AAA

bzl33

> “Selling protection on Microsoft at greater than 50% wider levels than fellow AAA rated J&J is a remarkable opportunity,” Weinberg said. A representative for Microsoft, which hasn’t issued debt this year, declined to comment. free money

Possible-Shoulder940

"The spread on Microsoft default swaps is remarkably wide for a AAA rated company, according to Andrew Weinberg, a portfolio manager at [Saba Capital Management](https://archive.is/o/X3iHR/https://www.bloomberg.com/quote/3328773Z:US), a hedge fund management firm that has been selling protection. By comparison, protection on Johnson & Johnson, the other US company rated AAA, cost about 19 basis points a year on Thursday."

Hwangoutpltr

5'4" and hung like a AAA battery

vegienomnomking

AAA lifetime SPIA are good in my books. I won't put all my money in one but I will do a portion of it when I am older.

DolanTheCaptan

Eh, if anything I think this forces developers to actually optimize their games for once, and maybe gamers will finally actually play their steam libraries instead of expecting to play all the AAA titles on max settings. Also I just don't buy that decent gaming computers are that expensive even with price hikes, my mid range computer from half a decade ago still runs games very well

Visual_Enthusiasm_73

Not sure how they are missing such an obvious point. Hollywood big budget, and AAA game studios, have insanely bloated budgets and the quality more often than not - Is shit. Meanwhile, smaller or indie studios and game developers are producing high quality products at like 5% the budget. It's not rocket appliances.

Visual_Enthusiasm_73

It's true in many cases. Look at video games as well... Expedition 33, Black Myth Wukong, etc. versus most AAA releases.

No_Stand5622

Bundle a subprime company with AAA companies in S&P Sounds familiar in 2008

Wild_Space

I wish they had demos. I mean, if I could just try like a level of a AAA title it may convince me to keep it and drop money on games. KInda hard tho when all the games I see look like Vaperware.

oldirishfart

AAA CLOs, still just over 5% (JAAA, PAAA, etc)

OchoGringo

I know there can be a range. But looking on the Fidelity website just now, they list new 6-mo CD’s at 3.85% and 1 year CD’s at 3.8%. They list AAA 6-month Muni’s at 2.7% and 1 year Muni’s at 2.89%. So, if you are paying 37% income tax (for income above $650K, I believe), it’s probably very similar to do a CD & pay income tax, or do a AAA Muni and not pay tax. I’m sure if you looked at individual Muni’s you could beat these rates.

Health_Code_T

it's OK, just mix the junk debt with prime debt and sell the whole thing as AAA

348274625912031

And a bunch of sub-prime mortgage, derivative securities were AAA rated... until they failed.

SignificanceLate7002

ABVE - Merger pending with Palm Global The tokenization of $1.5 trillion in AA+ and AAA-rated sovereign assets. A gold-backed stablecoin anchored by $350 billion in U.S.-based gold assets A proprietary trading platform for real-world asset-backed investment products Peter Knez, former global chief inbestment officer of Blackrock is CEO of Palm Promax and his Highness Sheikh Mohammed Bin Maktoum Bin Juma Al Maktoum, a member of the Dubai royal family, is a member of the board. CCCX - SPAC play with merger pending with Infleqtion Quanfum computing.

pigglesthepup

Maybe. We keep comparing the present to the past. I don't think we're comparing it to the *correct* parts of the past. The 2008 GFC created a massive hole. Comparing it to the Depression is a correct comparison: they were both severe banking crises caused by excessive leverage. The debt reduced the money supply to the point of deflation. During the Depression, government bonds and cash were king. On the opposite end was the Great Inflation of '70s. We keep using it as the basis of comparison for our present. The '70s had unique factors that created that level of inflation: **Currency Shock:** the end of Bretton Woods was the end of the gold standard. The dollar has been purely fiat since. The shock of moving from a fixed currency to a floating one has already been priced in. **Energy Shocks:** because of what happened in the '70s, we have greater energy independence and efficiency today. That doesn't mean we're still not vulnerable to energy shocks. We had some with the Ukraine War in 2022. We're just more insulted from it now. **Decline of Unions:** workers no longer have the organizing power to demand higher wages. Higher wages are achieved by switching jobs. When the Fed slows the economy through rate hikes, it's harder for workers to find new, better paying jobs. **High Savings Rate:** The average American had higher savings. This was excess cash they could use to chase around limited goods. One factor that is still the same is an executive branch that seeks to politicize the Fed. That hasn't happened *yet*. We don't have a new Fed chair yet and we also don't know what that new Fed chair is going to say or do (although yes, chances are good they will bow to Trump). IMO we're comparing our present to the wrong time period. The more accurate time period to compare to would be the late '40s. The government was forced to pull out all the stops and throw shit tons of money at the economy in order to fight WW2. This caused quite a bit of inflation both during the war and afterwards. Investors bought war bonds regardless. When the war ended, there was even a mild recession due to the slowdown in spending. But Americans had built up savings from the stimulus, which is why it was a mild recession. All that spending and inflation was enough to finally get the economy out of the hole caused by the Depression. The economy in the late '40s wasn't overinflated so much that it was finally back at par. It was finally where it would've been if the banking crises that turned a recession into a depression didn't happen. IMO the '40s is the analogous situation to today. The government pulled out all the stops and through shit tons of money directly at Americans to fight Covid. The stimulus has been inflating us out of the hole created by the GFC. Economically, the 2008 GFC + Covid is analogous to the Depression + WW2. So, two things to keep in mind: 1) The GFC was only 16 years ago. It's still fresh in investors' minds. When investors like me see the 30-year once again yielding 5%, it's something I want to hold because that's what it was yielding in 2006 before the financial crisis. An investor that loaded up on treasuries in 2006 set themselves up for nice returns over the next 14 years: they would be holding the saving grace during the 2008 crash, which they could sell then for a huge profit and reinvest in stocks at historic lows we will likely never see again. Pension funds are probably weary of the long bond right now, but they also don't want to find themselves holding AAA-rated securitized dogshit again like in 2008. 2) Today's economy hasn't been on a tear for two decades already like it was in 70s and is other factors that contributed to inflation. If you look at the Fed chart, rates started on their solid upward path in the early 60s. Americans had built-up savings from two decades of economic world domination. They had cash to chase around goods. The average American's savings rate went up during Covid and those excess savings softened the effects of Fed hiking in 2022, but the savings rate has dropped again. Anyway, that's my take. Interest rates could still go up. The vigilantes could still appear. There's still no real alternative to treasuries. They're pretty much a religion at this point.

