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I will be appearing on The Kudlow Report tonight to discuss the markets 200 point shellacking today.
I will be on CNBC at 7:00 – 7:20 or so with Zachary Karabell, who is an all around raconteur and nice guy.
To review our stance: Our early warning of a coming disaster — recall Dow 6800 — was made in 2006. We were long but miserable throughout 2007, and finally got stopped out of everything in December 07. Mostly cash all 2008 (see this). A long trade October 2008 or two, a bounce, then back into cash. We finally flipped bullish early March 2009, advising traders to close shorts. “There is a monster bear market rally coming,” we said.
We reiterated that Bullish view over the summer, and again in September.
Last week, we advised putting on some hedges (QID and SDS), writing: “While no one knows whether this will be a collapse or a mere shallow consolidation, I suspect the latter — but we have had a huge run since March, and our managed accounts have profits that require protecting . . .”
We currently own names a mix of big and small names like Disney (DIS), and Arch Coal (ACI) and Allied Irish Bank (AIB), as well as some smaller firms, like Continental Airlines (CAL), Bare Essentials (BARE) and Ulta Salon, Cosmetics & Fragrance (ULTA).
Should be fun!
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UPDATE: Video is here
The latest from the 4th branch of government (pari passu, although junior in ranking, guarantees, subordination, and First Out rights, to Goldman Sachs)
h/t Joel
| Attachment | Size |
|---|---|
| Bill Gross October 2009.pdf | 208.26 KB |
Sorry for being MIA in the past two hours but I’ve had a myriad of things to deal with. Let’s take a look at the sweet tape we all enjoyed today:
Obviously this was a textbook down day with little breaks for the bulls. I have added the past three trading days on the Zero Lite to point out the fact that the negative signal strength appears to be increasing, which is a good omen for the bears. Also worth noting is the NYSE A/D ratio which closed at 0.196 and thus beats the 0.307 reading of September 24th. This would be in line with the type of increasingly bearish sentiment I would expect for a third wave to the downside.
A quick bone for you rats - I’ll probably flesh this out either tonight or tomorrow. At this stage we are pushing into an important support cluster on the SPX. The bears will have to breach through this tomorrow and continue downward if this is indeed a third wave according to the blue count. For now I have removed the orange line as I’m not sure yet how I would count it should we rally back up tomorrow. I want to be clear however - we are not out of the woods yet - as you zoom out of this chart you realize how little we’ve dropped in comparison with the countless rallies we had to endure. If this is for real and not just another dip buying opportunity then we need to see a continuation which would represent some pain and source of frustration for the bulls. As I’ve pointed out on numerous occasions - we need to see some panic and ‘forced selling’ - the only way to make that happen is to breach through some important support line and thus sweep some stops.
I continue to remain steadfast and short like a midget in a limbo contest - unlike other hobby bears I have not taken profits as my trading window is measured in months, not in days. After months of failed starts many bears have been so traumatized that they will quickly take profits according to the old (and completely specious) maxim that ‘nobody ever went broke taken profits’. I beg to differ - if you tried to short five times and had your ass handed to you, taken profits early will not get you back on track.
You’ll have to make a decision as to what kind of trader you are: Either you are an Elliott Wave trader who attempts to anticipate market tops and lows, or you are a trend trader who follows an already established trend change. You can’t be both. Because the trend trader will get in late and the EWT trader will get in early - otherwise, why bother counting waves in the first place. OR - you can do both - that’s what Berk is actually doing right now, and it’ll be my approach as well. IF this is Primary {3} then I will add positions once we are near the peak of Intermediate (2) - and that’s most likely when trend traders will hop on the bandwagon as well.
Again, whatever your system may be - think it through and then trade it. Don’t just be reactive and head for the hills because you’re afraid that the big bad bull will take it away from you again.
Program Trading Update:
geronimo/ES: -8.75 (ouch)
In case you rats are wondering - yes, there is a short signal in geronimo, but it has not triggered yet. Also, Eric and I are monitoring the market each day and as soon as new tradeable short patterns emerge we will add them as trading signals. And that will happen when the GS boys switch from trading the tape up to trading the tape down. More on that later - I have made Eric an author on this blog and I’m sure he’ll chime in on the subject in the next few days.
