American International Group
- One million flee as typhoon hits China's eastern coast.
- Asian stock markets rose Monday after a better-than-expected US jobs report.
- Australia's central bank signaled it will start raising interest rates.
- Economy isn't strong enough to support a long-running stock, bond recovery: cons. view.
- China accuses Rio Tinto of deceit; says Co's actions led to $102B in overcharges.
- China home prices rise in July for 2nd month; up 1 percent amid stimulus spending.
Dozens of frenzied calls between Hank Paulson and Lloyd Blankfein in September 2008 probably just mean the two Goldmanites were in love.
- Here we go: Geithner formally asks Congress to lift $12.1 trillion statutory debt limit, saying it could be breached as early as October, Amex Centurion happy to comply (Reuters)
- Totally unrelated - psychopaths have faulty brain connections, scientists say (Reuters)
- Must read: Deleveraging the U.S. Economy (Comstock Partners, h/t Vince)
- Health debate turns hostile at town hall meeting (NYT)
- Healthcare critics make childish claims, Obama says (Reuters)
- The history of the stock market (Mint)
Spreads were mostly tighter this week with ExHVOL the only index that widened (thanks to HVOL's significant outperformance) as HY outperformed IG (While corporates were mostly tighter, Major Sovereign CDS were notably weaker on the week). Indices typically underperformed single-names (but intrinsics had been leading indices tighter all week) with skews mostly narrower as IG underperformed but narrowed the skew, HVOL underperformed but narrowed the skew, ExHVOL's skew widened as it underperformed, XO underperformed but compressed the skew, and HY's skew widened as it underperformed.
- Nonfarm payrolls down 247,000, right on top of Goldman's whisper estimate, unemployment rate now 9.4%, bonds yields explode (BLS, AP)
- Insider trading probe at SocGen cost former IB chief his job, TCW co-founder Robert Day also under investigation (Bloomberg)
- Australian workers cut work hours instead of firing (Bloomberg, h/t Aditiya)
- Jonathan Weil: Blowing up your company gets raised to art form (Bloomberg)
- It's not all golden at Goldman (Reuters)
- Goldman Sachs is (not) ripping you off (Ritholtz)
- Most major Asian stock markets move lower ahead of US jobs data.
- BoE to inject an addln $85B in new money into the U.K. economy.
- Car shoppers can purchase via $2B 'cash-for-clunkers' program through Aug.
- Initial claims for jobless benefits fell by 38,000 to 550,000 last week.
- Fewer layoffs expected in July as recession winds down, but few new hires.
Fannie's churning derivatives as usual. About $100 billion a day. They also lost a few Bil in the process. Who's on the other side of this? Fannie's pals on Wall Street,
First the 85 Broads roll one of them out at CNBC, depositing the permabullish dinosaur Abby Cohen to preach how the bull market has just restarted compliments of the mega squeeze in AIG, FNM and CIT (in finance you are as valuable if you bat 0.000 as if you bat 1.000), and now, hot on the hells of Hatzius' upgrade to Q2 GDP from 1% to 3%, they roll out another macro bullish piece, saying July nonfarm payrolls will be up to -250,000 from -300,000 (the question of whether the 50,000 actually matters in any scheme of things, is irrelevant). Ironically, it was yesterday that Jan thought projected employment assumptions wouldn't budge. So much has changed in 24 hours.
While the short squeeze manipulators and stock borrow pullers try to kill any and every last bear out there, the much bigger problem of mortgage yields is starting to get out of control again: the last two days have seen the widest spreads on 30 Year Current Coupon FNMA in almost two months.
- Liquidity deluge - markets higher after UK recession shockingly discovered to be deeper than expected; BOE pumps another $84 billion (Bloomberg)
- Judge won't approve Bank of America, SEC settlement (Reuters)
- Chrysler May Replace 300C Engineering With Joint Fiat Platform (Bloomberg)
- Senate to vote today on cash for clunkers (Reuters)
- AIG breakup is fee bonanza (WSJ)
Spreads were mixed in the US with all but ExHVOL tighter (but spread moves were very marginal today with extremely narrow ranges in IG and HY once again). Indices typically underperformed single-names with skews mostly narrower as IG underperformed but narrowed the skew (notable since the skew is at contract tights and intrinsics are hovering at critical support levels from last fall), HVOL underperformed but narrowed the skew, ExHVOL intrinsics beat and narrowed the skew, XO's skew increased as the index outperformed, and HY outperformed but narrowed the skew (as we heard a HY12 arb list doing the rounds).
AIG (short interest of 16%) and CIT (13%) are today's latest squeeze puppets. Because non-bankruptcy prospects before both companies are just so hot. Will whoever is pulling all the borrow please fess up already.
Analyzing CDS open interest data since the March 6 lows demonstrates a troubling trend: there has been over half a trillion in net derisking across various industries, with financials leading the pack with over $130 billion. The global tightening in the CDS universes across all sectors is one direct consequence of this substantial shift to derisking.
Zero Hedge recently submitted a FOIA to the Federal Reserve regarding information prepared by Davis Polk and Morgan Stanley in their capacity as legal and financial advisors to the Fed in its negotiations on whether or not to push AIG into bankruptcy. We present their response.
- More on GDP:
- The next brewing scandal: Chase serves itself first in mortgage mods; MBS bond holders up in ARMs (DebtWire, h/t Paul) - "You have Barney Frank and the government raising all this noise about hedge funds and investors, and you have Chase … taking half the borrowers’ interest payment each month"
- Who is Capco? (NYT)