Things are pretty quiet on the news front so far this weekend. I wanted to hop on real quick and give you an update on the credit spreads this afternoon. As you can see they continue to soar:
Ignore CNBC when they tell you things are continuing to improve in the credit markets. As you can see, spreads are back on the rise again after dropping a few weeks ago when the worldwide bailout was announced. The moves on all of these charts are parabolic.
AAA debt is rated to be the safest debt available. The rising credit spreads tell you this is a bunch of hogwash. The spreads on the BBB debt tell you that its basically worthless at this point. All of this garbage debt is what is sitting in the banks books folks.
These charts show you no one wants to touch any of it. We are reaching new highs from a spread perspective day after day.
Things are not well in the credit markets folks. You won't see these charts on CNBC.
The only thing that's improving in the credit markets is the LIBOR rate is dropping. This is a lending rate set in London for banks. Keep in mind, this statistic is meaningless if no one wants to borrow! Mortgage applications were down 20% last week! The fact that the banks don't want to lend right now as they try to heal their balance sheets makes the LIBOR rate even more irrelevant.
As I said yesterday, ignore all of the "silver linings" on CNBC. They are blowing smoke up your ass when they tell you all is well in the credit markets.
Larry Kudlows new mantra is we are now planting "mustard seeds" for the next bull market. The problem Larry has is they will bloom 25 years from now! What happened to Goldilocks Larry? My guess is she now working as a hooker in order to pay her $3000/month mortgage payment on her 600k McMansion.