Cheers,
Mole
Spreads widened significantly amid very negative breadth once again today as risk appetite was clearly shifting today with TSYs rallying strongly, dollar safe-haven status reappearing, HY underperforming IG, and credit and equity risk premia rising. IG12 saw its biggest close-to-close widening since 04/20 (absolute) and 02/17 (percentage!) as VIX and swaption vols both rose significantly on the day and single-name activity was its highest (at 71% moving more than 3bps) in over three weeks.
All risky assets closed at their lows as the disappointing macro numbers today (following on from yesterday's green shoot withering headlines) were not helped later in the day by the weak auto sales numbers (which were in general in line to slight worse than expected but dramatically down from CfC summer-time fun and games). The unusual dollar questioning of Bernanke pushed some volatility into DXY (and ramping in EUR/JPY was unable to budge it much) as his 'other-than-fiscal issues' comment (which reminds us of Monty Python discussing the Romans) slammed DXY and then saw a run to quality as DXY closed at its highest since 09/08.
Other than a very late day drop, the selling in credit seemed fairly orderly though, no major gaps intraday as notable pivot point support was tested and taken out ion both SPY and IG as volume picked up dramatically as XLF dramatically underperformed SPY on the day.
In credit, financials outperformed non-financials today despite the CDR Counterparty Risk Index (CRI) jumped back above 100bps since 9/15. European sovereigns weakened considerably also with our Government risk index (GRI) up by 1bps led by European majors weakness (indicated by SovX pushing back up towards 50bps led by UK and Spain). Notably ITRX Main ExFINLs underperformed this widening in SovX helping that decompression trade.
Technically speaking, our note last week on the significance of the triple-trough divergence between IG movement and two of our main momentum indicators appears to have nailed this reversion. IG12 (or 13 if adjusted) broke above the 50-day moving average today. This is the fifth time we have tested this average since it initially broke it on 04/22, but today's move is the largest break above the average during that time and highest close above it. The 50-day average is 112.5bps and we suspect will act as support now that we are through it and our momentum indicators are pushing higher (confirming this move).
A look at some recent swings provides some context that the swings in IG have tended to run 7-10 trading days and range between 13 and 27% with this latest move pretty much in the middle of that range (though any move beyond that could be taken as confirming a new widening trend rather than countertrend sell-off): 9/23 low 95.5bps to 10/1 high 120.5 is a 26% rise in 7 trading days, 8/24 low 111bps to 9/02 high 125.5 is a 13% rise in 8 trading days, 8/07 low 104bps to 8/19 high 126.5 is a 21% rise in 9 trading days, 7/01 low 128bps to 7/13 high 148 is a 16% rise in 8 trading days, 6/10 low 117bps to 6/23 high 148.75 is a 27% rise in 10 trading days, and 5/7 low 132.5bps to 5/15 high 160 is a 21% rise in 8 trading days. The notable difference in today's (the recent move) is the amount it is above the 50-day moving average and the acceleration in the widening, which we did not see in any of these previous swings wider.
IG12 closed at its widest since 09/04 as the S&P fell notably back to 09/09 levels. We did find one interesting (think conspiracy theories) item for Q3 that both the S&P and Dow gained almost exactly 14.98% from close Q2 to close Q3 (seemed odd to us that two indices with very different components in terms of size and concentration as well as weighting methodology should have exactly the same return over that three-month period).
IG13 obviously closed at its contract wides and also underperformed intrinsics. For note, IG13 has traded for nine days, opened 9/21 at 96/97, traded as tight as 88/89 on 9/23, flatlined around 99/100 around the weekend, and is now 110.5bps offered. That is a 22.5bps swing in six days, seems that perhaps shorts are rolling after all. HY13 also closed (and traded intraday) at its lowest price of the contract as HY12 traded at its lowest price since 9/15 (clearly some room for deterioration over IG).
CIT was once again topic-du-jour although trading was relatively quiet in the single-name. HY13 intrinsics and index underperformed HY12 with HY13 breaking 750bps and HY12 trading at 700bps intraday. The relatively wide HY13 skew was compressed today which given the talk of a few lists flying around was driven by index arb (HY13 intrinsics were 35-40bps wider while the index only managed 20bps or so.
