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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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Tue, 10/04/2011 - 09:25 | 1736704 Bithead1
Bithead1's picture

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

Tue, 10/04/2011 - 09:42 | 1736790 jez
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?

Tue, 10/04/2011 - 10:03 | 1736882 tmosley
tmosley's picture

Not being based in America?

Tue, 10/04/2011 - 10:32 | 1737023 Comay Mierda
Comay Mierda's picture

BAC website down again lol

Tue, 10/04/2011 - 11:06 | 1737183 Oh regional Indian
Oh regional Indian's picture

Perhaps shortly to be known as 

Bank of Chimerica!

Smile, that's my hand in your pocket!


Tue, 10/04/2011 - 10:27 | 1737006 Withdrawn Sanction
Withdrawn Sanction's picture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. 

Tue, 10/04/2011 - 14:40 | 1738097 Cosmicserpent
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.

Tue, 10/04/2011 - 12:42 | 1737612 Yikes
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?


Tue, 10/04/2011 - 13:27 | 1737792 Widowmaker
Widowmaker's picture

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

Tue, 10/04/2011 - 16:57 | 1738951 Freddie
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.

Tue, 10/04/2011 - 09:25 | 1736706 winter is coming
winter is coming's picture

Those MS $3 Jan puts are looking attractive

Tue, 10/04/2011 - 11:15 | 1737218 geminiRX
geminiRX's picture

I took that gamble and bought 10

Tue, 10/04/2011 - 09:26 | 1736709 jm
jm's picture

Got fiat?

Tue, 10/04/2011 - 09:28 | 1736726 GeneMarchbanks
GeneMarchbanks's picture

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

Blame Europe crowd getting larger by day.

Tue, 10/04/2011 - 09:31 | 1736741 Comay Mierda
Comay Mierda's picture

cramer is the ultimate pump and dumper

Tue, 10/04/2011 - 09:43 | 1736798 jm
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.



Tue, 10/04/2011 - 09:34 | 1736746 ZeroPower
ZeroPower's picture

A recession at MS is near!!

Tue, 10/04/2011 - 09:44 | 1736803 jm
jm's picture

Bonus = your paycheck clears.

Tue, 10/04/2011 - 11:24 | 1737246 Bananamerican
Bananamerican's picture

the smartest guys the men's room

Tue, 10/04/2011 - 13:44 | 1737859 jm
jm's picture

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

Tue, 10/04/2011 - 09:26 | 1736712 GeneMarchbanks
GeneMarchbanks's picture

Huh? Who woulda thunk...

Tue, 10/04/2011 - 09:29 | 1736729 fuu
fuu's picture


Tue, 10/04/2011 - 09:26 | 1736714 PaperBear
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 ?

Tue, 10/04/2011 - 09:29 | 1736733 FMR Bankster
FMR Bankster's picture


Tue, 10/04/2011 - 09:36 | 1736756 ZeroPower
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?

Tue, 10/04/2011 - 09:41 | 1736783 Fips_OnTheSpot
Fips_OnTheSpot's picture

Transitory!! The curve will re-invert *)


Haha.. gotcha!



*) on the appr. level

Tue, 10/04/2011 - 09:54 | 1736841 MillionDollarBonus_
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.

Tue, 10/04/2011 - 10:05 | 1736888 fuu
fuu's picture

Not really one of your best efforts.

Tue, 10/04/2011 - 11:41 | 1737308 topcallingtroll
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.

Tue, 10/04/2011 - 10:09 | 1736909 blindside
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?

Tue, 10/04/2011 - 10:10 | 1736910 blindside
blindside's picture


Tue, 10/04/2011 - 10:35 | 1737039 Withdrawn Sanction
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.

Tue, 10/04/2011 - 10:42 | 1737066 tmosley
tmosley's picture

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

Tue, 10/04/2011 - 15:23 | 1738331 Cosmicserpent
Cosmicserpent's picture

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


Armageddon bitchez!

