Archive - Mar 18, 2009 - Story

The law of unintended stock bonus payment consequences strikes and this time it is truly hilarious. Turns out Citi will seek shareholder approval to issue 40 million new shares to cover employee compensation. Per the WSJ, as Citi's stock has plummeted for one reason or another, the total bonus amount has to be satisfied with many more shares.

The law of unintended stock bonus payment consequences strikes and this time it is truly hilarious. Turns out Citi will seek shareholder approval to issue 40 million new shares to cover employee compensation. Per the WSJ, as Citi's stock has plummeted for one reason or another, the total bonus amount has to be satisfied with many more shares.

As the dust is settling, some good preliminary observations on how the latest (and maybe last) move by the Fed changes the landscape, from Bob Savage.

What worries people now?

The most anticipated and least shocking bankruptcy in the history of chemical companies has finally come. Got a $400 million DIP - not bad... those Citi blokes actually did their job. That's a much needed $6 million fee for the Cititanic.

Chemtura Corporation's U.S. Operations File Voluntary Chapter 11 Petitions to Facilitate Financial Restructuring

Zero Hedge has received some troubling info (like there isn't enough) regarding major pricing discrepancies between certain securities pricing services. The services include companies such as IDC, Advantage Data, Markit and others. While I will not disclose which one may be a culprit, the allegation is that one (or more) are providing substantially above market pricing levels, specifically as pertains to distressed securities.

Judge Bernard Fried took one hard look at Ken Lewis' inane "bonuses are trade secrets" argument and had a laughter induced hernia. Look for some seriously good real estate deals in Manhattan in the next few weeks. Bloomerg has more.

Forget the circularity of CDS shorting... this one should make your head explode... This has long been perceived as the FED's very last recourse. Maybe one should really start buying stocks ahead of the uber-hyperinflation that will imminently ensue.

Compliments of ole Barney Frank, here is the AIG retention contract in all its glory. Always best to hear it straight from the financial singularity's mouth.

An interesting opinion from Karl Denninger that I missed when it came out. Hat tip to reader Colin for pointing out. In a nutshell Zero Hedge disagrees with Karl's conclusion: his argument of reflexivity in pricing feeding collateral calls is an oversimplifcation.

A three-axial analysis of some of the most prominent REIT names yields some interesting results. The chart below is a 3D scatter plot of Z spreads of REITs bonds (for this analysis bonds maturing in 2015/2016 were selected) based on today's bond market levels (Z spread is the CDS equivalent spread for a specific bond; as most names are trading sub 1,000 it is fair to say that convexity is not much of an issue), versus the company's leverage level, and juxtaposed to today's stock market capitalization of the underlying company.

A three-axial analysis of some of the most prominent REIT names yields some interesting results. The chart below is a 3D scatter plot of Z spreads of REITs bonds (for this analysis bonds maturing in 2015/2016 were selected) based on today's bond market levels (Z spread is the CDS equivalent spread for a specific bond; as most names are trading sub 1,000 it is fair to say that convexity is not much of an issue), versus the company's leverage level, and juxtaposed to today's stock market capitalization of the underlying company.

Rampant rumors from traders that repo desks are continuing to call in shares used to short financials such as Citi and AIG (look at charts below for lift off). This is causing a forced covering of all financial shorts, and an impossibility to put on new shorts... Interesting how this happens the day before Obama shows up on Leno. This fits in perfectly with Zero Hedge's conspiracy theory of the Volkswagen situation repeating itself in the financial sector in general and Citi in particular .

MGM joins the crowd of highly levered companies that announced a going concern by its auditors in its annual filing. The Vegas casino operator also announced it had received a 2 month covenant waiver from lenders on its $7 billion credit facility.

The news is likely not of the "good" kind

Jeffery Harte at Sandler O'Neill, who had MS at a hold previously, pulled all stops and cut the company to Sell (does anyone have the report?). Is this a competition for who will be the next Meredith Whitney? In the meantime, financials whipping boy Dick Bove parrots the execs of the Too Big To Mark To Market companies saying he expects a "very good" quarter for Goldman and MS.