• Pivotfarm
    04/18/2014 - 12:44
    Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and...

CIT Group

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Frontrunning: January 28





  • Emerging markets pray for Wall Street tumble (Reuters)
  • Yellen Faces Test Bernanke Failed: Ease Bubbles (BBG)
  • Samsung sets new smartphone sales record in fourth quarter, widens lead over Apple (Reuters)
  • China’s Foreign-Reserves Investment Chief Said to Depart Agency (BBG)
  • China’s Rescue of Troubled Trust May Stoke Risk-Taking (BBG)
  • Ukraine PM Azarov offers to resign 'to help end conflict' (Reuters) ... And Russia says may reconsider aid if this happens
  • But... but... it was all gold's fault: India Unexpectedly Raises Rate as Rupee Risks Inflation Goal (BBG)
  • Former Belgian king 'boycotting' public events after complaining £760,000 is not enough to live on (Telegraph)
  • Greek disposable income tumbles 8% in Q3 (Kathimerini)
 


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Frontrunning: December 23





  • Apple, China Mobile sign long-awaited deal to sell iPhones (Reuters)
  • U.S. growth hopes help shares shrug off China money market jitters (Reuters)
  • Rule Change on Health Insurance Rattles Industry (WSJ), Obamacare's signup deadline on Monday has its exceptions (Reuters)
  • Tale of Two Polish Mines Shows Biggest EU Producer’s Woes (BBG)
  • Probes See U.K. Market Manipulation Reports Rise 43% (BBG)
  • Shoppers Grab Sweeter Deals in Last-Minute Holiday Dash (BBG)
  • Banks Mostly Avoid Providing Bitcoin Services (WSJ)
  • Secret Handshakes Greet Frat Brothers on Wall Street (BBG)
 


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Frontrunning: October 22





  • Despite budget win, Obama has weak hand with Congress (Reuters)
  • Carney Brings In McKinsey for Bank of England Strategy Rethink (BBG)
  • Bill Gates Buys Stake in Spanish Construction Company FCC (WSJ)
  • Jerusalem Mayor Barkat Seeks New Term in Race Arabs Sitting Out (BBG)
  • J.P. Morgan Aimed to Limit Damage (WSJ)
  • EU Lawmakers Reject Draghi Call for Bank Bondholder Clemency (BBG)
  • Wall Street Profits May Halve in Second Half (WSJ)
  • Petrobras-led group wins Brazil oil auction with minimum bid (Reuters)
  • Apple to Refresh IPads Amid Challenges for Tablet Share (BBG)
  • Italy plans to offer guarantees on govt bond derivatives (Reuters)
  • Berkshire Beats Apple as Favorite Stock of Tiger 21 Group (BBG)
 


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Frontrunning: August 2





  • Low Wages Work Against Jobs Optimism (WSJ)
  • Tourre’s Junior Staff Defense Seen Leading to Trial Loss (BBG)
  • Russia gives Snowden asylum, Obama-Putin summit in doubt (Reuters)
  • Fortress to Blackstone Say Now Is Time to Sell on Surge (BBG)
  • Brazil backs IMF aid for Greece and recalls representative (FT), previously Brazil refused to back new IMF aid for Greece, says billions at risk (Reuters)
  • Google unveils latest challenger to iPhone (FT)
  • Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees (BBG)
  • Academics square up in fight for Fed (FT)
  • Potash Turmoil Threatens England’s First Mine in Forty Years (BBG)
  • Dell Deal Close but Not Final (WSJ)
 


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Frontrunning: July 23





  • Biggest Banks Face Fed Restoring Barriers in Commodities (BBG)
  • SAC to Employees: Cohen Didn't Read Dell Email at Heart of SEC's Case (WSJ)
  • Second (and Third) liens are back, and so is 2005: As Banks Retreat, Hedge Funds Smell Profit (WSJ)
  • Singapore funds benefit from Asian wealth (FT)
  • 2 years later the lies haven't changed one bit - Tepco hit over slow admission of radioactive leak (FT)
  • How big tech stays offline on tax (Reuters)
  • Hilton Leads Rush to Africa in Fastest Boom (BBG)
  • U.S. and UK fine high-speed trader for manipulation (Reuters)
  • Key witness takes stand in SEC case against Goldman's Tourre (Reuters)
  • Boomer Sex With Dementia Foreshadowed in Nursing Home (BBG)
  • Bentley SUV gives £800m boost to UK car industry (FT)
 


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Biggest Stock Market Scams in History - Part II





When Charles Ponzi was around, it took just a tad longer to rake in the cash and commit financial fraud, escaping with the proceeds to better climates. Today, the internet and the power of the virtual world have made the transfer of funds so much quicker.

