CDS

In keeping with the fallen dictator theme of late....

• Mussolini  +10
• Francisco Franco +10
• Gomes da Costa +40
• Guinness (b/c its just that good)     +10
• Ioannis Metaxas     +35
• Begium unch  (no governments, no dictators... time to rename it to Shangri La)
• Napoleon +5
• Engelbert Dollfuss  +3
• George III  +3
• Walter Ulbricht  +3

When all breaks, the food shall still remain:

• STROMBOLI +7
• PAELLA +2
• COZIDO +6
• GUINESS +6
• TZATZIKI   +2
• FRIES +10
• SNAILS+3
• WIENER SCHNITZEL+3
• FISH AND CHIPS +4
• SPAETZLE+4

Just one data point to note: Germany: +10

Not even the core is safe anymore, with Germany and the UK both joining the periphery in today's CDS rout:

• PORT +5
• ITALY  +10
• IRELAND   +8
• GREECE    +2
• SPAIN +10
• BELG  +3
• FRANCE +1

• AC Milan: -2.5
• Real Madrid: -2
• RSC Anderlecht: -10
• Ronaldo: +3
• AEK Athens: unch
• ManU: - .5
• Bohemian FC: +5
• Les Bleus: -5.5
• Vienna FC: -6
• Hamburger SV: -1

14:00 CDS update:

• MER 355/375 +25
• BAC  310/320  +25
• MS  260/275 +15
• GS 190/205   +10
• JPM 112/120 +5
• WFC 110/120  +5

Well, that short-selling ban sure worked for 48 hours.

• EURO Bnks: +doub digits on avg across the board

As for Sovereigns, + means bad:

• LIMONCELLO: +2
• GALICIAN: +10
• MOSCATEL: +14
• OUZO: +1
• DUBBEL: +1
• GREY GOOSE: -1
• ZIPFER: +1
• NEWCASTLE: -1.5
• GUINNESS: +20
• KOLSCH: +1

Sov:

• BERLUSCONI: -17
• ZAPETERO: -13
• COELHO: -15
• G-PAP: unch
• LETERME: -16
• SARKOSY: -2
• FAYMAN: -7
• CAMERON: -3
• GUINNESS: -40

• BUNGA BUNGA: -25
• SIESTA: -20
• PORT: -90
• YOGURT: unch
• WAFFLES: -36
• RIOTS: -11
• GUINNESS: -45
• F. FRIED: -21
• ANSTALT: -10
• GERM: -11.5

...35 points wider: the highest since April 6, 2009. But fear not - credit has a reputation of being always wrong, while equities (especially short covering squeezes) are always right.

IG16 is 125.5 +10 as I type.  Could be 5 bps different by the time I finish writing.  Main is being quoted on 2 bp markets.  I'm seeing IG16 quoted on anywhere from 1 to 2 bp market.  Typical bid/off is 1/2 a bp.  HY16 is down 1 3/4 points again, but shockingly is still being quoted in 1/4 pt markets by most dealers.  It could be a bright spot when the weakest of weak is actually holding on to some liquidity.  Maybe have some people looking for the bottom in that market. SOVX is trading on 6 bp markets, and fins in Europe are all over the place.

Just because 3 hours ago is so 3 hours ago:

• ITRAXX FIN SR +15, NEW RECORD 232
  
• IT +51
• SP +47
• PORT +39
• IRE +31
• GREECE +.5
• WAFFLES +37
• FR +15
• AUST +14
• ENG +3
• DEUTSCHE  +2.5

Almost as if someone shouted fire in a crowded theater... And yet, the DJIA surged 400 points yesterday. That is unpossible. After all, the market iz a perfectly iffishynt discounting mechanizm.

BAC default risk at 265-270 bps as of this morning. About 30 tighter from yesterday's epic rout which saw the final bid/asl around 290/310, or well over 100 wider on the day. The longer BAC keeps mum, the worse this will get, and we expect the bleed wider to resume shortly, slowly at first, then very fast if no curve steepening QE3 Operation Twist is announced.

European CDS rerack:

• MAIN  141.25/142.5   +.75   XOVER 590/593  +10.5
• ITALY  -4
• SPAIN -13
• PORT -5
• IRELAND    -
• GREECE     -
• BELG  -2
• FRANCE +2
• AUSTRIA  -1
• UK  +5
• GERM  +4
• SOVX  245/250   -

With Bank of America investors finally realizing it is game over for the company as a going concern, at this point there are just two options for Brian Moynihan: the spin off of CFC as a bad bank, backstopped by the Fed, or, well, Chapter 11, which for a bank is essentially liquidation (and with CDS trading up 50 bps to 260 a bankruptcy seems increasingly inevitable). It also means that another TARP is on the way. And once America realizes that another several trillion have to be put into its insolvent banking sector, it will get quite violent. The biggest irony: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.