Speaking on Fox Business, Charlie Gasparino notes that the full wrath of the government in the latest insider trading spat may end up hurting as many as a dozen hedge funds. We already know three of them. The question of whether the big kahuna will also be implicated will be resolved another day. Additionally, now that the implications of the Galleon fund scandal are finally coming back with a vengeance, and everyone is once again talking about insider trading, which is a crime when one person does it, but is perfectly condoned when all the biggest hedge funds are engaged, below we present Gasparino's conversation with a securities fraud expert on just how far-reaching the implications of today's gauntlet may be. On the other hand, how not one TBTF bank has been (so far) prosecuted for being an integral part of all these illegal activities is beyond us.
Brian Cowen is due to make a statement on betraying his people live any minute now. It can be seen at the following RTE livecast.
We have been inundated with reader requests to present some more data on just who these suddenly infamous "expert networks" are. Below we present what is arguably the world's largest expert network, the Gerson Lehrman Group, which boasts a roster of over 200,000 expert consultants in its network. Access to GLG is typically confined to ultra high net worth clients, read hedge funds, who can afford to pay hundreds of thousands of dollars per quarter, and comp the company's consultant to the tune of between $250 and $1,000 per hour, which is why so many readers may have never heard of GLG and its comparable companies.
After recent 7, 10 and 30 Year auctions all came in at a higher yield than prior, today it was the 2 Year's turn. Today's $35 billion 2 Year bond came at a 0.52% high yield, substantially wider than the previous 0.40% which wasa also a record. And despite the rise in the rate, the Bid to Cover still came at a near all time high of 3.60, lower only compared to September's 3.78 and October 2009's 3.63%. Direct Bidders were 14.39%, in line with the last 12 auction average, the same for the Indirect and PD bid, which were 38.26% and 47.41%. Of course, with the Fed about to monetize up to $8 billion of 2 years on the 29th, one can bet that CUSIP 912828PV6 will be not only on the inclusion list, but one of the securities monetized.
Preliminary news of a WSJ report that the FBI has raided Diamondback and Level Global. First two SAC spin offs down. David Ganek's 740 Park suite about to be put on the market.
Ever feel like this market just does not provide enough unique and suicidal ways for you to lose your hard stolen money within nanoseconds of trade execution? Never fear - here comes the TVIX, a levered third derivative bet on volatility: simply said, the TVIX will be the world's first double leveraged VIX ETF. According to the ETF creator, VelocityShares, "the TVIX and TVIZ ETNs allow traders to manage daily trading risks using a 2x leveraged view on the S&P VIX Short-Term Futures™ Index and S&P 500 VIX Mid-Term Futures™ Index, respectively, while the XIV and ZIV ETNs enable traders to manage daily trading risks using an inverse position on the direction of the volatility indices. The indices were created by Standard & Poor's Financial Services LLC, a division of the McGraw Hill-Companies, Inc." Then again, why not just call these what they are: a novel way (brought to you via the synthetic CDO legacy product known as ETFs) to lose money with a 99.999% guarantee. As always, we wonder why anyone would trade this product, when, with much better odds, one would at least get comped in Vegas...
RealtyTrac Opines On The Coming Wave Of GSE Foreclosure Buybacks: "The Final Liability Will Be Enormous"Submitted by Tyler Durden on 11/22/2010 - 11:39
As if an insolvent Europe was not enough (and everything seemed so good one short month ago), foreclosure expert firm RealtyTrac opines on the issue of fraudclosure and just how big the impact will be on the GSEs, and thus, on the upstream lenders who sold Fannie and Freddie MBS that had material misrepresentations. Add this to the over 240,000 REO properties held by the GSEs, and one can see why Jim Saccacio, CEO of RealtyTrac says: "Not only do the GSEs have an REO problem, they also have a guarantee problem because they promised to make good on the securities they sold to mortgage investors. The potential liability of the GSEs is a matter of debate but there's little doubt that the final total will be enormous.” Oops.
Today's POMO is now over. The FRBNY has bought back $8.3 in 2018-2020 notes, wth a submitted to accepted ratio of 4.1x, right on the median. The PC8 CUSIP was untouched as even the Fed lifting some arbitrary offer (nobody knows at what price these buybacks occur) would be insufficient to make up for the loss incurred by the PDs who bought this issue two weeks ago and the subsequent drop in the price. Obviously, PDs are hoping that the longer-end of the curve will pick up for a better exit point to the Fed. On the other hand keep an eye out on the next 2018-2020 auction (after December 10) - if the 10 Year does not pick up in price over the next 3 weeks and if PDs sell the PC8 CUSIP into weakness, that will be a very critical inflection point.
