Archive - Jul 2009

• Jobless claims pick up again, hit 584,000 (Bloomberg)
• Pettis: Brace for a decade of lower Chinese growth (FT)
• Must read: Wall Street analysts keep telling big earnings lie (Bloomberg)
• Goldman Sachs hatred might cost you your bonus (Bloomberg)
• NYSE Euronext swings to loss (WSJ)

• Alcatel-Lucent swung to a net profit of €14M ($19.6M) vs. a year-ago loss of €1.1B.
• Ambac Fincl expects Q2 impairment losses on credit derivatives to rise by ~$1.6B to $4.9B.
• BAE Systems swung to 1H loss of $134M; revs jump 28%.
• British American Tobacco H1 profit up 16 pct to 1.45 billion pounds.
• British Sky Broadcasting posts a solid fourth-quarter net profit.

I love watching the press struggle with the issue of Asia buying U.S. debt. You can look at three different papers in a two day period and get three different answers on the topic. They are buying more. They will sell it all. They are doing nothing. We are fine. We are fucked. Who the hell knows?

Brazil's top performing hedge fund warns of weakness in the real and potentially higher rates.

The glory of maintaining your own SPARC-core server headquarters at 65 Montgomery Street (or at least a first lien therein) can be yours for a mere $65 million, compliments of the Houdiniesque commercial real estate folken at Citi Commercial Mortgage Finance.The full mini prospectus can be found here for your enlightenment.

"Hundreds of people from clergymen to lawyers have claimed decorations for bravery that they never earned. Why should finance be any different?"

There is no doubt that investors are feeling quite exhilarated from the recent wave up. The 1966 cartoon titled “Out and Out Rout” featuring none other than Wile E. Coyote and the Roadrunner comes to mind when comparing the recent drag racing to the top. Investors (gamblers) are chasing the absolute dream of higher returns in the same way that the coyote is addicted to catching the bird.

Fannie and Freddie Pref are up 200% in five weeks. Who knows what?

"Investment conclusions? A 3% nominal GDP "new normal"means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model."

Bill Gross

Up until now, Goldman may have been guilty of various forms of market "intermediation" but if it was one thing, it was at least convincing in the argumentation by its various analysts who are paid to promote the opposite side of Goldman on any one trade. However, today's report by Andrew Tilton on Durable Goods was a massive disappointment. It was written with the sophomoric style, ebullient flourish, statistic skewage and groundless goal-seeking abanadon of a first year script writer for CNBC. If this is the best "conviction" job Goldman can do, then the end may certainly be nigh for the once high and mighty.

C goes off the NO BORROW list on Friday. The value of the common is just a guess.

Spreads were mostly tighter in the US today with HVOL outperforming IG (pushing ExHVOL wider) but HY continuing its rally (albeit with both IG and HY in extremely narrow intraday ranges of 3 and 25bps respectively). Indices generally outperformed intrinsics with skews mostly narrower (although not enough to warrant index arb expectations as we saw IG/HVOL9 underperforming IG/HVOL12 on further CIT/SLM/monoline weakness and suspected correlation book hedging) as IG underperformed but narrowed the skew, HVOL outperformed but widened the skew, ExHVOL intrinsics beat and narrowed the skew, XO's skew increased as the index outperformed, and HY outperformed but narrowed the skew.

Dear Senator Schumer,

You recently approached SEC head Mary Schapiro with some very valid concerns about Flash trading, and the potential for investor abuse by advance looks to select market participants ahead of the general order pool. We would like to provide some thoughts.

As excess demand for portfolio insurance is at near record highs, the VIX has become irrelevant as an indicator of sentiment.

Insightful paper from the New York Fed discussing such issues as (the permanent loss of) securitization, liquidity and leverage.