Archive - Aug 24, 2009

The more things change, the more they stay the same and the higher the market goes.

We think it would be somewhat aggressive to suggest that an "in kind" distribution to limited partners by an LBO fund is necessarily indicative of a meltdown in the buyout shop- but only somewhat aggressive. As aggressive as pancreatic cancer? We're not sure. (And since it is the New York Post that is reporting on Bernie's demise, we're not so sure about that either).

The kind folks at the New York Fed have launched a useful service whereby citizens can look at the collapse of the credit economy in real time as they buy Fannie, Freddie and Citi stock (which at last check had a pro forma market cap higher than Bank of America).

In what can only be attributed to a rogue computer blowing a vacuum tube, virtually all the names in the credit universe were wider over the past week, despite an equity market ripping, or, more specifically, AIG, FNM and FRE ripping and everyone piggybacking for the ride in a few bankrupt companies. In the meantime, loans were wider on average 5 bps while bonds saw their firsts widening in over 2 months at 58 bps.

Per a letter disclosed in the WSJ earlier, it appears the torch that Chuck Schumer picked up for a regulatory response on Flash orders is now being carried up by Senator Ted Kaufman over a much broader set of market issues: in fact Kaufman seeks a neutral review of virtually every aspect of modern equity capital markets.

• Roubini: Risk of double dip recession rising (FT)
• The month in charts (Cleveland Fed)
• UBS faces gruebel gloom until 2011 as withdrawals curb recovery (Bloomberg)
• Investors miss bubble while drunk on Lafite (Bloomberg)
• Readers' Digest files prearranged Chapter 11 (AP)
• New FICO model may boost some borrowers' scores (MarketWatch)

The Federal Reserve's and Treasury's actions have become the new catalysts for market movement, as they flood and drain the system with liquidity. An analysis of their options looking forward, particularly in the realm of the high interest rates that QE and the constant equity market bid have left us with, may be a better indicator than any in regards to future market direction.

After some interesting disclosures over the past week -- including the fact that a large percentage of the U.S. market volume is comprised of just five financial stocks -- let us review new information and take a look at the week ahead, in order to make some sense of the train wreck already in progress.

• Argentina to offer swap for $2.3B of inflation-linked debt, as export revenues slump.
• Asian stocks advance on recovery hopes, strong earnings lend support.
• Auto worker retirees may get help from $10 billion in U.S. Health Proposal
• Average price of regular gasoline at filling stations slipped to $2.6417 a gallon
• China commercial-property sales in H1 worth more than US, UK deals combined.
• Crude oil futures in Asia continued to consolidate on Friday's gains

!---This is an attempt to harness the ZH brain trust, an invitation to discuss---!