80s_JDM

Offering Bespoke Tranche Opportunities Get them while they're AAA+

rwc5078

What are you selling them for I am looking for some grad AAA stocks in these turbulent times!

4Yk9gop

Guys I have a great idea. They should package them with AAA, AA and BBB auto loans and then get the credit rating agencies to rate them as AAA.

Famous_Wear_8376

ok so what im doing is im bundling all these ai stocks your coreweaves and nbis and tesla and put them with other things in the same b/c category but now theyre all AAA rated

TedriccoJones

Just watched the Big Short again last night and the reason '08 happened was outright fraud. There was a massive demand for AAA rated mortgage bonds and the housing market was viewed as safe and boring. Soooo, there was quite a bit of incentive to put as many loans on the table as possible and many people were given loans that they shouldn't have received. So call liar loans. Banks weren't accurately accessing the risk of the underlying bonds because after all, everything was rated AAA and the mortgage market was safe and boring. When the inevitable defaults started to occur it cascaded into a liquidity crisis because there was so much exposure to the losses. Bingo bango bongo, government bailout!

MutaliskGluon

Today has all the markings of a potential flash crash / circuit breaker. Private credit and loans are fucked. Goldman tried to unload a bunch of 6% Chicago AAA rated bonds at 6%+ and couldn't find buyers. I don't think many grasp the seriousness of the above sentence, but if fucking GS can't get a AAA bond at 6% off it's books Jesus christ. Shitcoin continues to live up to its name. It's really just a levered nasdaq play and it co tinting to drop through supports without even a bounce is ominous for risk assets. People are still super bullish and thinking everything is an overreaction or a sale without understanding why NVDA is dumping off and the extreme parallels to Cisco in summer 2000. Cisco had a great ER, raised guidance, CEO talked about infinite demand and blah blah blah. Then sold off 75% in the next 6 months. Japan is fucked. They arr going to launch a stimulus bazooka and their bond yields are gonna spike even more and the carry trade is gonna get margin called. I'm literally 100% cash/SGOV right now and have decision paralysis because liquidity is so thin right now we could go 4% green today or hit circuit breakers. The ONLY thing that matters today is which way the algos go

LionRivr

If you mean CPI or PCE inflation, sure. But we know those numbers don’t accurately reflect reality. And what actual retail investor is buying AAA bonds? Treasuries do not outpace currency debasement. The dollar loses purchasing power faster than the 4 or 5% you can get with any bank CD or UST.

FrenchieChase

The yield on some AAA bonds is currently higher than inflation

FlimsyPomelo1842

I didn't replace that until 3 years ago. It was girthy enough to run AAA games 7 years after release

notyourregularninja

Just a reminder US economy a AA+ rated economy and not AAA anymore!!

AdCritical5383

**Username:** ✅ **Flair:** N/A **Comment:** Grade-AAA **Action Taken:** Award Given

Slarrrrrrrty

It's probably in a AAA MBS and they can't tell anyone about its current status.

RandomRocketScience

obviously super regarded if he yolos that on 0dtes, but at that interest rate it's a good deal. 0-3 month t-bills pay above 3%, 10-15 year AAA corporate bonds pay above 4% easily. AAA Government bonds are lower, but should still be above your interest rate. Put 20% in a broad world ETF, and you're golden. No idea if you are allowed to do that, though :D

Send_Lawyers

I sold a 911 on it. Worked great. Made 10k more than I was offered in trade at the dealership. Sale took about 1 hour at a AAA location.

db_deuce

2M, if you were gifted 10M, why turtle up on go AAA bonds?

