Archive - Mar 2009

Rampant rumors from traders that repo desks are continuing to call in shares used to short financials such as Citi and AIG (look at charts below for lift off). This is causing a forced covering of all financial shorts, and an impossibility to put on new shorts... Interesting how this happens the day before Obama shows up on Leno. This fits in perfectly with Zero Hedge's conspiracy theory of the Volkswagen situation repeating itself in the financial sector in general and Citi in particular .

MGM joins the crowd of highly levered companies that announced a going concern by its auditors in its annual filing. The Vegas casino operator also announced it had received a 2 month covenant waiver from lenders on its $7 billion credit facility.

The news is likely not of the "good" kind

Jeffery Harte at Sandler O'Neill, who had MS at a hold previously, pulled all stops and cut the company to Sell (does anyone have the report?). Is this a competition for who will be the next Meredith Whitney? In the meantime, financials whipping boy Dick Bove parrots the execs of the Too Big To Mark To Market companies saying he expects a "very good" quarter for Goldman and MS.

According to Hedge Fund Research, that homeless person sleeping on sewer vent could easily have been a 2008 special situations portfolio manager. Of the record 1,461 hedge funds that closed in 2008, more than half or 775 shut their doors in Q4.

• Another bogus econ datapoint: CPI ex food and energy at 1.8%
• UK Unemployment rises at fastest pace since 1971 (Bloomberg)
• The disastrous January TIC data (Brad Setser)
• AIG furor shifting to Goldman Sachs (Reuters)
• The joke that are retention bonuses (

Citi's chief economist Lewis Alexander is said to be leaving for a post with the U.S. Treasury Department. Alexander will be a direct counselor to Tim Geithner. This makes some sense keeping in mind who Geithner's predecessor was.

Mr. Alexander's role as Citigroup's chief economist didn't entail significant management responsibilities. But his optimistic economic forecasts colored executives' views that the U.S. was unlikely to face a prolonged slump.

Not really news, but at least reflects that the rating agency has a pulse and still tracks companies. The reasons for the D rating (from C) is none other than yesterday's bond default by GGP and cross-default provisions which that event triggered.

If only companies knew they would be rewarded with aggressive buying of their stock after reducing and/or PIKing cash dividends they likely would have done so much, much sooner... After all why would investors demands cash out of "dividend stocks." This little trick however has not escaped REITs Mack-Cali and Simon Properties. CLI announced after market close today that it would be reducing its dividend by 30%, from $2.56 to $1.80 (a 30% reduction) and would pay the quarterly dividend of $0.45 on April 13 with an ex-div date of April 3.

As Zero Hedge expected, the FDIC announced today that surcharges imposed on the TLGP program will be in effect on April 1st. I wrote about the topic extensively here, discussing its implications for capital raising, specifically for bank holding companies. The FDIC's press release can be found here.

Hat tip reader Michael who points out that Nissan has launched a presumably heavily oversubscribed TALF deal which is a "AAA"-rated four-part sale that includes a 0.32 percent issue offered at a spread of 40 basis points over one month Libor, a one-year issue offered at 185-200 basis points over eurodollar swap futures and two-year and 3.16 year notes at spreads of 200 to 225 basis points and 325 to 350 basis points over swaps.

S&P earlier downgraded Textron and Textron Financial to BBB- which was not at all surprising. However, an amusing tidbit in their report presents just how ingrained the sentiment against private jets is: if the ultimate lagging indicator S&P is saying jets are a liability, it may be time to actually splurge for that Dassault you have had your eye on recently.

America's armpit claims "misrepresentations by Lehman execs led to the state losing millions." New Jersey's suit names top executives and board members, claiming it lost $100 million on stock investments... Ernst & Young is also a defendant in the lawsuit.

Interesting summation of the AIG populist anger from an employee's point of view.