Archive - Feb 2009

The ETF bubble looks like it may be the next one to burst. WSJ just out that the CFTC is probing the USO ETF for price moves coinciding with trades in and out of crude-oil contracts. The USO has recently gotten prominent media attention over allegations that it is a perpetually value bleeding asset, and potentially a pyramid structure.

Just what the auto industry needs: Ford, which may have foolishly avoided government aid so far, announced U.S. auto sales in February fell even more compared to January, when the annualized sales rate was the lowest since 1981. Ford sales analyst George Pipas also had this bleak comment to share "We don’t know where the bottom is." January's SAAR was 9.6 million and February numbers which comes out next week should further cement the case that U.S. automakers are simply unviable in current form.

Thanks to an intrepid reader who pointed out Seth Klarman's must-read 1991 book "Margin of Safety" is easily accessible on the internet, we are presenting the link to where it can be found on rapidshare.

Fox Pitt analyst Gary Ransom says to be very wary when Berkshire posts earnings tomorrow, warning results may be the worst since Buffett took over the company in 1965. As a result of equity losses and writedowns on derivative bets, the Oracle of Omaha's book value per share, or intrinsic value may have dropped by 8.5%, which will be only the second time this metric has declined under Buffett's command, the only previous time being 6.1% in 2001.

In an 8-K filed early today, MGM announced that on February 24 it had requested a full drawn down on its $4.5 billion revolver, which the banks satisfied yesterday.

In an 8-K filed early today, MGM announced that on February 24 it had requested a full drawn down on its $4.5 billion revolver, which the banks satisfied yesterday.

In a historic event that went largely unnoticed, last night ISDA disclosed it is open sourcing JP Morgan's legendary CDS Standard Model which it got ownerships of on January 29, thereby issuing a challenge to the global community of financial white hats to decompile the code and figure out just what the voodoo is the wizards in JP Morgan's Quantitative Research group have p

In a historic event that went largely unnoticed, last night ISDA disclosed it is open sourcing JP Morgan's legendary CDS Standard Model which it got ownerships of on January 29, thereby issuing a challenge to the global community of financial white hats to decompile the code and figure out just what the voodoo is the wizards in JP Morgan's Quantitative Research group have put

• Hungary wants $230 billion bailout package for Eastern Europe (Bloomberg)
• Citi will need a bigger boat (PR)
• Blackstone has $827 million Q4 loss, misses estimates, on real-estate asset writedowns (PR)
• Rosy assumptions hold down deficit (WSJ) [we jus
  

Economy's wheels are coming off.

Citi common diluted 74%. Fed converts up to $25 billion of preferred to common, as expected, however with the twist that other private preferred investors have to agree to terms. C shares down 42% post announcement... Did people not see this coming??? Although this was worse than expected. Government keeps making rules up on the fly.

• BofA served with bonus subpoena after Ken Lewis' 4 hour interrogation (Bloomberg)
• 14,000 additional layoffs at JPM (Reuters)
• The financial terrorist system to demand another $750 billion soon (Reuters)
• Regulatory investigation into shady European "dark pools" (

Rumor of the night, as reported by our friends at Debtwire, is that everyone's favorite private jet company Textron, which we brought to people's attention before anyone cared about it, has hired former Masters, now merely Janitors, of the Universe, Goldman Sachs, and makers of fine, fine left bank Burgundy, Rothschild to sell the businesses that make up TXT's industrial division.

The acrimony over the world's largest DIP is reaching fever pitch. For a second day in a row, Judge Gerber said he will listen to yet another round of arguments tomorrow before deciding whether to approve the Debtor in Possession loan. As we wrote previously, the fate of the company (at least over the next 6 months) hangs in the approval of the DIP, as without it Lyondell will proceed straight to liquidation.