Another Confidence Inflection Point
Submitted by Tyler Durden on 07/15/2009 - 10:04
Another confidence peak reached (and breached).
Morning Bond Charts
Submitted by Tyler Durden on 07/15/2009 - 09:55
The flip flop between equity and credit accelerates. Just as the administration managed to lower mortgage rates enough to get a moderate pick up in refi applications, bonds are starting to get out of control.
Guest Post: High Frequency Trading Alert - AIG
Submitted by Tyler Durden on 07/15/2009 - 09:34There has been alot of talk over the past few weeks about high frequency trading. We have argued that the volume these high frequency traders are creating is not beneficial to the market. Lets take a closer look at what a high frequency favorite stock looks like. The poster boy for HFT this week is none other than 80% U.S. government owned, AIG. AIG recently underwent a 1 for 20 reverse split since the “issuer” wanted to make their stock look more attractive to institutional clients. You would have expected volume in this stock to be reduced by 20x. Instead, volume has remained at a consistent pre split level of 75 million shares/day. How could this be? Did something change to attract more institutional buyers? Did the black hole of AIG liabilities somehow close? No, the answer here is that the High Frequency traders found a new stock to play in.
Wells Covertly Offloading Subprime Loans
Submitted by Tyler Durden on 07/15/2009 - 09:26A relatively obscure piece in the Triangle Business Journal, referring to a piece in the National Mortgage News, demonstrates how some of the larger banks are bypassing the PPIP and going direct to willing toxic buyers in a very "under the radar" fashion. In this particular case, Wells Fargo has apparently offloaded $600 million in subprime loans to Arch Bay Capital at 35 cents, or double what other hedge funds had offered. While the price discrepancy alone is worth a follow up, the TBJ had this interesting tidbit to note about the transaction:
No one involved in the recent sale is talking on the record, which may
be a key reason lenders will look to private transactions to unload bad
assets rather than turn to a government-sponsored program.
Daily Highlights: 7.15.09
Submitted by Tyler Durden on 07/15/2009 - 08:52The CalPERS Lawsuit Against The Rating Agencies
Submitted by Tyler Durden on 07/15/2009 - 08:32The pre-emptive attack on the rating agencies has begun. As Zero Hedge has long suspected, once the next major leg down in the market occurs,populist anger will again have to be directed away from its true focal point- the intersection of Wall Street and DC. And since major investment banks such as Goldman have already suffered major reputational blows over the past several weeks, it behooves everyone to throw the straw man in the open... In other words, the next congressional lynching will focus exclusively on S&P, Moody's and Fitch, and likely will result in the end of one or more of the rating agencies. And last week's action by CalPERS is just the catalyst to get that particular avalanche rolling.
Amusing Morning Interlude
Submitted by Tyler Durden on 07/15/2009 - 07:57We were hoping CNBC would catch Zero Hedge's prompt yesterday about analytical powerhouse Merrill siding the DK. They did not disappoint. Not much else to be said here.
The Story Of Stuff
Submitted by Tyler Durden on 07/15/2009 - 07:39Great clip explaining the lifecycle in the materials economy. Now you can buy that fifth iPod you don't need, and know where it came from, where it will go, and what prompted you to buy it.
Frontrunning: July 15
Submitted by Tyler Durden on 07/15/2009 - 07:15Ratigan And Ritholtz Discuss Goldman
Submitted by Tyler Durden on 07/14/2009 - 20:02Dylan Ratigan and Barry Ritholtz dissect Goldman.
Is A British Court About To Decide The Future Of Securitization?
Submitted by Tyler Durden on 07/14/2009 - 17:33
While momentum chasers in America quarrel over worthless data points and whether some trading desk bought an additional 20 PCs with Intel's brand spanking new i7 CPU to reduce latency by yet another 1 nanosecond, imagine hypothetical green shoots, and storm the futures in hopes of getting other momentum chasers to get behind them, a much more relevant development is currently unfolding which could potentially have a terminal effect on the future of securitization. Creditflux reported last week that the lawyers of bankrupt Lehman Brothers recently filed in English courts a request to overturn the concept of bankruptcy-remoteness for special purpose vehicles (SPVs). If granted, this request could spell the end of securitization as a once upon a time multi trillion credit product, regardless of how many PPIP or TALF revisions the administration throws in the CRE fire.
Daliy Credit Summary: July 14 - Steeper and Flatter
Submitted by Tyler Durden on 07/14/2009 - 15:57Spreads were tighter in the US as all the indices improved (with credit curves flattening/inverting in the face of significant TSY steepening today). Indices generally outperformed intrinsics with skews widening in general as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL outperformed pushing the skew wider, XO's skew increased as the index outperformed, and HY's skew widened as it underperformed.
Bond Action Back In The Spotlight
Submitted by Tyler Durden on 07/14/2009 - 15:04
The bond ski jumpers are back.
Gasparino Tells CNBC To Stop Protecting Goldman
Submitted by Tyler Durden on 07/14/2009 - 13:35In a scathing expose of Goldman (has Goldman suddenly become the media's punching bag), Gasparino gets yanked off the air for telling it how it is. Chaz concludes by telling CNBC to stop protecting Goldman (fast forward to the 3 minute mark). Crickets ensue as MC Cabrera pulls off her best Blue Steel impersonation.
Are The Fed's Rapidly Disappearaning Central Bank Liquidity Swaps Crushing The Dollar?
Submitted by Tyler Durden on 07/14/2009 - 13:15
As frequent readers know, Zero Hedge compiles an update of the Fed's balance sheet every week,
based on the most recent H.3 and H.4.1 statements. One odd trend that has caught our attention is the virtual disappearance of central bank liquidity swaps as disclosed in the weekly H.4.1 report. The historical low level for this metric was in the pre-Lehman days when it averaged about $60 billion weekly. Then in the depth of the crisis it peaked at just under $600 billion in December 2008. Yet, oddly, even though Europe's economic and monetary situation has deteriorated since then, the foreign CB swaps have plunged, and are now almost at pre-Lehman levels: the most recent reading was of $100 billion, a half a trillion decline from the peak!