AICHEngineer

Current 20 yr bond yields on treasuries in the US is 4.7%, since its a bond thats guaranteed. Triple A corporate bonds are yielding low 5.1% rn https://fred.stlouisfed.org/series/AAA

BrannEvasion

I don't know if you've noticed, but the entire AAA market is pretty much dead as it is.

Affly

To put it in perspective: they would have to release like 8-9 Clair Obscure type games to have the same revenue they have now. Imagine if all top 10 gaming studios did it, you'd be flooded with games and the entire AAA market would just die.

Beginning_Stay_9263

"We need more women in gamedev!" should be etched on the tombstone of the AAA gaming studios. They started mass hiring women no matter how talented they are. It's like hiring a bunch of men to write romance novels.

Neel_Crashkari

5'4" and hung like a AAA battery

jiggolo420

This year was lit. From someone who found AAA going stale in the last decade.. The past few months we got Expedition 33 Silksong Ninja Gaiden 4

BrannEvasion

>Now, you could make that number by releasing a large number of low-quality offerings, but that's not sustainable It's clearly more sustainable than Ubisoft's model of releasing a bunch of shitty AAA games.

talann

Dead? AAA - Battlefield 6 seems to have knocked it out of the park with a very well optimized game. AA - Clair Obscur: Expedition 33 may actually win game of the year and has stunned a lot of people being a turn based RPG that a lot of people didn't think could still be a viable genre. Indie - Hollow Knight: Silksong is better than its predecessor and has cemented itself as one of the best Metroidvanias. 2025 was a stellar year for games.

LeMAD

The whole gaming industry is dead. AAA, AA, indie. All garbage.

KMI_Dragon_Knight

The market slip, SPY callers degenerates are high on copium, but KMI is all-welcoming. Profitable, stock resistant to BS volatility, upgraded to AAA bonds recently, double the contracts, and awaiting until the Japan deal comes online to also become market leader there too. No wonder institutional and some politicians keep buying. You're welcome, enjoy your stay.

gibe93

but it's AAA

movdqa

I think that the Fed is more constrained in the current debt and inflation environment to do a bailout again. One piece of news that I saw from October is the Palisades Mall in W. Nyack NY appears to be in a takeover or default. Their AAA-rated CMBS bonds lost $72 million. How can you have this happen with a AAA rating? I'd normally expect the rating to decline as the risk increased.

rismay

The genius was that CDOs were rated AAA. That means that CDSs were trading for mere basis points of the yield. However, the defaults meant that they were going to collect 30-50% of the PRINCIPLE. So it was a 1000x trade.

FountainCurve

In 2007 NINJA loans were repackaged and sold as AAA debt based upon the mantra real estate only increases in value. Today, NVIDIA GPUs and data center build outs are funded with massive amounts of leverage that are being repackaged and sold in a similar manner.

CurledBeardMyBad

Nice analysis. Though isnt it that the junk bonds, dot com infra, AAA ratings of mortgages, etc. failed that led to these market falls? Do you think AI capability over-estimation is the issue, or that it will fail completely as a new topic to pour money into? If the former, would we say, see covid like market behavior instead of a full blow?

FountainCurve

The quiet story here isn’t NVIDIA’s earnings. **It’s private credit being sold as a safe asset class.** Wall Street has found a new way to rebrand leverage. **The same desks that once syndicated LBO debt, dot-com convertibles, and mortgage tranches are now structuring loans to finance AI infrastructure** — GPU farms, data centers, and private clouds. On paper, it all looks safe: long-dated contracts, real hardware, predictable revenue. That’s the sales pitch every credit cycle starts with. Look at **xAI. Musk’s venture is reportedly raising close to $20 billion**, much of it debt, to build its compute footprint. That’s not R&D spending; that’s a **leveraged infrastructure bet underwritten by the same private-credit funds that financed CoreWeave’s $7½ billion GPU-backed facility**. When lenders start treating experimental AI capacity as “core infrastructure,” you’re no longer talking about technology — you’re talking about structured finance. In the 1980s, junk bonds were the “safe” yield. In 2000, it was internet-traffic infrastructure debt, billions poured into fiber-optic networks and Cisco routers on the belief that bandwidth demand would double forever. In 2007, it was mortgage paper stamped AAA. Today, it’s the AI mania, fueled by private credit and packaged as yield so safe it supposedly pays for itself. **Each time, the promise is the same: high returns, low risk.** **This time, the collateral is in GPUs instead of houses, but the narrative is the same.**

Aazadan

Game dev here. There's still reasons for it. Porting does entail a bit of platform specific work, as consoles have specific architecture and system specs that encourage lower level decisions on everything from art to programming to level design. The PC port is interesting too because while high end PC's blow consoles away, if you look at things like the steam hardware survey, the average PC, and even within 1 standard deviation is on hardware that's much more limited than consoles, and more importantly limited on different bottlenecks than consoles are. So making a game that's built for mass release on every system can get considerably more challenging when you're trying to push AAA or even AA quality.

herring-net

You jumped ship early. The bubble won’t pop until Open AI defaults on debt, which is much less likely now that Microsoft (AAA credit) owns 27%. 

karl4319

It will be the next starfield I think. Years of anticipation for a product that seems have finished. Polished and nice, but not the AAA we were promised.

