The Deposit Insurance Fund must be so happy it won't be depleted today. Who will buy Corus next?

"While the worst of the current US recession appears to have passed, we caution that CRE trends are just starting to soften and will remain weak into 2011; as such, REITs should underperform the broader equity markets during the next stage of the recovery (6-9 months). In fact, we anticipate a decline in FFO of more than 10% for REITs next year, on top of the 15-20% expected decline in 2009. Hence, 2011 should be the bottom with growth resuming thereafter. Over the next 12-24 months, we see the combination of rising CRE loan defaults, deteriorating fundamentals (similar to the 2001 downturn), and more stringent lending standards (50% LTV loans at higher rates) resulting in a “challenging road ahead” for REITs." - Goldman Sachs

It seems consumers are focusing on more than merely their 401(k) these days. Now it may be time for the administration to focus on jobs, wages, deflation, budget deficits, tax rates, burgeoning sovereign debt, sticky consumer debt,bankrupt states dispensing IOUs, wealth destruction and other items that actually impact the day to day lives of the US public.

In April Zero Hedge discussed the potential conflict of interest of secured lenders providing equity financing to companies in which they are the primary secured lender, with a "debt repayment" use of proceeds, in essence using the raised equity to pay down the debt on which the underwriters themselves are on the hook for. Not surprisingly, this was all occurring in the context of REITs - the same companies that face a massive credit crunch as numerous CRE loans come due for refinancing in the 2011-2014 timeframe. It seems this game of "bait and switch" continues unabated.

• Toxic loans topping 5% may push 150 banks to point of no return (Bloomberg)
• Aussie dollar hits new 11 month high (FT)
• California to redeem IOUs early (WSJ)
• Floyd Norris: Teetering on failure but meeting standards (NYT)
• No new normal as JP Morgan sees V-shaped recovery on robust growth (Bloomberg)

• Asian stocks gain on speculation improving earnings will extend a 5-month rally in equities.
• China may boost spending on oil, mining acquisitions by half this year.
• Crude Oil rises a third day as economic recovery to spur demand for fuels.
• Hong Kong's yearlong recession may be over as China rebound bolsters trade.
• India may spark $39B of share sales with cap on controlling stakes.
• Japanese demand for services unexpectedly rose in June on stimulus measures.
• US Industrial output probably rebounded in July as auto plants reopened.

UK and Europe highlights for Friday 14th August 2009. More discussion on the topic of Eastern Europe, Ireland. Fully posted now...

Foreign holdings of US Securities decreased for the first time in 5 months by $299 million sequentially (weekly) to $2,809.9 billion from $2,810.2 billion in the prior month. Keep in mind in the same time period the Fed purchased over $16.6 billion of Treasuries, indicating that in the last week the Fed was the only purchaser of Treasuries. In a normal environment this would be a very troubling development.

Having moving into our new facility and having liberated or resurrected a number of pieces of audio hardware thought long lost, eventually we had to put the new digs through their paces. What better night than a Thursday for Studio Zero's first public beta?

The fun begins at 10:45pm ET and continues until the red bull runs out and the convenience store down the street is closed.

Update: http://cdo.zerohedge.com:8000/listen.pls

Chat up the DJ(s) and send us mp3 requests: AIM:  radiozh

"We see the summer pause as natural and as unemployment rises, there’ll be more foreclosures and lower prices. The depression is only pausing to catch its breath." - Bob Chapman

An impressively comprehensive and succinct explanation of the events that have gotten us here, and where we may be heading.

The man cited to be Ben Bernanke's replacement if and when the stock market (not the economy) takes a decided turn for the worse, Larry Summers, has been implicated in an act that may make his transitioning into his role of running monetary policy for the world's biggest economy slightly more complicated. A report that was issued several months ago by Asia Times' blog discloses that the man who has President Obama's attention on all matters financial was in fact selling the AAA-rated tranches of toxic CDOs held by his former employer, multi billion hedge fund D.E. Shaw after the collapse of the CDO-loaded Bear Stearns hedge fund.

In their weekly commentary piece, among many other things, Moody's discussed the downstream impacts of the ban of Flash, IOIs and other existing practices. They provide a different perspective in terms of a pros/cons analysis of the upcoming changes to both brokers-dealers and exchanges. Nothing earth shattering, but useful information to keep a sense of perspective in light of upcoming market structure developments, and who stands to lose the most.

Spreads were broadly wider in the US as all the indices deteriorated (with HY12 underperforming IG and closing above 800bps for the first time in over two weeks). Indices generally outperformed intrinsics with skews widening in general (as we continue to see single-names leading the market wider and index hedges seemingly dominant) as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL outperformed but narrowed the skew, XO's skew increased as the index outperformed, and HY's skew widened as it underperformed.

The big brain from RBS chimes in with highly abbreviated yet quite insightful perspectives once again