Leucadia

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"More Bloodletting" As Citi/JPM See Plunge In Trading Volumes





Jefferies, Deutsche Bank, and now Citi and JPMorgan are all facing a collapse in trading volumes as Bloomberg reports the two banks brace for a fourth straight drop in first-quarter trading revenues - a period of the year when the largest investment banks typically earn the most from that business. “It sounds like more bloodletting on Wall Street,” warns one analyst, as Citi expects trading revenue to drop by a “high mid-teens” percentage.

 
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Jefferies' Epic Plunge In Bond Trading Revenues Shows Not All Is Well





The chart below summarizes what can only be described as an epic collapse in Jefferies' fixed-income trading revenue, which imploded by an unprecedented 88% Y/Y, and 84.5% from later quarter, to $33.1 million - the lowest since the same quarter in 2011 when the European collapse dragged everyone down, and sent Jefferies stock into the single digits over concerns about its European exposure, forcing Dick Handler to release a CUSIP by CUSIP disclosure of its European holdings.

 
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Frontrunning: November 19





  • Israel Ready to Invade Gaza If Cease-Fire Efforts Fail (Bloomberg)
  • Petraeus: A Phony Hero for a Phony War (NYT)
  • IMF'S Lagarde says Greek deal should be "rooted in reality" (Reuters) "rooted" or "roofied"? And where was it until now?
  • ECB's Asmussen says Greece to need aid beyond 2014 (AP)
  • EU makes budget plans without (FT)
  • Japanese Poll Shows LDP Advantage Ahead of Election (WSJ)
  • Shanghai Composite Dips Below, Regains 2,000 Level (Bloomberg)
  • Bond investor takes big punt on Ireland (FT)
  • Noda defends BoJ’s independence (FT) Indewhatnow?
  • Inaba Says BOJ Could Ease More If Government Reins in Debt (Bloomberg) Actually it's the other way around
  • Miles Says Bank of England Can Do More If U.K. Slump Persists (Bloomberg) So much for the end of QE
  • US tax breaks worth $150bn face axe (FT)
 
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Frontrunning: November 13





  • The Bild is now a source for EURUSD stop hunts: Germany eyes 'bundled' loan payment to Greece-paper (Reuters, Bloomberg)
  • Congress comes back Tuesday to confront “fiscal cliff.”  (Reuters)
  • Gen. John Allen ensnared in Petraeus scandal (Politico)
  • FBI Agent in Petraeus Case Under Scrutiny (WSJ)
  • Comcast's NBCUniversal unit lays off 500 employees (Reuters)
  • University Fees Stoke U.K. Inflation (WSJ)
  • Consumers Closing Wallets in Japan Add to Noda’s Woes (Bloomberg)
  • John McAfee Wanted for Murder... and explaining bathsalt anal suppositories (Gizmodo)
  • Europe Gives Greece 2 More Years to Reach Deficit Targets (Bloomberg)
  • Where Spain Is Worse Than Greece (WSJ)
  • Microsoft's Windows unit head, once a possible CEO, exits (Reuters)
  • Glitch stops NYSE trading in 216 companies (FT)
  • Large European Banks Stash Cash (WSJ)
  • The death of San Bernardino: How a vicious circle of self-interest sank California city (Reuters)
  • Apple stores most productive US shops (FT)
  • Treasuries See U.S. Falling Over Cliff as Yields Converge (Bloomberg)
  • Bra-Bodysuits Make H&M One Hit Wonder as Zara Prospers (Bloomberg)
 
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Frontrunning: November 12





  • Jefferies to be bought by Ian Cumming's Leucadia in an all-stock deal for $3.59 billion or about $17/share (WSJ)
  • FBI Scrutinized on Petraeus (WSJ)
  • Identity of second woman emerges in Petraeus' downfall (Reuters)
  • SEC staffers used government computers for personal use (Reuters)
  • Japan edges towards fifth recession in 15 years  (FT)
  • Europe Finance Chiefs Seek Greek Pact as Economy Gloom Grows (BBG)
  • Americans Say Europe Lesson Means Act Now as Austerity Will Fail (BBG) - of course it would be great if Europe had ever implemented austerity...
  • Greece battles to avert €5bn default  (FT)
  • You don't bail out the US government for nothing: No Individual Charges In Probe of J.P. Morgan (WSJ)
  • Israel Warns of Painful Response to Fire From Gaza, Syria (BBG)
  • Greece's far-right party goes on the offensive (Reuters)
  • Don’t fear fiscal cliff, says Democrat  (FT)
  • Apple Settles HTC Patent Suits Shifting From Jobs’ War (BBG)
  • Man Set on Fire in Argentina Over Debt (EFE)
  • Iraq cancels $4.2-billion weapons deal with Russia over corruption concerns (Globe and Mail)
  • An Honest Guy on Wall Street (Bloomberg)
 
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Subordination 101: A Walk Thru For Sovereign Bond Markets In A Post-Greek Default World





Yesterday, Reuters' blogger Felix Salmon in a well-written if somewhat verbose essay, makes the argument that "Greece has the upper hand" in its ongoing negotiations with the ad hoc and official group of creditors. It would be a great analysis if it wasn't for one minor detail. It is wrong. And while that in itself is hardly newsworthy, the fact that, as usual, its conclusion is built upon others' primary research and analysis, including that of the Wall Street Journal, merely reinforces the fact that there is little understanding in the mainstream media of what is actually going on behind the scenes in the Greek negotiations, and thus a comprehension of how prepack (for now) bankruptcy processes operate. Furthermore, since the Greek "case study" will have dramatic implications for not only other instances of sovereign default, many of which are already lining up especially in Europe, but for the sovereign bond market in general, this may be a good time to explain why not only does Greece not have the upper hand, but why an adverse outcome from the 11th hour discussions between the IIF, the ad hoc creditors, Greece, and the Troika, would have monumental consequences for the entire bond market in general.

 
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Deep Thoughts From Leucadia





With Leucadia coming boldly from behind the shadows, where Ian Cumming and Joe Steinberg have always enjoyed operating, and joining Buffett in a deal over Capmark's loan-servicing and mortgage business, it makes sense to introduce readers with some of the very original thinking of the Leucadia founders (and very close friends of the mellifluously named Dick Handler). We present their most recent annual investor letter, which frequently is cited as among the best hedge fund (even though they don't like to be seen as one) strategy reading material.

 
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