Training-Drive-6419

When Take Two fired all those developers for trying to unionize a week ago I predicted GTA6 was going to be delayed to October. I was one monthoff but the delay was inevitable anyway. Every AAA game without at least two delays is considered a dull affair.

skilliard7

There is uncertainty about future revenues, they won't be able to achieve a AAA rating without cash flows. if OpenAI was rated by S&P, they would probably have a rating of B- or CCC+, which would require a significant interest rate premium. Fixed income investors are much more risk averse than equity investors.

misc1444

2-3 banking relationships are enough. You should keep larger deposits in AAA rated banks or money market funds. You can use smaller banks for smaller day to day payments. Why can’t Silicon Valley firms do that?

Complex-Note-5274

AAA corporate bonds funding AI capex including data centers

Sand_Trout

AAA gaming publishers are a bad bet these days. They have tremendous organizational bloat, poor agility within their market, and have generally lost the plot with regards to their actual buisness of selling games to people. This has gotten so bad that even nominally massive successes are just treading water.

CMDR_Shepard96

AAA and meta's red again

Asleep_Swordfish8896

Critics argue that Tesla has published misleading safety claims about its Autopilot driver-assistance system, and that Tesla cars are actually less safe with Autopilot activated.[183][184][185][186] Tesla’s “public beta” release of Autopilot has been called unsafe and irresponsible, as critical safety features aren’t thoroughly tested before being released to consumers.[187] The National Transportation Safety Board has criticized Tesla for neglecting driver safety, calling certain Autopilot features “completely inadequate”,[188] and cited Autopilot as the probable cause of multiple deadly crashes involving Tesla vehicles.[189] A 2019 study found that Autosteer increased the odds of airbag deployment by a factor of 2.4.[190] A 2020 study found that drivers were more distracted when they used Autopilot, and the researchers called on Tesla to take more steps to ensure drivers stay attentive.[191] Another 2020 study identified significant inconsistencies, abnormalities, and unsafe behavior with Autopilot on three Tesla Model 3 cars.[192] Numerous videos have shown misuse and apparent malfunctions of Autopilot leading to collisions,[193][194] and between 2016 and 2022 at least fifteen fatalities have involved the use of Autopilot, nine of which occurred in the United States.[195] The Center for Auto Safety and Consumer Watchdog have criticized Tesla for what they believe are deceptive marketing practices related to Autopilot.[196] Studies by AAA and the Insurance Institute for Highway Safety have shown the name “Autopilot” to be misleading, causing drivers to think the system is safer than it actually is.[197][198][199] A German court ruled in 2020 that Tesla had misled consumers by using the terms “Autopilot” and “Full Self Driving”.[52] As of March 2021, the NHTSA was investigating 23 recent accidents involving Tesla vehicles that may have been on Autopilot.[200] Tesla’s Autopilot technology has struggled to detect crossing traffic and stopped vehicles, including stationary emergency vehicles, which has led to multiple fatal crashes.[201][202] (Tesla released an “Emergency Light Detection” over-the-air update to Autopilot in September 2021, and the NHTSA questioned why it didn’t issue a recall.[203]) Additionally, an MIT study published in September 2021 found that Tesla Autopilot is not as safe as it claims and leads to drivers becoming inattentive from regular use of the system.[204][205] In February 2022, NHTSA began an investigation of phantom braking at highway speeds after 354 complaints from customers concerning a group of about 416,000 Tesla vehicles.[206] The complaints describe rapid deceleration that can occur repeatedly without warning and apparently at random. One owner of a 2021 Tesla Model Y reported a violent deceleration to the NHTSA from 80 mph to 69 mph in less than a second.[207] In May 2022, the NHTSA said in a letter that they had received over 750 complaints about this issue.[208] In June 2022, NHTSA announced it was investigating 16 instances in which Autopilot shut off less than a second before a collision. Fortune suggested this “might indicate the system was designed to shut off when it sensed an imminent accident”. Fortune also pointed out that Musk has frequently claimed that “accidents cannot be the fault of the company, as data it extracted invariably showed Autopilot was not active in the moment of the collision”.[209] Senator Ed Markey praised the NHTSA investigation, criticizing Tesla for disregarding safety rules and misleading the public about its “Autopilot” system.[210] In April 2024, the NHTSA released the findings of its 3-year investigation of 956 vehicle collisions in which Tesla Autopilot was thought to have been in use that found that the system had contributed to at least 467 collisions including 13 that resulted in fatalities.

