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PrimeX Update: The Rout Continues
Stocks may go up, and stocks may go down, but Prime X knows only one direction...
From a bank that is about to announce its EPS handily beat earnings expectations courtesy of its CDS soaring to near all time record highs.
Cpn Bid Offer Chg from Close Factor
PrimeX.FRM.1 442 102-16 / 104-00 -0-171 0.47
PrimeX.FRM.2 458 91-00 / 92-16 -1-005 0.49
PrimeX.ARM.1 442 96-24 / 98-08 -2-067 0.41
PrimeX.ARM.2 458 85-08 / 86-24 -1-233 0.44
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PrimeX sounds like a protein supplement or a Viagra imitation. I can see a Ron Jeremy commercial for PrimeX now..
any way you slice it...somebody's getting fucked.
Yeah its the people who will be at Occupy Wall Street 2012 and beyond
At least it wasn't any of my puts.
Um, that would be Raj.
not sure i understand real world implications of this
30 year mortgage rates up...
how strongly does this offset bens purchases of mortgage backed bonds?
It means Jumbo Prime mortgages are beginning to see defaults.
Just like subprime...
contraction nation.
it may go down again. Power4Home
Search the more recent threads about Primex and scan the comments. Some great explanations were given.
http://ftalphaville.ft.com/blog/2011/10/11/699021/a-primex-primer-also-featuring-abx/
FT Alphaville did a good overview of PrimeX the other day.
Thread FYI: Gary Kaminski on CNBC just said PrimeX is an $11 billion market. It's a small market.
Just the other day I found $2B in my couch cushions.
Now that made me laugh.
I was going to print 20 billion last weekend but I felt bad for the greeks with their ink shortage.
HelluvaEngineer - Your $2b find intrigues me. I'm a venture capitalist and former upholsterer. If you can present a decent business model, I'm primed to invest $4B.
Presuming that number is true, that's likely the unlevered "underlying". It's a bit like saying "Well, the market cap on SPY is only $87.5 billion". Appears small, yet 10-20% swings in either direction can blow up multi-billion dollar firms in a hurry.
Also, PrimeX holdings are much more concentrated.
Subprime blowup of 2008. Now the credit worthyness of so called prime borrowers (those with supposed better credit) about to blowup in the coming weeks or months. In other words, all standards of credit worthyness is pure BS and all will be taken down.
.
here comes the obligatory 11:30am US dollar shanking to save the markets.
I was on coupons ( sunday ) open.
OK, I give up. What the f is Prime X? The autobot leader's porn stash?
Just think 'prime real estate, commercial, jumbo loans,' etc.
Indeed. Ol' Optimus enjoys nothing more than to read the new copy of PrimeX, lubricate his lug nuts then "transform" and "roll out". There is an appalling shortage of transformable women...
I hear the Decpticons have a "Don't ask don't tell" policy.
Arcee was kinda hot. I'da tapped it.
Nevermind. I just found a Primex primer. Yeah, disturbing trend. Does this mean that the time to exchange gold for real estate is approaching more rapidly than Gonzalo Lira predicted?
Yea sure trade gold for real estate, because rising rates are sure to add value there. ?
"Approaching more rapidly" does not mean "here now." The end result of this is likely to be a collapse of prime real estate values. Assuming the PMs achieve the stratospheric valuations in dollar terms that they are predicted to achieve, there will come a time when the Au - Real Estate swap makes sense. Maybe that time is coming sooner than expected.
thatthingcanfly
that the time to exchange gold for real estate is approaching more rapidly than Gonzalo Lira predicted?
Under the current regimes, and power players,fiscal/global conditions, I can never see a time to exchange Gold for RE.
One reason,really two.
Eminent Domain, and Taxes.
Either one can SCREW you into the ground on RE like a Chance keep stake anchor.
What do you then use for survival?
The Markit PrimeX is a synthetic CDS index referencing a basket of prime mortgage-backed securities. The intent of the index is to create a liquid, tradeable tool allowing investors to take positions on prime mortgage-backed securities via CDS contracts. Its liquidity and standardization will allow investors to accurately gauge market sentiment around the asset-class, and to take short or long positions accordingly.
Thanks. I'm not familiar with this and its not on the ZH Glossary yet.
Think back a few short years to Bernank's statements about "sub-prime" mortgage problems being contained.