Tue, 10/04/2011 - 09:26 | 1736715 Abitdodgie
Abitdodgie's picture

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

Tue, 10/04/2011 - 09:27 | 1736720 Outlaw Of The W...
Outlaw Of The Wasteland's picture

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

Tue, 10/04/2011 - 09:30 | 1736738 fuu
fuu's picture

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

Tue, 10/04/2011 - 09:43 | 1736796 Hansel
Hansel's picture

Bank of America did that last month.

Tue, 10/04/2011 - 09:52 | 1736837 fuu
fuu's picture


Tue, 10/04/2011 - 09:28 | 1736723 Bithead1
Bithead1's picture

chart p0rn

Tue, 10/04/2011 - 09:30 | 1736736 unky
unky's picture

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

Tue, 10/04/2011 - 09:34 | 1736745 InMisesITrust
InMisesITrust's picture

I hope it is with playboy, and includes a spread

Tue, 10/04/2011 - 09:36 | 1736752 Vergeltung
Vergeltung's picture

I'll second that.

Tue, 10/04/2011 - 21:06 | 1739741 StychoKiller
StychoKiller's picture

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

Tue, 10/04/2011 - 09:55 | 1736851 thunderchief
thunderchief's picture

Murderous Bitch!

Tue, 10/04/2011 - 10:50 | 1737101 pupton
pupton's picture

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

Tue, 10/04/2011 - 10:38 | 1737047 Withdrawn Sanction
Withdrawn Sanction's picture


Amanda Hugandkiss? (Bart Simpson)

Tue, 10/04/2011 - 09:30 | 1736737 Cassandra Syndrome
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.

Tue, 10/04/2011 - 09:33 | 1736744 Outlaw Of The W...
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

Tue, 10/04/2011 - 09:34 | 1736747 aVian
aVian's picture

isnt their p/e like 50 something?

Tue, 10/04/2011 - 09:36 | 1736751 Motley Fool
Motley Fool's picture

rut roh!

Tue, 10/04/2011 - 09:36 | 1736753 azzhatter
azzhatter's picture

No worries mate, Cramer said it's good as gold. All time buy. Well capitalized. 

Tue, 10/04/2011 - 09:36 | 1736754 CClarity
CClarity's picture

So many stupid humans.  2004 and the Dems best was Kerry.  2011 and the GOP field just silly.  3 years after financial crisis still the same.  No plan, system on precipice, confidence eroded while politicians and regulators make "all is okay" happy talk.  Le sigh!

Tue, 10/04/2011 - 09:57 | 1736859 Nascent_Variable
Nascent_Variable's picture

Wesley Clark was a solid candidate in '04.  He just wasn't willing to compromise his integrity to win.

At least now, Ron Paul is getting taken seriously, if not by the media, then by the public.

Tue, 10/04/2011 - 12:16 | 1737500 Moe Howard
Moe Howard's picture

Wesley Clark and Integrity in the same sentence? You must be confused.

Tue, 10/04/2011 - 09:37 | 1736759 papaswamp
papaswamp's picture

I'm sure BoA is happy to have attention elsewhere...

I thought today was going to be boring..

Tue, 10/04/2011 - 09:37 | 1736760 blind squirrel
blind squirrel's picture

I have MS 5Y CDS at 510 - 530 which is tighter than yesterday's 582 close

Tue, 10/04/2011 - 09:43 | 1736793 credittrader
credittrader's picture

naah - MS 5Y is 645/665, 1Y 790/860 - very not pretty...front-end is all CVA desks and CDS-Equity Put Arbs for now...may put some technical pressure on deep OTM vols (lower) but feels like momentum has it for now...doesn't feel very good out there

Tue, 10/04/2011 - 09:55 | 1736852 blind squirrel
blind squirrel's picture

Thanks.  You are correct.  The minute I clicked submit, I realized quote was from 10am yesterday.  sorry.