Complex-Note-5274

the first brands debts was also AAA. Makes sense

InterimOccupancy

This semiconductor backed security, gentleman, is **AAA** rated

SirGlass

I feel like Mark Zuckerberg is just a bad sales man / hype man There is a reason why Tesla trades at a PE of 350 and META 30 PE Musk can go on a call and hype / spin (some say strait up lie) and say Tesla doesn't have much profits today but you know tomorrow it will have self driving cars that will earn you money as taxis when you are not using them. And oh Tesla is not a car company its a robotics/AI company and in a couple years will have robots that can build homes and do brain surgery and tesla will be a 100 trillion dollar company in 3 years when these robots are released! When Zuckerberg was asked about AI spending instead of telling investors they will be making 10 trillion dollars in a few years like Elon would, he got defensive and just said "Yea I spend 40 billion on cap ex and just getting started and going to spend a whole lot more" He needed to spin a tail how AI will be able to develop an AAA game in like 2 hours or develop a blockbuster movie with amazing CGI in 2 days and FB will be making TRILLIONS a year ; that what Musk does and investors eat it up

InterimOccupancy

This semiconductor backed security, gentleman, is AAA rated

db_deuce

Bonds that yield a mere 4-4.5% pre-tax is AAA+, most of the safest bonds pays 5-7%. Most buy bonds because they have too much money in equity already. You should not worry too much about these folks, if they have 200K in JPM bonds, they are likely sitting in 20M in liquid assets.

3boobsarenice

Call AAA free tow and a ride home

Complex-Note-5274

Who do you think are holding those AAA corporate bonds? If META etc goes tits up, it’s going to be felt across financial market. Liquidity dries up. People will sell the good holdings first to address the bleeding.

think_up

> The trade was set in motion after Black Diamond Capital Management bought more than 70% of the top-ranking slice in a commercial mortgage-backed security tied to the struggling Palisades Center shopping mall in West Nyack, New York. The firm then used its position to acquire the sole mortgage backing the CMBS at a discount, triggering the bond’s liquidation So the fund bought enough of the junior “controlling class” to become the directing certificateholder. That role can appoint or replace the special servicer and approve major actions like loan sales. This is where they gained control. > In March it sent a letter proposing Mount Street, a London-based firm that that works out soured loans on behalf of bondholders, as the deal’s new special servicer. Here they exercised the right to replace the special services and approve a loan sale. > By September, Black Diamond had reached an agreement with Mount Street to purchase the underlying loan backing the CMBS for $170 million. Buying “at a discount” - because the loan was distressed, the trust sold it below par to the fund. > A report for bondholders shows that Mount Street received only three bids for the loan and did not solicit a wider auction. By contrast, in a similar recent CMBS deal, a special servicer contacted more than 500 potential buyers Obviously shady. > Bondholders in the top-rated tranche recovered about 70 cents on the dollar, while lower-ranked holders were wiped out, according to the deal’s latest remittance report. After the trust sells its only asset, it has cash but no collateral. This triggered the bond’s liquidation. Senior loan holders get paid first and the waterfall trickles down until the money is all gone and junior subordinated debt gets wiped out. So even the AAA tranches took a hit. And they still own the dam mall after it’s all over. This is so much of what’s wrong with Wall Street. They manufactured a default and wiped out investors in the process. None of this *needed* to happen. Literally just pure greed.

trade_thriving

I've been watching the bond market pretty closely and yeah, this is actually concerning. AAA bonds getting hit like this reminds me way too much of 2008 vibes. The sarcastic tone in the post title is spot on though - feels like everyone's trying to downplay it. I mean, when was the last time we saw AAA-rated stuff take a real beating? That's supposed to be the "safe" money. I'm honestly starting to wonder if we're seeing some cracks that nobody wants to talk about yet. Been keeping more cash on the sidelines because of stuff like this. Could be nothing but I'd rather be cautious than sorry. Anyone else noticing wierd patterns in the credit markets lately?

AppleTree98

Found an article when I searched on the title. Very similar looking article related to AAA-bonds tanking. [https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944\_0https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944\_0https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944\_0https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944\_0](https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944_0https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944_0https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944_0https://www.fastbull.com/news-detail/failed-sale-appraisal-delays-behind-first-loss-on-4301944_0)

Gunk_Olgidar

>How was dotcom, or 2007 compared in terms of people’s enthusiasm? 2000 tech bubble went something like this: There was huge tech investment leading up to 2000 due to the use of two-year dates in many databases. Many businesses needed to completely re-create and convert their databases, and many took the advantage to also upgrade their hardware. So there was market boom across all parts of industrial tech. This alone created a very large spike in demand with limited capacity to fulfill it all, so there was a lot of money to be made. Thus, investors were throwing insane capital investment money at anything remotely tech oriented. My LED factory literally got its paint and carpeting leasehold improvements financed at next to nothing with no collateral, and that stuff has negative asset value. The pop was triggered by a combination of the "Y2K disaster" that never happened, aforementioned irrational investment exuberance, plus rising Fed interest rates, and finally insider selling. IMO the insider selling triggered it because everyone was all high on their own smoke, then suddenly got paranoid by "what do they know that we don't" and then the market ran. 2007 (actually 2008 with the SLB bankruptcy) was about wall street playing games with CDOs using mortgages to pump up the credit ratings. They bundled 20% class "AAA" into 80% subprime junk mortgages, and then called it class still A (or B) because they were collateralized home mortgages, when it was actually just all junk. Individual home investor/flippers used variable rate mortages to effectively create a real-estate ponzi scheme, and the banks kept writing the paper because bank regulators were not stopping them. The artificial demand of individual home owners investing in an additional 2-3 more homes to flip created an over-borrowed market price spike due to the triple demand for primary single family residences. Eventually this ponzi scheme failed like they always do... when everyone ran out of homes to buy. And it went very fast and very hard as folks stopped making payments on their balloon mortgages. The early players made bank, the rest got stuck in bankruptcy and lost everything. And it took down some large wall street investment banks and their insurers who had over-leveraged themselves with badly rated junk CDOs. And home values dropped by 20-30% in about 90 days. In both cases, it was irrational exuberance. It was easy money. And in both cases it was tied to demand of hard assets. Not terribly different from today's demand for graphics cards/chips, data centers and electricity to power them. But in this case it's closer to the conditions of the 2000 bubble than 2008, because you and I aren't building AI datacenters using our own money. So when it pops, only your stock portfolio will be impacted, not your personal domicile.

