Does Lousy Service Master Deal Hold The Key?

Discussion in 'Trading' started by stonedinvestor, Jul 10, 2007.

  1. Well they are setting us up for the big fall. There has been huge lack of responsibility shown by the RATING agencies in how they cover CDO's. Collaterized Debt Obligations. Since these are rather phantom assets they are not priced really just estimated and the estimates will CHANGE drastically and overnight ( it would be like a portfolio gapping down through stops on every stock )
    when and if a large deal doesn't get done. Which brings me back to this end of week pricing on the Service Master debt if that is deemed disappointing- Moodys and others will pounce. They HAVE TO, to defend themselves from the future lawsuit about their lack of oversight in this highly leveraged area of the market. If I told you I really understood all of this I would be lying It's a typical "why should that affect me?" type of conundrum. Well as these CDO's are most illiquid the selling of course from hedge funds and brokerages will be in the slightly better rated, more liquid junk bonds- so better run companies will take the hit, companies that you and I own stock in who will then disappoint in earnings if they can't execute their business plan which was based on borrowing... Ironically, these sellers will just sit on their real problem the sub prime mortgage CDO's hoping for a housing comeback at some time.

    US Treasuries are LIKELY TO TAKE A BIG HIT. Yields Up that would = MARKET DOWN... it's getting tricky folks right here at the top. ~ stoney