Tue, 10/04/2011 - 09:37 | 1736763 Racer
Racer's picture

As long as the AAPL is bouncing it doesn't matter

Tue, 10/04/2011 - 09:39 | 1736770 Fips_OnTheSpot
Fips_OnTheSpot's picture

So - while there's no hopium in that chart, german Handelsblatt comments: "Wont be as bad as 2008, because(!!) the difference is that 'we' now know what might happen when such an event (TBTF fails) happens".

I think that author had hopium overdose.

Tue, 10/04/2011 - 09:56 | 1736858 WoodMizer
WoodMizer's picture

Side effects of Hopium may include:

-Cognitive dissonance


- Bloody stool

-Cold sweats


-Panic attacks

Hopium may also increase,

-Suicidal thoughts 

-Substance abuse

-Intrest in sports and religion

Contact physician Ron Paul, immediately, if you experience,

-Bloody projectile vomit


-Spinal fluid leakage from ears

as they indicate a more serious medical condition. 

Tue, 10/04/2011 - 10:27 | 1737004 Shvanztanz
Shvanztanz's picture

-compulsive list making

Tue, 10/04/2011 - 09:42 | 1736787 buzzsaw99
buzzsaw99's picture

whatever is a poor bank holding company to do? oh yeah, mooch off the gubbermint like they always do.

Tue, 10/04/2011 - 09:42 | 1736788 Outlaw Of The W...
Outlaw Of The Wasteland's picture

dick bove thinks ms is the buying opportunity of a lifetime, vince farrell is "dipping a toe in the financials", bob dahl is "nibbling", and the najarians are seeing HUGE buyers of calls at the offer.

to be continued............

until the other shoe drops and the entire kosher nostra crew at the propoganda outlet are directed to put on their serious faces for an hour or two.

Tue, 10/04/2011 - 09:57 | 1736863 chindit13
chindit13's picture

I see the problem.  Fear has them off the playbook.  Official jargon is this:

"Morgan Stanley looks compelling at this price"

Tue, 10/04/2011 - 09:42 | 1736791 mikmid
mikmid's picture

CDS handgrenades for everyone. When the 1st one goes down we will see who's left holding the CDS hot potato and if Bernake and Timmah have the nuts to call for a new bailout. Occupy Wall St. may bring a little new focus onto the banksters and thier minions in cogress.

Tue, 10/04/2011 - 11:44 | 1737303 Bananamerican
Bananamerican's picture

"Inside Job" seems to be required viewing for OWSers....

Some of their platform proposals:


1) Comprehensive health care, as a right for all citizens, to be provided through a single-payer, non-corporate system. No one is free who must worry about disease and accident in a world where almost no one can possibly afford the cost of such care. Healing the sick and maimed should never be a for-profit enterprise. Our doctors and other health professionals should be paid well of course, better than most, but if they find that their wage under such a system is too low, then perhaps they are not so well-suited for work as healers. Perhaps they should become lawyers or stockbrokers instead. We reject, as an alternative to this demand, Obamacare. We do not believe in corporate give-aways, and we know that a guarantee of subsidized health care without cost controls is a fool's game, whose only end is endlessly ballooning deficits.

2) We demand a living wage. Anyone with a full-time job should be able to afford the housing, food, and education that they need to live a good, healthy and worthwhile life. They should feel that they are able to better their children's futures. They should be able to look forward to their retirements with hope and happiness, and never dread.


3) In order create the national wealth that will be necessary to make this new way of life possible, we demand that corporations take responsibility for their fortunate status, as entities afforded the protection and wealth of being in the United States, and give back a portion of that which their place in this great nation has afforded them. They have often spoken to the poor and unfortunate of the responsibilities that come with privilege, now we turn back toward them and ask if that rhetoric does not equally apply to them? In particular, we demand that any corporation that is called American, be based in America, make its products in America, provide its services through American labor, and pay ALL of its taxes in America. If it does not do these things, then what about it makes it American? If a country employs Mexicans and Chinese, pays it taxes in Bermuda, and keeps its money in Switzerland, in what way is it an American company? If it is not a true, taxpaying, American-hiring company then why does it deserves unimpeded access to the American market, the greatest market on the Earth, and the source of all its wealth?


