Archive - Jun 2009

Zero Hedge had some fun recently analyzing the extensive thought process that goes into the decision making that leads to the addition (and, more relevantly, subtraction) of any given stock from the Goldman Sachs conviction list. One could say a case study of exhaustive insight and careful risk management it was not. After a flurry of requests, I provide an unabridged, updated snapshot of the entire Goldman Sachs Conviction List (both Buys and Sells) for North American stocks.

Until yesterday, the only real risk at the 5th branch of government (4th is the PIMCO/BlackRock two headed hydra) was making sure that 2009 is the year of the biggest bonuses on record (amusingly, now that Cerberus has all but followed Chrysler to its ignominious end (oddly missing from the company's industry expertise page - one would think the Dan Quayle-advised company learned more from this cataclysm than anything else), maybe Stephen Feinberg can sell the brand to the GS/PIMCO/BlackRock triumvirate and generate at least some recovery for its long-suffering LPs: the name would be so much more appropriate then).

I guess there is a very good chance that there will be fundamental changes to global financial markets within the next 5 to 10 years. This will not only include adjustments to rules and regulations, the structure of how markets work, instruments and processes, but also include fundamental changes in how participants operate and what the financial institutions of the future will look like.

One of the most overhyped and underdelivering companies in the world has liquidated, less than a few years after spending a boatload of capex to purchase uber-expensive machines that ended up being complete garbage and will probably reap 5 cents on the dollar in salvage value. Cardmembers are currently in process of getting their notifications.

• Must read: Researching corruption at the Treasury: The PPT 101 (Market Skeptics)
• NRG suit against Exelon bid dismissed (WSJ)
• State Street will have something to say about this: Fed in discussions on changing Repo transactions (Bloomberg)
• Someone is buying the solar hype: GCL-Poly to buy Jiangsu Zhongneng Polysilicon (Bloomberg)

Spreads were broadly wider in the US as all the indices deteriorated. Indices generally outperformed intrinsics (as post-roll derisking covered by index hedges seemed prevalent) with skews widening in general as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL outperformed pushing the skew wider, XO's skew increased as the index outperformed, and HY outperformed but narrowed the skew.

The HFR Market Neutral index is back down to when we first discussed it. In the meantime, market neutrals have repeatedly tried to leverage up on numerous occasions and failed every single time. With YTD performance of -3.88%, it will likely only get worse from here.

The 50 DMA and 200 DMA are about to collide. What next?

Developing story: this means that unemployment will either be allowed to reach its true, "unadjusted" levels in the low teens shortly, or will be kept artificially low for 2-3 months, allowing that to be spun as a green shoot by CNBC. Time will tell.

San Francisco Fed providing their 2 cents on classical Keynesian economics as pertains to the efficacy of the $787 billion Obama Stimulus Plan. In summary: "The uncertainty ... remains high. Several economists remain skeptical that fiscal multipliers—whether from spending or taxes—are very large (see, for instance, Barro 2009). Moreover historical relationships may prove much less reliable during this downturn. Faced with a large decline in wealth and tight credit availability, households may very well respond differently to tax cuts today than they have in the past."

June 22, 2009 Dear Friends & Supporters: Now that all of the media attention and inquires have lessened, I wanted to thank all of you for the supportive phone calls, kind notes, and encouraging e-mails regarding Indiana’s involvement in the Chrysler, LLC bankruptcy proceedings. I have tried to respond to each of you individually, but given the enormous number of letters, calls, and emails have made that impossible. Forgive me for this impersonal note, which may read like a form letter, but please know that I have been personally touched by the incredible response of kindness by all of you.

June 22, 2009 Dear Friends & Supporters: Now that all of the media attention and inquires have lessened, I wanted to thank all of you for the supportive phone calls, kind notes, and encouraging e-mails regarding Indiana’s involvement in the Chrysler, LLC bankruptcy proceedings. I have tried to respond to each of you individually, but given the enormous number of letters, calls, and emails have made that impossible. Forgive me for this impersonal note, which may read like a form letter, but please know that I have been personally touched by the incredible response of kindness by all of you.

Claudine De La Villehuchet, widow of Rene?Thierry Magon who commtited suicide on December 23 after losing everything in the Madoff scheme (over $1.4 billion in personal and client capital), has spoken out for the first time. In an interview with Fox Business Network's Adam Shapiro, Claudine calls Madoff "a murderer" and for the first time comes clean with her own personal tragedy.