Archive - Mar 2009

BAC 340/360: +30
C 525/545: +35
JPM 200/215: +20
WB 270/290: +25
WFC 270/290: +25
MER 425/445: +25
MS 430/450: +15
GS 335/350: +15
GECC: 16.5/18.5

ING stock down almost 20% in Europe trading:

Lastly, Trichet just adjusted ECB growth forecasts:

2009 growth -3.2% to -2.2%; prev -1.0% to 0.0%
2010 growth -0.7% to 0.7%; prev 0.5% to 1.5%

• Evans-Pritchard: Europe's banks face a $2 trillion dollar shortage (Telegraph)
• BoE cuts rates to 0.5%, will print over $100 billion of new cash (Reuters)
• Delta sells planes as operations plummet (

To close the day we present two different opinions, first one a relatively downbeat one by Goldman, and the second one modestly optimistic by Mike O'Rourke... note Mike's discussion on Buffett CDS - he brings up a very critical point that is true for all companies that have technicals preventing a true indication of risk either at the equity or debt levels.

Also, check this out: some pessimism porn from a high up Russian guy.

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MGM Mirage's travails are widely known, with the most recent iteration being yesterday's announcement that it may breach covenants in the near term.

Reader Mike points out an interesting potential selling opportunity in AIG 1 Yr CDS, which is trading on one of the most inverted curves in CDS land. As a collapse of AIG would be equivalent to the blasphemous "credit event" of U.S. Sovereign CDS, having to pay for the settlement on 1 years in AIG seems like an oddly armageddonesque prospect.

Reader Mike points out an interesting potential selling opportunity in AIG 1 Yr CDS, which is trading on one of the most inverted curves in CDS land. As a collapse of AIG would be equivalent to the blasphemous "credit event" of U.S. Sovereign CDS, having to pay for the settlement on 1 years in AIG seems like an oddly armageddonesque prospect.

The only US automotive company not to be on the taxpayer's payroll, Ford, earlier announced it would pursue a proactive debt for equity and cash exchange in which it would convert up to $10.5 billion of its $25.4 billion in debt at year end. The exchange is in fact a combination of three separate transactions:

The only US automotive company not to be on the taxpayer's payroll, Ford, earlier announced it would pursue a proactive debt for equity and cash exchange in which it would convert up to $10.5 billion of its $25.4 billion in debt at year end. The exchange is in fact a combination of three separate transactions:

The Federal Reserve Board has approved the proposal of Atlanta-based Intercontinental Exchange (ICE) to be CDS clearinghouse. The SEC is expected to follow promptly in its approval as well. As counterparty risk is thus set to be eliminated, CDS spreads will likely widen dramatically and the CDS basis trade will collapse over the next few months as CDS and bond spread converge.

Matlin Patterson's pet investment banking project Broadpoint announced it was acquiring another boutique investment bank, Gleacher Partners, for $67 million, consisting of $20 million in cash and $47 million in stock, and will henceforth be known as Broadpoint Gleacher.

UBS announced today it is refusing to comply with the I.R.S,' demand that it turn over the names of tax evaders who had used the Swiss Banks' services. The U.S. earlier filed a lawsuit seeking to force UBS to disclose the names of 52,000 people who had major problems with accessing the help feature in TurboTax.

First General Electric, now BRK. Berkshire Hathaway CDS not helping market today... The implied risk of Warren Buffett's derivatives bet and his 2008 losses have pushed BRK 5 year CDS to an all time wide today, offered at 540bps after closing at 510 yesterday. Indicatively the IG11 index of investment grade names is currently at 244bps, implying the market views BRK's AAA rating a little more like BB (or the investment grade universe is massively mispriced).

Ray Dalio's phenomenal track record has finally caught up with him, as his Bridgewater Associates is now the world's largest hedge fund measured by assets under management.

Ray Dalio's phenomenal track record has finally caught up with him, as his Bridgewater Associates is now the world's largest hedge fund measured by assets under management.

Many hopes and dreams reside with what so far has been the best accepted (at least by Wall Street's conventional wisdom) government program - the Term Asset-Backed Securities Loan Facility, aka TALF, aka Prime Broker Of The People, By The People, For The People. But as we have seen before (TARP 1, TARP 2, Tim Geithner) it is usually only a matter of time before those who read (instead of just repeating the talking heads) scratch the surface and sniff between the lines.