CDS EOC question

given:

outlook1: italy’s economy will weaken

outlook2: US economy will strengthen relative to Canada

outlook3: credit quality of electric car mfg will improve relative to that or traditional.

based on those 3 outlooks, profitable long/short trade would be:

a) long canadian CDX IG, short US CDX IG

b) short iTraxx crossover, long iTraxx Main

c) short electric car CDS, long traditional car CDS

care to explain ? thanks

the choices comes down to what happens during a weaking outlook and what happens during positive outlook

choice a wouldnt make sese because outlook 2 says US is going to do better than canada, so you wouldn’t want to be long on Canada and short on US

choice b makes the most sense because outlook1 has italy’s econ is going to weaken, which means the spread between low quality and high quality will expand, so shorting italiy’s high yield (iTraxx crossover) and long on the high quality (iTraxx Main) makes sense

choice c wouldnt work because if outook #3 contractdicts the choice. If the credit quality of electric car is going to improve, then you want to be long on electric car CDS not short.

thanks… i got confused with the directions long/short buy/sell protection

I want to come back to this 'choice a wouldnt make sese because outlook 2 says US is going to do better than canada, so you wouldn’t want to be long on Canada and short on US" If US will do better that means right now its not doing so well. So for example the premium right now is 200 bps in 1 months time its 100 bps so ideally i want to sell US right now so i can get a higher premium for it. Why is this not the correct logic? “choice b makes the most sense because outlook1 has italy’s econ is going to weaken, which means the spread between low quality and high quality will expand, so shorting italiy’s high yield (iTraxx crossover) and long on the high quality (iTraxx Main) makes sense” again italy’s spread is going to weaken which means its lets 100 bps now but in the future it will go up to 200 bps. that means I want to buy protection now so that i can lock in a 100 bps lower premium for a ref entity that has higher risk in the future. why is this not the correct logic?

long = selling the CDS

short = buying the CDS

Am i right ?