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What Are Credit Traders Worrying About?

Tyler Durden's picture


It seems that while the volatility, equity, and interest rate markets are moving in a risk-on direction (admittedly on dreadful volumes); that HY credit is not enojoying the uncertainty. HYG is now at lows of the day (after filling its gap from a few days ago). What is also more evident from the chart is equity (and vol)'s relatively high beta today to any and all headlines...though it is now anchored at VWAP.



UPDATE: an hour later, Volatility and stocks have converged down to HYG...

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Fri, 12/28/2012 - 14:04 | 3102177 ekm
ekm's picture

That's exactly what it comes down to: CREDIT AND DEBT



When you are inside an insect trap, all you can do is buy, buy and buy. The only way to get out is dead.


Take MFG as example: Since they were levered into buying italian bonds, the only option they had is to .........keep buying italian bonds. They came out of that situation, but they came out..........dead.


Conclusion: Whoever is into stocks right now(Primary dealers and uncovered recently pension funds) can get out of them only .....dead...since there's nobody else ready to buy from them.


Right now, crude oil leveraged long holders look to me like MFG.

That's why credit knows, because the other face of CREDIT is ...........LEVERAGE/DEBT holding stocks and crude oil.


Fri, 12/28/2012 - 14:09 | 3102206 MillionDollarBonus_
MillionDollarBonus_'s picture

The only thing credit traders are worried about is the retail investors catching on to the biggest wealth oporunity in history - European peripheral debt. While the media has been blasting out negative pessimistic headlines about Europe,  the smart money has been quietly accumulating european debt. Once the dumn money catches on, Europe will be fixed, and the value investors that saw this oporunity will be rich beyond their wildest dreams.

Fri, 12/28/2012 - 14:14 | 3102227 ekm
ekm's picture

People read ZH in order NOT to be suckered in, like you're trying to do here.

I guess you've got some eurodebt stuck into an insect trap and are trying to get out alive by looking for suckers here.


You've come to the wrong place. Go to Bloomberg or CNBC or FT. Plenty of suckers there.

Fri, 12/28/2012 - 14:15 | 3102234 GMadScientist
GMadScientist's picture

Just bad parody of MDB (a bad parody of a human, presenting a humorous alternative take on a bad parody of a market).

Fri, 12/28/2012 - 14:15 | 3102235 firstdivision
firstdivision's picture

Yes, it worked out so well for MFGlobal, along with enriching those clients whose funds were borrowed from to fund a periphreal debt buying spree by MFGlobal. 

Fri, 12/28/2012 - 14:33 | 3102314 Schmuck Raker
Schmuck Raker's picture

Missed you, MDB. Welcome back.

+1 for misspelling "dumb".

Oh, the irony.

Fri, 12/28/2012 - 14:53 | 3102400 bidaskspread
bidaskspread's picture

You actually have a point MDB. Media was blasting how bad subprime mortgages were. In the secondary market some loans were selling 30 to 40 cents on the dollar or less. Smart money was slowly buying these loans up.Then came HARP/HAMP/TARP, risky borrowers were able to refinance/modify and the lien holder got a dollar for dollar payout. People that did this trade made a lot of money. Also was a large backdoor bailout for banks with the loans on their balance sheets. Nothing like taking a subprime mortgage changing some laws to make it a prime mortgage saleable to Fannie and Freddie. Maybe the same in the Europe. People looking at certain pieces of debt that large institutions have and buying it with the expectation if everything fails, the government will step in to shore up balance sheets just like they in the past, in the meantime will continue to take the yield.


Fri, 12/28/2012 - 15:40 | 3102572 ekm
ekm's picture

As I said, you won't find any suckers here.

Go and meet some pension fund managers. Seeing that unions want yield for their members, you may suck in one or two.

Sat, 12/29/2012 - 04:30 | 3104298 MeelionDollerBogus
MeelionDollerBogus's picture

and not ONE libertarian?

Sat, 12/29/2012 - 14:03 | 3104736 csodak
csodak's picture

The "Smart Money"? I would be interested in your understanding of who is defined as the "Smart Money".

Fri, 12/28/2012 - 14:03 | 3102182 NOPOMO
NOPOMO's picture

The sham continues. 

Fri, 12/28/2012 - 14:11 | 3102211 busted by the b...
busted by the bailout's picture

Greater Recession

Fri, 12/28/2012 - 14:16 | 3102241 GMadScientist
GMadScientist's picture

Known to historians as "That One Depression Where Rachel Uses an EBT Card".

Fri, 12/28/2012 - 14:16 | 3102239 q99x2
q99x2's picture

SnapDragons for the Holidays.

Fri, 12/28/2012 - 14:18 | 3102249 GMadScientist
GMadScientist's picture

"What Are Credit Traders Worrying About?"

How the fuck corpse-orations with margins that thin and growth prospects that bad will pay rates that high?

Fri, 12/28/2012 - 14:37 | 3102335 knukles
knukles's picture

Let alone contiue with them dividends.....
But don't forget the bonerus pools

Fri, 12/28/2012 - 14:36 | 3102331 SuperDeDuper
SuperDeDuper's picture

I'm going to stock up on Milk, I just cant fathom the thought of next week not being about to afford an extra $2 a gallon and not be able to eat it with my lucky charms.

Fri, 12/28/2012 - 14:36 | 3102332 SuperDeDuper
SuperDeDuper's picture


Fri, 12/28/2012 - 14:56 | 3102416 asteroids
asteroids's picture

The Credit boyz are the smartest in the room I guess there probably won't be an end of day or end of year ramp.

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