Archive - Mar 2009

Iconic fashion house BCBG Max Azria is setting off on a last ditch effort to avoid bankruptcy. As I wrote last, the company has a $20 million March loan payment due which it will find next to impossible to make.

• Geithner's trillion dollar gamble (Eurointelligence)
• AIG furor helped funds in Geithner's toxic plan (Reuters)
• U.S.
  

The one-two knockout punch from last week's quantitative easing by the Fed and today's massive implicit toxic asset offloading guarantee by the Treasury served a bitter dish to market doomsayers. Putting the fact aside that the two actions are essentially contradictory (30 years collapsed Monday after the ripfest last week), much was said today, and over the weekend, about Geithner's plan to present hedge funds with a once in a lifetime opportunity of a 12-to-1 upside/downside investment ratio.

A bunch of critical numbers are coming out tomorrow including the German and EU purchasing manager index numbers and UK CPI and RPI indices. The US housing price index numbers are largely irrelevant after today's existing housing sales numbers and the consensus which has been priced in, is likely to be spot on.

And yes, as reader Mike points out, it is 14x, not 12x (as ZH also erroneously assumed). The administration's 6x definition of leverage is really debt to equity. In their example where a PPIP participant invests $6 in equity, he ultimately purchases $84 in assets, or a total effective notional leveraging of 14x. (14x upside, 1x downside: taxpayer footing the difference.

And yes, as reader Mike points out, it is 14x, not 12x (as ZH also erroneously assumed). The administration's 6x definition of leverage is really debt to equity. In their example where a PPIP participant invests $6 in equity, he ultimately purchases $84 in assets, or a total effective notional leveraging of 14x. (14x upside, 1x downside: taxpayer footing the difference.

Some midday sanity from Goldman's Bob Savage. Zero Hedge does not necessarily agree with some of the assumptions/conclusions here.

The doubters about the US PPIP and TALF are significant. Most point to three issues:

Right now, the CNBC hoi polloi are crowing about March closing out at potentially the best monthly performance since October 2002. As usual, there's nothing to back up this piercing analysis other than various interviews with floor traders who are profiting off the vol on the major indices. Of course, come mid-April when Q1 numbers are released the doom and gloom will come back with a vengeance.

It's almost like CNBC was formed purely to supply Jon Stewart with material on slow days on CSPAN.

Reader Lookout has done a great job of not only editorializing Geithner's earlier WSJ opinion piece for junior high school English grammar but also explaining in simple English the message that Geithner is trying to convey between the lines. For anybody still confused of what all the hoopla is about this is a must read.

Not if you believe Reuters, but where there is smoke there is usually fire. According to an earlier report by ABC News, the house of Dimon was fully intent on shaming Vik's Cititanic and his meager attempt to buy one lowly Dassault Falcon, by purchasing not only two Gulfstream 650 jets but also a hangar in which to house these new acquisitions at Westchester airport! The total cost: $138 million.

Existing home sales number were released this morning and on the surface, it seemed to be a solid win for the US - about time right? MoM existing home sales were priced into markets about a -0.9% clip but the numbers came out at 5.1% in the green. The NAR's numbers are pretty solid drivers for the USD and these numbers were being carefully watched as January clocked in at a buzz-killing -5.9% MoM.

However, the deeper story painted is not a promising sign.

In yet another sign of how Wall Street is appreciating Obama's recent foray into compenstation decisions, Karl Will, head of JPM global tech M&A, is leaving the company, joining two other recent senior level departures, Brian McCarth, former co-head of global healthcare investment banking and Eric Rabinowitz, a VP in the same group, both of whom ended up at TARP non-beneficiary Oppenheimer.

On March 20, the German parliament adopted the Finanzmarktstabilisierungsergänzungsgesetz bill (FMStErgG in short), or the Bank Nationalization Act, which allows the government to expropriate shareholders of systematically relevant banks in distress in order to take a more proactive role in their restructuring.

The latest sucker punch against what has become the Las Vegas Strip Pinata comes from MGM Mirage's very own partner in the CityCenter development, Dubai World, and specifically the Infinity World subsidiary. The latter claims MGM has defaulted on the terms of their JV, and has filed a lawsuit against the casino operator in Delaware Chancery.

Goldman has been really pounding the REIT space. Which, of course, skeptics will say simply means their prop desk (or what is left of it) is buying REIT assets hand over fist. Or maybe they just really hate the space.