Jim Cramer was spot on with calling the housing bottom. Oh wait - he was dead wrong again about this as he is about everything else: downward prior revision and lower than expectations. At least he is consistent at batting 0: almost as good as someone batting 1000.

The name of the game last week was the roll, with the expiration of the June contract leading to over $300 billion in Matured Transactions. New protection creation was delayed into the roll and this week will likely see a comparable pick up in new protection purchasing.

Zero Hedge discussed a few months ago the fact that the ratings agencies consider distressed exchange offers essentially equivalent to an event of default. If that is the case, then Raiffeisen Bank is basically bankrupt: one of Austria's biggest banks with massive Eastern European exposure has recently launched an exchange offer for €500 million of notes (ISIN: XS0253262025) at 55 cents on a dollar, to be exchanged into new notes yielding 15%!

As many readers have been requesting data on both intro and intermediate CDS topics, I am posting a paper on one of the most fundamental credit derivative concepts: how to equate CDS pricing levels with those of cash bonds. As new concepts emerge, more explanatory information will be provided. Enjoy the paper - compliments of Maiden Lane I.

First it was Extended Stay, which filed for bankruptcy last week (and whose unexpected filing may make life for CMBS participants very complicated as the law of unintended consequences strikes again). Today, it is budget hotel chain Red Roof Inn. The company, which owns 210 hotels, defaulted on $367 million of mortgage debt, has a total of $1.2 billion in total debt, including mezz loans and other notes. The company was purchased a mere 2 years ago by Citigroup (yep, the same phenomenal deal makers who wouldn't know how to find their gluteus maximum with a magnifying glass, bought a 79% stake in yet another toxic piece of garbage) from Accor SA for $1.3 billion.

Or maybe the correct question is "what wasn't" especially for the past 3 months... I touched earlier upon the pain that is still to be unleashed upon the autosuppliers when I discussed the Visteon CDS auction. However, it seems the credit market is already on top of this. A brief observation of the CDS (and to an extent the equity) levels of TRW and American Axle indicates that over the past week something has really spooked longs in the names.

Strange day, with VWAP reversion ruling on no volume as has been the norm over the past 3 months. Liquidity was so hard to come by that 2,000 bps TICK swings were almost a norm in the second half of the day, yet the SPY closed virtually unchanged. 2s10s gyrated wildly after the $40 billion 2 year auction which cleared at a 1.151% yield vs. a 1.202% expected, and closed practically unchanged.

Spreads were mixed in the US with IG marginally worse, HVOL a smidge wider, ExHVOL weaker, XO wider, and HY rallying (as intraday ranges were generally half their average levels). Indices generally outperformed intrinsics (with curves flattening and rolls decompressing as unwinds seem the theme of the week) with skews widening in general as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL intrinsics beat and narrowed the skew, XO's skew increased as the index outperformed, and HY outperformed but narrowed the skew.

Much like our President who earlier announced he had quit smoking, with the exception of inhaling the occasional pack every time the mortgage spread passes 100 bps or gold gets close to $1,000. Deep thoughts from the SPARC-tamer himself. Oddly absent is a discussion of stochastic processes involving the massive loss of capital for LPs caught on the wrong end of a huge high-beta short squeeze.

It was only three months ago when people assumed that the turnaround in BLS' metric for mass layoff events meant an end to something or another. Nope. For the third straight month both mass layoff events and initial claimants for insurance picked up. There is nothing even remotely optimistic about this data...

Market tests are useful as they best indicate just what is the real value of hundreds of billions of distressed securities stripped away from any unwarranted optimism and green shoot propaganda. Today's Visteon CDS Auction was just one such test. And if there was a way to grade the test, it would be an emphatic F: not so much for bankrupt Visteon which is already in the morgue, but for other comparable auto suppliers whose bonds and loans recently have seen overambitious PMs buying their debt as if every single credit instrument would be rolled into Taxpayer Capital LLC's Worthless Assets Fund.

Finally someone is sticking against the taxpayer rape going on behind the scenes each and every day in bankruptcy court (even if it is paradoxically the government itself), in which taxpayers directly pay Wall Street's investment banks who pretend to facilitate Obama's pet UAW-placating and merely liquidation-delaying projects.