Bank of America CDS Back at 2009 Highs (XLF, BAC, C, WFC, BAC CDS, Clog Index Charts)

BAC 5Y CDS (source: Bloomberg)
The banks that were bailed out in 2008/2009 are now under pressure again. Is Bernanke going to save the day on Friday during his Jackson Hole speech? Bank of America ($BAC) and its 5Y credit default swaps are leading the way back to early 2009 levels. BAC is trying to unload its stake in China Construction Bank Corp to raise capital (BofA to maintain stake of at least 5% in CCB: China Daily, Bloomberg).

The end of QE2, global economic slowdown, recent equity crashes, euro zone sovereign debt and banking crises, falling ABX and CMBX prices / rising premiums (credit default swap indexes insuring pools of subprime residential and commercial mortgage securitizations from 2005-2008) and the recent sunspot cycle correction are probably all responsible for the volatility recently (why sunspots). I want to show you charts of XLF, BAC, BAC CDS, C, WFC and the Financial Clog Index. See the CMBX Index and more at Zero hedge (links below). S&P, Dow and Nasdaq futures are up big tonight, while gold and the dollar are down. The next big moves will probably be Gold (going parabolic), EUR/USD (triangle squeeze coming) and DXY (testing floor support, downtrend). Those charts deserve a separate post. Traders are placing bets on whether the Fed continues to support the stock market and economy (Bloomberg).

XLF (Financials Select SPDR) broke through a 2-year channel. It looks ugly... Will the Fed backstop channel support?



Bank of America Corp. looks like it's going to zero again... What else will they sell?



WFC (Wells Fargo) is still holding on to its QE1/QE2 channel, but will be lost under $25.50 imho.


Citigroup is a flatliner.



The HSBC Financial Clog Index is interesting. It measures inter-bank lending risk (TED Spread and LIBOR-OIS Spread), U.S. Financials default risk (credit default swaps), Fannie Mae and Freddie Mac credit spreads and the VIX (equity volatility index). As you can see, the Clog Index is nowhere near the levels seen when Lehman went bust, but it did break above the 2010 high, for what it's worth. Check out the chart here at bloomberg.




Goldman's chart doesn't look pretty either. These posts at Zero Hedge explain what's going on:

"BofA Warns Upcoming "Desperate Measures" By Authorities Will Result In Another 2008 Market Collapse" (8/22)

Bank Of America CDS Hits Escape Velocity (8/22)

European Liquidity (Or The Complete Lack Thereof) Summarized In One Chart (8/22)

With Just 4 Days Left Till Jackson Hole, Are The "Great Expectations For QE3" Too High? (8/22)

Guest Post: Weekly Kumo Break Suggests Long Term Structure Changing (8/21)

Goldman's Jim O'Neill: "2008 All Over Again? (8/21)

Charting The Upcoming Recession, And Is Goldman Really Predicting A 2012 Year End S&P Range Of 700 - 900? (8/20)

Goldman Cuts Q3 Growth Forecast In Half, Sees Q3, Q4 GDP At 1.0%, 1.5%, Presents Jackson Hole Event Walk Thru (8/19)

A $2 Million Bet That Bank Of America Will Be $4 By November (8/18)

Time To CMBShort (8/17), CMBX Selloff Accelerates" (8/18)

Other links

"The median EPS drawdown during recessions is about 15%"... (iBankCoin)

China’s HSBC Flash PMI: In The Contraction Zone (49.8) (Discipline Investor)

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