HVOL13 underperformed HVOL12 (despite the latter's CIT exposure) as we suspect investors followed risk aversion trades and used HVOL on-the-run as vehicle of choice (given its lower carry costs relative to HVOL12). Early in the day, IG and HY were in line but as the day wore on, HY started to underperform and at the same time IG was outperforming its intrinsics (s12 and s13).
This tells me that there was some movement towards the decompression trade (or more simply unwinding of the crowded compression trades). This was also evident as off-the-run indices underperformed significantly (unwinding of the roll trade?). HY-LCDX also compressed today quite a bit with HY12 edging back towards a 700bps close (and towards sub-100bps in the differential). On a side note, HY12-XOver11 was back up to 200bps (50bps wider in 3 days) as our favorite 'convoluted' trade HY-IG/XOver-Main jumped another 15bps to 175bps.
One other item we saw today was a continuation of the intrinsic curve flattening in IG12/13 while the index curves were steeper to unch. IG12 interestingly steepened more than IG13 today even as CIT's curve inverted further as we suspect that some of the 3s5s steepeners were unwound in IG12 which helped keep IG12 tighter than we would expect (given IG13's move and IG12's intrinsics). IG12-13 did decompress though on the day and we believe this trade ios worth sticking with.
ABX and CMBX prices dropped today for the second day in a row but notably all were weaker, there were no price improvements (and along with talk of regulators wanting to bring ABS prices into the TRACE methodology we wonder if there is some building fear of the real MtM for some of these instruments). Builders widened across all names (for the third day in a row) and this time stocks followed with high spread names underperforming.
Weak auto sales prompted significant mark-ups in auto and supplier spreads but it was financials that saw considerable selling pressure today. Monolines saw the largest absolute spread weakening as tail risk and counterparty risk seems to be being hedged aggressively but insurers were all wider (led by higher beta names like HIG and PRU). General finance names were weak as AIG/ILFC/CIT/SLM weakened and GECC jumped 30bps to 225bps on news of a possible NBC Universal sale to CMCSA (which was 10bps wider at 125bps) - we worry (as it seems do others) that GE is concentrating assets and not in the good stuff (i.e. financials making up more of the mix). Banks were weak with GS underperforming but CCard names (AXP and COF were notably weaker).
INDUstrials and CONSumers were again the weakest (but considerabl;y worse than yesterday) as surprisingly low beta underperformed high beta (thanks mainly to the weakness in the very low spread transports which lagged today). ENRG and TMT outperformed (though were 95% wider) thanks to a negligible improvement in VZ (offset by weakness in CMCSA for example of the CNBC deal). Interestingly DD and SHW bucked the INDUs trend and tightened today and we note that while ENRG names were less battered, the higher beta (NRUC, VLO, and APC) sold off pretty hard.
In other assets, gold slid but held above $1000 as oil was volatile but ended down only a smidge (though above $70). VIX and swaption vols were up notably but it was the TSY complex that was notable today. Dramatic drops in yields and curve flattening was evident as 2Y fell below 90bps, 10Y below 3.2% and some notable regimes in 2s5s, 2s10s, and 2s5s10s, were on the verge of breaking - all quite notably deflationary. The spread between 10Y TSY and 30Y MTH fell 4bps today back its lowest differential since 05/29 and one of the indicators we watch (inflation-swap adjusted 10Y rate) reached its lowest level since 5/10 (while the 10Y reached back to 5/20 levels). It would appear that perhaps the quarter-end has seen a shift in allocations of new fund flows as we see risk definitely off (at least for today).
Commentary Compliments of www.creditresearch.com
Index/Intrinsics Changes
CDR LQD 50 NAIG +6.19bps to 88.93 (50 wider - 0 tighter <> 16 steeper - 34 flatter).
CDX13 IG +7.75bps to 110 ($0.05 to $99.59) (FV +5.99bps to 103.99) (119 wider - 4 tighter <> 49 steeper - 75 flatter) - Trend Wider.
CDX13 HVOL +16bps to 206 (FV +11.45bps to 197.18) (29 wider - 0 tighter <> 10 steeper - 20 flatter) - Trend Wider.
