MS 1 Year CDS Hit 800/875, Curve Massively Inverted

Tyler Durden's picture

Ladies, this is getting scary. Someone is betting on the endgame for the house of Mack. We, for one, can't wait for this week's H.4.1 release to find out if not who, then how much was borrowed at the Fed's discount window...

And this is the migration of the curve in the past 3 days:

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Bithead1's picture

Oh, I thought that was a chart showing the decline of BOA account bad

jez's picture

I can't understand it. Just the other day BOA announced it was "delayering" thousands and thousands of its wage slaves, and STILL the stock is being shot to shit.

Dumb PR-speak -- check.

Mass redundancies -- check.

New monthly charge on checking accounts -- check.

Thick-as-pigshit CEO -- check.

What the hell more does it take to be a success in America today?

tmosley's picture

Not being based in America?

Oh regional Indian's picture

Perhaps shortly to be known as 

Bank of Chimerica!

Smile, that's my hand in your pocket!


Withdrawn Sanction's picture

No doubt this has been said in another thread on BOA (and if so, my apologies), but it occurs to me that the $5 charge is really way of managing the bank's liability side of its balance sheet.  If it can drive off depositors at about the same rate as its assets deteriorate, its capital remains essentially unchanged (and as a percentage of assets, its capitalization rate actually increases).  But since this arithmetic is too complicated for Moynihan and Co. it couldn't possibly be true. 

Cosmicserpent's picture

That is a very interesting observation.  If it is true, it is a brilliant observation.  However, I don't think that bailing out the sinking boat is going to prevent the boat from sinking.  First, they have to stop knocking holes in the hull, i.e; lawsuits, soveriegn debt defaults, increased foreclosures, etc.

Yikes's picture

Okay Tyler/people, I need input.

I just got off the phone with my retired father who just told me he put $4M into MS senior debt last week.  My jaw dropped. When asked who recommended it, he told me a Merril Lynch broker.


I just told him he should get out.  I'm I being too much of an alarmist or is it looking like MS is going down?  If does go down, any chance of recoverying anthing with his senior debt position?


Widowmaker's picture

If you don't know then it is hella' time to exit or hedge the position.

Freddie's picture

Is daddy retired or retarded?  I thought it might be a typo.  He needs a dribble cup cause he is a moron.

winter is coming's picture

Those MS $3 Jan puts are looking attractive

geminiRX's picture

I took that gamble and bought 10

GeneMarchbanks's picture

Cramer: "Short ban in Europe is forcing shorting of US banks as proxy"

Blame Europe crowd getting larger by day.

Comay Mierda's picture

cramer is the ultimate pump and dumper

jm's picture

You have full-on panic right now.  Not sure why MS gets to meet Friendo.  The CDS market is the "wisdom of crowds" but the crowd is pretty small and they don't have enough information about exposures. 

DeutscheBank doing a lot of talk about how solid their shit is.  Bad sign for the biggest CDS force around.



ZeroPower's picture

A recession at MS is near!!

jm's picture

Bonus = your paycheck clears.

Bananamerican's picture

the smartest guys the men's room

jm's picture

ZeroPower is as smart as they come.  The Morgue may be following the Goldman route re: bonuses.

GeneMarchbanks's picture

Huh? Who woulda thunk...

PaperBear's picture

Some help for a CDS-illiterate person, please.

The horizontal axis is year-on-year and the vertical axis is percentage basis points ?

ZeroPower's picture

Vertical is midpoint of b/a for various flavors of MS CDS.

Just like with the treasury yield curve, when it gets inverted, one expects bad shit to go down.

No reason to be paying MORE for protection in the near term that in the longer term now is there?

Fips_OnTheSpot's picture

Transitory!! The curve will re-invert *)


Haha.. gotcha!



*) on the appr. level

MillionDollarBonus_'s picture

Don't listen to these zero hedge bullies. An inverted CDS curve is NOT necessarily bearish for Morgan Stanley. This just indicates the loss of credibility of the CDS market as a whole. The CDS curve is highly variable because this is an extremely illiquid and unprofessional market. To indicate a possible bankruptcy by a financial powerhouse like Morgan Stanley is completely absurd, and I would advise you to ignore this doomer nonsense in the future.

fuu's picture

Not really one of your best efforts.

topcallingtroll's picture

Give him credit for trying. We have been running short on trolls lately. Been kinda lonely around here. He does make a good point. This inversion took what? Ten major trades to accomplish? Wisdom of crowds is most evident when there is an actual crowd.

blindside's picture

Seems like all of the TBTF would have been bankrupt had Uncle Sugar not bailed them out. I seem to recall 'absurdity' and 'unthinkable' becoming reality around 2007/2008.

Are they still in the TBTF still, or more like Lehman now?

Withdrawn Sanction's picture

This just indicates the loss of credibility of the CDS market as a whole.

So what you're saying is the CDS curve is inverted market-wide and as steeply so as MS?  Really?  The CDS market was flashing the same warnings 3 years ago and some chose to ignore or ridicule it then too.  Good luck w/that strategy working as well today as it did then.

tmosley's picture

You didn't know?  This time will be different!

Cosmicserpent's picture

Indeed it will. This time there will be no TARP.


Armageddon bitchez!

Abitdodgie's picture

Just another chart going down ,America is full of them .

Outlaw Of The Wasteland's picture

Internal memos as to the recycling policy of staples and paperclips can't be far off.

fuu's picture

Someone is out pricing paper shredders with the last of the petty cash right now.

unky's picture

In other news Amanda Knox was offered 1 million dollar for exclusive TV interview...

InMisesITrust's picture

I hope it is with playboy, and includes a spread

StychoKiller's picture

Hmm, "Acquited murderers of Italy", what's not to like?

pupton's picture

You forgot the word "Hot"...I'd like to see a lesbo combo of her and Kasey Anthony...Mmmmmm.

Withdrawn Sanction's picture


Amanda Hugandkiss? (Bart Simpson)

Cassandra Syndrome's picture


MS has more liabilities than Lehman's had when it went tits up. Dexia has more than MS. 2 x Lehman's on the Global Financial System at the same time? And its a hell of lot mre bruised and battered than back in 08.

Outlaw Of The Wasteland's picture

ricky ricardo, the pear shaped chink with broken teeth, lenin, and dirty david faber just went on a diatribe defending their propoganda efforts.

The entire staff of cnbc with the exception of the great santelli should be arrested and tried under the rico act.

"This isn't 2008.  The banks are fine"- vladimir cramer