Is the Kriger/Keiser "Short Squeeze JPM to Oblivion" plan working? Judging by the wholesale availability of silver (or lack thereof) the answer is a resound yes. In Coin Updates News we read that "as of today, there are no longer any regular wholesale supplies of the 1 ounce through 100 ounce silver rounds and bars available for immediate delivery. It may be possible to locate incidental quantities of some product, but most wholesalers are now promising two to four weeks delivery to allow time for the silver to be fabricated." Over the weekend we noted that even at the smaller, retail level, Silver American Eagles sold by the US Mint, have surged to a 2010 high in just the first three weeks of November. Is America now fully intent on ending Jamie Dimon's domination over the precious metal space?
In this interview with the RT, Jim Rogers says what everyone except a few bankers and corrupt politicians know to be the case: namely, that Ireland should go bankrupt. Instead, the government is forcing the country into a tough spot, where social tensions are flaring, and could erupt into an all out social conflict, confirming that the interests of its people is the last thing the Irish government cares about, and is only concerned about preserving what is now virtually proven to be a failed model (even JPM said so), and prevent losses at all major German and English banks. Quote Rogers: "It would teach everybody a good lesson, and in the end Europe would be stronger for it, and the EUR would be stronger... You can not spend staggering amounts of money that you don't have of other people's money that you don't have because somebody has to pay the piper. This is ludicrous. This will cripple the Irish economy for years to come. In the future Ireland will be crippled because everything they earn will go to pay off old debt. There is no reason why taxpayers around Europe or in Ireland should pay for other people's mistakes. The bondholders and the stockholders of banks should lose money"... So simple, yet so irrelevant when dealing with a dying economic model.
Today's $7-9 Billion POMO focusing on bonds due 2018-2020 has started. This one wil be carefully watched because if Brian Sack can't create at least some "wealth effect" when Europe's (and America's) taxpayers have just doubled down by another $100 or so billion, then the wheels will really be falling off the Keynesian endgame wagon. As for the POMO, the most amusing inclusion CUSIP is the PC8 due 11/15/2020: this is the 10 year auctioned off just two weeks ago on November 9.
Now that RINO is the stuff of Chinese fraud folklore, many turn their attention to those who allowed this abortion to happen in the first place: namely the company's accountant, Frazer Frost, LLP ("FF"). We have tried to get some more information on the recently incepted accounting company, unfortunately, when we click on the website's link requiring more information on the "auditor" we get the following "under construction" blank page. The little we could glean, from RINO's 10-K, is the following information: "Moore, Stephens Wurth Frazer and Torbet, LLP (“MSWFT”), located at 135 South State College Blvd., Suite 300, Brea, CA 92821 was approved by our audit committee and board of directors to be our new independent accountant. Effective on January 1, 2010, certain partners of MSWFT and Frost, PLLC (“Frost”) formed Frazer Frost, LLP, which became the Company’s new independent accounting firm.)" Following the abysmal lack of audit controls at RINO, we will leave it to the Federal authorities to determine whether FF is just another Arthur Anderson in the making. However, in our attempt to protect readers from what could be a Chinese-focused Enron fallout, we present the 26 public tickers all audited by FF. It is no surprise that among the company's clients is a preponderance of Chinese companies (many of which have used the recent Chinese IPO bubble to list on various American exchanges). While we caution readers to do their own due diligence, it is probably safe to assume that a short basked of the following 26 names will generate outsized alpha over the next few months: a very rare outcome in a market determined exclusively by levered beta strategies.
This is certainly true of most classic movies, and it applies quite well to shock and awe emergency/extraordinary economic or monetary policies. Indeed it has so far been true of QE 2.0, and we are finding out for now this could also be true of PIIGS bailout. Part of the reaction is completely natural. Bailing out Greece was a first within the EU and perceived as a sign of dedication to fighting the crisis by European institutions it squeezed out weak shorts and profit takers in PIIGS bonds. However the second time around the surprise effect is lost, and if anything it raises the questions as to how many countries really bailed out, is austerity working (Ireland was one of the first to adopt measures), and how many can Europe reasonably bail out before the euro currency's existence is put in question and the richer countries simply throw in the towel on helping their poorer neighbors in an attempt to save themselves. As of now it appears the worries are dominating euphoria. - Nic Lenoir
Headlines flashing that according to RTE, Sinn Fein protesters are now trying to enter Irish government buildings. As always, someone please keep an eye out on Waddell and Reed. It's one of those days. And with stub quotes now eliminated, limit buy orders at $0.00 will be honored.