CDX13 ExHVOL +5.14bps to 79.68 (FV +4.32bps to 75.59) (90 wider - 5 tighter <> 56 steeper - 39 flatter).
CDX13 HY (30% recovery) Px $-0.87 to $90.63 / +25.7bps to 757.3 (FV +43.17bps to 669.98) (98 wider - 2 tighter <> 7 steeper - 93 flatter) - Trend Wider.
CDX12 IG +8.5bps to 119.75 ($-0.34 to $99.19) (FV +7.04bps to 115.46) (121 wider - 3 tighter <> 47 steeper - 77 flatter) - Trend Wider.
CDX12 HVOL +12.2bps to 241.9 (FV +14.72bps to 240.58) (30 wider - 0 tighter <> 8 steeper - 22 flatter) - Trend Wider.
CDX12 ExHVOL +7.33bps to 81.18 (FV +4.75bps to 78.14) (91 wider - 4 tighter <> 56 steeper - 39 flatter).
CDX11 XO +6.4bps to 281.4 (FV +24.83bps to 319.53) (31 wider - 2 tighter <> 6 steeper - 28 flatter) - Trend Wider.
CDX12 HY (30% recovery) Px $-0.81 to $92.88 / +23.1bps to 691.5 (FV +41.34bps to 651.59) (92 wider - 2 tighter <> 7 steeper - 87 flatter) - Trend Wider.
LCDX12 (65% recovery) Px $-1.03 to $97.6 / +32.71bps to 574.35 - Trend Wider.
MCDX12 +3bps to 93bps. - No Trend.
CDR Counterparty Risk Index rose 5.11bps (5.27%) to 102.07bps (14 wider - 0 tighter).
CDR Government Risk Index rose 0.99bps (2.4%) to 42.14bps..
DXY strengthened 0.65% to 77.15.
Oil fell $0.3 to $70.31.
Gold fell $9 to $998.7.
VIX increased 2.66pts to 28.27%.
10Y US Treasury yields fell 12.5bps to 3.18%.
S&P500 Futures lost 2.42% to 1027.4.
It was immensely refreshing to find an actual probing piece of investigative journalism coming out of Reuters, instead of the traditional regurgitated, opinion-based, fluff-filled, secondary source monologues (we prefer the British spelling) we have become accustomed to seeing out of the Thomson Reuters behemoth. In a rare example of how even the MSM gets it right sometimes, Matt Goldstein has done an admirable job of connecting the dots based on a FOIA request he had submitted to the FDIC, in which the insolvent (as of Be today) Deposit Insurer has provided Goldstein with a unique glimpse into the daily travails and activities of its boss, Sheila Bair, and how they may have a direct bearing on the future of none other, than a very troubled Chief Executive Officer.
From Goldstein's "Bair's summer in the Citi"
The FDIC provided Reuters with a copy of Bair’s datebook from June through August in response to a Freedom of Information Act request. The 92-page document offers a window into the FDIC chairman’s world, providing a brief listing of who Bair met with during that three-month period.
There is no record of what was discussed during those meetings, so it forces one to become a bit of a detective to piece together what may have been on the agenda. One can only guess what Bair and Alan Greenspan talked about over lunch on July 1, or what she and bank analyst Meredith Whitney may have chatted about on July 9.
But it is Bair’s frequent consultations with Parsons and other Citi board members that really jump out from the pages of the datebook. In June alone, Bair met with Parsons three times.
Matt follows up with some interesting observations:
It’s been clear that Parsons has taken the lead in handling Citi’s often tense relationship with the FDIC and other federal agencies. But it’s still surprising that neither Pandit nor anyone from his team met with Bair, even after Citi did as the FDIC requested and installed a new chief financial officer on July 9 along with other management changes.
These days the storyline coming from those close to Citi and its 17-member board is that Parsons has managed to smooth out any lingering bad feelings between Bair and Citi’s top management.
Some of that bad blood stems from the FDIC throwing up a road block to Citi’s unsuccessful bid for Wachovia. The former Time Warner chairman and chief executive supposedly convinced Bair not to push for Pandit’s ouster and put the FDIC chairman more at ease with the direction Pandit is taking the bank.
