Archive - Oct 19, 2009 - Story

Billionare investor Carl Ichan offers ailing CIT Group a $6 Billion loan in a letter sent to the board of directors according to AP sources. The loan would save the New York-based lender to small and midsized businesses some $150 million in fees.

We are working a buy order for a customer of ours (it is not in the large cap top 100 names where HFT blesses us with their liquidity), and trying to float our bid in as the market is heavy. Essentially, we are bobbing and weaving, changing our trading venues, and pegging at times off the bid side of the NBBO. Some predatory proprietary algorithm keeps trying to join us on the bid on the ISE, so as to stop our pegged bid from further floating down, so that they can short our stock at inflated prices in our destination (without hitting the stock in the ISE).

The Fed sure loves those tri-party repos. From allowing bankrupt stocks as collateral when Lehman blew up, to extracting all the value out of insolvent companies when the time comesto extract liquidity (some time in 3000 AD), here is what the NY Fed thinks of the initial forray into liquidity management. With tri-partite repo counterparts apparently expanding to virtually all market players (just in case the Blessed 18 all are tied up with stocks trading at $0.01 or money markets) soon, watch for this development to impact the dollar adversely in our new banana economy. In other news, expect repos and MBS purchases to work side by side for the (un)foreseeable future. Guess who will win in toppling the dollar further.

Very little economic data whether it's in Europe or the US today. Recently that has been synonymous with more carry trade: short USD long anything that has high beta. Today seems to be no exception so far, though the USD is not getting beat up all that much by recent standards. Expect dismal volume and an attempt to run the market up.

Is JPMorgan in urgent need of gold replenishment? If one reads between the lines of today's surprising announcement out of the CME, that the Chicago exchange will allow the use of gold as collateral for margin requirements (for up to $200 million), with the actual physical gold to be stored at JPM's bank in London, that is one possible explanation.

"My view is that we are still in a secular bear market...My big concern is that the market has gotten ahead of the economy. The S&P is pricing in $85 dollar of operating earnings which would be a double from where we are right now, and it usually takes four to five years to double earnings off a recession low... The market has clearly overshot the fundamentals. The government should be promoting more of a savings culture...I have a tough believing time you can destroy $14 trillion of net worth in the U.S. - right now bank lending is contracting at 15% annual rate and who is filling the void: the Fed, the FHA, Fannie, Freddie..." - David Rosenberg

• Must read Abelson: A whiff of reality (Barron's)
• BB&T reports slumps as credit issues weigh (Reuters)
• Dutch DSB Bank bankrupt after sale failure (BBC)
• CIT's changes do little to enhance debt swap, according to CreditSights (Bloomberg)
• Gennett ad sales still dropping despite Q3 profit (AP)
• C'mon Ben - it's time to raise rates (Barron's)

• Asian currencies advance for a seventh week as growth, yields draws funds.
• Asian stocks fell as losses at Casio, Yaskawa Electric spook expectations of recovery.
• Business-Jet demand likely to skid before recovering: Honeywell Intl.
• China’s economy grew by over 7% in the first nine months of the year: Govt official.
• China's regulator urged 5 biggest state lenders to maintain a 'reasonable pace' of lending.
• China's growth exceeds 7 pct in January-September, will easily hit 8 percent target.