 


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Frontrunning: January 29





  • U.S. Wants Criminal Charges for RBS (WSJ)
  • Bernanke Seen Buying $1.14 Trillion in Assets in 2014 (BBG)
  • Irish banks at mercy of international paymasters (Reuters)
  • Do badly, and we will let you do even worse: Rehn Signals EU May Ease Spain Budget Goal in Austerity Retreat (BBG)
  • Too Soon to Celebrate for Europe's Banks (WSJ)
  • Army says political strife taking Egypt to brink (Reuters)
  • Media Firms Probed on Data Release (WSJ) - No Criminal Charges Seen
  • Japan’s Government Proposes First Spending Cut in 7 Years (BBG)
  • Nazi Goebbels’ Step-Grandchildren Are Hidden Billionaires (BBG)
  • Goldman seeks to reduce China exposure (FT)
  • More than 70% of Chinese airports generate losses (People's Daily)
 


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Frontrunning: January 3





  • Obama Signs Bill Enacting Budget Deal to Avert Most Tax Hikes (BBG)
  • GOP Leaders Take Political Risk With Deal (WSJ)
  • Basel Becomes Babel as Conflicting Rules Undermine Safety (BBG)
  • Portugal Faces Divisions Over Austerity Measures (WSJ)
  • The Fiscal Cliff Deal and the Damage Done (BBG)
  • Cliff deal threatens second term agenda (FT)
  • Deposits stable in euro zone periphery in November (Reuters)
  • Fresh Budget Fights Brewing (WSJ)
  • China Poised for 2013 Rebound as Debt Risks Rise for Xi (BBG)
  • Who's Afraid of Italian Elections?  (WSJ)
  • China services growth adds to economic revival hopes (Reuters)
  • Asian Economies Show Signs of Strength (WSJ)
  • Japan’s Aso Targets Myanmar Markets Amid China Rivalry (Bloomberg)
 


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The Hostess Liquidation: A Curious Cast Of Characters As The Twinkie Tumbles





Perhaps one of the most interesting aspects of the just announced Hostess liquidation, one that will be largely debated and discussed in the media, or maybe not at all, is the curious cast of characters and the peculiar history of this particular bankruptcy. Some may not be aware that the company's Chapter 11 (or colloquially known as 22) bankruptcy filing this January, which today became a Chapter 7 liquidation, was the second one in the company's recent history, with Hostess, previously Interstate Bakeries, emerging from its previous protracted multi-year bankruptcy in 2009. What is curious is that its emergence had all the drama of a anti-Mitt Romney PAC funded thriller, with a PE firm, in this case Ripplewood holdings, injecting $130 million in order to obtain equity control of Hostess as it was emerging last time. There were also more hedge funds, investment banks, strategic buyers, politicians involved in this particular story than one can shake a deep fried numismatic value Twinkie at. More importantly, however, as America has been habituated following the last season of the reality TV show known as the presidential election, if Private Equity then "bad." Only this time there is a twist: because it wasn't really PE that was the pure evil in the Obama long-term campaign, it was associating PE with Republicans, and thus: with jobs outsourcing. And here comes the Hostess twist: because Tim Collins of Ripplewood, was a prominent Democrat, a position which allowed him to get involved in the first bankruptcy process in the first place, due to his proximity with the Teamsters' long-term heartthrob Dick Gephardt (whose consulting group just happens to also be an equity owner of Hostess). In other words, the traditional republican-cum-PE scapegoating strategy here will be a tough one to pull off since the narrative collapses when considering that it was a Democrat who rescued the firm, only to see it implode in a trainwreck that has resulted in the liquidation of a legendary brand, and 18,500 layoffs.

 


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CDS Market Begins Trading Imaginary Credit With LIBOR-Style Fixings





We have not been aggressive anti-CDS fanatics in the past - since the ignorance of mainstream media types satisfies that need - as the reality in the credit market is less extreme than many would love it to be. However, the latest move by Markit and its self-aggrandizing dealer owner/clients, to bring names into the high-yield credit index that do not even have CDS trading on them, is simply remarkable. While they will defend the move on the basis that it will force dealers to provide single-name CDS liquidity in three of the high-yield credit markets most-indebted companies (CIT, Charter Comms, and Calpine), the fact is that they are using the liquidity/fungibility of the index to enable risk to be unwound on what is likely bloated balance sheets containing too much of this crap. By imagining (or fixing LIBOR-style) where the CDS would trade, based on where the firms' bonds trade, we worry that the hitherto somewhat liquid source of 'fast' macro-hedging or positioning has become even more manipulable than before - and in the event of a default (or stress/illiquidity event), we can only imagine the law-suits. As the FT notes - all this does is provide more 'arbitrage' opportunities as opposed to real hedging; simply amazing that as with equities - it is now the synthetic indices that run the entire market.

