Bankster of America in trouble?

[marmar]

from the WSJ blog:



By Mark Gongloff


Stocks are bouncing this morning, like they do, because Chinese economic data were not soul-meltingly awful and because stocks have sold off so hard for so long. But the credit market is still moving in the other direction.

In the credit-default swap market, spreads are wider across the board, meaning people are paying up for protection. The Markit investment-grade corporate debt index is 3 basis points wider. The index of European sovereign debt is 10 basis points wider. The index of European financials is also 10 basis points wider.

Bank of America’s five-year CDS spread, meanwhile, is pushing toward 390 basis points, a record high. In other words, higher than the levels it hit during the financial crisis. At last check, the five-year spread was up 8% to 388 bp. The one-year spread is even higher, up 8% to 424 bp, meaning the CDS curve is inverted, usually a sign of trouble. ..........(more)

The complete piece is at: http://blogs.wsj.com/marketbeat/2011/08/23/credit-misses-rally-memo-bank-of-america-cds-approaches-record/

[BR_Parkway]

1. I don't really understand how alot of that works, but the comment in the

bottom is easily understood and pretty intense in it's meaning:

Steve wrote:

This seems like 2008 all over again. Short B of A and push CDS spread up for the benefit of the hedge funds. Until the regulators stop allowing people play the CDS system, ie hedge funds, this bogus trading will continue. Thanks for allowing an easy enty into B of A….I will smile all the way back up!!!

and it looks like the players on Wall St seem to agree - BOA is down while the rest of the sector is ahead:

http://www.google.com//finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1314129600000&chddm=1955&chls=IntervalBasedLine&q=NYSE:BAC&ntsp=0