And what all this means for the future of Vikram, who has been practically incognito since Ken Lewis became the fall guy for Wall Street a month ago compliments of Jed Rakoff and everyone else, who jumped on that bandwagon.
Pandit may not want to rest too comfortably. The apparent absence of any one-on-one between Bair and Pandit may speak volumes about her true feelings.
That’s because Bair managed to make time to meet with executives from other big banks that have received assistance from the federal government. On June 30, for instance, she met
with Wells Fargo CEO John Stumpf and Howard Atkins, the bank’s chief financial officer. And on August 11, she met with Bank of America’s new chief risk officer, Gregory Curl.
And now that Lewis is gone (although his trail is still very much warm: his departure in no way has changed the presumed imminent filing of charges against him by the SEC, and various AGs), the public's eye may turn to the other deathly wounded CEO, who even after practically ceded control of his company to the taxpayers, is still shockingly in his throne.
Parsons’ last get-together with Bair during this three-month stretch occurred on August 10. Three days later, the Financial Times ran a story that Citi, at the request of regulators, had hired an outside consultant to conduct a top-to-bottom management review and recommend additional managerial changes.
The outside consultant’s management review is supposed to be presented to Citi’s board and regulators sometime in October — around the time the bank reports third-quarter earnings.
So should Bair have reason again this fall to talk to Parsons, the result may be less comforting to Pandit and his management team.
Only naive idealists may think that Pandit has more than 6 months left in his CEO tenure. The fact that he has managed to last this long alone is amazing. And Zero Hedge will be closely following the strategic moves undertaken by the CEO of the company which, alongside BofA, has the most toxic combination of assets on its balance sheet. In the meantime, thanks Matt, not only for bringing us this highly informative FOIA, but showing to your Reuters colleagues that it is really not all that difficult, and it "can be done" if one were just willing to put in that little extra effort.
Goldstein FOIA response presented in its entirety:
| Attachment | Size |
|---|---|
| bairfiles.pdf | 4.79 MB |
Some interesting columns worth killing a few trees for:
• If Hugo Chavez Is Selling Dollars, Maybe You Should Be Buying (Barron’s)
• AIG Said to Dismiss McKinsey as Benmosche Seeks to Cut Fees (Bloomberg) I have a thesis that McKinsey is the root of all evil . . .
• Moody’s secretive nature described to Congress (Reuters)
• Strategic Defaults: Leaving Affordable Mortgage May Become Winning Gambit (Bloomberg)
• Wall Street Wizardry Reworks Mortgages (WSJ)
• Volcker Says China’s Rise Highlights Relative U.S. Decline (Bloomberg)
• 47% will pay no federal income tax (CNN/Money)
• John Thain “defends himself” in Knowledge@Wharton
• Why Google Loses in China (Foreign Policy)
• Internet overtakes television to become biggest advertising sector in the UK (Guardian)
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What are YOU reading?
Tell reluctant senators and representatives that, if they think their constituents don't want any public insurance except for medicare and medicaid, then they can refuse to have it.
EK Can they opt out?
MC States can opt out.
Tom Carper's proposal is more interesting. It's gone through a couple twists in the past 24 hours (including the addition, and then welcome removal, of a trigger), but in its current form, each state would have the option to:.
1) Participate as grantees in the CO-OP program and apply for seed funding.
2) Open up that state’s employee benefits plan.
3) Create a state administered health insurance plan with the option of banding together with other states to create a regional insurance compact.
Each state would, in other words, be allowed to create a public option
Click on graph for larger image in new window.
The second graph shows light vehicle sales since the BEA started keeping data in 1967.
Vanilla products would turn basic financial services into a commodity business, and force providers to compete on price…. Since vanilla financial products would be commodities, banks would have to universally collude to offer them at inflated prices in order to bilk consumers. Competing vanilla project offerings would (at least they should) vary only on a single dimension (e.g. an interest rate). Points, fees, penalties, etc. would be homogeneous or uniformly pegged to the core price.
