Archive - Jun 2009

CDS and option traders love to hate and hate to love the Depository Trust & Clearing Corporation (DTCC). But few aside from those who trade derivatives over-the-counter care about the DTCC. Here is a reason why you should: "Last year DTCC settled $1.88 quadrillion in securities transactions across multiple asset classes. We essentially turnover the equivalent of the U.S. GDP every three days."

The market is attempting to commence a high-beta led sell off: IWM underperforming SPY by large margin.

It is according to Rosie's summary points from this morning. (Highlights mine).

Bond Market Selloff and Stock Market Meltup Look Overdone

All the more reason for readers to support the Fed Transparency Petition. Must Watch. (link here)

Some key soundbites:

"If the Fed examiners were set upon the Fed's own documents—unlabeled documents—to pass judgment on the Fed's capacity to survive the difficulties it faces in credit, it would shut this institution down."

In a fitting redux of the Japan real-estate invasion (which Colin Powell had some hilarious comments on at last year's JPM High Yield megaconference in South Beach), South Korean firms Youngwoo & Associates and Kumho Investment Bank have acquired the AIG headquarters at 70 Pine St and 72 Wall St, for a total price in the neighborhood of $100 million, a third of what these could have sold for two years ago. AIG itself will continue occupying the 1.4 million sq.

Yesterday Congressmen Dan Maffei (NY-25) and Congressman Frank Kratovil (MD-1) introduced Bill HR 2743 called the "Automobile Dealer Economic Rights Restoration Act of 2009", which aims at "requiring Chrysler and General Motors to continue to honor their commitments to auto deal

• 10 financial institutions were granted permission to repay $68B in government-bailout cash.
• Financial institutions escaping TARP face $5 billion warrant repayment.
• Dollar gains on yen as risk appetite improves.
• French industrial output drops.
• Japan machinery orders weak, recovery seen slow.
• Obama admin drops plan to cap salaries at firms receiving bailout money.
• Obama administration ready to tighten reins on Wall Street pay, bonuses.
• Oil soars above $71 as 3-month rally continues, reaching 2009 high.
• World stock markets ri
  

• Russia to swap Treasuries into IMF debt (Bloomberg)
• Citigroup exchange offer at the beginning of the end, just a few more months of 120% borrow rates (Bloomberg and

The $3 billion Las Vegas casino which Zero Hedge discussed at length previously (must read for anyone curious how big banks now decide which companies get to live or die), has thrown in the towel. Deutsche Bank's strong arming tactics have won yet again: that other bloated monstrosity, the Cosmopolitan, will now be safe knowing that its biggest competitor on the crappy side of the strip will likely face liquidation.

Since the creation of Zero Hedge 5 months ago, the blog has exploded. In that brief period, we have had over 5 million visitors, average 120k hits a day (and higher by the day), the number of contributors has increased to four, and Zero Hedge has become the fastest growing financial blog on the internet. The smartest people on Wall Street and Main Street come here daily, not just for the posts, but for the community and commentary, to which each and every one of you has contributed.

After many weeks of cumulative derisking, the CDS market rerisked violently, most notably in the Consumer Goods and Consumer Service sectors, where a total of $169 billion in net notional open interest rerisking occurred. One explanation is that the big move is due to unwinding of new issue basis trades put on over the past month as horrendous companies issued all sorts of garbage debt.

The clip below demonstrates what happens when one of Ben Bernanke's dollar printers gets a PC Load Letter error.

[youtube=http://www.youtube.com/watch?v=-NWFA6g2x-4&hl=en&fs=1&]

And for the musically inclined, Marla is DJing the evening set at Radio Zero Hedge.

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Ginsburg denies application for stay. For commentary, check out SCOTUSblog.

The ratio of VIX (1 month fwd implied vol) to VXV (3 month) has dropped to a low of 0.92, a level crossed to the downside only 7 times over the past 2 years, and usually as a leading indicator of market downside activity. However, in this environment, where a majority of corporate risk is nationalized, and the only traders are a few tireless SPARK stations, it is anyone's guess whether this metric is relevant for anything anymore.

The ratio of VIX (1 month fwd implied vol) to VXV (3 month) has dropped to a low of 0.92, a level crossed to the downside only 7 times over the past 2 years, and usually as a leading indicator of market downside activity. However, in this environment, where a majority of corporate risk is nationalized, and the only traders are a few tireless SPARK stations, it is anyone's guess whether this metric is relevant for anything anymore.