SharpY2001

Hey Peeps! I’m looking to see through the noise here, so I’m in need of some consensus. I have a substantial amount (physical) of physical gold which was all acquired in 2001. As you might imagine, the current state of gold means I have the chance to realise some substantial gains on said gold due to the current market conditions. This gold makes up about 50% of my whole investment portfolio (I am aware that this is a comparatively huge ratio) In my mind this is a great opportunity to realise gains and exit my gold position but there is also a certain amount of FOMO playing in my psychology. Obviously I would reinvest the funds into other assets, preferably something income generating such as AAA Corporate bonds. I AM a huge believer in the sentence “if it’s good enough to screenshot it’s good enough to sell” but I’m curious what the members of the community would do if they were in my place. Thanks in advance :)

bobwhite1146

Almost all debt today is securitized. Any instrument (prom note) with regular cash flows can be pooled with similar instruments that represent a given amount of pooled cash flow; bonds are then underwritten and sold, and then bondholders are repaid as cash flows come in regularly from these debt instruments. The beauty of this system is that a lender can sell its notes into a pool, then make new loans since its loans have been sold and repaid to them. Instant liquidity. Then the pool, the servicer (the party who collects the note payments and pays bondholders for a fee), and the bondholders assume all time risk as to repayment of the debt notes. This system began in earnest in the early 1990s with the RTC and securitization of pools of Savings and Loan debt, which was debt secured by real estate. The issue that can arise is what happens when the note debtors do not repay their notes. This is a long, complicated process, but during the RTC days, the federal government insured repayment to bondholders with its full faith and credit and these bonds had a AAA+ credit rating. Ever since the RTC era, pools have used big insurance companies as their guarantors, or similar entities that have large pools of assets. However, if a lot of defaults occur at the same time under these promissory notes, then occasionally, as happened in 2008-9, the private party guarantors cannot afford to make the bondholders whole and we have a crisis. And greed being what it is, the subprime lending market tends to make way too many loans for the available security and the available guarantor asset base and the bond rating agencies are somehow cajoled into giving the bonds decent credit ratings notwithstanding. It is unclear from this article exactly what is happening here although we've seen issues over the last couple of months with several of these so-called "subprime" lenders, which means lenders who make initial car loans to high risk borrowers. The only thing I can presume is these high risk borrowers are losing their jobs or income and are becoming unable to repay their debt. Hopefully we'll learn more soon, but since securization is the way of the world these days, and since we've been burned by it significantly in 08-09, and the Dodd-Frank Act that was supposed to save us from a repeat of 08-09 in the future is both ill conceived and incomplete, I'm sure we are encountering an issue for which it does not provide a satisfactory resolution or satisfactory protection. Regardless, the problem must stem from a bad economy, followed by lots of defaulting borrowers, which ultimately brings down the house of cards, and the private party guarantors, the insurance companies, cannot afford to bail out the pool and the bondholders because of the scope of the defaults under many, many promissory notes whose individual note collateral is only by rapidly depreciating automobiles. This is coupled with insufficient reserves by lenders and pool guarantors to protect the system in the event of cascading defaults. My understanding is banks have quit making profligate real estate loans like they did an 08-09 because of Dodd-Frank rules, and instead are making corporate loans of the kind discussed in the article because they are either less regulated, or unregulated, by Dodge Frank and enable banks to extend credit to companies that then issue retail debt to car buyers. It appears we have essentially created a parallel retail debt system (though not rooted in real estate lending) that is just as precarious as the real estate lending was in 08 and 09. I'm sure we'll learn more soon.

Tapeattle

I think its pretty clear that there are two different buisness models here: the classical AAA games that you have to buy, and modern subscription based (or like) games or gatcha/gambling/mobile with microtransactions. They are speaking about the first one, rather uninvestable, the second one seems to be doing quite well.

isdjtantichrist

AAA bonds going to 0 in CRE and Used cars space Huge outflows in CLO market https://preview.redd.it/253ify92wnwf1.png?width=360&format=png&auto=webp&s=15464ec30d541b23c4a84039cc230d7f3c108bf4 Usually a Credit downcycle lags the business cycle but passive is currently distorting a lot of things.

