On Friday we noted that Morgan Stanley CDS would be worth watching as a sort of “canary in the coal mine.” At the time, the CDS were selling for around $455 (that is, it cost $455, 000 to insure $10 million in 5-year bonds). Today the CDS continued to widen, closing just north of $490. For those keeping score, that’s nearly a 10% increase in one day. The canary doesn’t look so healthy…
In other financial news, Bank of America’s stock price is approaching the monthly fee they are now charging for debit card users — $5. Sometimes irony is awfully ironic. Maybe BAC will accept 1 share of its stock for payment of the fee. That would be a unique stock buyback program!
Goldman Sachs is down nearly 5% today and Citi is down over 10%. Pre-reverse split, Citi is trading at $2.31.
It seems to me that investor fatigue may soon set in. Investors will be quantifying their September losses upon receiving statements from their brokers, and the seemingly endless string of 200 point down days (followed by brief, convulsive rallies) may finally trigger capitulation.
There is so little predictability in a market trading as monolithic as this, that such prognostication has value only as an entertainment vehicle.
I think I heard the canary say something about keeping net exposures low…