Extinct Possibility

Open the door, get on the floor
Everybody kill the dinosaur
--Was

After racking up some nice gains this morning, domestic stock markets flipped over as folks began focusing on share price declines in British Petroleum (BP). The stock is off another 15% today on huge volume.

Perhaps more importantly, BP credit spreads have been blowing out big time today (below).

This is classic prelude-to-bankruptcy type of action. More than one person on the 'Ville has noted similarity between today's trading patterns in BP securities and those in Lehman as it began its death spiral in 2008.

As such, it's worth pondering who might be on the sell side of BP credit default swaps as the spectre of bankruptcy looms larger. Likely more than one institution would be on the hook for some big insurance payouts if BP goes to zero.

What probably concerns the markets most, then, is who's short all those BP CDSs?

position in SPX