The Cash For Clunkers party mess cleanup is getting uglier by the minute. From Citigroup:
September Auto Sales Currently Running at an 8.9 Million Unit SAAR (64.8% reporting)
With 64.8% of the industry now reporting, we are seeing a sales rate for September of 8.9 million units SAAR. This lower pace appears to be heavily influenced by the pay back from the cash-for-clunkers program as luxury brands do not appear to be having the same large drop as more utilitarian vehicle makers.
And this is what disastrous government policy looks like when charted:
Quite a day, quite a day. As I've said before, traders are never happy. This is one of those days where I'm thinking, "Oh, if only I was more exposed!" Because I have had 75 - count 'em, 75 - short ideas waiting in the wings. But I'm not inclined to chase prices downward.
But my array of 91 short positions - every blessed one of them short - are doing fine and dandy, thank you very much. I'll probably do another video update after the close.
Godspeed, intrepid Slopers!
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For the past two weeks we have been warning that economic data is turning lower. On Wednesday, US beancounters manufactured a better than expected GDP but private economic data appeared that was materially worse than expected.
The ADP Employment change for September is -240k; -200k was expected. More importantly, the
closely-watched Chgo PMI declined to 46.1, which is below the 50 line of demarcation between growth and contraction. 52 was expected. ‘Production’ declined to 47.2 from 52.9; ‘New orders’ declined to 46.3 from 52.5 and ‘order backlogs crashed to 36.7 from 45.8…Why would anyone expect a 2-point increase with other data heading south and the termination of the ‘clash for clunkers’ artificial boost?
Stocks were saved from big losses and commodities rallied on Q3 performance gaming and because Atlanta Fed President Dennis Lockhart surfaced to state that the Fed must eventually remove the juice but, “I don’t think that time has yet come, and to be consistent with my outlook, I think it may well be some time before comprehensive exit need be underway.”
Lockhart’s pronouncement indicates he believes the economy is still struggling and vulnerable.
The dollar sank while gold and commodities rallied on Lockhart’s dovish assertion.
It appears that Fed officials are now ‘good cop, bad copping’ the markets. Just one day before
Lockhart’s dovish braying, Dallas Fed President Richard Fisher stated, “I expect that when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation.”
And on Wednesday evening, Phily Fed President Charles Plosser, speaking at Lafayette College, said the Fed should tighten credit “promptly” when it appears necessary to avert a recurrence of the high inflation that plagues the US during the late 1970s.
“Our credibility depends on it. We recognize the costs that significantly higher inflation and the
ensuing loss of credibility will impose on the economy if we fail to act promptly, and perhaps
aggressively, when the time comes to do so.”
Also contributing to Wednesday’s dollar decline and commodity rally was: 1) reports that the BoJ might allow its emergency corporate debt monetization program to expire; and 2) the Bank of England said it had no immediate intention of lowering rates on bank reserves. So the pound and yen rallied.
As we warned, US Winston Smiths concocted a better GDP despite a preponderance of private industry data to the contrary. GDP was 0.5 better than consensus even though GDI was revised 0.5 lower!?!?!
John Williams: 2nd-Q GDP Decline Narrowed in Revision (to -0.8% from -1.0%), but GNP and GDI
Contractions Deepened (GNP to -1.0% from -0.8%, GDI to -2.6% from -2.1%) – Annual GDP Contraction Remained Worst of Post-World War II Era
As noted last night, Comcast is discussing a majority NBC purchase from GE:
Its good to have low friends in high places — especially lawyers! (Thanks, David!)
Nachfolgend wieder ein wenig Statistik – u.a. die Top-10 Suchbegriffe, mit denen dieser Blog im letzten Monat gefunden wurde. Das ist u.U. recht interessant, da man daraus z.B. sieht, was die Mitmenschen in diesem Zeitraum am meisten interessiert hat… 
Die Ergebnisse für 08/2009 finden sich hier.
| Suchwörter | Aufrufe |
|---|---|
| baltic dry index chart | 124 |
| chronologie der krise | 115 |
| apotheker und ärztebank | 64 |
| hw71.wordpress.com | 41 |
| dubai krise | 24 |
| hsh nordbank | 23 |
| thomas göhler | 23 |
| bip 2009 | 22 |
| inflation deutschland | 22 |
| arcandor | 21 |
Overall, in year-over-year measurements, the industry’s occupancy fell 7.2 percent to end the week at 59.8 percent. Average daily rate dropped 10.1 percent to finish the week at US$100.30. RevPAR for the week decreased 16.6 percent to finish at US$59.94.