And sell side people saying, "sub-prime is a mess, but prime mortgages are doing fine"
This instrument, PrimeX, was set up to follow prime mortgages.
As you can see, they are breaking containment.
That's my simple understanding of it anyway.
PrimeX is going under? But that means all the McMansions are upside down!
Quick, we need to bail out all the rich people! (Again)
It's ok. Trump towers was financed with junk bonds and it's gone bankrupt 3 times. If you say financial pariah around a banker they think you said mariah carry.
Of course all the mcmansions are financed with junk bonds as well. I think they call it a mortage note. LOL
so is it that the lower Prime-x goes the higher bank earnings will be ?
Wells was bragging last quarter that it's portfolio was doing relatively well due to high composition of prime mortgages.
Expect everything to get more bizarre and totaly untradeable from here on out as we approach kickoff to WW3 with Iran. The retail trader has been barred from the markets, but theyll still be happy to steal your money if youre brave enough to actually place an order with an HFT robot.
bunker buster bombs were recently shipped to israel, war within two weeks according to inside sources!
If true are there any publicly traded blood bank stawks I can buy ?
Blood ETF?
Source?
http://content.usatoday.com/communities/theoval/post/2011/09/report-obam...
http://www.thedailybeast.com/articles/2011/09/23/president-obama-secretl...
https://www.nytimes.com/2011/09/24/world/us-quietly-supplies-israel-with...
First three links when I googled it. How about you getting off your lazy ass.
Is this bullish for BAC, GS? That's all that really matters.
Hard to tell what's really going on, considering the bid/ask spread is wide enough to let several trucks through
Meanwhile, the Riverboaters continue to pile into the absolute worst crap imaginable in a vain attempt to "make their year".
Chinese Junkers like JKS up 70% in 5 days.
What a freaking casino.
You know if you posted this stuff BEFORE they go up and not after, people around here might appretiate you more.
no way, robo is the best hindsight trader around. cant beat his after the fact calls.
and it is still down what 80% from July?
At least you said the word casino.
I just want to see Deckers take a giant crap on the trading floor. That would make my year.
Gave you a thumbs up just because you mentioned a chinese solar company that Leo probably dumped a bunch of money in on margin.
Whatever happened to Leo and Harry?
Too bad that commercial real estate loans have "yeild maintenance" prepayment penalties.
One wonders how hard it would be to manipulate the underlying debt on these things.
How many Jumbo loans would actually have to be in technical default (or simply in arrears) to move the needle on certain CDS and/or the PrimeX index which is composed of such?
In other words, could you 1. lay doen some CDS/index bets then 2. (at the appropriate arm's length) buy up a bunch of McMansions (with cheap, borrowed money of course), 3. stop paying the mortgages, 4. realize the gains on your CDS/index position (which will have responded to the loans' non-performance) and turn a handsome profit?
Just sayin'...
if you could hand select the tranches to bet against like Paulson did, but have a feeling that wouldn't fly anymore given the increased scrutiny....
Maybe. I'm talking about manipulating the actual individual mortgages though and I'm sure someone could figure out how to adequately obscure the activity between the left hand and the right hand....or just go for it anyway. PrimeX is pretty complex and (at least) three removes away from the original, underlying commercial activity to begin with.
I'm not trying to play D. Evil here but it just seems like there has to be an inherent (and exploitable) weakness in situation where a huge notional amount of derivative instruments surround a relatively small amount of unique, illiquid assets. If that's the case, disaster (beyond the spheres of the "accredited investors" directly involved) is inevitable.
Prime (X) , is a derivative, that trades off of the over all market! If you look @ the chart. The close is like a P/L close on a weekly ? bULLSHIT DERIVATIVE CONTRAct.
WTF is the spin in the multi layered contract movement? So .47 is a (sell) signal?
I'm not too worried about this. Stocks don't trade on fundamentals, this is irrelevant to markets. It'll be at least a year before anyone trading stocks knows what a PrimeX is
Does PrimeX also come in liquid, the 32 oz bottle...or solamente powder?
It may be about to come as a suppository.
Thks for the PrimeX info link
Could someone put this on a graph so we can see how it is perfroming over time? Also, are there other indicators that would substantiate that prime real estate loans are in trouble (and maybe indicate if there is some regional bias).
