Archive - Feb 2009

Following in the footsteps of previous insider firesales (Neuberger, R3, merchant-banking) within the bankrupt estate, Lehman's former Venture Capital arm is the most recent asset to be sold to yet another Lehman insider, this time Thomas Banahan, ex-head of global venture c

Reading at 25 versus survey consensus at 35 (whatever it is these numbers indicate), and a drop from 37.4 in January. Not like one needs the reasons for this but unemployment, record drops in house prices, stock market collapse and general rioting may hint as to the reasons.

Summary from report:

"Commercial real estate trends are eroding at a pace indicating that occupancy and rental declines should match the deep recession of the early 1990s. To that end, we ran a “stress test” for the 36 companies under coverage and now expect a 25% decline in earnings in 2009/2010, far below Street growth forecasts. Moreover, we expect most companies to reduce dividends to help address debt rolls of more than $100 bn into 2012."

Rated BB+. S&P is swinging the scythe max power. Also the rating agency revised India's outlook to negative on increasing fiscal deficit, but affirmed its cusp IG BBB- rating.

Much more information provided in SEC filing than in last night's press release. Also a lot more detail on debt covenant compliance and operating statistics.

Based on the 8K the company is on the verge of breaking most of its leverage and coverage covenants but hasn't done so yet. However with Zales as a top ten tenant, the writing is on the wall.

Much more information provided in SEC filing than in last night's press release. Also a lot more detail on debt covenant compliance and operating statistics.

Based on the 8K the company is on the verge of breaking most of its leverage and coverage covenants but hasn't done so yet. However with Zales as a top ten tenant, the writing is on the wall.

• Microsoft provides guidance, sees tough times ahead, loses share to Apple (Silicon Alley Insider)
• Obama to continue talking as economy flails (Bloomberg)
• Sir Stanford exclusively marketed fund run by Joe Biden family members (WSJ)
• Thain set to testify on bonuses today at 4 PM (

• Asian stocks drop to five year low (Bloomberg)
• Separating Eastern European's wheat from chaff (NYT) [Funny how this stuff develops.
  

Company reported Core Funds From Operations of $0.72 versus consensus of $0.86.

Dennis Lockhart (not related to FHFA's much more clueless James), President of the Atlanta Fed and voting member of the Fed's policy-setting committee, had some surprisingly insightful commentary today, most notably recognizing that debt backing the commercial real estate market is doomed.

Our friend Felix Salmon has written a very insightful article for Wired magazine on the implications of the Gaussian copula function for the capital markets. We recommend that anyone, who is curious about why correlation and index arbs desks are doomed in this high vol environment, should read it.

The VIX chart below indicates that the downtrend from the November high, the 55-dma and the interim high from February 2 have all converged in the 47.15-49.54 range. The market has unsuccessfully tried to break above the 50 top over the past week. The Jan 28 - Feb 13 lows are all against the 76.4 retrace of the bounce from the Jan 2 low, and a closing break of this resistance level would be significant. In Elliott Wave terms, we are in the beginning of the 5th wave of a sequence starting in May 2008.

Previous dividend $0.38. Gives some amusing arguments about why dividend is getting whacked.

Also lots of chatter about JPM's "fortress balance sheet." Ahem, shorters are already crossing the moats.

Previous dividend $0.38. Gives some amusing arguments about why dividend is getting whacked.

Also lots of chatter about JPM's "fortress balance sheet." Ahem, shorters are already crossing the moats.

Not a lot of commentary needed here although the shout out to Gasparino by analyst Itay Michaeli deserves at least 10 brownie points. One can only imagine if GM had a research department what they would have to say about Citi's stock price target. But it would probably look like this, taken verbatim from the GM report:

"Given GM’s [CITI's] complex restructuring and Chapter 11 risk, valuing the stock remains very fluid. We value the shares off an out of court workout simulation consistent with GM’s [CITI's] 2012 plan."