Archive - Apr 16, 2009

Several reports came out today on CNBC and other MSM conduits about a brand new government effort which may consider expanding the already many-times revised TALF program to capture all sorts of commercial real estate securities, including the uber toxic ones, and extend the duration on TALF loans from the established 3 years to 5 or more years.

Much has been made about the Chinese connection with regards to copper demand since our last piece on the subject. This piece indicates that Chinese are gearing up for a manufacturing and construction rebound as supplies fall, prices rise, and Chinese indicators are showing bullish signs that are increasingly rare - being first order positiver rather than second order.

And some readers call Zero Hedge pessimistic.

April 16 (Bloomberg) -- David Tice, the chief portfolio strategist for bear markets at Federated Investors Inc., said the Standard & Poor’s 500 Index will probably plunge about 62 percent.

He spoke during a Bloomberg Television interview today. The Federated Prudent Bear Fund that he founded returned 6.7 percent last year as the S&P 500 plunged 38 percent, the most since 1937.

Such is the conclusion based on a Bloomberg article that notes that MGM Mirage is being pressured by none other than Icahn and Oaktree Capital.

Spreads were mixed in the US today (amid low volumes) with IG tighter, HVOL improving, ExHVOL weaker (as HVOL arb helped), XO stronger, and HY rallying. Indices typically underperformed single-names (for the fourth day in a row as index arb remains active) with skews mostly narrower as IG underperformed but narrowed the skew, HVOL underperformed but narrowed the skew, ExHVOL intrinsics beat and narrowed the skew, XO underperformed but compressed the skew, and HY's skew widened as it underperformed.

The Stardust just made a margin call to Zero Hedge. We are happy to pay up when our cynicism is proven wrong. Minutes ago Steve Sakwa did come out with an updated report on Duke Realty as expected, however he kept the company at Neutral, and in fact lowered his price target from $10 to $9/share based on, gasp, dilution. Although with the stock closing at $9.37, shouldn't that be a sell? But we are nitpicking.

A different way to look at the late market rally is that it is options related ahead of tomorrow's option expiration... Since index options expire on the opening print, any trading has to be completed today, explaining the trading spike late in the day. Thus, dealers who are short SPX calls have to keep buying futures or SPX cash baskets to keep their hedge on, resulting in purely technical fluctuations in the market.

Couple this with the rumored tremors in quant land and the entire rally, again, is likely not related to individual equities.

Interesting article out of WSJ, that dovetails with Zero Hedge's expectation that the mega REIT bankruptcy will portend only bad things for all other mall operators as this develops into a stressed "market test". WSJ reports that while retailers have said they would be willing to stay with GGP, they will likely demand an arm and a bone in terms of concessions for remaining as a tenants.

we are living in interesting times.

compliments of www.creditresearch.com

we are living in interesting times.

compliments of www.creditresearch.com

From Bloomberg:

April 16 (Bloomberg) -- General Motors Corp. is planning to make a formal offer to all bondholders by April 27 to exchange their $27.5 billion in claims for equity, according to a person
with knowledge of the discussions.

GM, facing a June 1 U.S.-backed bankruptcy, was told this week by President Barack Obama’s auto task force to try to restructure its debt out of court, said people familiar with the

That's 0.01%.

Last levels seen during the fiasco after the November crash. Was at 0.08% two days ago. All money is running for near term safety, despite CNBC's urges for tresury investors to jump into equities - well, the opposite is happening...Maybe the real money is seeing something, and is accelerating purchasing of T-bills into this melt up.

Equities: have fun buying stuff.

That's 0.01%.

Last levels seen during the fiasco after the November crash. Was at 0.08% two days ago. All money is running for near term safety, despite CNBC's urges for tresury investors to jump into equities - well, the opposite is happening...Maybe the real money is seeing something, and is accelerating purchasing of T-bills into this melt up.

Equities: have fun buying stuff.

"Zero liquidity now"

"Large quant blow up in progress right now"

the market abides... the last bit is mine, not the quant's

Yet another troubled REIT Duke Realty has jumped on the Kimco, ProLogis, etc.