CMBX

CMBX (CMBX-NA-AAA-4 is pictured) is being thrown into the same pool as sub-prime, and this comparison should not be made. CMBS are investment properties (where the owner largely realizes the inherent risk), and most importantly they are backed with a substantial equity cushion. CMBX is getting particularly hard-hit, as it is the subject of selling pressure by managers attempting to hedge positions in individual mortgages. Commerical real estate does have a way to drop before it reaches it's settling price, and the owner is properly compensated for his risk via an appropriate cap rate, however it appears that "true AAA" CMBX CDS is overpriced, as the risk of default is overstated given the size of the typical equity cushion above CMBS (which is much more signifigant than residential).

Long CMBX (Short CMBX CDS), Short Commerical RE Equities

Also short SPX, long Cotton