Consider these data points - the CDS on Berkshire Hathawayare trading at a wider spreads than those of covering Vietnam's debt, and the CDS spreads of GECC are trading at a spread wider than those of Russia's debt.It’s all the more remarkable because Berkshire’s and GE Capital’s debt both carry the highest rating of triple-A from Moody’s and Standard & Poor’s. Wll, that does not actually mean that the companies chances of default is much more than Rusia's or Vietnam's. CDS aren’t always a true gauge of the market’s risk perception.CDS can be thinly traded, and therefore subject to exaggerated movements — or even manipulation. Moreover, there is always an incentive for an Investor (Hedge funds or Institutional Investors) to TWEAK the CDS spreads and take advantage of long/short positions. Its very much similar to shorting a banks stock and spreading rumors about bank going under. No wonder CDS market shoudl be regulated.
Wells Fargo joins the band of banks/companies which slashed their dividends. WFC today slashed its quarterly payout to 5 cents from 34 cents a share.
The U.S. unemployment rate surged in February to the highest level in more than 25 years and the economy lost more than 600,000 jobs for a third consecutive month, this would mean further reductions in spending, more fore closures. The jobless rate surged to 8.1 percent, more than forecast and the highest since December 1983.
The Markit iTraxx Crossover index rose to 1,170 basis points for the first time. This means it costs 1,170,000 euros to insure 10m euros of debt on an annual basis over five years. The index, which is considered the best gauge of credit sentiment in Europe, has broken through fresh levels all week as concerns over the world economy and financial system grow.
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