So Much For The Whole Stock Bonus Theater: Citigroup Employees Can Sell Their Bonus Shares In The Open Market... In APRILSubmitted by Tyler Durden on 01/27/2010 12:29 -0500
More smoke and mirrors for the peasantry, courtesy of Wall Street, this time coming from Citigroup. Remember all that hoopla how banks are making payments in stock almost entirely, and how no Citigroup employee would get more than $100,000 in cash? Well, turns out the stock portion of compensation is just as liquid: it has been revealed that Citigroup employees can sell stock received as part of their bonuses as early as April. Hopefully by then the CNBC watching sheep will have forgotten all about Wall Street's record bonuses year and everyone can get on with their lives.
Instead of trying to curb short selling, curb the uncertainty that comes from misleading and fraudulent reporting practices.
Presenting The BlackRock-AIG Presentation In Which It Becomes Clear That Soc Gen Had Pledged Sub-50 Cent Securities To The Fed's Discount WindowSubmitted by Tyler Durden on 01/26/2010 17:17 -0500
As expected, Goldman did approach AIG about contract tear downs of its CDS contracts, and "Goldman would likely accept a small concession." This makes sense due to the draconian collateral margin demands that Goldman had previously extracted from AIG (12% positive haircut), and also due to spurious collateral demands made by Goldman ($1.3 billion more than BlackRock's estimated fair value). This is all as Zero Hedge reported yesterday. Yet another smoking gun emerges, this time not from Goldman, but from French bank Societe Generale...
Dear Congressmen, please read this before your questioning of Tim Geithner tomorrow. A complete and thorough investigation by David Fiderer, into what is allegedly the greatest (Goldman-facilitated) taxpayer heist in history for the sole benefit of the self-proclaimed Masters of the Universe.
Also, Dear FRBNY general counsel Thomas Baxter - please tell us how the below is wrong? Because it would appear your proclamations of saving the world are not only self-serving, but flawed and hypocritical beyond measure:
"The party line, expressed in Too Big To Fail and elsewhere, is that an AIG bankruptcy posed a greater systemic risk than a Lehman bankruptcy, because AIG was so much bigger. But that analysis is highly superficial and very misleading. AIG itself was a holding company, which guaranteed the debt of its unregulated financial subsidiary, AIGFP. The lion's share of AIG's revenues and profits, and about 80% of its consolidated assets, were concentrated among its different insurance company subsidiaries. Those insurance companies were solvent. They did not pose any systemic risk. In fact, it's quite likely that they would have continued to operate outside of bankruptcy.
The only subsidiary with major problems was AIGFP, whose financial obligations were guaranteed by the parent. But AIGFP was only about one-third the size of Lehman. It's almost impossible to see how AIGFP ever posed a systemic risk, unless everyone's intention to provide a backdoor bailout to the banks. Put another way, it seems that the only reason that the government needed to step in for AIG was to provide a backdoor bailout to its banks."
The SPX is going to plunge 10-20%, Treasury bond interest rates are going to soar (TBT), and gold (GLD) has peaked out. Then brace yourself for the Big One in 2013. (SPX), (TBT), (GLD), (FXA), (UNG), (WHEAT), (CORN), (SOYBEANS)
Bankers are destroying Capitalism. Unfortunately, most Westerners won’t realize this until five years from now, when the middle class has been forcibly relegated to the ranks of the poor. And this isn’t just a situation that will afflict America but it will likely afflict Japan and many countries in the EU such as the UK, Spain, and Greece just to name a few.
Whether this week was THE turning point or A turning point we will not know for a while (though we have our suspicions) but it was the largest week-over-week widening since JUN09 in absolute and relative terms for IG credit. IG has not closed a week above 95bps since 12/4 and HY still has some room to go to revert empirically back to same date levels of risk.
Recently Goldman Sachs has been attempting to downplay the impact of prop trading on its operations, with various executives, among them both Lloyd Blankfein and David Viniar, claiming that proprietary trading accounts for a mere 10% of total revenue. This is likely a major misrepresentation and a substantial underestimation of the true impact of prop trading to the firm if an earlier analysis by third party credit analysis firm CreditSights is correct. According to CS analysts, Goldman's true prop exposure is at least 30% and probably inbetween 30% and 40%. This would imply that the proposed ban will have a truly material impact on Goldman, much more so than Goldman's executives claim.
With everyone in arms over the prop trading ban, the simplest question has so far evaded the broader population: just what does the administration define as "prop trading." And, as Bernstein points out, will the loophole needed to not crash the bond market be large enough to render the entire proposal moot: "Bernstein would guess that the wording of "operations unrelated to serving customers" in the Administration's release may be related to primary dealers in government bonds that must take on market risk to remain profitable when dealing with clients in the Treasury market. With virtually no bid-offer spread, proprietary trading exemption would be necessary for the government desks. But we find it hard to believe that the new proposals are meant to allow unlimited risk taking in high yield, derivatives and emerging markets desks as these desks make a market for its clients. Unfortunately, at this point, nobody knows exactly what the limitation, or even the definition, will be."
Efficient Market Proponent Senator Kaufman Endorses Prop Trading Ban, 99 Other Senators Have No Idea What Prop Trading IsSubmitted by Tyler Durden on 01/21/2010 13:46 -0500
"Separating core banking franchise from speculative activities, imposing tighter leverage requirements and examining the complicated relationships between high frequency traders and banks constitute critical steps toward ensuring our financial markets are strong and stable.
By adopting these common-sense proposals, we can go a long way toward stabilizing our economy, restoring confidence in our markets and protecting the American people from a future bailout.
America cannot afford another financial meltdown and the American people are looking to Congress to ensure that that does not happen." - Ted Kaufman
"Compared with where we were in late 2008 and early 2009, financial markets have stabilized, and the prospect of a collapse of the financial system and a second Great Depression now seems extremely remote...What is fundamentally at issue here is not “turf,” but rather how we as a nation can best ensure that we never again re-live the events of the past few years—that the legitimate public interests associated with a safe, efficient and impartial banking and financial system are well served." - Fmr Goldman Chief US Economist Bill Dudley (and current New York Fed President)
President Obama used his bully pulpit on Thursday to chastise banks and bankers while announcing a punitive tax on them to assuage an angry populace. Is his rage valid? Should we be angry at banks for making lots of money and then paying out big bonuses?
From the rumor bag: Todd Kaplan, who joined Citadel less than a year ago from Merrill to build the firm's investment banking business, has quit. Wonder if that means the hedge fund's attempt to become a direct competitor to Goldman in the underwriting/advisory business has been scrapped? Perhaps an analysis of how many deals Citadel underwrote in the past year should be sufficient to answer this question.
- JP Morgan Chase & Co: 51.50, last 46.3 +5.25
- Goldman Sachs Group Inc: 104.50, last 100.5 +4.00
- Merrill Lynch & Co., Inc: 114.50, last 105.5 +9.00
- Morgan Stanley: 119.50, last 113.5 +6.00
Spreads were broadly wider in the US as all the indices deteriorated. IG trades 14.3bps tight (rich) to its 50d moving average, which is a Z-Score of -1.5s.d.. At 79.25bps, IG has closed tighter on only 5 days so far this year (268 trading days). The last five days have seen IG flat to its 50d moving average.
Indices generally outperformed intrinsics with skews widening in general as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL outperformed but narrowed the skew, HY outperformed but narrowed the skew.