Credit Risk Appetite On Cusp Of 'Euphoria'

Tyler Durden's picture


Presented with little comment except to note that the ebullience (pre-crisis spread levels and dramatically rising PIK Toggle issuance?) driven by flow/technicals and financial repression - even in the face of releveraging and fundamental deterioration will see an over-crowded euphoric group of investors knocking at Ben's door when this turns to dysphoria as the credit cycle inevitably does...



Chart: Credit Suisse

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Wed, 10/24/2012 - 15:31 | 2916519 AvoidingTaxation
AvoidingTaxation's picture

Time to grab some puts. Zynga and FB are the first on line.

Wed, 10/24/2012 - 18:38 | 2917027 saturn
saturn's picture

And what exactly is US credit today?

Wed, 10/24/2012 - 15:31 | 2916522 q99x2
q99x2's picture

Nice present for the incoming Totus.

Wed, 10/24/2012 - 15:32 | 2916523 Jlmadyson
Jlmadyson's picture

On the cusp of something alright.

Who are buying these toxic assets after Greece....

Wed, 10/24/2012 - 18:21 | 2916989 bank guy in Brussels
bank guy in Brussels's picture

Re 'toxic' debt and unpayable interest ... Thursday now beginning, is the Muslim holy day commemorating when Islam's Prophet Muhammad said, that all interest payments on debt, should be cancelled.

Holy day A'rafah in the Muslim Hajj (Mecca pilgrimage) month, recalls some of Muhammad's last public words, his 'Farewell Sermon' in 632 CE ('Common Era' same as 'AD') just before he died ... as famous to Muslims as the Sermon on the Mount is to Christians ... where Muhammad said:

« ... Allah has forbidden you to take usury (interest), therefore all interest obligation shall henceforth be waived ... »

Muhammad's speech from nearly 1400 years ago, sounds surprisingly modern. In the same talk, Muhammad also said not to be racist, not to discriminate re ethnicity or skin colour: « ... All mankind is from Adam and Eve ... »

And Muhammad said to honour and be kind to women: « ... You have certain rights with regard to your women, but they also have rights over you ... to them belongs the right to be fed and clothed in kindness. Do treat your women well and be kind to them for they are your partners and committed helpers ... »

Seems like Christians, Jews and Muslims are each falling short of Jesus, Moses and Muhammad, respectively  ... Here is the brief 'Farewell Sermon' -

Wed, 10/24/2012 - 23:04 | 2917674 jeff montanye
jeff montanye's picture

and for an interesting non fiction update (at least to the '90's) from an aussie jewish convert who writes like a dream (one pulitzer for fiction already) check out

a real eye opener.

Wed, 10/24/2012 - 15:32 | 2916527 stocktivity
stocktivity's picture

Benny might be leaving when his term expires in 2014 so says the NY Times. He reaffirmed today that interest rates will stay near 0% until mid 2015. Eventually interest rates will rise and when they do, the hopium induced market ends with a wallop. Call Benny what you want but he's not stupid....he will be gone when the shit hits the fan.

Wed, 10/24/2012 - 15:36 | 2916542 fonzannoon
fonzannoon's picture

Ben is the same asshole who said in 2010 that he would need to start tightening by late '11. By next year they will push it out to 2019.

Wed, 10/24/2012 - 15:43 | 2916561 Dr. Engali
Dr. Engali's picture

By next year it will be all over with. They are doing all they can to support these markets through the election. The whole damn thing is trading on vapors.

Wed, 10/24/2012 - 15:45 | 2916566 fonzannoon
fonzannoon's picture

I wonder about that. I stare at this stuff with sticks in my eyes because I think so too. But unless you clear the debts we can have a reset and people will just be that much more broke and still owe the money.

Wed, 10/24/2012 - 15:33 | 2916534 Eireann go Brach
Eireann go Brach's picture

Europe is remarkably quiet these days, sure looks like they have a "Biden Muzzle" on to ensure O"Robyomamma gets voted back in! Just imagine the news that will fly out of Europe post the US elections!

Wed, 10/24/2012 - 15:46 | 2916569 ziggy59
ziggy59's picture

Bens wish for the public is coming true again...

Fleece em when you want

Wed, 10/24/2012 - 15:48 | 2916571 vote_libertaria...
vote_libertarian_party's picture

uhhhh...what is this chart measuring?

Wed, 10/24/2012 - 15:58 | 2916596 LongSoupLine
LongSoupLine's picture

would love to see volume in there too.  Would really expose HFT and other factors.

Wed, 10/24/2012 - 15:59 | 2916598 debtor of last ...
debtor of last resort's picture

Hmmmm, where shall i put your money..... One number? Red or black? A line? Or at the blackjack table? Maybe in the Corzine jackpot machine? Shuffle play? Yep, that's it. Oke, a drink please!

Wed, 10/24/2012 - 16:14 | 2916639 SheepDog-One
SheepDog-One's picture

For any of the 46 million SNAP card americans who might be in the room, what this article says is 'Deez markets be a hot damn mess yo!'

Wed, 10/24/2012 - 16:16 | 2916642 Martin T
Martin T's picture

"Any statistician will tell you, a good outcome for a bad risk doesn't mean the risk wasn't bad; it just means you happened to get lucky".


Definition of Zemblanity - "The inexorable discovery of what we don't want to know".

In credit markets, liquidity can fast become a problem. Should the credit market experience a consequent sell-off, losses will be fast and furious. One should polish its "Bayesian learning" once in a while or take the great risk of becoming a victim of some "irrational exuberance" or "euphoria".

"-He who has the gold, does not always make the rules.
-The market does not learn for long.
-Human nature does not change."

Wed, 10/24/2012 - 16:19 | 2916652 rosethorn
rosethorn's picture

Bernanke has practically guaranteed to backstop just about every kind of credit risk out there.  What's not to be euphoric about?


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