ThirstyWolfSpider

No, no, one doesn't start that way. One buys 64,000 investor addresses and sends a _free_ newsletter. 32,000 get the "buy AAA!" recommendation, 32,000 get the "short AAA!" recommendation. If AAA goes up, one discards the second group, and if AAA goes down one discards the first group. One does the same thing with two groups of 16,000 with recommendations on BBB. One repeats until down to 1000, for whom one has given free always-correct advice for six months in a row, and _then_ one asks for a paltry price of $995/month for additional mailings. Of course, don't do this, as it's an old scam, but don't fall for it either.

Ill_Campaign4141

Someone please just assure me the AAA national gas price will stay below 3.10 by the 31st

Ill_Campaign4141

Y tf did AAA gas prices just start going up again I was probably lows 3s by end oft oct. who fcking me China and the US or wut

Great_Molasses_4601

Other then EV batteries? I know they mentioned large scale power cell storage for our electric grid, and various types of smaller better made batters (like AAA batteries). I also know that companies making electric helicopters that are currently heavily set back due to battery life set backs, something dragonfly could kill.

Pic889

Judging from what investment vehicles were rated "safe" (AAA) the previous time around (2008), I wouldn't be so serious. This time it won't be CDOs, but it may be some other kind of paper alchemy.

onlyonebread

> In 2008, it was banks owning too much subprime mortgage debt repackaged as CDOs and rated AAA (in other words, too much of people's deposits was invested in subprime mortgage debt via CDOs). Yes, this is what made it into a global catastrophe, not the existence of subprime debt in and of itself. What you are describing was massive, large-scale _fraud_. It was technically outside of what is allowed in the system, it's just that the system created the perverse incentive strong enough that violation way way outstripped enforcement. > So, the question now is: Who owns all that subprime auto debt and does it have the potential to bring them down? And how much of Average Joe's bank deposits and 401K has been invested in subprime auto debt? I am not confident that any large segment of finance is leveraged on fraudulently labelled auto debt. I wouldn't bet any amount of money on that. I don't think safe investment accounts could fill with garbage debts like that in this day without ringing massive alarm bells, ESPECIALLY if it was on a massive scale.

Pic889

The problems start when subprime loans make up a larger-than-safe percentage of a firm's portfolio, since subprime debt is by definition unsafe and has the potential to sink a firm. In 2008, it was banks owning too much subprime mortgage debt repackaged as CDOs rated AAA (in other words, too much of people's deposits was invested in subprime debt via CDOs). So, the question now is: Who owns all that subprime auto debt and does it have the potential to bring them down? And how much of Average Joe's bank deposits and 401K has been invested in subprime auto debt?

Perfect_bleu

Everything is fine AAA-rated Klarna burrito loans for everyone

DigitalHemlock

AAA rated!

Big_Wave9732

Whether or not they're "bad loans" is all relative. If the tranche profit model is based on a 3.5 percent default rate, then a default rate of 5 - 6 percent is "bad lending". If the buyer's model and acquisition costs assume up to a 7 percent default rate, then 5 - 6 percent is still winning. Of course the two tranches from the example above will have different credit ratings and will sell for different premiums. So the ones doing the complaining here are the hedge funds, insurance companies, and re-investors who thought they were getting an AAA tranche and instead got an A+ or A tranche. I have no sympathy for these folks, they fuck enough people on their own anyway so let the buyer beware.

Reddituser183

Moodys? You mean ratings agency that gave junk investments AAA ratings? Fuck ‘em!

CloudyBlues82

The lie they are telling us is that it was a few regional banks that screwed up...the reality is some of the largest investment banks and asset management firms lost a whole percent of their ports on specific leveraged bonds because 2 random auto firms no one's ever heard of went bankrupt and suddenly everyone is questioning the safety of AAA-rated leveraged bonds, a multi trillion dollar industry

Fearless_Strike5651

Man I’m not some perma bull or Bear in denial, how you talk I know EXACTLY what side your on. This is just an opinion from someone in the banking business The whole “This is 1929, 2000, or 2008 all over again” Your argument falls apart the second you actually look at the structure of today’s market. In 1929, there was no modern Federal Reserve (Technically YES) BUT, it wasn’t built to do anything like it does now. System policy framework, no QE, no swap lines, no FDIC, no circuit breakers, nothing to stop panic once it started. And 08?…lol Man… I’ve literally got the book at home. You ever actually looked inside those 2008 era CDO structures? It was mezzanine tranches stacked on top of subprime MBS, loaded with 2/28 ARMs, NEGATIVE amortization loans, and NINJA paper. Half the collateral was already deteriorating the day it was securitized. They wrapped toxic SHIT into ‘AAA’ through synthetic swaps and overcollateralization games that wouldn’t make it past a first year compliance desk today. This was a leverage time bomb, and they knew it. Tell me what junk like that exist today ???? IT DOESNT!!!!!!! In 2008, the Fed also moved very slow, didn’t have quantitative easing ready to go, Literally made it up on the go, and spent years stabilizing credit markets. Those were true credit and solvency crises. A bunch of Wanna Be Michael Burrys on Reddit, who grew up reading the House of Cards ;). You will be lucky to call a correction bud Also I didn’t even mention , Post COVID, it’s a completely different playbook. What The Fed do? instantly JUMPED on it !!! cutting rates, launching QE, opening repo facilities and swap lines, and backstopping credit within weeks, corporations were sitting on record cash, households had stimulus, and delinquencies were at record lows. That’s why the system bent but didn’t break. Add in passive flows, ETFs, and instant global coordination, and liquidity floods back into markets at a speed that simply didn’t exist in prior decades. Thats why BTFD will Always work. In the long run. You need to change the way you think Doom and Gloom !!! So when u compare today to 1929 or 2008, you are ignoring the single biggest variable, policy response and liquidity infrastructure. 1929 had none. 2008 had to build it on the fly. 2020 had the full arsenal ready. That’s why we got a V shaped recovery, not a multi year slog. Today’s market is designed to absorb shocks faster, and the Fed isn’t just sitting on the sidelines anymore

