Lehman Debacle 2? Credit Suisse Market Turmoil Deepens After CEO Memo Backfires (Credit Suisse’s CDS Now Higher Than During 2008-2009 Financial Crisis)

New CEO Koerner sought to reassure employees in Friday memo
Shares fall to a fresh record low, gauge of credit risk rises

It is like the Lehman Brothers debacle in 2008 all over again.

(Bloomberg) — Credit Suisse Group AG was plunged into fresh market turmoil after Chief Executive Officer Ulrich Koerner’s attempts to reassure employees and investors backfired, adding to uncertainty surrounding the bank.

The stock, which had already more than halved this year before Monday’s sell-off, fell as much as 12% in Zurich trading to a record low that values the firm at less than $10 billion. That was accompanied by a spike in the cost to insure the bank’s debt against default, which jumped to its highest ever.

Koerner, for the second time in as many weeks, had sought to calm employees and the markets with a memo late Friday stressing the bank’s liquidity and capital strength. Instead, it focused attention on the dramatic recent moves in the firm’s stock price and credit spreads, and investors rushed for the exit when trading reopened after the weekend.

One notable difference between 2008 and today is that Credit Suisse’s equity was flying high in June 2007 then crashed a the global banking crisis went into full motion. We then saw Credit Suisse’s credit default swaps soar in early 2009. But today Credit Suisse’s equity is a pale imitation of its former self, but its credit default swap is now higher than it was at its peak in early 2009.

Credit Suisse is now trading lower than its European rival Deutsche Bank (aka, The Teutonic Titanic).

Yes, this brings back sickening memories of the 2008-2009 global financial crisis. Let’s see how The Federal Reserve, ECB and Bank of Switzerland handle this debacle, particularly with M2 Money growth so low.

It appears that we are in another Lehman debacle. Or should I say “Lemur Bros.”

Livin’ In Biden’s Paradise! Percentage Of NYSE Stocks Closing Above 200 Day Moving Average Collapses To 13.48% (Bollinger Band, Fibonacci, Elliott Wave, Ichimoku)

My 401k is Livin’ in Biden’s Paradise.

The percentage of NYSE stocks closing above the 200 day moving average has collapsed to 13.48% as The Fed tightens to fight Bidenflation.

Bollinger Bands? The lower band is near breaking.

Fibonacci retracement? NOT retracing.

Elliott Wave? I feel like I am at the bottom at Nazare, Portugal.

Ichimoku cloud? The NYA index is so far below the cloud it has landed.

Yes, I feel like my 401k is surfing at Nazare, Portugal.

Wasting Away In Bidenville! Dow Tanks -500 Points On Friday As Fed Reaffirms Their Fight On Bidenflation

My investments are wasting away in Bidenville! Looking for my lost 401k value.

The Dow Jones Industrial Average was DOWN -500 points on Friday as The Federal Reserve continues their fight against inflation (green line).

If fact, since January 4, 2022, the Dow is down -22%.

Negative wage growth, relentless inflation, collapsing 401ks, we are wasting away in Bidenville.

Hey Joe! Where is the US economy? With Jackie Walorski??

Living In An Inverted (Bond) World! 19 Nations Have Negative 10yr-2yr Yield Curves (As US Housing Inventory For Sale In SOARING Out West)

We are living in an inverted (bond) world!

19 nations now have inverted 10yr-2yr yield curves.

And housing inventory for sale growth is soaring out West and in Tennessee?

At least Ohio is seeing a modest increase in housing inventory for sale.

On a parting note (before I watch the Ohio State Buckeyes annihilate the Rutgers Scarlet Knights tomorrow at 3pm EST, reverse repos parked overnight at The Fed just hit an all-time high. Apparently, banks don’t believe Janet Yellen’s inflation is transitory mumbo-jumbo.

UMich Buying Conditions For Houses Remain Depressed As Fed Tightens (Fed’s Brainard Calls For Fed To Keep Tightening!)

Bidenflation and The Fed’s counter-attack has caused considerable damage to the housing and mortgage markets.

Today, the University of Michigan consumer sentiment indices were released for September. Of note, buying conditions for houses remained in the tank.

Meanwhile, Fed Vice Chair Lael “Brainless” Brainard is calling for The Fed to NOT stop tightening money and raising interest rates.

As The Fed tightens, the entire range of Agency MBS TBA (to be announced) are under $100.

For example, the FNCL 2.5% TBA is now 84-17. And falling like a paralyzed falcon.

Here is Brainard with Fed Chair Jerome “Foul Owl” Powell, the dynamic duo of crashing markets.

Wipe Out! $32 TRILLION In Stock Value Wiped Out (US Core Deflator Rises To 4.9% Prompting Taylor Rule Fed Target Rate Of 9.65%, We Are Currently At 3.25%)

Wipe out!

