Archive - May 26, 2009 - Story

The selloff in bonds is unstoppable. Bernanke is furiously scratching his head at this point, as he envisions the future: S&P at 2,000, and a 30 year mortgage at 20%. Brilliant

In a last ditch effort to stall the Chrysler sale, the Indiana Pension Fund has moved its objection to the 363 sale away from Gonzalez who flatly denied the plaintiff's objection, and have moved it, with the assistant of White & Case's Tom Lauria to NY Southern District Court. A hearing with Judge Thomas Griesa commenced at 11:45am today, ahead of tomorrow's bankruptcy court hearing to approve the sale. From the memorandum filed in district court (attached below in its entirety):

WSJ reports that the UAW has said US taxpayers will provide additional "massive" bail out funding to GM. Nothing like layering another $20-30 billion in DIP funding and really destroying any bondholder recovery claims. As for the surging common stock action - takes a really smart man to explain that one.

The question arises who will Rattner pick out of the hat for the role of Good GM's stalking horse bidder, now that Chrysler is the template for automotive bankruptcies:

Seeing how the icon of U.S. auto production will likely enter bankruptcy in the next several days, it is only fitting to use an automotive metaphor to represent the current risk embedded in portfolios. Alas, it would seem that the speed is declining, on higher and higher RPMs, just as the low gas indicator light is starting to blink.

Seeing how the icon of U.S. auto production will likely enter bankruptcy in the next several days, it is only fitting to use an automotive metaphor to represent the current risk embedded in portfolios. Alas, it would seem that the speed is declining, on higher and higher RPMs, just as the low gas indicator light is starting to blink.

Seeing how the icon of U.S. auto production will likely enter bankruptcy in the next several days, it is only fitting to use an automotive metaphor to represent the current risk embedded in portfolios. Alas, it would seem that the speed is declining, on higher and higher RPMs, just as the low gas indicator light is starting to blink.

Developing Story: just a couple of people have tendered for the bonds ahead of today's midnight deadline. Bankruptcy up next.

Good luck shoving that particular 363 down the throats of 90%+ of bondholders.

JP Morgan and Deutsche Bank continue dominating the trading in the most popular index hedges, SPY and IWM. Aside from these trading outliers, all is good, as consumer confidence spikes, and while retail sales continue dropping, the whisper, the promise, the hope, of at least one more sale at (or within +/-30% of) MSRP is in the air.

JP Morgan and Deutsche Bank continue dominating the trading in the most popular index hedges, SPY and IWM. Aside from these trading outliers, all is good, as consumer confidence spikes, and while retail sales continue dropping, the whisper, the promise, the hope, of at least one more sale at (or within +/-30% of) MSRP is in the air.

Always good to keep things in perspective. The most recent Fed Balance Sheet reading of $2.16 trillion is a doozy and is only getting higher, and a couple hundred bucks away from the highest ever recorded of $2.17 trillion a month ago. This is just the beginning: Bernanke at Co. have committed to monetizing $1.75 trillion of securities this year, of which $1.21 trillion remain to be purchased still. This means that the chart will likely pass the $3 trillion mark at some point over the next 3-6 months.

The English Grammar Standards Association is spinning in its grave with a Formula 1-esque RPM with each of these missives (don't run a spell checker on this - it will fry your computer), however that can not take away from the profound insight that Bob provides.

The first tightening in both asset classes, as loans widened by 3 bps and bonds: by 12 bps. Third derivative? Continuing on the theme from the prior week, Neiman Marcus bonds continue widening and now the bonds have joined the party as well. The biggest bond widener last week was First Data, while the squeeze is likely extracting the last few drops of blood from Sealy shorts. Look for the inevitable pullback over the next few days.

The first tightening in both asset classes, as loans widened by 3 bps and bonds: by 12 bps. Third derivative? Continuing on the theme from the prior week, Neiman Marcus bonds continue widening and now the bonds have joined the party as well. The biggest bond widener last week was First Data, while the squeeze is likely extracting the last few drops of blood from Sealy shorts. Look for the inevitable pullback over the next few days.

GM loans now at 70+, after trading sub 60 in late April. Expectations are that GM secured lenders will be made whole. To those who believe the administration can't wait to pander to first-lien whims, we recommend a front row seat at tomorrow's Chrysler bankruptcy hearing.

• Asian shares fell due to North Korea Tension.
• Fed's Kohn says Economy showing signs of stabilizing.
• Russia will sign first commercial contract to supply US utility companies with uranium fuel.
• ABN Amro's Q1 loss at €886M, largely due to hefty losses on the business acquired from RBS.
• BofA will hire staff from global rivals Citi and Goldman to expand equity sales in Japan.
• CF Industries extends exchange offer for Terra Industries to June 26, 2009.
• CSL Ltd.'s $3.1B bid to take over Talecris Biotherapeutics Inc.