• Gold Money
    05/03/2016 - 11:35
    Crude oil time-spreads have completely dislocated from inventories. Historically, such dislocations have proved to be short lived. We expect that either spot prices will sell-off again or the back...

CDS

CDS
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China Stocks, Credit Risk Worsen Despite "Short-Squeezed" Yuan Strength





On the heels of new reserve ratio regulations and the biggest strengthening in the Yuan fix in 4 weeks, offshore Yuan has strengthened notably (despite Chinese default/devaluation risk surging in the CDS markets). Chinese stocks are weaker in the early going but corporate bond yields continue to slide to new record lows as the "last bubble standing" stands ignorant of the risks around it.

 
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GM/Ford Credit Risk Surges To 2 Year Highs As Fitch Raises Auto Sector Concerns





With the feds probing Deutsche Bank's exaggerating Auto ABS demand, car dealerships suing automakers for being forced to channel-stuff, direct evidence of massive channel-stuffing with near-record inventories-to-sales, and sales now beginning to tumble after last month's weak credit growth, it is perhaps no wonder that Fitch has raised the warning flag about automotive vehicle and parts makers...

 
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The Game Of Chicken Between The Fed & The PBOC Escalates





There’s more than a whiff of 2008 in the air. The sources of systemic financial sector risk are different this time (they always are), but China and the global industrial/commodity complex are even larger tectonic plates than the US housing market, and their shifts are no less destructive. There’s also more than a whiff of 1938 in the air, as we have a Fed that is apparently hell-bent on raising rates even as a Category 5 deflationary hurricane heads our way, even as the yield curve continues to flatten.

 
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Icahn's Freeport McMoran Is Not Buying The Bounce





With Freeport McMoran at the top of the list of entities due to be downgraded to junk (in fact trading in credit markets with a 79% chance of default), it is perhaps not entirely surprising that yesterday's dead-cat-bounce is fading fast this morning as Carl Icahn's big bet turns sour-er.

 
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Nigerian Currency Collapses After Central Bank Halts Dollar Sales To Stall "Hyperinflation Monster"





Having told banks and investors "don't panic" in September, amid spiking interbank lending rates and surging default/devaluation risks, it appears the massive shortage of dollars that we warned about in December has washed tsunami-like ashore in oil-producing Nigeria. Following the Central bank's decision this week to halt dollar sales to non-bank FX market operators, black market exchange rates spiked to 282/USD (vs 199 official) and CDS spiked to record highs implying drastic devaluations loom.

 
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Glencore CDS Soar To 6 Year High After Bankruptcy Of US Subsidiary, Ongoing Copper Carnage





The default of Sherwin Alumina, a US subsidiary of Glencore, refocused the market's attention on the one company which in September was among the hardest hit in the post-China devaluation rout, and the immediate result was that while Glencore stock plunged and is once again approaching all time lows, a more ominous development was that GLEN's CDS spiked to as much as 950 basis points, the highest since April 2009 and suggesting far more pain is in store for the commodity trading giant.

 
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This Is The $3.5 Trillion "Neutron Bomb" That Keeps Kyle Bass Up At Night





"... what we are going to see next is a credit cycle, and in a credit cycle you see some losses, but if China's banking system loses 10%, you are going to see them lose $3.5 trillion."

 
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As The Saudi Economy Implodes, A Fascinating Solution Emerges: The Aramco IPO





Earlier today everything changed when Saudi Arabia's unveiled what may be a stunning Hail Mary: one which is great news for the suddenly liquidity challenged Saudi government, and is very bad news for the future price of oil. According to the Economist, Saudi Arabia is contemplating taking Saudi Aramco - arguably the world's most valuable company - public. Here are the implications.

 
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Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal





Saudi Arabia, which entered 2015 with virtually no debt and an FX reserve war chest that amounted to around three quarters of a trillion dollars, is now viewed as less creditworthy than a country where a coalition of socialists, left-wingers, and communists just overthrew the government.

 
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Macy's Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed





Two months after the first "Macy's Massacre", the massacre is back with a vengeance, and moments ago the iconic retailer not only reported yet another cut in its guidance, but also announced it would be laying off another boatload of retailers, demonstrating just how strong the "service" economy truly is.

 
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DVA Is Dead: Banks Will No Longer "Profit" From Collapsing





The debt valuation adjustment, or DVA, will no longer be included in net income, according to revisions to the fair-value measurement standard published by the Financial Accounting Standards Board Tuesday.  The DVA rule increased net income when a bank’s bonds tanked, on the theory that the firm could buy back its bonds at a lower price and benefit from the decline in value.

 
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For Kyle Bass This Is "The Greatest Investment Opportunity Right Now"





"Given our views on credit contraction in Asia, and in China in particular, let's say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there's one thing that is going to happen: China is going to have to dramatically devalue its currency."

 
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Saudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos





On the heels of a tumultuous weekend that saw Saudi Arabia cut diplomatic ties with Iran after the Saudi embassy was torched by protesters angry at the execution of a prominent Shiite cleric, CDS spreads for the kingdom have blown out to six-year wides while the implied odds of the riyal peg finally breaking are hitting new record highs.

 
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