$32 TRILLION of global stock value has been wiped out since December 2021.

Today’s core PCE deflator reading of 4.9% YoY shows that the inflation surge is not over. With a core PCE deflator of 4.9%, the Taylor Rule suggests that The Fed Funds Target Rate should be at 9.65%, far below its current level of 3.25%. So, IFF The Fed is following any sort of rule, rates should continue to soar.

And if we use headline inflation of 8.30% YoY, the Taylor Rule suggests hiking the target rate to 14.75%.

After yesterday’s dismal Q2 report of -0.6%, I fully anticipate a recession. Ain’t this a kick in the … head.

Fire! European Stock Valuations Lowest Since 2012 On Strong King Dollar, Atlanta Fed GDPNow Q3 Drops To 0.271% (Bostic Calls For 1.25 MORE Rate Increase)

Fire! European stock valuations have dropped to lowest since 2012.

The US Dollar index is soaring (not helping Europe) as The Federal Reserve tightens monetary policy to combat the inflation fire.

Meanwhile, the Atlanta Fed’s GDPNow real-time forecast for Q3 is at least above zero (barely) at 0.271%.

Fed officials continued to hammer home the central bank’s hawkish outlook, with Atlanta President Raphael Bostic saying he backs raising rates by a further 1.25 percentage points by the end of this year. Meanwhile, the People’s Bank of China said it will accelerate usage of targeted loans.

Bond volatility is increasing.

The US Treasury 10-year yield was down -20 basis points yesterday and is up +10 basis points today. This is the Fed’s Rollercoaster effect.

The Dow is down another 400 points today as The Fed’s Sugar Rush is ending. Perhaps The Federal Reserve main building in Washington DC should be renamed “The Sugar Shack.”

In related news, apparently the Biden Administration is going to replace Treasury Secretary Janet Yellen with … anybody else??

Meanwhile I will have a bottle of wine to kill the pain of inflation and Fed tightening.

When Temporary Seems Permanent: Overnight Repos Hit All-time High, $2.366 TRILLION (MOVE Bond Volatility Index Near Covid Recession High)

When temporary seems permanent?

Banks get to park money at The Federal Reserve overnight in the form of repurchase agreements (or repos). But as inflation is raging in the US, banks have parked a record $2.366 TRILLION at The Federal Reserve.

The MOVE bond volatility index keeps rising as inflation roars and The Fed fights back,

The US bond volatility index is now almost as high as during the Covid Crisis and approaching financial crisis levels.

US Pending Home Sales PLUNGE -22.5% YoY In August As Fed Continues Panzer-like Assault Against Inflation And Consumers

The scalding inflation rate crippling middle class Americans and low-wage workers is causing The Federal Reserve to take action by finally tightening their monetary policy.

As such we are seeing a rapid decline in the US housing market in terms of sales. For August, pending home sales declined -22.5% YoY as expectations of further Fed rate hikes (blue line) soars. Note that impact of The Fed’s and Federal government “sugar rush” after the Covid outbreak in early 2020 and its impact on pending home sales.

Without the “sugar rush,” pending home sales are dying.

Speaking of a sugar crash, risk parity ETF is down 32% from high.

The culprit? The Federal Reserve’s Panzer onslaught! With its leader, ~~Heinz Wilhelm Guderian~~ Jerome Powell.

The Dow is up 500 points today on the expectation that The Fed will stop tightening in the face of global chaos.

As UK 10yr yields fall -50 BPS!! And US T-10 yield drop -20.8 basis points.

Here is a photo of The Federal Reserve attacking American consumers to reduce inflation caused by Biden’s green energy policies and insane spending by Biden/Pelosi/Schumer.

Will Janet Yellen and Jerome Powell be awarded Panzer assault medals for 1) leaving monetary stimulus too large for too long then 2) suddenly tightening stimulus?

Flight To Safety! US 10yr Treasury Yield FALLS -12.2 BPS, UK 10yr Yield FALLS -46.6% BPS (UK Natural Gas Futures UP 16.37%)

It is going to be a bad day in markets. As I often mentioned in my classes, any 10 basis point shift in Treasury yields is a big deal.

On the bond side, the US Treasury 10-yr yield fell -12.2 basis points as investors run for cover. The UK 10 yr yield fell -46.6 basis points.

On the commodity side, we see WTI crude up 1.12%, heating oil up 1.92% and … UK Natural Gas Futures up 16.37%.

The natural gas leak in the Baltic Sea might have something to do with global jitters.

Here is a map of the gas leak.

I will have to turn on “The View” to find out who sabotaged the natural gas pipeline. /sarc

No, I don’t think Biden yelling at gasoline companies to lower prices has anything to do with market turmoil today. Its just another day under Joe Biden.