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Jefferies Back To Single Digits As Implied Default Probability Rises Even More

Tyler Durden's picture





 

Last time when Jefferies' (which is not MF Global although it is just as a big question market in the TBTF category, and as a reminder is not a Bank Holding Company, being the last pure play investment bank left out there) stock had a $9 handle, it triggered a -20% circuit breaker and forced a short covering squeeze. This time it is far more methodical. At this time Leucadia is underwater on both of its recent purchases, all past and future Jefferies press releases have been priced in and will be irrelevant in the future, and Handler only has half of his original gross sovereign book left to sell (into a bidless market and thus generating more major P&L losses).

and the JEF 2019 bonds are in free-fall down almost $4 today alone.

Chart: Bloomberg

 


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Thu, 11/17/2011 - 10:45 | Link to Comment FLUSA.com
FLUSA.com's picture

Gonna have to be renamed  Jettison

Thu, 11/17/2011 - 10:46 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

'At this time Leucadia is underwater on both of its recent purchases, all past and future Jefferies press releases have been priced in and will be irrelevant in the future, and Handler only has half of his original gross sovereign book left to sell (into a bidless market and thus generating more major P&L losses).'

Need.Larger.Boat.

Thu, 11/17/2011 - 10:47 | Link to Comment jmcadg
jmcadg's picture

What a difference two weeks makes ... nothing!

Thu, 11/17/2011 - 10:49 | Link to Comment RobotTrader
RobotTrader's picture

Which is down more today?

XLF or GLD?

Tough call.

Thu, 11/17/2011 - 11:00 | Link to Comment slaughterer
slaughterer's picture

Just talked to a PM.  He is buying financials hand over fist today: the old "trades x below book value argument."

Thu, 11/17/2011 - 11:43 | Link to Comment tekhneek
tekhneek's picture

Ah yes. Let's buy the mark-to-myth book value of invisible assets that no one wants.

Great play. I'll take the other side of that bet.

 

Thu, 11/17/2011 - 12:16 | Link to Comment 11b40
11b40's picture

Me too.  Here's a nice play for patient swing traders with fun money.

Accumulate SKF under $62 with a stop at $56.  Sell it at $85 - at least put on a trailing stop.  I'm currently waiting for my 3rd round trip on this one this year.  Same fundamental trade worked great in 2008.  You just have to 1.) be confident that the fundamentals of the banking system are weak and not likely to improve, and 2.) use stops in case you are wrong.  It may be gambling, but in my opinion, it beats Vegas odds.  Your bigest enemy quickly becomes the FED & QE, but that is what the stops are for ;-)

Leveraged ETF's can be dangerous - just like fire.  But, like fire, they can also keep you warm and cozy when winter comes.

Thu, 11/17/2011 - 12:07 | Link to Comment Mugatu
Mugatu's picture

Just like in 2008, when you start seeing gold move down in big chunks, you know the liquidity trap is in full play.

Looks like every asset class is about to lose 20% - except cash.  Next stop is Dow 9000.

 

Short banks then at the bottom buy gold and silver - just like in 2008 

Thu, 11/17/2011 - 10:50 | Link to Comment Hippocratic Oaf
Hippocratic Oaf's picture

Nov. 17 (Bloomberg) -- Jefferies Group Inc. Chief Executive Officer Richard Handler said turmoil around the investment bank’s shares and publicly traded debt will ease as the fallout dissipates from the collapse of MF Global Holdings Ltd.

     “It is not surprising that our bonds are under pressure after the assault on our company over the past two weeks,”

Handler said yesterday in an e-mail. “Some bond investors sell first and ask questions later. We expect the market to return to normal pricing once we move beyond the ripple effect of the inaccuracies others have recently disseminated and once investors digest all the information” that Jefferies disclosed.

Thu, 11/17/2011 - 10:51 | Link to Comment scatterbrains
scatterbrains's picture

leads me to wonder just how much damage miller did to Legg Mason.. which looks kinda wobbly this morning.

Thu, 11/17/2011 - 10:53 | Link to Comment sabra1
sabra1's picture

when your Legg is wobbly, it's Miller time!!!

Thu, 11/17/2011 - 10:52 | Link to Comment RobotTrader
RobotTrader's picture

Everyone dumping hard assets and fleeing to Treasuries.

