PrimeX Update: The Rout Continues

Tyler Durden's picture

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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homersimpson's picture

PrimeX sounds like a protein supplement or a Viagra imitation. I can see a Ron Jeremy commercial for PrimeX now..

alien-IQ's picture

any way you slice it...somebody's getting fucked.

Divided States of America's picture

Yeah its the people who will be at Occupy Wall Street 2012 and beyond

LawsofPhysics's picture

At least it wasn't any of my puts.

kito's picture

not sure i understand real world implications of this

Quadlet's picture

30 year mortgage rates up...

kito's picture

how strongly does this offset bens purchases of mortgage backed bonds?

Pool Shark's picture



It means Jumbo Prime mortgages are beginning to see defaults.

Just like subprime...


Scisco's picture

Search the more recent threads about Primex and scan the comments. Some great explanations were given.

Hansel's picture

Thread FYI:  Gary Kaminski on CNBC just said PrimeX is an $11 billion market.  It's a small market.

HelluvaEngineer's picture

Just the other day I found $2B in my couch cushions.

Hephasteus's picture

I was going to print 20 billion last weekend but I felt bad for the greeks with their ink shortage.

tom a taxpayer's picture

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. 

Panafrican Funktron Robot's picture

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.   

Panafrican Funktron Robot's picture

Also, PrimeX holdings are much more concentrated.

sessinpo's picture

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.

alien-IQ's picture

here comes the obligatory 11:30am US dollar shanking to save the markets.

Yen Cross's picture

 I was on coupons ( sunday ) open.

thatthingcanfly's picture

OK, I give up. What the f is Prime X? The autobot leader's porn stash?

SheepDog-One's picture

Just think 'prime real estate, commercial, jumbo loans,' etc.

HD's picture

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...

jdelano's picture

I hear the Decpticons have a "Don't ask don't tell" policy.  

thatthingcanfly's picture

Arcee was kinda hot. I'da tapped it.

thatthingcanfly's picture

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?

SheepDog-One's picture

Yea sure trade gold for real estate, because rising rates are sure to add value there. ?

thatthingcanfly's picture

"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.

DosZap's picture



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?

fightthepower's picture

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.

Missiondweller's picture

Thanks. I'm not familiar with this and its not on the ZH Glossary yet.

Larry Darrell's picture

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.

Smiddywesson's picture

PrimeX is going under?  But that means all the McMansions are upside down!

Quick, we need to bail out all the rich people! (Again)

Hephasteus's picture

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

scatterbrains's picture

so is it that the lower Prime-x goes the higher bank earnings will be ?

traditionalfunds's picture

Wells was bragging last quarter that it's portfolio was doing relatively well due to high composition of prime mortgages.



SheepDog-One's picture

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. 

sabra1's picture

bunker buster bombs were recently shipped to israel, war within two weeks according to inside sources!

wombats's picture

Is this bullish for BAC, GS?  That's all that really matters.

Aunty Christ's picture

Hard to tell what's really going on, considering the bid/ask spread is wide enough to let several trucks through

RobotTrader's picture

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.

SMG's picture

You know if you posted this stuff BEFORE they go up and not after, people around here might appretiate you more.