4) We demand that the United States will stand for FAIR trade before it stands for free trade. This means that any country that has lesser environmental or labor standards than those created by our laws and regulations will pay tariffs in order to access our markets. This include companies that are supposedly American but choose to do the bulk of their business overseas and then come to us with their so-called "cheap" products. We are tired of the corporate propaganda that calls this "protectionism." If that means that we intend to protect our workers, our businesses, and our Earth, then so be it, We are Protectionists. Any foreign country that does not allow workers to freely organize and strike, any foreign country that pollutes with impunity, creates an unfair competition with our workers whose forefathers have literally fought and died for these rights. We refuse to have a hundred years of progress obliterated by the so-called "global economy." As has been said, this applies equally to any American company that takes advantage of these unfair, inhumane differences in global living standards. We also make clear that we hold no grudge against our working brothers and sisters in Mexico and China and around the world. We sincerely hope that through our struggle, their living standards will be improved as well, as opposed to their lives and health being consumed by the endless capitalist hunger for profits.

5) We demand a fair, progressive tax structure. That the repeal of the Bush tax cuts is supposedly controversial is laughable to us. We demand a return to the tax structures that were in place in the period between WWII and 1980, an historical time that saw the rise of the middle class in America, which is the source of all of its Peace and Prosperity, the very same middle class that has been in obvious, precipitous decline since the movement to unfairly lower the taxes on the wealthy. The money lost by our nation during the last three decades of tax cuts for the rich and powerful are now either to be paid by the middle class or poor, who can not afford them, or, as has been the case of late, to be foregone altogether. This has led to a class of people who feel no responsibility to their country whatsoever -- calling themselves "job-creators," they ship our jobs overseas, calling themselves "hard working Americans," they live on inheritances, tax cuts, tax shelters, and the labor of unfairly compensated workers, American and otherwise, calling themselves "democrats" and "republicans," they live in a world completely divorced from responsibility for their privileged place in our society, from the responsibility and sacrifice that is required for true Democracy and true Republicanism. In the meantime our children are not educated, our bridges fall to the ground, and our old people sit in rooms without heat.

6) We demand an end to the American Empire. We do not believe that controlling other human beings through military force is possible or desirable. We do not believe that wars for the control of resources, or “vital American interests” is anything but criminal theft and murder. We reject dressing these terrible deeds in the clothes of freedom and democracy. Freedom and Democracy are never imposed from without by military force, they are incubated from within, as was the case in Tahrir Square. We need the innocence that comes from not spilling foreign blood. We need the money wasted on this destruction for constructive good in this world. We, unlike the so-called capitalist “freedom fighters,” believe in the free market. If oil, or anything else, becomes very expensive because of these peaceful policies, we believe the free market of American ingenuity will find unheard-of, peaceful ways to make up the difference, and much more.


7) We demand, and pledge to create, a new political party that will stand strong for all of these, and all other policies that will be needed to create the strong, free, peaceful nation that we seek to create. We call on all liberal Democrats already elected who find themselves in a position to win their next elections (or currently have no election to win) regardless of political party: Bernie Sanders, Dennis Kucinich, John Conyers, Howard Dean, and so many more to band together and form such a party immediately. The Democratic Party has abandoned you, it is time for you to abandon it. We can not accomplish our goals through a party formed by a single person, such as Ross Perot, nor can we achieve them through the Democratic Party, which has long been co-opted by the corporate powers that be. Come together and form a new party that will give hope to the youth and the elders, and the poor, and the middle class of America! Together we can do this!

8) We demand, and will work tirelessly for, the repeal of the electoral college so that our newly founded Social Democratic Party will have a fair field on which to fight for the hopes and dreams of the American People.




THE best thing about OWS is their name. Every time Occupy Wall Street's name is mentioned, sheeple build synaptic responses as to the true source of their misery. That, imho, can only be a good thing.

