Archive - May 5, 2009 - Story

If anyone actually cares about the market at this point, and is naive enough to trade, here are some observations.

HSKAX abd HFRXEMN are both about to take the bottom out of their respective charts. One can only imagine what is going on behind closed doors in East Setauket as small, more agile quants with price-only based short term momentum strategies are devouring their larger, more sophisticated brethren.

Let's recall what the magical bonus number was that caused Barney Frank to almost get a lynch mob armed and ready to march on Wall Street: $165 million in retention bonuses.

In a filing today with the SEC, GM announced that it would issue 60 billion new shares, in order to "pay off" debts to the government, its bondholders and the UAW. And since the government would end up being the majority owner, only the approval of the US Treasury would be needed (talk about a gating factor).

Spreads were mixed in the US with IG tighter, HVOL wider (seemed like significant index arb at play), ExHVOL better, XO stronger, and HY selling off (as we felt modest HY-IG decompression pressure). Indices typically underperformed single-names with skews mostly narrower as IG underperformed but narrowed the skew, HVOL underperformed but narrowed the skew, ExHVOL outperformed pushing the skew wider, XO underperformed but compressed the skew, and HY's skew widened as it underperformed.

Thank you Rick.

[youtube=http://www.youtube.com/watch?v=_TQBpqpejyc&hl=en&fs=1]

The escalation of the "interpretation" of Section 363 in the bankruptcy code, especially with regard to the Chrysler bankruptcy, is starting to attain epic proportions, and the latest observation comes from Finem Respice, who has put together a necessarily erudite post, which may be needed, especially since the other side of the argument lately has resolved to using somewhat more mundane and rhetoric-based arguments in defending their positions

Assuming certain electronic paraphernalia are not confiscated, I will attempt to Tweet observations from today's 2:30pm Chrysler Hearing. If an epic fail is experienced, there will be end of day notes recapping this very interesting bankruptcy.

Some more pesticides for the second derivative brigade. Data released from Cass Information Systems indices for tracking heavy freight shipments and expenditures, indicates that after a bit of a recovery recently, both metrics have reverted to their prior southern direction.

Presumably soon the CNBC crowd may be forced to start looking at improvements in 3rd derivatives.

Expenditures Index:

Some more pesticides for the second derivative brigade. Data released from Cass Information Systems indices for tracking heavy freight shipments and expenditures, indicates that after a bit of a recovery recently, both metrics have reverted to their prior southern direction.

Presumably soon the CNBC crowd may be forced to start looking at improvements in 3rd derivatives.

Expenditures Index:

In a encyclopedic post, Brian Pretti of Contraryinvestor.com has done an amazing job of integrating the various facets of the "Green Shoots" we are currently hearing about all over the MSM, which absent the constant intervention by the Fed to facilitate "unfreezing" of credit markets, the Shoots will become Venus Fly Traps soon enough. The take home message, and a point Zero Hedge has written about in the past, is that absent the Fed propping the credit market day after day, the entire system is on the verge of systemic collapse.

In a watershed case, the SEC has launched its first CDS insider trading case implicating Millennium Partners portfolio manager Renato Negrin and Deutsche Bank CDS trader Jon Paul Rorech. According to the SEC, Negrin and Rorech engaged in illegal activity in the CDS of VNU N.V., a Dutch holding company that owns Nielsen Media, and made a $1.2 million profit.

Previously Zero Hedge observed the rather curious integration of Goldman Sachs within the fabric of the NYSE's program trading environment, which, by their own admission, has everything to do with Goldman being the (monopoly) actor in the NYSE's Supplemental Liquidity Provider program. I highlighted that the program was set to expire on April 30.

• GMAC posts $675 million Q1 loss as defaults rise (Bloomberg)
• UBS posts $1.8 Billion loss despite bad bank offset (NYTimes)
• Legg Mason reports fifth straight loss, cuts dividend (Bloomberg)
• Wall Street set for post-rally slide (

• There are 2040 hits for "optimism" on Bloomberg default search, 369 for "

Not surprisingly in today's (or more appropriately, insert x calendar period) increasingly odd trading action, the total advertised SPY volume was gobs (this is not a DeMarkian technical term) lower than Friday's. And oddest of all... Morgan Stanley is not anywhere in the top 12 advertised brokers. Has the accumulation/deleveraging passed? But oddness is the theme de jour.