday.

Sun, 01/30/2011 - 21:01 | 918939 topcallingtroll
topcallingtroll's picture

You are probably right this thing has a ways to go but as you rigjtly pointed out some of the extremes when greek soveriegn cds spreads blew out it was a great opportunity to scoop some up for a quick 20 percent return for the nimble and the brave. Does anyone.seriously think saudi cant pay their bills? The saudis wont pussyfoot around if they are seriously threatened. They will shoot to kill and chase down any protest leaders and execute them. The saudi monarchy doesnt play games. They will tolerate some limited peaceful assembly but nothing more.

Sun, 01/30/2011 - 21:05 | 918949 Yen Cross
Yen Cross's picture

 The saudis hold a lot of usd treasuries and like to rinse the the oil revenue every night when the ACB (Asian Central Banks)  wash their dollars.

Sun, 01/30/2011 - 21:06 | 918951 buzzsaw99
buzzsaw99's picture

That's a screaming buy. There is zero chance of revolution in the KSA.

Sun, 01/30/2011 - 21:20 | 918961 Zeilschip
Zeilschip's picture

CDS on Saudi-Arabia don't trade on a bonds & loans basis, and there are no bonds Saudi-Arabia can default on that would trigger the CDS, so at one point (I'd say when it trades close to 200 bps) traders will start selling the CDS.

Sun, 01/30/2011 - 21:18 | 918962 Catullus
Catullus's picture

http://www.doctorhousingbubble.com/housing-hiding-inflation-sectors-econ...

Sorry, not the forum.  It's a good one though.

 

Sun, 01/30/2011 - 21:21 | 918966 Caviar Emptor
Caviar Emptor's picture

Prince Alwaleed hosting free American-style barbecue for Saudi natives :)

Sun, 01/30/2011 - 21:22 | 918968 RobotTrader
Sun, 01/30/2011 - 21:35 | 918989 Yen Cross
Yen Cross's picture

Blowtorched? I have usd/jpy within 5-10 pips on every chart. Relative to the Friday close. The JPY news is good. But yen never moves on news anyways. Plus I think good JPY news is positive for USD. Even though a risk off trade is USD negative technically vs YEN.

Sun, 01/30/2011 - 21:52 | 919019 ExploitTheMarket
ExploitTheMarket's picture

Gold is red, Crude futures trending lower after junping to about 91...ES now flashing green (at least for the moment).

Is there disappointment the revolution has not (yet) spread to the rest of the middle east?

Sun, 01/30/2011 - 22:48 | 919125 asteroids
asteroids's picture

If I were the FED I would be nervous. Get the FED before the FED gets you.

Sun, 01/30/2011 - 23:04 | 919160 HoofHearted
HoofHearted's picture

My blowtorch just got blowtorched. I should have seen that shit coming.

Sun, 01/30/2011 - 23:24 | 919205 Thinking Bulldog
Thinking Bulldog's picture

Okay, so Blowtorched is bad.  Is that better or worse than Monkeyhammered? It's hard to keep up with the ZH acronyms and colloquialisms, but I will fight to the death...

Sun, 01/30/2011 - 23:48 | 919260 StychoKiller
StychoKiller's picture

How about "nukin' the fridge", does that do it for ya? :>D

Mon, 01/31/2011 - 00:25 | 919336 Yen Cross
Yen Cross's picture

B carefull with Issems.They bite back!

Sun, 01/30/2011 - 21:26 | 918977 Caviar Emptor
Caviar Emptor's picture

 

Youth unemployment:49%,  38%, 35%,  33%, Tun 26%. Staggering? Try: Europe: 30-50%, USA: 25-50%.

Sun, 01/30/2011 - 22:17 | 919066 NOTW777
NOTW777's picture

40% + for black youth in us

 

http://www.bls.gov/news.release/empsit.t02.htm

Sun, 01/30/2011 - 22:51 | 919131 Devout Republican
Devout Republican's picture

100% for 1 armed 3 eyed Asians with Spanish accents from Belgium.

Sun, 01/30/2011 - 21:29 | 918983 Crab Cake
Crab Cake's picture

The pr war for the status quo by TPTB has now officially been lost. Business as usual won't do anymore, and the status quo is eroding at an ever increasing rate. The dice are now rolling, and the prelude is over.

Sun, 01/30/2011 - 21:29 | 918984 Yen Cross
Yen Cross's picture

Saudi Arabia (soverign) are huge EURO holders as well.Every time the fed monitizes debt it heats overseas markets. Why? Cheap labor, and tax repatriation from corporate revenue. Roughly 50% of Major corporate revenue come from overseas markets. There is no reason to strenghen the USD. It's akin to the Japanese exporters buying yen from 85 down. No reason to create jobs or build domestic business. As a Republican, and a person that cares deeply about my country. I'm working on that.

Sun, 01/30/2011 - 21:31 | 918988 Brokenarrow
Brokenarrow's picture

By the close tomorrow the es will be green and all this will be just another little road bump.

Sun, 01/30/2011 - 21:36 | 918991 buzzsaw99
buzzsaw99's picture

The JPM-fed conspiracy will make everything green before lunch.

Mon, 01/31/2011 - 00:41 | 919357 Yen Cross
Yen Cross's picture

If a conspiracy existed? With Japan. JGP @ MoF would be in cohorts with KAMPO (aka The postal system) That must explain all those smart Women in Japan.

Sun, 01/30/2011 - 21:46 | 919014 dearth vader
dearth vader's picture

Green is the color of my truelove's screen, in the morning
In the morning, when we rise...

Sun, 01/30/2011 - 21:54 | 919022 rubearish10
rubearish10's picture

Already green son. Things are cool in ME.

