Archive - May 2009 - Story

As Zero Hedge previously noted, and the WSJ now reports, GM secured lenders will get full recoveries on their loans, which is not to say full cash repayment but rather a notional roll into "Good GM" at par value. This is not surprising, seeing how the secured loans at GM are not the fulcrum security (unlike at Chrysler), however the major haircuts at the unsecured, bond level will prove to be a much more relevant issue for the expediency of the bankruptcy case.

As Zero Hedge previously noted, and the WSJ now reports, GM secured lenders will get full recoveries on their loans, which is not to say full cash repayment but rather a notional roll into "Good GM" at par value. This is not surprising, seeing how the secured loans at GM are not the fulcrum security (unlike at Chrysler), however the major haircuts at the unsecured, bond level will prove to be a much more relevant issue for the expediency of the bankruptcy case.

As Zero Hedge previously noted, and the WSJ now reports, GM secured lenders will get full recoveries on their loans, which is not to say full cash repayment but rather a notional roll into "Good GM" at par value. This is not surprising, seeing how the secured loans at GM are not the fulcrum security (unlike at Chrysler), however the major haircuts at the unsecured, bond level will prove to be a much more relevant issue for the expediency of the bankruptcy case.

Rick Bensignor of Execution LLC provides a good glimpse of today's market action. As he says "The market is up 2.75% percent and sell-side trading desks are completely dead. You've got computers doing all this buying." And people wonder why Zero Hedge is so infatuated with Program Trading (usually SLP, but in this case the market neutrals, who had a knock out day today).

This one got lost in the Venus Fly Trap Shoots file at CNBC. From a letter sent out to Advanta clients today. Good thing the company had the foresight to give its long-suffering cardholders a whopping 5 day notice - for their sake they better be on good terms with Amex, Visa, MC.

Dear Customer,

When your own research analysts (who are on their 9th and final life after not catching that one particular short squeeze on time) have generated a P&L loss of over 10%, and barely demonstrate an interest in raiding the fridge of all its Redbull Cola contents, let alone spreading the S&P 500, the next best thing is to fish around for some nice and juicy free research, while throwing in a little promise for a possible job call back.

A must see video for all who still don't understand just how major the implications of the Chrysler bankruptcy are for creditors and case law.

Yet another day in which selling was initially frowned upon, then prosecuted with the full faith (or lack thereof) of the purchasing powers (no > -600 TICKs until 2pm). The only time selling programs tried to poke their head out was toward EOD, which attempt was promptly punished after 6 million SPY shares were gobbled up into the close. For some more observations on what TICK is click here.

Yet another day in which selling was initially frowned upon, then prosecuted with the full faith (or lack thereof) of the purchasing powers (no > -600 TICKs until 2pm). The only time selling programs tried to poke their head out was toward EOD, which attempt was promptly punished after 6 million SPY shares were gobbled up into the close. For some more observations on what TICK is click here.

Yet another day in which selling was initially frowned upon, then prosecuted with the full faith (or lack thereof) of the purchasing powers (no > -600 TICKs until 2pm). The only time selling programs tried to poke their head out was toward EOD, which attempt was promptly punished after 6 million SPY shares were gobbled up into the close. For some more observations on what TICK is click here.

Spreads were tighter in the US today as all the indices improved (but were well off their tights by the close). Indices typically underperformed single-names with skews mostly narrower as IG underperformed but narrowed the skew, HVOL underperformed but narrowed the skew, ExHVOL intrinsics beat and narrowed the skew, XO underperformed but compressed the skew, and HY's skew widened as it underperformed.

Interesting observation, correlating the ratio of US to Japan CDS (especially with Japan CDS' tightening 7 bps while USA CDS was 2 bps wider) versus the JPY/USD (inverted axis). Is the sovereign risk trade trying to find other conduits for expressing relative risk in this environment where no sovereign risk seems to exist anymore as all countries are expected to print, print, print all their problems away.

Interesting observation, correlating the ratio of US to Japan CDS (especially with Japan CDS' tightening 7 bps while USA CDS was 2 bps wider) versus the JPY/USD (inverted axis). Is the sovereign risk trade trying to find other conduits for expressing relative risk in this environment where no sovereign risk seems to exist anymore as all countries are expected to print, print, print all their problems away.

Interesting observation, correlating the ratio of US to Japan CDS (especially with Japan CDS' tightening 7 bps while USA CDS was 2 bps wider) versus the JPY/USD (inverted axis). Is the sovereign risk trade trying to find other conduits for expressing relative risk in this environment where no sovereign risk seems to exist anymore as all countries are expected to print, print, print all their problems away.

The lives of the CMSA and Chris Hoeffel are about to get a whole lot more complicated. In a report issued today by S&P, titled "U.S. CMBS Rating Methodology And Assumptions For Conduit/Fusion Pools" Standard & Poors is issuing a Request For Comments on 'its proposed changes to its methodology and assumptions for rating U.S. commercial mortgage-backed securities." Aside from the RFC, S&P goes into detail what the changes to its rating methodology will be, and the impact from these on CMBS.