- Next Week: Cash In Now Or Wait For A Santa Rally?
- US Markets Bracing for Selloff On Worries About Dubai's Debt
- Wednesday's Economic News Crunch Could Tilt Markets
- Tuesday's Heavy Dose of Data to Dictate 'Risk' Behavior
- Thanksgiving Week Stuffed With Economic News
- Double-Dip Jitters Cast Pall on Stocks; Techs to Weaken
- Gold Rush to Prevail on Demand, Low Rates, Weak Dollar
- Citi Strategist Bumps Target
- Rally's Low Volume Prompts Question: Whither Buyers?
- Stocks May Rise Further after Fed Waves on 'Risk Trade'
RSS FEED
MOST SHARED
- US Shoppers Spent Less Over Black Friday: NRF
- Tiger Woods Wants to Protect Family Privacy: Agent
- UAE Stocks Tumble on Dubai Woes; Asia Rebounds
- Dubai's Nakheel Seeks Suspension $5.25 Billion in Bonds
- South Korea Sees Exports Bouncing, but Risks Remain
- Japan Won't Intervene to Weaken Yen: Finance Minister
- Dubai is Harsh Reminder of Prolonged Global Recovery
- Tiger Woods Wants to Protect Family Privacy: Agent
- Portfolio Prep for Next Week: 'Don't Get Crazy'
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Regulators Compile Global List of 'Systemic Risk' Banks
- UAE Central Bank Stands by Banks Amid Dubai Crisis
- Dubai's Nakheel Seeks Suspension $5.25 Billion in Bonds
- US Shoppers Spent Less Over Black Friday: NRF
- True Cost of 12 Days of Xmas Tops $87,000
- US Senator Opposes Fed Chief Bernanke Renomination
- A Weak IPO Debut for Las Vegas Sands' Macau Unit
- NBC and Comcast, a Takeover for Hollywood to Watch
- Woods Has Nothing More to Say to Police: Agent
Market Insider
Text Size 
Vince Farrell, managing director at Scotsman Capital and a CNBC contributor, made some interesting observations today about LIBOR and the credit markets. See his comments below.
For the Friday before New Year's, there is a lot going on.
The TED spread is down to 1.13%, or 113 basis points.
Remember, this is the difference between the LIBOR rate and the three-month U.S. Treasury bill rate, and is a measure of "fear" in the market place. The higher the number, the more fearful -- and the more money flowing to the safety of Treasurys, thus lowering the interest rate. A higher LIBOR indicates an unwillingness on banks part to lend.
This was 2.2%, or 220 basis points, a short while ago, so the improvement has been significant. Still not back to its 10-year average of 0.48%, or 48 basis points, but a lot better than it was.
This might be an indication of better flow in the bond and money markets, and that could be why a bunch of investment banks are taking this moment to try and clear the decks of a lot of inventoried Leveraged Buyout (LBO) debt.
The report is they are trying to sell $160 billion of bonds, and $70 billion of loans (think of a bond as a long-term loan, or a loan as a short-term bond) at discounts of 10% and 5%, respectively. If sucessful, the indicated loss would be $19.5 billion, but they could have hedged to soften the blow.
It's encouraging to see the attempt, since the implication is that there is a market for this stuff. I would doubt they would be successful at such tiny discounts. LBO deals done a few years ago were averaging prices that were around 7.5x cash flow, but the more recent deals were more towards 11x cash flow. The latter deals look very rich, and consequently, carry higher risks of flawed business strategies, [sensitivity to] economic downturns, etc.
Still, there is a price for everything, and, hopefully, all this will get done and credit can start to flow more easily in the marketplace.
New home sales -- at an annual rate of 647,000 -- were just awful. This is a 12-year low, but it doesn't look like the bottom yet. The silver lining is that we are approaching historic low levels. The sooner we get there, the better, so the backlogged inventory of homes for sale can be worked down.
I was accused of being an old grouch the other day. Grouchy? Yes, at least on occasion, but I still want to have snowball fights, so how old can I really be? Or is that more a question of (im)maturity? Whatever. Back on Monday and I'll wish you all a happy New Year then.
Questions? Comments?
- These four sectors will be the next to lead the market.
- Zhu Zhu Pets are this year's must-have toy, fetching $40 or more on eBay.
- From the why-didn’t-I-think-of-that file, we present Jason Sadler, a man whose job is wearing T-shirts.
- It may be the most unusual guide to business you'll read.
- Shopping for a gadget hound? The choices can be baffling. Here are a few that should be a hit.
- "The Who" will be the halftime act for Super Bowl XLIV on Feb. 7 in Miami. Is the NFL behind the times?
Data is a real-time snapshot *Data is delayed at least 15 minutes