recovery

Market tests are useful as they best indicate just what is the real value of hundreds of billions of distressed securities stripped away from any unwarranted optimism and green shoot propaganda. Today's Visteon CDS Auction was just one such test.

Market tests are useful as they best indicate just what is the real value of hundreds of billions of distressed securities stripped away from any unwarranted optimism and green shoot propaganda. Today's Visteon CDS Auction was just one such test.

Today's RH Donnelley CDS auction closed at an abysmal 4.875 final price (on top of the IMM). When will DTCC/JPM change the default recovery on bonds for the CDSW calc from 40 to 10? Why 10% - because, as the chart below demonstrates, that is what the weighted average CDS auction recovery has been for the past 8 months.

Today's RH Donnelley CDS auction closed at an abysmal 4.875 final price (on top of the IMM). When will DTCC/JPM change the default recovery on bonds for the CDSW calc from 40 to 10? Why 10% - because, as the chart below demonstrates, that is what the weighted average CDS auction recovery has been for the past 8 months.

Just as the futures buying hand starts gobbling up them spoos on the horrible housing and mortgage news, mortgages fail to stage any recovery. But please, keep equities artificially high - money out of treasuries into equities, on the road to 7% mortgages, is exactly what the doctor ordered.

Just as the futures buying hand starts gobbling up them spoos on the horrible housing and mortgage news, mortgages fail to stage any recovery. But please, keep equities artificially high - money out of treasuries into equities, on the road to 7% mortgages, is exactly what the doctor ordered.

Submitted by John Bougearel of Structural Logic

Structural Logic 5.22.09 -

On today's release of housing numbers, Bloomberg reports more false positives on the economic recovery path. On the second straight month of pending home sales rising (up 3.2%), many are calling this the bottom, pretty much THE leading indicator that we are close to out of the woods. I mean, come on... housing got us into this mess, it'll get us out, right?

Lehman bondholders have been reduced to selling Lehman branded merchandise, including pens, canvas bags, umbrellas, and stress balls on Ebay to generate recoveries according to Bloomberg.

Goldman analysts today provide a very useful checklist to keep tabs of where we stand on the proverbial road out of hell. As GS says, its US economic forecast calls for stabilization by middle 2009, and after annualized declines of 7% and 3% for Q1 and Q2, the bank expects real GDP to inch up at a 1% rate over the second half of the year.

Goldman analysts today provide a very useful checklist to keep tabs of where we stand on the proverbial road out of hell. As GS says, its US economic forecast calls for stabilization by middle 2009, and after annualized declines of 7% and 3% for Q1 and Q2, the bank expects real GDP to inch up at a 1% rate over the second half of the year.

Goldman analysts today provide a very useful checklist to keep tabs of where we stand on the proverbial road out of hell. As GS says, its US economic forecast calls for stabilization by middle 2009, and after annualized declines of 7% and 3% for Q1 and Q2, the bank expects real GDP to inch up at a 1% rate over the second half of the year.