Archive - Mar 2009

Prologis European Properties (PEPR), a fund investing in Prologis developments, just got the Moody's axe, which cut its rating from Baa2 to Baa3, with a negative outlook.

The tentacles of the Yellowstone Club debacle are spreading. Edra, the former wife of Tim Blixseth who smartly managed to transfer ownership of the bankrupt and lawsuit-festering resort to her as part of their separation, filed for personal bankruptcy late on Friday. The reason for filing was to prevent some of her property from being seized by creditors.

After getting clobbered the week before, the USD climbed back last week. The market viewed this as either a) a sign that the US has bottomed out or b) that investors are piling back into the "safe haven" of the USD due to another bout of risk aversion. Both sound like BS answers (especially because their contradictory nature). Below is EUR/USD, USD/JPY and GBP/USD for last week.

After getting clobbered the week before, the USD climbed back last week. The market viewed this as either a) a sign that the US has bottomed out or b) that investors are piling back into the "safe haven" of the USD due to another bout of risk aversion. Both sound like BS answers (especially because their contradictory nature). Below is EUR/USD, USD/JPY and GBP/USD for last week.

The TARP exodus continues. The latest departure, according to the WSJ, is GS advisor Byron Trott, who is departing the Masters of the Universe and will start his own merchant banking firm focusing on family-controlled and entrepreneurial companies. Trott used to be Goldman's vice-chairman of Investment Banking and ran the company's Chicago office.

Interesting report out of Deutsche Bank over the weekend, presenting hypothetical upcoming current-to-trough declines in real estate prices, based on DB's proprietary Home Price Appreciation (HPA) model outlook for the top 100 Metropolitan Statistical Areas (MSAs). While the full report should be read in its entirety, a good summary is the chart below which demonstrates (in the right most column) the worst-case modelled downside to home prices in the 20 worst U.S. MSAs.

As more and more questions rise about the real worth of U.S. assets in the form of household net worth, it makes sense to summarize the balance sheet of the American consumer. The following snapshot compliments of David Rosenberg:

GGP announced that its consent solicitation expired on March 27 without obtaining the required minimum consents from The Rouse Company bondholders. As there has been no new extension announced, this can only mean that the company is now in default, although we would wait for a formal announcement from the company, which is continuing last minute "hail mary discussions" with TRLCP ad hoc bondholders.

And so it begins.

• GM has 60 days until its brand new dodecatuple secret bankruptcy deadline (Bloomberg)
• Russia backs return to Gold Standard (Telegraph)
  

Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good.

I present the insider perspective of trader Lou (who wishes to remain anonymous) in its entirety:

Update: According to a White House official, Wagoner was asked to leave by the Obama administration. Scapegoating has begun.

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Over the past two months, it has become painfully obvious that everyone who has anything remotely to do with finance has become an expert on the bond-CDS basis trade. While this is absolutely fine, the problem is that understanding the fundamentals in basis is essentially pointless from the perspective of actually trading it, as lately (and for the foreseeable future) fundamentals will matter exactly diddly squat, now that technicals have become (and will be) the dominant trading factor.

Over the past two months, it has become painfully obvious that everyone who has anything remotely to do with finance has become an expert on the bond-CDS basis trade. While this is absolutely fine, the problem is that understanding the fundamentals in basis is essentially pointless from the perspective of actually trading it, as lately (and for the foreseeable future) fundamentals will matter exactly diddly squat, now that technicals have become (and will be) the dominant trading factor.

Two years ago it was said that you if had a direct line to the CIO of CalPERS, one of the nation's largest public pension funds, and specifically to its Alternative Investment Management group, you had it made. None of that Goldman Sachs partners being masters of the universe garbage - this was the real deal. Say you needed $100 million for fund XYZ - you simply dialed that one number in Sacramento, and if you made it past the secretary, you were golden. Of course, this worked best if your name started with Leon and ended with Black, but other managers were also sitting pretty.