What happened this week:

  • Panic at CDO markets
  • Panic at junk bonds markets
  • Panic at ABX.HE markets
  • Panic at CDX markets
  • Strangely, no panic at CMBX markets yet
  • First signs that already announced LBO deals are cracking
  • Failure of Blackstone IPO
  • Secondary market for CDO is drying up
  • Executives at New York-based S&P, Moody’s and Fitch say they are waiting until foreclosure sales show that the collateral backing the bonds has declined enough to create losses before lowering ratings on some of the $6.65 trillion in outstanding mortgage-backed debt
  • Savings rate fell to -1.4% in May, while it was firmly above -1% in Q1. I suppose people depend on their investments and savings for spending. Watch out those investments as S&P500 is cracking

What to watch next week:

  • It’s hard to track how fast the CDO crisis unfolds and how badly it will hit. I usually watch CDS charts on markit.com as a shadow of what’s going on
  • Stocks broke many technical indicators this week. I suppose the Q3 will start on the wrong foot 🙂