Archive - Oct 2009
October 28th
Norway Is First European Country To Lift Interest Rates
Submitted by Tyler Durden on 10/28/2009 16:02 -0500After interest rates had been lifted in several commodity producing countries, the rate game is shifting to the old continent, where Norway has become the first country to announce it is raising its interest rate by 0.25% and has signaled it anticipates steeper increases over the next three years as "inflation accelerates and unemployment remains low." Count the NOK as the latest currency that will be using the dollar as a short-funding vehicle.
Daily Credit Summary: October 28 - Banks, Builders And Bailouts
Submitted by Tyler Durden on 10/28/2009 15:52 -0500Spreads were broadly wider in the US as all the indices deteriorated (moving to their widest levels since 10/02). Curves were modestly flatter but roll trades saw significant decompression (both in HY and IG) especially between series 9 and 12/13. At 109bps, IG is within 1bps of its widest close since 09/04 (as we note intraday wides of almost 115bps as a significant eye-ball level for many to watch).
Cash Sink Hole GMAC Catches Last TLGP Train Out Of The Station With $2.9 Billion Free Issue
Submitted by Tyler Durden on 10/28/2009 14:35 -0500With the FDIC-backed TLGP program set to expire on October 31 (with a 6 month safety net optionality, whatever that means), GMAC did all it could to jump on the last train leaving the cheap taxpayer funded capital station. The government subsidized provider of car loans for cars nobody wants priced $2.9 billion of 3 year notes. Luckily for the UAW and for the autobailout fans, the issue came in to price at a measly T-31.6 bps: a yield of 1.753% which would be unheard of had GMAC actually tried to tap the private markets. Oh yeah, and it is AAA rated. Thank you Sheila Bair for putting another $2.9 billion of taxpayer money in harms way and with a virtually 0% probability of recovery.
The Collapse Of The Muni Bond Market
Submitted by Tyler Durden on 10/28/2009 13:35 -0500With most investors' eyes glued to equities and corporate bonds, and to a much greater extent, US Treasurys, many are ignoring the storm clouds gathering over the traditionally much more boring, income oriented municipal bond market. A recent research piece by welling@weeden covers most of the question marks vis-a-vis the muni market, although with proclamations such as "the municipal market will probably repeat the pattern of the sub-prime collapse. Although it is plain to see, the usual experts do not notice. This was true of all of our recent financial bubbles, including subprime mortgages" the paper's message may not be too welcome to the $3 trillion+ muni market. For all readers who enjoyed Sprott's recent outlook on the inevitable US debt repudiation, this is a must read report.
CIT Obtains $4.5 Billion Revolver, Locks Out Icahn
Submitted by Tyler Durden on 10/28/2009 13:06 -0500The CIT soap opera is developing by the minute, ahead of tomorrow exchange offer deadline expiration. In one corner shunned distressed investor Carl Icahn, who presumably owns $2 billion of CIT bonds, and is pushing for a complete shakedown at the company while offering to pay bondholders 60 cents on the dollar in order to vote down the proposed prepack plan. In the other corner is management, directors, secured lenders and some creditors, who are hoping against hope that by adopting the administration's broad practice of extend and pretend, everything will be ok. The latest gimmick pulled out of the hat: a new $4.5 billion credit facility.
On Iran, oil prices and how the Hajj f$#/ed Iran
Submitted by Cheeky Bastard on 10/28/2009 13:04 -0500Now, most of you know what happened to the oil prices, and where that lead us. Now multiply that by 10, and you will have a pretty good picture of the economy we will have IF, yet another time, a dark side of that what constitutes Humanity wins.