Sun, 01/30/2011 - 21:40 | 918997 dick cheneys ghost
dick cheneys ghost's picture

tyler, please give this story some coverage. protests are here!!

25 protesters arrested in california

http://nakedempire.wordpress.com/

Sun, 01/30/2011 - 21:56 | 919026 ThirdCoastSurfer
ThirdCoastSurfer's picture

Did someone say Ireland? 

 

"The (National Bank of Egypt ) investment portfolio is well diversified by country, with the largest

exposures at end?June 2010 being the UK (34%), Australia  (15%), the US (7%) and

Ireland (7%)...Egyptian institutional investors, accounted for 78% 

of non?equity funding"

http://www.nbeuk.com/eng/pdf/marketnews/2010_fitch_ratings.pdf

 

Sun, 01/30/2011 - 21:58 | 919033 TooBearish
TooBearish's picture

Sell em! its country specific......

Sun, 01/30/2011 - 21:58 | 919034 Brokenarrow
Brokenarrow's picture

8pm est--es green!

shorts will get smoked by tomorrow.

sp 1400 by mar. 31--

LOLOLOLO!

Sun, 01/30/2011 - 22:05 | 919045 roymunnson
roymunnson's picture

Saudi owns 323 tons of gold which Comex cannot find...the final chapter of the Islamic revoltion will take care of MANY issues!!!!!

Sun, 01/30/2011 - 22:09 | 919052 max2205
max2205's picture

Gut feel on oil for Monday. - 5% plus

Sun, 01/30/2011 - 22:18 | 919070 bunkermeatheadp...
bunkermeatheadprogeny's picture

In EUR or USD?

Sun, 01/30/2011 - 23:45 | 919257 HarryWanger
HarryWanger's picture

Oil, gold will get killed tomorrow. Equities will start slow and make strong gains as the day progresses.

Mon, 01/31/2011 - 00:36 | 919350 Saxxon
Saxxon's picture

Yes.  That U.N. guy is going to get installed.  Gold may be a buy on the slam, however.

Sun, 01/30/2011 - 23:53 | 919272 chump666
chump666's picture

that brent/wti divergence has got to narrow.  the middle east could sink into a sh*tstorm, may keep oil bid and gold.

china just came out mins ago and send that the US won't be doing a QE3?  Why, China will smoke the US with a big UST dump. They don't want exported inflation and the middle east is the wake up call.

 

Sun, 01/30/2011 - 22:16 | 919064 colonial
colonial's picture

is it possible to short brutal dictatorships with no respect for human rights and no system to peacefully transfer power? 

Where are all those global macro boyz now?  Did anyone at Davos see this coming?  Probably not.

Sun, 01/30/2011 - 22:22 | 919076 bunkermeatheadp...
bunkermeatheadprogeny's picture

Yes, just short TASE.

Sun, 01/30/2011 - 22:21 | 919075 Yen Cross
Yen Cross's picture

 Oh! I forgot about that pipe smoking conference in Switzerland! Darn.

Sun, 01/30/2011 - 22:27 | 919085 gwar5
Mon, 01/31/2011 - 00:53 | 919380 spekulatn
spekulatn's picture

Great stuff.

 

Good thoughts for those around the world ready to be free!

Sun, 01/30/2011 - 22:38 | 919106 redarrow
redarrow's picture

So how long do you all think before Saudi Arabia goes Egypts way? It did not take long for Bens printers to print up a new government in Egypt. I think QE 3 will do the trick. Before that other places in the world will likely go earlier.

Sun, 01/30/2011 - 22:44 | 919118 Caviar Emptor
Caviar Emptor's picture

Keep in mind every intervention by PPT costs money. Every time JPM steps up they've got their hand out to the Fed for a 'tip'. There ain't no free lunch in a world of massive imbalances being kept damed up. And of course more money spent means more money printed, aggravating the problem and hence a vicious circle is complete. It's a beautiful symphony! Treating the disease with poison is so cool. 

Sun, 01/30/2011 - 23:02 | 919155 Blankman
Blankman's picture

Being from IL this is a disappointment. We used to have bragging rights as to who has the shittiest credit ratings, but now those damn Arabs stole our thunder. At least we can rely on construction to get us through this mess... Oh wait they just pulled the capital bill, so we don't have any money for construction. We also raised taxes. I'm feeling right plum secure in this great state of ours.

Mon, 01/31/2011 - 08:53 | 919740 snowball777
snowball777's picture

Your plums are securely in the right of that great state of yours.

Sun, 01/30/2011 - 23:03 | 919158 chump666
chump666's picture

good post.

finally Dubai gets back on the debt map again, been struggling to cover it's interest payments since the middle of last yr.

Debt contagion coming back at ya stemming from the middle east, nice, should be EZ back onto the rader again.

China will lose the EUR/EZ debt buying = short

Gold is bid again

Oil = bid till China liquidity problems surfaces and inflation KO cometh

Sun, 01/30/2011 - 23:14 | 919180 Gordon Freeman
Gordon Freeman's picture

Explosive upward move tomorrow on no volume--will be tagged a relief rally, and further proof of the abundant, vigorous health of the world recovery.  Treasury rally RIP

Sun, 01/30/2011 - 23:41 | 919246 OMG
OMG's picture

Gold down Oil down Dow & SP up I can sleep better now cuddling with my oh so vaulable green backs. sarc/off

Sun, 01/30/2011 - 23:45 | 919248 OMG
OMG's picture

.

Mon, 01/31/2011 - 04:41 | 919588 mt paul
mt paul's picture

Saudi squids...

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