Archive - Oct 9, 2009

Who's bought and paid for?

For your consideration, a letter in which Obama does "not feel that [he] deserves to be in the company of so many of the transformative figures who've been honored by this prize." It would appear, many others agree.

Radio Zero: Peace (Prize) Sells... but Who's Buying?  (Hint: Not us).  We'll go live around 8:30 ET.

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Chat up the DJ (send your .mp3 files) here: radiozh.

Or... #radiozh on EFNet (for the real chat nerds).

It is that time again: the latest version of the Goldman LBO model is circulating (the primer is below). The last time this was popular was April of 2007, right before the LBO bubble went "pop." Maybe this is the subliminal way for Goldman to advise their clients that PE deals are back. After all, as disclosed earlier, there is a lot of dry powder out there. Yet what is missing? A catalyst, in the form of Goldman screaming Ready, Steady, Go.

A peculiar escalation developing in Chicago (what is it about that city) was today's development in the Citadel - Teza Technologies lawsuit. As a reminder, Teza is the firm run by former Citadel head of HFT and quantitative trading, Misha Malyshev, who got unmasked when it was made clear that he had recruited Sergey Aleynikov from Goldman, and was preparing to launch a quant trading group despite his non-compete with Citadel (which may very well be the reason for the entire Aleynikov fiasco after all). What was surprising in today's hearing was the proclamation by Citadel lawyers that Teza is a "veritable pirate ship of illegal activity."

Russia: "primitive resource-based economy, systemic corruption, lack of pluralistic democracy"
Russia's President Medvedev

• Lowest volume day of the year? Check
• Pattern matching and heatmapping? Check
• Time to ramp market to YTD highs? Check
• Does anyone care or trade anymore with Mr. Simons soon to be derelict cores? Not so much...

Yet another rotation engineered by some Chop House upgrade of the semiconductors, which sent some of the chip stocks into Outer Space. Investors never sell, they just switch from one Keno Table to another, sell one group, and reinvest in another. All part of the coordinated effort to keep the party going.....

The "new" General Motors has seen the death of Pontiac and Saturn... And the General just unloaded what was once one of its most popular brands, the icon of brawn and excess- Hummer. And they are rumored to have gotten a fraction of what they were hoping to get…

The story first presented on Zero Hedge yesterday as "The Fed's 30's Minute Agency Monetization Window" is now mainstream, after making headline news on Bloomberg.

Whether or not the rapid move in curve steepening is driven by a flight from long-dated bonds (and yesterday someone very demonstratively puked on the 30 year, both before and especially after the auction), or inflation is starting to finally be a concern for the bond community (unlikely, as it would be a first: everyprevious time equity and credit have disagreed about inflation, it was always credit which was proven right), the 2s10s has steepened by a whopping 14 bps in less than 24 hours. The flipside: more cash for the banks. Is it enough? Or, more importantly, will it be enough 2 years from now when the bank CRE whole loan holdings start rolling (hopefully). At least Bernanke has a head start on the $3.5 trillion problem which is contained.

Beneath all of the rhetoric, here is the REAL reason by big boys are fighting to keep CDS from being regulated.

The congressional candidate is the latest to chime in on perspectives of where gold is going. This ties in with our expectations that the Fed's generous excess liquidity, coupled with a declining dollar, will likely see gold as the primary focus on new capital flows. If gold does really hit $5,000 expect a military coup by the various governors of the Fed.

Courtesy of HedgeFund.Net, below is the September and Q3 highlights of hedge fund asset flows and performance. Curious are the long-only strategies, which contrary to expectations saw substantial out flows to the tune of 4.2% in Q3. Not surprisingly, stat arb strategies saw an asset allocation increase of 12.6% in the same time period. With regulatory focus on some of the potential loopholes abused by stat arb players, look for some volatility in this metric.

According to the latest poll of the National Association of Active Investment Managers, even as an almost record number of respondents confirm their bullishness (a contrarian indicator), an all time high confirm that they are "not confident" in their outlook. This is a turning point for bullish to bearish sentiment inversion, as can be seen in March of 2008, when a comparable confidence reading resulted in a major drop in sentiment, which subsequently resulted in a Fall 2008 market doldrums to put it lightly.