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Someone is taking project Mayhem in the right direction. The Tokyo Stock Exchange immediately suspended trading of CapCom bonds after a 3 trillion Yen order was placed. Unfortunately the entire outstanding issue is only 15 billion Yen.

A good analogy would be a trader (Obama) placing a $3 trillion market bid order in the common equity of Citi, which only has $15 billion outstanding.

• Japan exports fall 45.7%, resulting record trade deficit means no more Treasury purchases (Bloomberg)
• Merrill loss even greater: unseen $500 million charge emerges (FT)
• Highland's troubles grow: UBS sues for $745 million loss in CDO fund (Bloomberg)
• Renters losing edge on homeowners (

UBS recently threatened it would sue the US to prevent the IRS from getting access to its precious anonymous account logs, claiming the publication of these names would spell the end for its business model as the historical "nameless" Swiss account concept would be over. Unfortunately for UBS, it likely has no option but to comply with the US' demands. Why?

It is pretty fascinating that Merrill which ranks horribly in both increasing writedowns and change in leverage over the past 5 years has the highest compensation as % of operating profit (when this was positive). Merrill is the only firm that paid out over 100% of its operating profit to its employees over the '03-'08 period (185% to be exact). Even mighty Goldman barely registers on the chart when compared to Merrill on these parameters. Hat tip to Mike Cembalest.

With the ugly economic data in the morning, the market action today was paradoxical to say the least. There are probably five main arguments that can shed some light on the 3%+ rally in all major indexes, and the market being what it is, all of them are likely wrong.

The S&P 500 index has long been due for an reindexing overhaul, not the least because there are dozens of companies which do not meet its minimum threshold requirement of having a $3 billion market capitalization.

Northern Trust is the latest bank to suffer populist anger, choreographed courtesy of Barney Frank, after it was disclosed that they had some serious fun at the taxpayer's expense last week. TMZ via Dealbreaker gave a blow by blow of the festivities that Northern Trust Employees partook in, which included:

The charts below demonstrate why all the hoopla about whether or not one (or more) banks are nationalized is a moot point right now. The bottom line is that as a result of ongoing pumping of cash by the Fed and Treasury, more than 70% of bank liabilities and more than 20% of shareholders equity (via preferred stock) is currently supported by various federal programs. Additionally, support has been since extended to non-bank financials, the auto sector and homeowners.

The charts below demonstrate why all the hoopla about whether or not one (or more) banks are nationalized is a moot point right now. The bottom line is that as a result of ongoing pumping of cash by the Fed and Treasury, more than 70% of bank liabilities and more than 20% of shareholders equity (via preferred stock) is currently supported by various federal programs. Additionally, support has been since extended to non-bank financials, the auto sector and homeowners.

The terms of the government's semi-nationalization of Citigroup should come no later than Thursday according to FT. The terms of the deal are still not available, but as widely discussed include conversion of a potion of the government's preferred stake into common, and presumably other preferred shareholders. such as sovereign wealth funds and pension funds. will also convert some of thier $30 billion preferred into common.

We wrote about New York's pension predicament; next up is California. State Controller John Chiang just announced that the state has a $48 billion underfunded pension liability. That's $48 billion extra that California needs (and doesn't have given its $42 billion budget deficit) in order to pay retired state employees' health and dental benefits. Unless the state provides additional funding, the $48 billion underfunding will grow to $71 billion by 2017-18.

The latest chapter in the National Geographic special on the AIG black hole is that the company will scrap the plan to repay the $60 billion governmental loan by selling businesses, as no bidders for its assorted businesses have materialized. Bloomberg reports:

While Bernanke mumbles and stumbles, at least one American company is coming up with unique solutions to the fallout of the European crisis. Apparently Baxter's Austrian division sent out vaccine samples contaminated with deadly bird flu virus to laboratories in Czech, Slovenia and Germany. One can hope the following statement from Austrian Ministry of Health spokesman Sigrid Rosenberg is true:

Bill Gross' March investment letter/PIMCO monthly demand for taxpayer money is out. Nothing new here: the US government should avoid nationalization, but no viable alternative provided. Some harsh language on Roubini, Dodd, Greenspan and Orange County blondes.

An indication of the current frothy optimism in credit prices is today's decision from Cedar Fair Entertainment, which notified its lenders it is scrapping a proposed buyback amendment for its term loan. Cedar Fair had previously announced it was intent on buying back up to $125 million of its $1.467 billion L+200 term loan maturing 2012, and agreeable accounts would receive a 10 bps consent fee. The price of the loan in the meantime rose from the high 70s before the announcement to mid 80s early today.