Archive - Feb 17, 2009

Since the start of '08, the S&P has declined by 43%. Yet, if you only held the market on days following a down day, you would have earned a cumulative return of 36%. In contrast, if you only held the market on days following an up day, the cumulative return would have been -58%. In terms of daily (close-to-close) returns, the average return since the start of '08 following down days has been 0.28% while the average return following up days has been -0.62%.

* Requests total of up to $30 billion in U.S. government funding, including $7.5 billion in credit line
* Says would run out of cash by March without new gov't funding
* Says has not reached deals with UAW on VEBA, bondholders on debt restructuring

Chrysler - Free Legal Forms

Obama just coined the post-Lehman version of the ever popular "sell on the news"

Tangentially:

Goldman's Jon Winkelreid to retire March 31.

Also, is there some more ominous subtext to this Bloomberg headline than meets the eye?
"Obama Aide Says Bankruptcy Can't Be Ruled Out For Automakers"

Excel Maritime came out with this bombshell earlier, claiming that two major charters have begun paying the company dayrates at half the agreed rate, and that Excel is seeking legal action.

In a very interesting development for the CMBS market, and one which could lower mortgage-backed trading levels significantly, Riverton Apartments (what better example of a real estate bubble than a leveraged purchase of a housing project in Harlem), which was the first New York apartment complex to spook the CMBS market when it defaulted on interest payments last year, will be auctioned off on February 20, as owners Rockpoint Group and Stellar Management have been unable to modify loan terms.

Earlier today TV station company Young Broadcasting filed for bankruptcy in the Southern district of New York, raising the ytd default rate to 5.19% by notional outstanding, and 4.37% by number of issuers. The company owed $370 million of secured debt and $640 bonds at the time of filing.

The administration's draconian enforcement of bonus cuts for "distressed banks" has made Lloyd Blankfein and a slew of Wall Street executives hold their breath until they get the details of Geithner's stress test in order to immediately repay their portion of TARP (although it is unclear if Warren Buffett will dump another billion or so into Goldman at this point). So what will be the likely metrics for the stress test and which banks will be able to pass the test, in order to be on their merry way to TARP repayment?

The SEC has charged Robert Allen Stanford with "fraud of shocking magnitude that has spread its tentacles throughout the world." Mario Puzo's next book is already in the works. This makes the Cosa Nostra look like amateur hour.

Apparently the charge relates to $8 billion of CDs sold.

Some amazing facts presented in the SEC complaint below:

SEC Charge - Free Legal Forms

Developing Story:

Wow, this is just scary. If this happened in the U.S. you would see riots on Wall Street.

Royal Bank of Scotland to see bonuses drop from 2.5 billion pounds to 175 million total.
There will be no cash payments for future RBS bonuses, and will instead take form of bond payments to be made in 3 annual payments. Lastly, there will be a clawback.

Last week's mindnumbing expression of unbridled market optimism is spilling over into the hedge fund interest secondary market. Barely any offers over the past week, and many large, juicy bids. Fully anticipate complete inversion in this picture in the next day or so.

Major demand indications as follows:

• Canyon Cayman: $15 million
• Taconic Offshore: $10 million
• King Street: $10 million
• Level Global Overseas: $20 million
• GoldenTree Offshore: $10 million
• Horseman Global: $2 million

• IG11: 206/208; S&P Fut below 800
• Trump files for bankruptcy (Bloomberg)
• Sirius XM gets $530 million investment from Liberty Media (Bloomberg)
• California, almost broke, nears brink (

• Futures hammered (Bloomberg)
• The timeline of Geithner's impromptu bank rescue plan (Washington Post)
• California in limbo with no budget, 20% of state workers to be let go shortly (Reuters)
• Automaker bankruptcy looms (