Archive - May 2009

The preliminary result demonstrates a much lower inside market midpoint than expected.

The preliminary result demonstrates a much lower inside market midpoint than expected.

The preliminary result demonstrates a much lower inside market midpoint than expected.

The General Growth Properties LCDS auction is currently ongoing, and just finished the Initial Bidding Period. The results will be posted in about 6 minutes, eventually followed by a final Dutch auction bidding process at 2 pm. The reason this is relevant as it could provide a significant repricing and valid market test of secured obligations in the CRE market.

The participating bidders in the auction is provided below (they will hopefully work not only on behalf of their prop desk but for their clients as well).

Bank of America, N.A.
Barclays Bank PLC

JP Morgan continues to try and distance itself from the crowd of merely mortal banks. The issue spread on the notes will be curious as it provides yet another datapoint of how much incremental cost of debt all the other FDIC insured bank issuers will have to pony up eventually once (if) the government decides to pull its support from the banking sector and have banks fare on their own yet again.

Still waiting with (a)baited breath to see BofA/Merrill Lynch to set off on the non-guarantee path.

And so the backpedaling begins. Bloomberg quotes an administration official who has stated that the D-3's "bankruptcy might take as long as two years, not the two months President Barack Obama suggested as a target."

• Apocalypse when?

Retail sales fall 0.4% in April (0.5% ex autos), second straight monthly decline. Analyst consensus was 0.1% gain. Oops.

TrimTabs notes that in the second half of April (Apr 16-30), short interest on the Russell 3,000 stocks dropped to 13.62 billion shares ($260 billion / 2.88% of market cap) from 13.95 billion shares ($259 billion / 2.94% of market cap) on March 31.

TrimTabs notes that in the second half of April (Apr 16-30), short interest on the Russell 3,000 stocks dropped to 13.62 billion shares ($260 billion / 2.88% of market cap) from 13.95 billion shares ($259 billion / 2.94% of market cap) on March 31.

• US AAA credit rating at risk, former GAO director claims (Reuters)
• GM sinks to fresh low as Chapter 11 looms (FT)
• Social Security, Medicare will be depleted much earlier than expected (Bloomberg)
• Airbus orders nosedive, profit tumbles (

"Buy CDS" - that was the overarching theme from last week as $141 billion of rerisking occurred across all major sectors. Absent some nominal CDS derisking in Oil & Gas and Tech/Telecom, every single space saw credit traders betting that risk will increase. Of course, absent some swooning on Monday of this week, irrational exuberance 2.0 still dominates the equity markets, once again implying that credit is either generally more pessimistic than equities, or that CDS traders are much faster to bail at the first whiff of the squeeze ending.