Taleb On The Other Perspective
Submitted by Tyler Durden on 08/12/2009 - 10:07Love him or hate him, he has been right before, and is very likely correct again. Pay particular attention to Nassim's claim on the impact of marginal buyers: exemplified all too well by the 10.8% decline in short interest in the second week of July and the resulting 9% squeeze in the S&P.
Standard Chartered On The End Of China's "V"
Submitted by Tyler Durden on 08/12/2009 - 09:53Today’s avalanche of China data suggests that the economic recovery is solid, but that the momentum ebbed in July. What was a V-shaped recovery now seems to be experiencing a little gravitational pull. The slightly weaker-than-expected data means an even smaller chance of an imminent change in macro policy and lends weight to those who argue that it is too early to tighten. Having seen the data early, Premier Wen Jiabao restated at the weekend that the goal was to maintain a proactive fiscal policy and a moderately loose monetary policy.
V-Shaped Revenue Recovery Combined With L-Shaped CapEx Growth
Submitted by Tyler Durden on 08/12/2009 - 09:31And thus the original question is how quickly can the accumulated corporate cash buffer be converted into revenue growth? It seems companies don't really care to answer that: the growth will come from "elsewhere" they will be happy to announce, and refer you to the GDP - where all "growth" comes from transfer payments, and other fictitious items indicating "growth" yet all those merely do is sucker more and more people into the stock market at bubble valuations (why are not more companies doing follow on offerings, absent REITs of course? Is it because institutional stock managers know that valuations, which this is all really about, are simply insane?). Absent some investment in CapEx you can kiss your V-shaped revenue (and thus earnings) recovery goodbye. But who honestly cares about how a stable economy works any more when you have trillions in excess liquidity provided by Bernanke Capital LLC?
Loans Versus Bonds Relative Value: Week of August 6
Submitted by Tyler Durden on 08/12/2009 - 08:25
It's official: irrational exuberance in the secondary market is back. Indicative loans are now at just over 400 bps while bonds are less than double that at 761 bps. Of course, everyone at this point has forgotten the expectation of 20% defaults in HY names by the end of 2009. All shall be well in 5x+ leveraged consumer names wich make mattresses. Not sure if the Sealy loans trading 450 bps outside of bonds is real or not, but who really cares: the bond squeeze could easily push it so tight you would have to pay the company to hold their CCC-rated toxic paper.
Hero Or Knave, He's Back
Submitted by Zero Hedge on 08/12/2009 - 08:11“When business in the United States underwent a contraction... the Federal Reserve created more paper reserves.
The excess credit spilled over into the market triggering a fantastic speculative boom... “
Frontrunning: August 12
Submitted by Tyler Durden on 08/12/2009 - 08:02- June Eurozone industrial output drops, erases May gain (BBC News)
- $23 billion of 10 Years on deck (CNNMoney)
- Momo is now global - most stock optimism in two years (Bloomberg)
- China accuses US of protectionism in tire case (Yahoo, h/t Credittrader)
- Stocks: the latest Fed bubble (Fortune)
- A president as micromanager (WSJ)
Daily Highlights: 8.12.09
Submitted by Tyler Durden on 08/12/2009 - 07:33- Asian stocks fall as weaker profits fuel valuation concern
- China's money market rates drop on signs Central Bank to delay tightening
- Fed may acknowledge faster growth, pledge to keep rate 'exceptionally' low.
- Europe industrial production unexpectedly drops, suggesting slow recovery
- French inflation rate remains negative for third month on energy and energy retail
The (Monthly) Cost Of Bankruptcy
Submitted by Tyler Durden on 08/11/2009 - 20:43Readers have been recently inquiring why it is that so many financial advisors have sprouted all over the place and are scrambling to represent bankrupt companies: after all the company is, well, "bankrupt" - how much money can financial advisors really make on these kinds of deals? The answer may be surprising, especially in light of the proliferation of various splinter financial advisors who had previously been part of larger firms.
Latest DTCC CDS Update (Week Of August 7)
Submitted by Tyler Durden on 08/11/2009 - 19:31Continued substantial rerisking continued in financial last week, however at a slightly moderated rate. From the $96.2 billion net notional decline in the week ended July 31, the last week saw a $54.4 billion decline. Total net notional change was one tenth that of the previous week at -$14.5 billion, with a marked derisking in consumer services at $25.1 billion. Other notable derisking spaces were Industrials and State Bodies.
Merrill's RateLab On GSE's: The Denouement
Submitted by Tyler Durden on 08/11/2009 - 16:29"After all the finger pointing at greedy Wall Street big-wigs, a somnambulant FED, and “tulip-crazed” homeowners is over, the fact remains that the nexus of the housing market is Fannie Mae and Freddie Mac, aka, the GSE’s (Government Sponsored Enterprises). And just as the beginning of this crisis can clearly be marked to the date that their financial situation tipped south, so can we be sure that our problems will not be truly over until they have been stabilized." - Harley Bassman, ML
Daily Credit Summary: August 10 - MOMO NO MO
Submitted by Tyler Durden on 08/11/2009 - 15:56Spreads were broadly wider in the US as all the indices deteriorated (as HY underperformed IG and both closed at one-week wides). Indices typically underperformed single-names with skews widening in general (extending the trend of single-name weakness from the middle of last Friday) as IG underperformed but narrowed the skew, HVOL outperformed but widened the skew, ExHVOL's skew widened as it underperformed, XO's skew increased as the index outperformed, and HY's skew widened as it underperformed.
Stocks Flushed As Bonds Up, IG12 At Week Wides
Submitted by Tyler Durden on 08/11/2009 - 15:06
Late day sell off in stock translated into buying in treasuries - no surprise there. The AUD is doing whatever carry trade it does. VIX at the days lows. And the IG12 CDS index closes at 113 bps, 6.5 bps wider in a rush.
Multivariate Fibonacci Retracements
Submitted by Tyler Durden on 08/11/2009 - 13:24
The current Fibonacci retracement visualized in both price change and time.
Moody's Nukes 163 CMBS Classes Due To Maguire Toxic Exposure
Submitted by Tyler Durden on 08/11/2009 - 13:03Classes affected: * 15 CMBS Classes of WBCMT 2006-C28;
* 10 CMBS Classes of MSC 2004-TOP13;
* 14 CMBS Classes of WBCMT 2005-C18;
* 14 CMBS Classes of JPMCC 2006-LDP8;
* 14 CMBS Classes of GSMS 2005-GG4;
* 17 CMBS Classes of GSMSC II 2007-GG10;
* 19 CMBS Classes of CSMC 2007-C4;
* 7 CMBS Classes of GCCFC 2003-C2;
* 18 CMBS Classes of CSMC 2007-C3;
* 12 CMBS Classes of BACM 2005-3;
* 11 CMBS Classes of BSCMS 2004-TOP14;
* 12 CMBS Classes of BACM 2006-6;