Much_Candle_942

They ain't dumb.. they'll want something in return 😉  AAA debt rating incoming 🚂

Ill_Campaign4141

Cool I’ll make 20k if it stays below 3.10 reported by AAA

Ill_Campaign4141

My point is AAA has the national average at 3.07 will it stay below 3.10

Bdice1

Point to one.  I can provide heaps of info on how banks were aggressively approving large loans for consumers with bad credit.   And that wasn’t the only issue.  The banks were taking that risky bad credit debt, deceptively packaging it to get AAA ratings on the MBS, and then selling it like prime debt. I haven’t seen any evidence that there is a similar thing happening in AI.

swampassOG

5'4" and hung like a AAA battery

KittyLover-7

Tranches of AAA Chip default swaps

I-IV-I64-V-I

I think part of the issue is that subprime loan defaults and delinquency are being rolled under the rug right now- take the automotive AAA rated securities and how tricolor just went under If that's happening- what else is going on.

Aduialion

Tranches of AAA Chip default swaps

kkjonnykk

History repeats itself. Wall Street's gonna package these loans, slap AAA ratings on garbage debt, and we're right back to 2008. Taxpayers foot the bill when it all collapses. Same game, different asset.

turbo_dude

This prime AAA investment definitely isn’t a bunch of AI shit repackaged!!

I-IV-I64-V-I

5th/3rd bank just combined with another bank. To become the 9th largest bank... You don't think this has anything to do with 5/3 discovering the tricolor auto - AAA rated super high risk loans that just crashed And the other bank being 10billy in debt to private equity/ property loans Maybe they're trying to become.... To big to fail....

I-IV-I64-V-I

If you follow landlords or used car salesmen on YT youll see em (I follow some to keep tabs on that side of the economy) Several car dealerships were selling 20%apr no credit check loans as AAA rated ones. Florida, Texas, Colorado (COVID boom towns) are all going bust rn- but prices haven't really sunk below 2021 levels

I-IV-I64-V-I

Did you see the AAA rated car loans blow up recently? They should make a movie about it, with a guy Micheal who shorts the repackaged risky loans sold as stable securities

Safe-Breadfruit-1913

Thanks that helps a bit. Based on what you provided EUDF looks like a fine investment. Rheinmetall is probably a big reason for it's overvalued data, which in this case isn't a concern for myself. DFND while I don't have the aggregate data and can't make a solid claim because of that, I think it's composition is reasonable. GE, RTX, and Boeing aren't my favorite stocks but the expose you to US assets is good diversification in a EU defence ETF. If you want just one ETF I would recommend EUDF first and wouldn't advise against including DFND if you want. I would cut that third ETF for sure. Also you don't need to worry about overlap in ETFs or your holdings too much. If you have €100 and invest half in stock AAA and the other half in ETF ZZZ which has 10% AAA it's as though you have €60 in AAA and €40 in the ETF minus AAA. That's ok so long as you're aware of the overlap and account for that. Also legally I am not your financial advisor, this is merely advice from an Internet stranger.

EquivalentSelection

No - your battery isn't even in low power mode... and you haven't even tapped into all of your buying power. You might as well be doing AAA bonds and ultra low yield markets.

monk_cay

Try taking a more global view: If you're a big holder of US debt, i.e., China, Japan, the EU, etc., and are watching an administration that undermines its own BLS plus virtually every watchdog agency, is wide open for Pay to Play deals (or else tariffs), just shoveled $20 billion to Milei in Argentina as a favor and little more (that $20 B very likely just went up in smoke), is forcing chip companies to fork over a % of their gross, and wants to go all in on crypto (what can possibly go wrong), wants to weaponize every possible agency against any & every so-called enemy of the state (see the bizarre & unwarranted gathering of all the US military brass in VA)....the list is endless. With so much instability rocking the country - and its underlying assets - why wouldn't a foreign holder of US debt not have their finger on the 'sell' key. All good things come to an end. Since T's taken office the US dollar has fallen 11% - how much more is a bond holder going to tolerate? If all the above issues plus worsening debt/monetary woes gain footing, this country's 3rd debt-credit lower rating (from AAA) could set the ball rolling - downhill. The last one was Aug '23, just 2 years ago, the very first one in '11 during the recession. As for interest rates, the next Fed decision is the 29th but no BLS numbers Friday, and very possibly at least for another week, who knows, the Fed's much hoped for rate cut this year is likely off the table. Hold on and buckle up, this could get interesting.