Guest Post: Jeffrey Gendell's Hedge Fund Tontine Associates: The Rebirth
Submitted by Tyler Durden on 10/28/2009 12:45 -0500Jeffrey Gendell's Tontine Associates had an atrocious 2008 and that's putting it politely. Founded 12 years ago, Tontine is a multi-billion dollar hedge fund firm that focuses on investing in macro themes by taking large, concentrated positions in companies poised to benefit from various theses. Prior to founding Tontine, Gendell graduated from Duke and worked in Corporate Finance for Smith Barney. While Tontine posted 100% returns in 2003, they posted nearly the polar opposite in 2008. After all, they closed down funds and were amongst the worst hedge fund performers of the year with some of their funds returning a whopping -63.6% and -91.5%. The highly ironic and (admittedly) humorous part of this whole fiasco is the fact that Tontine is named after an older annuity created by Lorenzo de Tonti where investors desire to be 'the last one standing.' In this arrangement, investors pool their money and as they die off the remaining investors split the deceased's stake. The last investor standing then inherits the riches. By naming his firm as such, Gendell's desire is obviously to be the last man standing. The problem here is that he nearly fell flat on his face last year. But with a new year comes a figurative and literal new light.
VIX Has Biggest Term Jump Since March Lows
Submitted by Tyler Durden on 10/28/2009 12:18 -0500
An indication of just how overbought the market may be is the recent sudden move by the VIX index, which over the past several days has undergone the biggest periodic move since the March market lows. The nearly 36% move in the VIX is the sharpest retracement in over 7 months. Whether it will subsequently drop form here as the S&P tests the 50 Day MA support level will likely be seen tomorrow once the latest GDP data is released.
$41 Billion 5 Year Auction Closes At 2.39% High Yield, 2.81% Allotted At High
Submitted by Tyler Durden on 10/28/2009 12:08 -0500- Yields 2.388% vs. Exp. 2.381%
- Bid-To-Cover 2.63 vs. Avg. 2.35 (Prev. 2.4)
- Indirects 54.8% vs. Avg. 48.97% (Prev. 44.72%)
- Indirect Bid-To-Cover 1.29
- Allotted at high 2.81%
It's a Small World After All- A Car Guy's Advice to China
Submitted by Travis on 10/28/2009 11:43 -0500When I was a kid my parents took me to Disney World- and we did that ride that went through the world on a boat- "It's a small world…?" The global automobile business too, is getting smaller and smaller. And a whole-lot-more “international,” if you know what I mean.
Should We Give the Fed More Power ... Or Less?
Submitted by George Washington on 10/28/2009 11:36 -0500Is giving the Fed more power like appointing the head of the Medellin drug cartel as drug tzar?
Dollar On Fire, Is Short Covering Starting?
Submitted by Tyler Durden on 10/28/2009 11:36 -0500
Major DXY component trade EUR-JPY collapsing as the DXY is flying, crushing the momo equity/commodity correlation complex.
Guest Post: Zombie Love: Barack Obama, GMAC and Ally Bank
Submitted by Tyler Durden on 10/28/2009 11:22 -0500Kudos to The Wall Street Journal, which scooped the rest of the Big Media last night by reporting that GMAC Inc. is asking for yet another $3 billion bailout from the US Treasury. If Citigroup (NYSE:C) is the Queen of the Zombie Dance Party and AIG (NYSE:AIG) the King, then GMAC is certainly one of the children. In relative terms, GMAC has received far more subsidies than any other zombie and seemingly has no access to the private markets in terms of raising new equity. Of the 19 banks subject to the Fed's stress tests earlier this year, GMAC is the only bank that has not raised the required private capital.
A Comparison Of Liquidity Expansion Efforts In The Eurozone And The US - Implications For The Euro-Dollar Trade
Submitted by Tyler Durden on 10/28/2009 10:34 -0500
With the vast majority of analysts focusing on American monetary expansion, few if any seem to be looking at what the monetary situation is in the Eurozone. Alternatively, looking at relative strength of the dollar vs the euro, one may suggest that aggressive monetary expansion is the only factor that needs to be addressed. Some highlights of European monetary aggregates confirms just that (especially when juxtaposed with American counterparts), and present several questions: i) when will Europe catch up with the US in expanding various monetary bases, and ii) what will happen to the EUR once the ECB realizes that it needs to recreate the Bernanke Moral Hazard Doctrine and start expanding monetary circulation to the same extent as the Federal Reserve already has?
Third Time's a Charm- GMAC in Talks For Round Three of Aid
Submitted by Travis on 10/28/2009 09:49 -0500So is it denial or confidence? The Treasury and GMAC are in talks for billions more in aid. Denial, confidence or outright desperation- maybe the third time's a charm? What's another few billion? The American car business is at stake!





