Archive - Jun 2009

Must read white paper out of the IMF, discussing the burgeoning balance sheet of the Federal Reserve, which as Zero Hedge pointed out, is really the only relevant one nowadays.

Spreads were tighter in the US as index spreads were tighter across the board as IG12 and HY12 made new contract tights (even as IG11 underperformed). Indices typically underperformed single-names with skews mostly narrower as IG underperformed but narrowed the skew (with IG skew now at its tightest), HVOL underperformed but narrowed the skew, ExHVOL outperformed pushing the skew wider, XO underperformed but compressed the skew, and HY outperformed (breaking below 1000bps) but n

Jonathan Litt, formerly a top rated REIT analyst with Paine Webber and Solly, has some words of caution for all investors who can't wait to part with their cash and invest in ghost town malls, foreclosing multi-apartment buildings, unretnable offices with a 0.5x DSCR and 10%-full Vegas hotels. Ironically, this comes from a CNBC interview.

Anyone else getting nervous that treasuries are becoming more volatile than stocks (even though VIX is higher on the day despite the 80/30/0 degree equity rally)?

Udpate: for about 2 seconds we were in historical record territory at 277.717 bps.

Ran across this article posted in Jumping In Pools. Not sure how credible it is, but allegedly Barack Obama will provide the blueprints for the B-2 stealth bomber to China in exchange for $50 billion in debt relief. According to author Richard Hogarty:

After an explosion in early market volume for both cash and futures, the "buyer" seems to be running out of cash as the market has flatlined, which apparently has served the necessary and sufficient purposes on the day of the biggest industrial company's bankruptcy in history. And as sellers anticipate taxpayers to buy a few more trillion shares of 100x P/E stocks over the next few months, they have remained firmly out of the picture.

After an explosion in early market volume for both cash and futures, the "buyer" seems to be running out of cash as the market has flatlined, which apparently has served the necessary and sufficient purposes on the day of the biggest industrial company's bankruptcy in history. And as sellers anticipate taxpayers to buy a few more trillion shares of 100x P/E stocks over the next few months, they have remained firmly out of the picture.

The PPT is now hiring a specialist who will overhaul the trading system, and be able to buy both SPOOs and 10 Years at the same time. The current infrastructure allows for the purchase of just one of the two at a time. Today, it's not the 10 Year.

The head restructuring honcho from Evercore chimes in.

The full affidavit can be found here.

Some juicy sections:

If anyone is interested in how GM expects to burn through $20 billion of taxpayer cash over the next 9 weeks (presumably the time it will be in court), check out the table below. In addition, as these cash flow projections are always put together by a first year analyst just after a marathon green shoot smoking session, I am happy to bet an amount equal to the DIP draw down over the next 9 weeks that the final cumulative cash burn will be anywhere between 50 and 100% higher.

If anyone is interested in how GM expects to burn through $20 billion of taxpayer cash over the next 9 weeks (presumably the time it will be in court), check out the table below. In addition, as these cash flow projections are always put together by a first year analyst just after a marathon green shoot smoking session, I am happy to bet an amount equal to the DIP draw down over the next 9 weeks that the final cumulative cash burn will be anywhere between 50 and 100% higher.

The Fritz Henderson affidavit was filed earlier.

"The debtors have filed the 363 Motion because there simply is no viable alternative to the 363 Transaction to preserve the going concern value of the GM business and the employment opportunities and related benefits of that business."

For all who are curious as to the mystery behind the SPOOs buying force, I refer you to a research report published by none other than Government Sachs, titled: "Equity issuance: $100 billion YTD; we expect another $200 billion." Of course, ramping up futures does miracles for overpriced stock follow-ons (especially with GS as lead udnerwriter). In other words, the 35% rise in S&P from the 666 bottom will likely see another 70% or so ramp up as all the equity is cleared under the guidance of the Goebbels Kommendant brigade.

For all who are curious as to the mystery behind the SPOOs buying force, I refer you to a research report published by none other than Government Sachs, titled: "Equity issuance: $100 billion YTD; we expect another $200 billion." Of course, ramping up futures does miracles for overpriced stock follow-ons (especially with GS as lead udnerwriter). In other words, the 35% rise in S&P from the 666 bottom will likely see another 70% or so ramp up as all the equity is cleared under the guidance of the Goebbels Kommendant brigade.

Someone forgot to feed mortgages the crazy pills.