Again!!!

Gimme a $20 trillion deficit, won't even matter.

Thu, 11/17/2011 - 11:24 | Link to Comment Unprepared
Unprepared's picture

Robo's fan base is comprised of 2 people, potentially only 1 person since he might be "liking" his own comments.

Thu, 11/17/2011 - 11:52 | Link to Comment Fish Gone Bad
Fish Gone Bad's picture

I have to say that I honestly liked all the hot women he posted.  The hookers websites were a scream to look at!  People can be so incredibly stupid when it comes to women and money.

Thu, 11/17/2011 - 10:52 | Link to Comment lolmao500
lolmao500's picture

Of course Jefferies is going down... 

And if I'm right they got about 30 billion in assets. No big deal if they fail.

Thu, 11/17/2011 - 10:55 | Link to Comment azzhatter
azzhatter's picture

Has anybody consulted Bove?

Thu, 11/17/2011 - 10:55 | Link to Comment junkyardjack
junkyardjack's picture

What they could use is a nice share repurchase program right about now. Keep that stock price on up

Thu, 11/17/2011 - 10:56 | Link to Comment azzhatter
azzhatter's picture

The CEO's name is Dick Handler

Thu, 11/17/2011 - 11:17 | Link to Comment dhengineer
dhengineer's picture

Can you imagine going through junior high or high school with that name?  I think some parents should be bitch-slapped for the names they hang on their kiids... I knew a woman who's first and middle names were "Glorius Sunshine" and there was an executive for some national engineering society (forget which one) who's name was Don Duck...

Thu, 11/17/2011 - 13:29 | Link to Comment AndItsGone
AndItsGone's picture

Even better, one of the Directors is named I.M. Cumming. Frankly, at this point, I suspect JEF is a front for middle school bullies to launder stolen lunch money.

 

http://www.jefco.com/cositemgr.pl/html/InvestorRelations/CorporateGovern...

Thu, 11/17/2011 - 10:57 | Link to Comment srsly-wtf
srsly-wtf's picture

circling the drain...

Thu, 11/17/2011 - 10:59 | Link to Comment interbanker
interbanker's picture

What Retail Brokeage house will impacted by the upcoming implosion of JEF ? Please does any body knows ? I don't even know if my broker clears with them, so I want to know....Thanks...

Thu, 11/17/2011 - 11:00 | Link to Comment interbanker
interbanker's picture

Who are their Big Clearing clients ?

Thu, 11/17/2011 - 11:15 | Link to Comment slaughterer
slaughterer's picture

MF Global = Bear Stearns

Jefferies = Lehman  (the contagion will work its way through Leucadia in multiple directions)

Thu, 11/17/2011 - 11:16 | Link to Comment rambler6421
rambler6421's picture

YOu mean UniCredit will be Lehman.

 

libertarian86.blogspot.com

Thu, 11/17/2011 - 11:18 | Link to Comment PulauHantu29
PulauHantu29's picture

If JEF goes belly up, who are the Biggest Losers?

Thu, 11/17/2011 - 11:32 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

That's easy-- the taxpayer, one way or another.

Another easy question... who are the biggest winners? Answer: all the other investment banks, as another competitor goes by the wayside.

Thu, 11/17/2011 - 11:34 | Link to Comment Quadlet
Quadlet's picture

Who the f is buying BAC?  Paulson?  PPT?  They can have it.

Thu, 11/17/2011 - 11:54 | Link to Comment Fish Gone Bad
Fish Gone Bad's picture

Bank of America is probably buying its stock, just like Lehman did before it died...  God forbid they would pull an MF Global.

Thu, 11/17/2011 - 12:15 | Link to Comment lunaticfringe
lunaticfringe's picture

Has anyone seen 600 million laying around? I seemed to have misplaced it.

Thu, 11/17/2011 - 12:35 | Link to Comment Arthur
Arthur's picture

Flash crash time/panic time. 

 

 

Thu, 11/17/2011 - 13:28 | Link to Comment spanish inquisition
spanish inquisition's picture

22 Primary dealers with the Fed,  22 Primary dealers

You take one down, pass the cash around

21 Primary dealers with the Fed....

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