This is a really big deal if true. I have been watching some areas like Seattle where home prices for the upper end seem to have held up quite well. There have been some suggestions that banks are not forclosing on the more expensive properties to protect their "investments".
http://www.markit.com/en/products/data/indices/structured-finance-indices/primex/primex-prices.page?
Most Prime and Option ARM mortgages originated in CA and FL. I use Thousand Oaks, CA as a barometer since I used to live there and somewhat understand the econometrics of the area. Housing HAS taken a beating in the area but certainly not enough...
Exactly. Particularly true if the more expensive properties are underwater or have big ol' HELOCs behind them.
Yen Cross: the factor of .47 means that on average, there's only 47% of the original loan balance outstanding; in other words: these are somewhat seasoned jumbo's
I'm well aware. Thanks for having 1/2 a brain!?
On a related note... SRS ultrashort real estate just recently crossed into bullish territory on the weekly MACD for the first time since late 2008.
I liked MACD. I like over sold ( oscillator'[s more)...
You go ahead and hit those "REIT's" , dip shit!
Hey? did you catch bond yields yesterday? (10's)
Jesus WTF is going on? When will this motherfucker correct? Great Purge immanent for last 4 months!!!!
(PS: Give the ADHD WHORE enough time and she will revert and re-friend her old VD-infested scumbag stealing pals and her old dirty ways; INVERTED STOCKHOLM SYNDROME ain't gonna work with high IQuit so you know who you are and you know this is the best your bedouin whore ass will ever get: FUCK YOU and thanks for the rel cheap pussy, stress and cheap tattoos notwithstanding! Trash is as Trash does; if it dresses like a whore and acts like a whore, then......)
Yea, its crazy theyre going all-out to fool the retarded. Keeping things 'looking OK' until one morning we've got ICBM's flying. Its all a big 'whatever to me.
What is prime x?
It's a special lube to protect you against market/whore STDs, but it may actually make you contract faster....
Well that's just prime!
See above. Someone was nice enough to explain for those of us who don't work on a FI desk.
Doesn't redwood trust do mostly jumbos, from the short the mortgage space days in 2007 and on?
I haven't had that chart up for a long time. They still have very small held option chains.
I really like the Nasdaq chart today it looks like a Vietnamese jungle booby trap
Prime-X is a new brand of explosive - next generation Semtex. Doesn't need a source of ignition - blows up all on its own.
So that's what the navy came up with!
http://www.bbc.co.uk/news/science-environment-14581097
can we get a chart?
JPM now -6.5% for the day (Just broke 31). Let this house of crap fall down already.
Funny you bring this up because JPM just figured out a way to make money on its own demise.
http://www.marketwatch.com/story/jp-morgans-bet-against-jp-morgan-2011-1...
Which means silver is sure to follow.
Nope. The end of the quarter not the beginning.
Maybe the selling isn't so much a red flag for prime mortgages. Maybe it is a red flag that some large hedge funds are getting margin calls and need to raise cash. Trying to do some under the radar selling.
So, PrimeX is a small market, 1/10th the size of the sub-prime index back in 2008..
How does the action in PrimeX affect other, much larger indices and eventually the broader markets...??
Coincides with the drop in CA re prices, the bubble is really being pricked now.
An indication that says pretty much what any rational realist would say: you can manipulate the market up, you can point to inventory rebuilding, but at the end of the day you can't fake the economy into a recovery that isn't there. This along with sovereign issues are prime indicator of 'shifting the risk' whereby no one admits the utter failure and insolvency of the global monetary/fiscal system until they have fully thrown it onto the backs of those who have no political power (the taxpayer).
The shit just gets deeper. these cnbs,ers are a joke. Dingle/berries and all...
i know <table> as a web design element is like so 1998, but that tabular data up in the article really could have benefitted from one. just saying.
Maybe they just started to be serious foreclosing the expensive coastal California houses. When coastal California blowes up - watch it.
Anyone else drinking??
Cheers Bitchez!
I wasn't going to drink tonight, but I hate to see someone drink alone.
Bottoms up!
PrimeX blowup coincides w/ generational low mortgage rates (ie, int rates will only get worse from here for all ARM rollovers, refi's, purchases...plus refi booms are no more. Interesting.
Ahh, PrimeX, I love it when you talk dirty to me... smooch