Credit Default Sickness
Have been reading too much about the pink slime that the USDA is allowing into meat, which is beef trimmings sprayed with ammonia and considered safe for human consumption nowadays.
It is such a good way to bring down inflation.
Yet vegetables are getting cheaper on the year.
|
Lettuce |
-30.1% |
|
Cabbage |
-26.7% |
|
Tomatoes |
-21.8% |
|
Broccoli |
-18.9% |
|
Strawberries |
-15.6% |
Source : http://www.businessinsider.com/food-inflation-2012-3
Goes to show as middle class grows, they eat more meat and less vegetables ?
Thoughts just swung to CDS. Credit Demolishing Structures ? … ooops sorry, maybe Credit Destroyed Successfully ? …
I thought, if anything to demonstrate that the recovery is underway and that the Dow is at a 4 year high, surely spreads are back to normal ?
Turns out, they’re not.
| SECTOR |
2Y AGO |
NOW |
NO. OF NAMES |
CHANGE |
% CHANGE |
| BANKS |
142 |
296 |
172 |
153.95 |
109% |
| AIRLINES |
619 |
577 |
14 |
(41.70) |
-7% |
| AUTOS |
219 |
242 |
46 |
22.76 |
10% |
| BUILDER/REAL ESTATE |
107 |
182 |
14 |
75.79 |
71% |
| BUILDING/CONSTRUCTION |
213 |
186 |
19 |
(27.30) |
-13% |
| AERO/DEFENSE |
86 |
120 |
20 |
34.12 |
40% |
| CABLE TV |
275 |
329 |
18 |
53.96 |
20% |
| CHEMICALS |
156 |
119 |
56 |
(37.12) |
-24% |
| COMMERCIAL SERVICES |
419 |
422 |
9 |
2.75 |
1% |
| CONSUMER |
69 |
95 |
24 |
25.80 |
37% |
| CONSUMER SERVICES |
274 |
243 |
8 |
(30.78) |
-11% |
| CORPORATES (EMERGING) |
327 |
249 |
16 |
(77.89) |
-24% |
| DIVERSIFIED |
99 |
181 |
4 |
81.21 |
82% |
| FIN GNTY INSURANCE |
1877 |
933 |
13 |
(944.09) |
-50% |
| FOOD & BEVERAGE |
110 |
105 |
50 |
(4.58) |
-4% |
| HEALTH INSURANCE |
157 |
96 |
6 |
(61.00) |
-39% |
| HEALTHCARE |
202 |
237 |
20 |
35.06 |
17% |
| HOME BUILDERS |
307 |
460 |
17 |
153.37 |
50% |
| INDUSTRIAL |
55 |
76 |
6 |
20.74 |
38% |
| INSURANCE |
125 |
162 |
75 |
37.55 |
30% |
| LEISURE |
515 |
458 |
26 |
(57.23) |
-11% |
| LENDERS |
282 |
283 |
36 |
1.07 |
0% |
| MACHINERY |
139 |
118 |
12 |
(21.39) |
-15% |
| MANUFACTURING |
84 |
92 |
22 |
8.27 |
10% |
| MEDIA |
1005 |
158 |
39 |
(847.13) |
-84% |
| METALS/MINING |
161 |
245 |
40 |
84.80 |
53% |
| MUNICIPALS |
144 |
116 |
45 |
(28.07) |
-19% |
| OIL &GAS (DRILLING) |
120 |
149 |
30 |
29.41 |
25% |
| OIL & GAS (EXPLORE) |
132 |
169 |
16 |
36.71 |
28% |
| OIL & GAS (INTEGRATED) |
196 |
167 |
19 |
(29.86) |
-15% |
| PACKAGING |
119 |
277 |
7 |
157.39 |
132% |
| PAPER & FOREST |
320 |
312 |
18 |
(8.25) |
-3% |
| PHARMACEUTICALS |
53 |
57 |
21 |
4.60 |
9% |
| PIPELINES |
113 |
142 |
20 |
29.31 |
26% |
| PUBLISHING |
664 |
682 |
12 |
18.20 |
3% |
| REITS |
260 |
218 |
44 |
(42.05) |
-16% |
| RESTAURANTS |
90 |
98 |
4 |
7.20 |
8% |
| RETAIL |
192 |
230 |
54 |
37.25 |
19% |
| SOVEREIGN G10 |
53 |
119 |
11 |
65.61 |
124% |
| SOVEREIGN ALL |
175 |
241 |
71 |
66.61 |
38% |
| SOVEREIGN ASIAPAC |
159 |
176 |
13 |
17.34 |
11% |
| SOVEREIGN CEEMA |
212 |
341 |
22 |
129.74 |
61% |
| SOVEREIGNGULF |
187 |
266 |
7 |
78.88 |
42% |
| SOVEREIGN LATAM |
304 |
258 |
11 |
(46.39) |
-15% |
| SOVEREIGN W EUROPE |
103 |
245 |
18 |
141.60 |
138% |
| SUPERMARKETS |
163 |
252 |
6 |
88.85 |
54% |
| TECH |
204 |
212 |
66 |
7.13 |
3% |
| TELECOM |
168 |
1920 |
60 |
1752.06 |
1043% |
| TOBACCO |
88 |
87 |
10 |
(0.67) |
-1% |
| TRADING COMPANIES |
84 |
112 |
6 |
27.17 |
32% |
| TRANSPORTATION |
117 |
209 |
46 |
92.09 |
79% |
| UTILITIES |
178 |
278 |
105 |
100.64 |
57% |
Warning : This is tough back breaking work and Bloomberg only provides 2 years worth of data.
Then I went on to do random name checks and I found the tightest 5Y CDS level belonged not to a AAA sovereign like Norway… but …. GOODRICH (Aerospace) BBB+ at Libor +14.5 bp mid !
| NAME |
5Y CDS |
RATING |
| GENERAL MILLS |
35.5 |
BBB+ |
| GOODRICH |
14.5 |
BBB+ |
| IBM |
25.5 |
A+ |
| JOHNSON & JOHNSON |
37.5 |
AAA |
| NORWAY |
25.7 |
AAA |
| SPAIN |
409.1 |
A |
| THAILAND |
127 |
BBB+ |
| MACYS |
101 |
BBB- |
| MARRIOTT |
81.875 |
BBB |
| MERCK |
16.5 |
A+ |
| MICROSOFT |
36.35 |
AA+ |
| NOBLE CORP |
99.81 |
UR |
| HK LAND |
153.95 |
UR |
| GENERAL MOTORS |
308.8 |
BB |
| FORD MOTOR CREDIT |
217.5 |
BB+ |
This is mind boggling, utterly confounding news. That our new world order belongs to BBB+ companies andThailand(BBB+) is less than a third of Spain (A).
G10 Sovereign credit spreads have widened 124% in the past 2 years, led by West European Sovereigns which widened 138%.
To put in perspective, governments are people. Only in Iceland does the Prime Minister go to jail when the country defaults. We have the Irish referendum coming up soon though.
When the sovereign debt burden goes up, the people bear the brunt of it. Essentially, taxpayers are just paying for the bank bailouts. And it looks like its not just the taxpayers. Its his descendents too !!
So Is The Recovery Underway ?
Yes. There is no point in being healthy when everyone is sick. If everyone is sick, then sickness becomes the norm and there is no worries about Contagion anymore.
There is no point in eating meat when everyone else is into Pink Slime !!