 


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Barclays Wins Euromoney's Best Global Debt, Best Investment Bank, And Best Global Flow House Of The Year Awards





Financial magazine Euromoney, which in addition to being a subscription-based publication appears to also rely on bank advertising, has just held its 2012 Awards for Excellence dinner event. And in the "you can't make this up" category we have Barclays winning the Best Global Debt House, Best Investment Bank, And Best Global Flow House Of The Year Awards. Specifically we learn that "the bank’s commitment to the US is exemplified by the addition of another global senior manager to the country – Tom Kalaris is now going to be splitting his time between New York and London as executive chairman of the Americas as well as overseeing wealth management. Jerry del Missier, who has overseen the corporate and investment bank through its Lehman integration and was recently appointed COO of the Barclays group, says the bank is well positioned. "We came out of the crisis in a stronger strategic position and that has allowed us to continue to win market share and build our franchise. Keep in mind that the US is the largest investment banking, wealth management, credit card and investment management market in the world, and in terms of fee share will remain the most dynamic economy in the world for many years. As a strong global, universal bank operating in a competitive environment that is undergoing significant retrenchment, we like our position." That said, with the Chairman, CEO and COO all now fired, just who was it who accepted the various award: the firm's LIBOR setting team? And if so, were they drinking Bollinger at the dinner?

 


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Sears Plunges As CIT Reins In Loans (Again)





While so many were hoping for the siren-call of private-equity or perhaps a reverse-merger MBO with RadioShack, CIT has once again managed to pour well-risk-managed-credit-extension cold water on Sears short-squeeze. SHLD is down 6% following Reuters reports (via The Orlando Sentinel) that CIT will again stop providing loans to suppliers of Sears Holdings as the lender/factor awaits further information of the company's health. Volume picked up dramatically as the stock fell and we note that SRAC (the more active 5Y CDS contract) is leaking wider but has surged around 400bps (to 1800bps) in the last week (as the stock has been treading water off its spike squeeze highs on 1/23).

 


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Sears Noose Tightens As CIT Leaves Company Cold With No Vendor Financing





Two weeks ago, when we first announced the catastrophic earnings preannouncement by Sears we noted that we were stunned "that as part of its preannouncement, Sears has decided it would be prudent to provide an update on its credit facility status as well as availability. As a reminder to anyone and everyone - there is no more sure way of committing corporate suicide than openly inviting the bear raid which always appears whenever the words "revolving credit facility" and "availability" appear in the same press release. Just recall MF Global. And here, as there, we expect shorting to death to commence in 5...4...3..." Subsequently, when the company was downgraded to triple hooks S&P we said that "Accounts Receivable about to become one big perpetition charge off", the implication naturally being that the company is about to lose its vendor financing - which for retailers is the last step before outright default. Sure enough, the WSJ reports that this is precisely what happened. "Struggling Sears Holdings Corp. suffered another setback when a large lender said it would no longer finance loans to suppliers awaiting payment from the company. Sears representatives played down the decision by CIT Group Inc., the largest U.S. provider of what are known as factoring services for vendors, saying the payables the firm had financed amounted to only about 5% of the retailer's inventory." Basically this means that the company Net Working Capital is about to go poof, as there will be nobody to finance the Receivable-Payable spread, SHLD will have to demand COD or even cash upfront, vendors will balk and switch to other, and slowly Sears will suffer an inventory liquidation stranglehold which will culminate with the company's bankruptcy unless Lampert provides a massive liquidity injection, which also however will have a brief impact, as the company is now perceived by all as Dead Man Walking. In other news, we are hearing that several bankruptcy advisors are already preparing the K-Mart pre-pack/freefall pitchbooks... all over again.

 


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Frontrunning: January 12





  • Hedge Funds Try to Profit From Greece as Banks Face Losses (Bloomberg)
  • Spain Doubles Target in Debt Auction, Yields Down (Reuters)
  • Italy 1-Year Debt Costs More Than Halve at Auction (Reuters)
  • Obama to Propose Tax Breaks to Get Jobs (WSJ)
  • GOP Seeks to Pass Keystone Pipeline Without Obama (Reuters)
  • Debt Downgrades to Rise ‘Substantially’ in 2012, Moody’s Says (Bloomberg)
  • Petroplus wins last-minute reprieve (FT)
  • Geithner gets China snub on Iranian oil as Japan plans cut (Bloomberg)
  • Fed officials split over easing as they prepare interest rate forecasts (Bloomberg)
  • Draft eurozone treaty pleases UK (FT)
  • Premier Wen looks at the big picture (China Daily)
  • US Foreclosure Filings Hit 4-Year Low in 2011 (Reuters)
 


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