Archive - Apr 2009
April 25th
The One Trillion Commercial Real Estate Time Bomb
Submitted by Tyler Durden on 04/26/2009 01:48 -0500Imminently, Zero Hedge will present some of its recently percolating theories about some oddly convenient coincidences we have witnessed in the commercial real estate market. However, for now I focus on some additional facts about why the unprecedented economic deterioration and the resulting epic drop in commercial real estate values could result in over $1 trillion in upcoming headaches for financial institutions, investors and the administration.
The One Trillion Commercial Real Estate Time Bomb
Submitted by Tyler Durden on 04/26/2009 01:48 -0500Imminently, Zero Hedge will present some of its recently percolating theories about some oddly convenient coincidences we have witnessed in the commercial real estate market. However, for now I focus on some additional facts about why the unprecedented economic deterioration and the resulting epic drop in commercial real estate values could result in over $1 trillion in upcoming headaches for financial institutions, investors and the administration.
April 25th
Jumping The Shark In HY On Record Low Recoveries
Submitted by Tyler Durden on 04/25/2009 16:00 -0500Among the more important facts skipped by the general public in its fascination with the equity bear market rally, is that the perspective for leveraged corporate issuers is getting worse and worse, never more so than just this March, when the monthly annualized default rate surged to a 20 year record high of 19.4%, on par with rating agency expectations for 2009 actual default rates. This has been coupled with unprecedented low unsecured recovery rates of 9%.
Jumping The Shark In HY On Record Low Recoveries
Submitted by Tyler Durden on 04/25/2009 16:00 -0500Among the more important facts skipped by the general public in its fascination with the equity bear market rally, is that the perspective for leveraged corporate issuers is getting worse and worse, never more so than just this March, when the monthly annualized default rate surged to a 20 year record high of 19.4%, on par with rating agency expectations for 2009 actual default rates. This has been coupled with unprecedented low unsecured recovery rates of 9%.
The Stress Test Cliff Notes
Submitted by Tyler Durden on 04/25/2009 12:35 -0500Compliments of reader Tim.
For those too lazy to click on the Federal Reserve link and read, below are some of the key points contained in the SCAP:
(1) “more than 150 senior supervisors, on-site examiners, analysts and economists” spent a month reviewing the 19 BHC’s that hold two thirds of the country’s bank assets and account for one half of the loans
Renaissance Underperforms S&P by 17% In April
Submitted by Tyler Durden on 04/25/2009 03:17 -0500Demonstrating just how massive the ongoing quant (and market) dislocation is, the most recent performance numbers for Jim Simons monster RIEF fund, which is arguably one of the largest quant funds in the world with $100 billion in total capacity (comps being BGI, Getco and Highbridge, the last of which incidentally was responsible for the massive market spike on Thursday afternoon as it force-deleveraged through its owner JP Morgan), indicate that it is underperfoming the S&P by almost 17% Month To Date.
April 24th
GM Liquidates Two Employee Benefit Plans
Submitted by Tyler Durden on 04/24/2009 20:27 -0500In an 8-K just released, GM has announced that it has liquidated two key employee benefit plans (the Savings-Stock Purchase Program and the Personal Savings Plan). The plan custodian State Street started selling the plan assets, consisting entirely of GM stock, on March 31 and reinvesting proceeds into fixed-income investments and money market funds.
Latest In The Bank Failure List: 4 Banks, 1 Credit Union
Submitted by Tyler Durden on 04/24/2009 20:06 -0500Bank failures #26, 27, 28 and 29 for the year were American Southern Bank of Kennesaw, Georgia, Michigan Heritage Bank of Farmington Hills, First Bank of Beverly Hills and First Bank of Idaho of Ketchum, Idaho. The cost to the FDIC from the three failures will be $48.7, $50 million, $394 and $113 million, respectively.
Daily Credit Market Summary: April 24 - Squeeze
Submitted by Tyler Durden on 04/24/2009 19:59 -0500Spreads were tighter in the US today as all the indices improved (and curves steepened with shorts getting squeezed at the mid to short-end). Indices typically underperformed single-names with skews mostly narrower as IG underperformed but narrowed the skew, HVOL outperformed but widened the skew, ExHVOL intrinsics beat and narrowed the skew, XO underperformed but compressed the skew, and HY outperformed but narrowed the skew.
Weekly Macro Observations
Submitted by Tyler Durden on 04/24/2009 18:21 -0500David Rosenberg punching the table on the little noticed fact that the Detroit production shutdown will have profound negative ripple effects on the economy. Zero Hedge still believes that fundmantals are more important to report than ongoing wholesale market short squeezes, so we present David Rosenberg's latest weekly observations.
Quicksand
Weekly Macro Observations
Submitted by Tyler Durden on 04/24/2009 18:21 -0500David Rosenberg punching the table on the little noticed fact that the Detroit production shutdown will have profound negative ripple effects on the economy. Zero Hedge still believes that fundmantals are more important to report than ongoing wholesale market short squeezes, so we present David Rosenberg's latest weekly observations.
Quicksand
Fed Releases "Stress" Test Assumptions
Submitted by Tyler Durden on 04/24/2009 17:03 -0500The Fed has released the stress test methodology (link here). Note the amusing "More Adverse" projections.
Also, a relevant statement from the Fed: “Losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks."
Fed Releases "Stress" Test Assumptions
Submitted by Tyler Durden on 04/24/2009 17:03 -0500The Fed has released the stress test methodology (link here). Note the amusing "More Adverse" projections.
Also, a relevant statement from the Fed: “Losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks."
Fed Releases "Stress" Test Assumptions
Submitted by Tyler Durden on 04/24/2009 17:03 -0500The Fed has released the stress test methodology (link here). Note the amusing "More Adverse" projections.
Also, a relevant statement from the Fed: “Losses associated with the deepening recession and financial market turmoil have substantially reduced the capital of some banks."
Additional Thoughts On The GGP Substantive Consolidation Threat
Submitted by Tyler Durden on 04/24/2009 16:50 -0500Following up on the RBS GGP piece from earlier today, here are some even more specific insights, courtesy of Wachovia. Of particular note is the observation that SPE cash flows are subordinated to Bill Ackman's DIP.





