what actually mattered today
Mar. 10th, 2008 09:40 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdHere's what actually mattered today:
Margin calls on Treasuries. That's right: margin calls on funds guaranteed by the Federal government:
Here's other stuff that matters some, but not as much: Crude oil hit $108/barrel today before closing just under that. That's 12 times the cost 10 years ago. Twelve times. Also, TIPS, which are inflation-adjusted bonds, are in such demand that their current rate is negative. That's right: you pay to own them. Buyers are betting, accordingly, on hyperinflation, and the resulting (and automatic) surge in interest rates associated with the bonds. Minyanville thinks they're betting on the wrong horse.
And briefly, in criminal justice matters, Monoline insurer and AAA-fantasy-league player MBIA asked Fitch to destroy data related to MIBA's downgrade. Gosh, that's not at all suspicious. Also, the Countrywide probe might give Bank of America what is almost certainly just yet another way out of that deal.
Finally, for those keeping score, yes, the ABX (residential-lending based CDOs) and CMBX both set records yet again today in the bad ways. Fantasy-world AAA-rated ABX CDOs are almost down to 50¢ on the dollar; AA is hanging on just barely over 20¢; everything else is of course even lower. CMBX spreads are crazytalk, with BBB-grade material moving - when it moves at all - at 2100 basis points (six months ago: 800), and fairyland AAA paper still in moonshot mode up to 275 (six months ago: 40).
Oh, and here, this'll scare you good: CNBC's Jim Cramer is warning of old-fashioned bank runs. Some people consider him a bit of a contrarian indicator, but that's not so much valid when he talks about explosively bad things. Tasty.
Margin calls on Treasuries. That's right: margin calls on funds guaranteed by the Federal government:
The hedge-fund industry is reeling from its worst crisis in a decade as banks are now demanding more money pledged to support outstanding loans even when the investment is backed by the full faith and credit of the United States.Bold added because amusement.
Since Feb. 15, at least six hedge funds, totaling more than $5.4 billion, have been forced to liquidate or sell holdings because their lenders -- staggered by almost $190 billion of asset writedowns and credit losses caused by the collapse of the subprime-mortgage market -- raised borrowing rates by as much as 10-fold with new claims for extra collateral. ...
"If you have leverage, you're stuffed," said Alex Allen, chief investment officer of London-based Eddington Capital Management Ltd., which has $195 million invested in hedge funds for clients. He likens the crisis to a bank panic turned upside down with bankers, not depositors, concerned they won't get their money back.
Here's other stuff that matters some, but not as much: Crude oil hit $108/barrel today before closing just under that. That's 12 times the cost 10 years ago. Twelve times. Also, TIPS, which are inflation-adjusted bonds, are in such demand that their current rate is negative. That's right: you pay to own them. Buyers are betting, accordingly, on hyperinflation, and the resulting (and automatic) surge in interest rates associated with the bonds. Minyanville thinks they're betting on the wrong horse.
And briefly, in criminal justice matters, Monoline insurer and AAA-fantasy-league player MBIA asked Fitch to destroy data related to MIBA's downgrade. Gosh, that's not at all suspicious. Also, the Countrywide probe might give Bank of America what is almost certainly just yet another way out of that deal.
Finally, for those keeping score, yes, the ABX (residential-lending based CDOs) and CMBX both set records yet again today in the bad ways. Fantasy-world AAA-rated ABX CDOs are almost down to 50¢ on the dollar; AA is hanging on just barely over 20¢; everything else is of course even lower. CMBX spreads are crazytalk, with BBB-grade material moving - when it moves at all - at 2100 basis points (six months ago: 800), and fairyland AAA paper still in moonshot mode up to 275 (six months ago: 40).
Oh, and here, this'll scare you good: CNBC's Jim Cramer is warning of old-fashioned bank runs. Some people consider him a bit of a contrarian indicator, but that's not so much valid when he talks about explosively bad things. Tasty.
