Archive - Sep 9, 2009

Some serious fireworks go off as Clearly Gottlieb clutches at straws to make Lewis, from merely Patron Saint of Taxpayer Funded, No MAC Clause Invoking Acquisitions of Bankrupt Companies, into Saint Ken, Martyr of The Dispossed Investor.

The challenges in private markets are also weighing on many institutional investors who are growing increasingly impatient with private equity groups charging hefty fees on the big funds they raised during the debt bubble. It's fair to say that unless activity picks up, private markets will reach a breaking point - one that may weaken the industry for a very long time.

A closer read of the SEC response to Judge Rakoff reveals some nuances that indicate the SEC could be positioning to throw lawyers from Wachtell, Lipton, Rosen and Katz and specifically partner Ed Herlihy at the wolves, presumably to spare the "chosen one" Ken Lewis from a fate that could potentially include jail time.

Zero Hedge is starting a new commentary piece, which analyzes the immediate market impact of any most recent Treasury auction. As expected our initial focus will be on today's 10 Year Auction. We expect the tomorrow's $12 billion 30 Year to be markedly more interesting.

"To me, the clearest value in these charts is yet one more piece of evidence that this recession/depression is very comparable to the Great Depression, despite the claims of many people that this period is "nothing like the Great Depression." And I did check the data for the years since WWII and found no other dividend declines near as large as today's, so this is not a normal recession pattern." - Thought Offerings

Spreads were tighter in the US as all the indices improved. IG trades 7.7bps tight (rich) to its 50d moving average, which is a Z-Score of -0.7s.d.. At 114.25bps, IG has closed tighter on only 11 days so far this year (180 trading days) and the last five days have seen IG diverging (bullishly) from its 50d moving average (clsoing at its tightest since 08/10). Indices generally outperformed intrinsics with skews tighter in HY, XO, and HVOL and wider in IG and ExHVOL. Spreads ended the day generally improved as tighteners outpaced wideners by around two-to-one with CONSumers systemically underperforming the rest of the non-financial names (especially noteworthy after such a significant rerisking in last week's DTCC data for the sector) while financials outperformed led by general finance names.

If you thought the entire investing world had lost sight of Dick Bove after his Buy recommendation on Lehman stock on August 21, 2008... You were right. Which is why Dick can not contain his excitement at seeing media exposure after someone still apparently cares what the Rochdale analyst has to say.

Classic whipsawing everywhere today in order to get the bewildered herd confused and nervous before Obama's big speech tonight. Odds are high that due to Obama's record low popularity and the collapse in unemployment, the O-Team will pre-program HAL to launch stocks to avoid embarrassment tomorrow.

BofA and the SEC submit their responses to Judge Rakoff. Confusion and hilarity ensues.

The stock market is no longer a one to one match for the DXY. Unless it is, and computers have yet to filter data indicating the it is now whack-a-bid time.

Tudor's former start trader emerges out of the void, and surfaces on the trading desk of London's Brevan Howard. Will a new wave of some serious "capital rotation" into equities follow? Stay tuned to find out.

• Yields 3.510% vs. Exp. 3.350%- Update: It appears the fine folks at Ran Squawk, where we sourced this data, had a typo (http://www.zerohedge.com/news). It would appear they had a fat finger moment and the actual number was 3.53% Exp. This is, of course, in line with the auction outcome.
• Bid-To-Cover 2.77 vs. Avg. 2.62 (Prev. 3.28)
• Indirects 55.3% vs. Avg. 28.5% (Prev. 43.9%)
• Allotted at high 78.40% (BBG)
• Indirect bidder Bid-To-Cover at 1.4x

As the market shoots up once more, there is absolutely no volume breadth participation aside from the traditional program traders who now enjoy complete domination over daily market moves. The SPY intraday volume is plunging relative to average, and at last check 62 million shares were traded compared to a 105 million average by this point in the day: a 40% drop! This should account for all those on the "sidelines" who have taken the Wall Street equivalent of the Main Street revolt to heart, and refuse to participate in what everyone realizes is a market that has no connection to any underlying fundamental reality. We wish the computers all the best as they gun the S&P to 1,600 on 20% real unemployment, $9 trillion in budget deficits, a CRE collapse, waning stimulus effects, and a fast approaching 10% savings rate.

"You are evil thieving bastards, you have reaped ungodly profits in your behemoth casino scams, then lost, only to turn around and usurp the wealth of this great nation by the outright rape and pillage of middle class Americans' whose sweat and toil built it. The biggest ripoff in the history of the world is padding your bonus checks with the Federal Government as your co-conspirators. Every last one of you should be rotting in prison." - American Middle Class Representative

The quants are on their own today, frontrunning each other to lift whatever offers are available.