Archive - May 2009

The pillaging in Commercial Real Estate has hit a new high. Real Point is reporting that CMBS loans are accelerating their special servicing deterioration yet again. The total amount of CMBS in special servicing has hit $24 billion, after a staggering $3.8 billion increase in April.

Some amusing commentary on the most recent bond auction from Rick Santelli. $14 Billion of 30 year UST priced at 4.288, with Bid To Cover at a precariously low 2.14. CNBC of course makes this sound as terrific for banks due to steepening yield curve (10s30s attached). We shall see how terrific it is once the Bid To Cover drops below 2 and USTs are sold in the toilet hygiene section in your neighborhood Duane Reade.

I present below NYSE volume charts compliments of a reader who has noticed that unlike in the last 2003 "end of bear market" period, when New Highs and New Lows fluctuated constantly, indicative of broad buying and selling, the current rally which has brought 80% of all stocks above their 50 DMA, is much more indicative of very few people pushing trading at essentially the same price points as the New High/New Low has basically flatlined constantly from the March 9 lows.

I present below NYSE volume charts compliments of a reader who has noticed that unlike in the last 2003 "end of bear market" period, when New Highs and New Lows fluctuated constantly, indicative of broad buying and selling, the current rally which has brought 80% of all stocks above their 50 DMA, is much more indicative of very few people pushing trading at essentially the same price points as the New High/New Low has basically flatlined constantly from the March 9 lows.

Funny how that happens. NYSE volume on this red day is now 54% higher than the 20 DMA. And Goldman is providing liquidity all the way.

The chart below shows that in real terms we have virtually reverted back to the cheap housing conditions of the early 1990's, as the spread between the 10 year UST and the 30 year FN current coupon index will soon take out even the 1992 lows.

"Cheap" credit [to those lucky enough to be eligible] - check
Push credit cards to everyone [at 29.95% APR] - check
PPIP to get $1 trillion in securitization back [this one may be tough] - check
CNBC mantra of consumer to buy, buy, buy [thanks Bob Pisani] - check

The chart below shows that in real terms we have virtually reverted back to the cheap housing conditions of the early 1990's, as the spread between the 10 year UST and the 30 year FN current coupon index will soon take out even the 1992 lows.

"Cheap" credit [to those lucky enough to be eligible] - check
Push credit cards to everyone [at 29.95% APR] - check
PPIP to get $1 trillion in securitization back [this one may be tough] - check
CNBC mantra of consumer to buy, buy, buy [thanks Bob Pisani] - check

The chart below shows that in real terms we have virtually reverted back to the cheap housing conditions of the early 1990's, as the spread between the 10 year UST and the 30 year FN current coupon index will soon take out even the 1992 lows.

"Cheap" credit [to those lucky enough to be eligible] - check
Push credit cards to everyone [at 29.95% APR] - check
PPIP to get $1 trillion in securitization back [this one may be tough] - check
CNBC mantra of consumer to buy, buy, buy [thanks Bob Pisani] - check

In its retention application to represent the Debtor, aka Chrysler, aka US taxpayers, bankruptcy law firm Jones Day has disclosed not only its fee rates (at or over $900/hour for the top lawyers, compliments of Joe Q. Public), but also a very peculiar phrasing in the request of where in priority its fees should fall in the current bankruptcy. For the first time since once can remember, a law firm has requested a Section 364 superpriority status as a retained entity.

The presentation below from Ann Rutledge is recommended almost exclusively for credit and structured finance fanatics. It does a very good job of capturing the morphing face of credit products and the (un)packaging of risk, especially over the past two decades.

One picture is worth a thousand propaganda machines:

One picture is worth a thousand propaganda machines:

One picture is worth a thousand propaganda machines:

Last week was relatively quiet in the CDS market, shadowing the complete lack of liquidity in equities. Notable traded sectors were consumer Services and Industrials which saw a net gross notional rerisking of $32 and $39 billion, on 7,127 and 3,888 contracts respectively. Aside from these two sectors, the only other sector that saw marginal rerisking was Tech/Telecom with $11 billion in notional traded. All other sectors saw a net rerisking, for a total tally in the prior week of a rerisking of $23 billion.

Last week was relatively quiet in the CDS market, shadowing the complete lack of liquidity in equities. Notable traded sectors were consumer Services and Industrials which saw a net gross notional rerisking of $32 and $39 billion, on 7,127 and 3,888 contracts respectively. Aside from these two sectors, the only other sector that saw marginal rerisking was Tech/Telecom with $11 billion in notional traded. All other sectors saw a net rerisking, for a total tally in the prior week of a rerisking of $23 billion.