Go long lamposts and stretched bankers' necks

Tue, 10/04/2011 - 11:48 | 1737351 topcallingtroll
topcallingtroll's picture

I guess they didnt get the memo that communism doesnt work.

Van House ,or whatever that commie czar's name is, is one of the "leaders"

Tue, 10/04/2011 - 12:22 | 1737523 Moe Howard
Moe Howard's picture

There are a couple of good points but they are outnumbered by the use of the word Progressive, the code word for communistic leveling. 

Tue, 10/04/2011 - 13:28 | 1737793 Grinder74
Grinder74's picture

So if they have #2 why do they need #1?

Tue, 10/04/2011 - 13:31 | 1737804 Grinder74
Grinder74's picture

I'm wondering when the U.N. will condemn this "occupation" of Wall Street like they condemn the "occupation" of Palestine.

Tue, 10/04/2011 - 09:43 | 1736792 Mister Ponzi
Mister Ponzi's picture

Creditanstalt bitchez!

Tue, 10/04/2011 - 09:44 | 1736802 machineh
machineh's picture

What's disgusting is that MS still gets 'free money' from Benny Bubbles' Federal Reserve sugar tit, by masquerading as a 'bank.'

Throw GS and MS overboard! They aren't deposit takers ... and THEY AREN'T OUR FUCKIN' PROBLEM!!!

Tue, 10/04/2011 - 09:45 | 1736809 mess nonster
mess nonster's picture

Buy dem CDS! Then sell 'em quick, quick! If you're left holding the bag, you'll never collect, bitchez!

Tue, 10/04/2011 - 09:45 | 1736810 tempo
tempo's picture

Investors only love social media stocks that pump revenue, not profits. With the near bankruptcy of EK and AA, the decline of America is apparent. There can be no stock market rally w/o the financials. Twitter on until you collaspe.

Tue, 10/04/2011 - 09:55 | 1736854 americanspirit
americanspirit's picture

I see chickens - millions of chickens in the sky. I didn't think they could fly, but they can, and it looks like they're all coming home to roost. Chicken shit falling like rain - manhattan traffic snarled, windshield cleaners out in force. Limos stuck in chicken shit. It's a nightmare.

Tue, 10/04/2011 - 09:57 | 1736861 PaperBear
PaperBear's picture

Looks like it will breach 1000 sometime tomorrow.

Tue, 10/04/2011 - 10:10 | 1736911 Comay Mierda
Comay Mierda's picture


Tue, 10/04/2011 - 10:41 | 1737061 Withdrawn Sanction
Withdrawn Sanction's picture

Bank run, indeed.  Or at least they're trying to prevent one by closing the electornic doors.

Tue, 10/04/2011 - 10:43 | 1737071 pupton
pupton's picture

Talking out of my arse here, but my opinion is it is the first modern bank run in America and either the traffic is clogging/killing the network or BOA is trying to thwart the run by pulling down their website.  This is hard to explain away as an IT issue or a hack.  Better get your money out before a closed network becomes a closed teller window - bitchez...

Tue, 10/04/2011 - 10:16 | 1736939 Agent P
Agent P's picture

Remind me how this plays out...MS goes down, government steps in, all counter parties get filled at 100 cents on the dollar? 

This whole 2008 Scooby Doo flashback (last nights fun with numbers post) is giving me an ulcer.  BTW, CNBC hijacked that this morning and had some guy spouting the 10/3/08 - 10/3/11 comparison word for word.

Tue, 10/04/2011 - 10:56 | 1737126 mayhem_korner
mayhem_korner's picture

Looks like the Red Sox September profile.


Tue, 10/04/2011 - 11:04 | 1737164 geminiRX
geminiRX's picture

I have never seen this message before on an options chain, "no put option is available at this price". This is what is showing for some Nov MS puts.

What the hell does this mean?

Wed, 10/12/2011 - 12:25 | 1766152 karmete
karmete's picture

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