Click on graph for larger image in new window.
As prospects for an amicable resultion at Club CIT grow ever more blacklightish, the company is now alleged to be desperately seeking a $5-7 billion DIP loan (the kind you need when you file for Chapter 11, and when all your existing equity is wiped out). Reuters:
CIT Group Inc is planning to get a debtor-in-possession loan of $5 billion to $7 billion if its planned debt exchange offer fails and it files for prepackaged bankruptcy, sources familiar with the matter said on Thursday.
CIT has not finalized the loan yet but would do so over the next few days, if it has to file for bankruptcy, the sources said, declining to be identified because the talks are private.
Our advice to CIT: approach investment advisory guru Jim Cramer: it was a long and arduous 48 hours ago (and 100% higher) that the soon to be Comcast employee was pronouncing how the stock was "primed for upside." If there is anyone who would put their money where their mouth is, Jim Cramer is your man. And to a former hedge fund manager of Jim's caliber, $7 billion is parking meter money.
h/t Joe
… oder weniger Schulden 
Laut nachfolgendem Artikel werden nächstes Jahr im Juni acht Mrd. Dollar fällig (!).
Gefunden bei handelsblatt.com:
01.10.2009, 08:16 Uhr
US-Mittelstandsfinanzierer
CIT – „Mission Impossible“
von Robert Cyran (breakingviews.com)
Der US-Mittelstandsfinanzierer CIT wird Mühe damit haben, seine Seele zweimal zu verkaufen. Das schwer ins Wanken geratene Kreditinstitut hatte im Juli fast sämtliche unbelasteten Vermögenswerte verpfändet, um sich in letzter Sekunde eine Finanzierung von drei Mrd. Dollar zu sichern.
Am 1. Oktober muss CIT nun einen Plan vorlegen, wie die Verbindlichkeiten über 30 Mrd. Dollar umgeschuldet werden sollen. Die Chancen stehen schlecht, dass die nachrangigen Gläubiger irgendeine Lösung außer der Insolvenz oder einem Verfahren, das einer Insolvenz in der Funktion gleichkommt, akzeptieren werden.
Die drei Mrd. Dollar umfassende Fazilität entsprach einer relativ kurzfristigen Brückenfinanzierung zu hohen Kosten: Die Geldgeber erhalten Libor plus zehn Prozent. Zudem waren belastende Kreditvertragsklauseln vereinbart worden, die die Fähigkeit der CIT, zusätzliche Schulden aufzunehmen und Vermögenswerte ohne die Zustimmung der Kreditanbieter zu verkaufen, einschränken.
Damit mag die Bank zwar ein bisschen Zeit gewonnen haben, aber dennoch braucht die CIT nach wie vor entweder mehr Kapital, oder weniger Schulden, oder beides. Im kommenden Juni werden Schuldtitel über acht Mrd. Dollar fällig, doch der Finanzierer weiß immer noch nicht, wie er sie abbezahlen soll. Und noch mehr Geld wäre notwendig, wenn die CIT weiter im Kreditvergabegeschäft mitmischen und ihr Kapital auf ein Niveau hieven will, das die Aufsichtsbehörden gnädig stimmen würde.
Das Management von CIT und einige der bevorrechtigten Gläubiger könnten sich vielleicht mit der Idee anfreunden, dass die Firma zusätzliche besicherte Darlehen erhält, während sie andere Schuldtitel in Aktienkapital umwandelt. Doch alle Gläubiger ins Boot zu holen, wird schwierig werden. Und neue Kredite könnten das Unternehmen letztendlich noch teurer zu stehen kommen als die Notfazilität vom Juli.
Diese Fazilität sieht jetzt schon kostspieliger aus als das, was die CIT für eine Debtor in possession-Finanzierung zahlen müsste, wenn sie Antrag auf Gläubigerschutz stellen würde. Und einige Gläubiger könnten auch zu dem Urteil kommen, dass eine Insolvenz sie nicht schlechter stellen würde als ein allerletzter Umstrukturierungsversuch, mit dem eine Pleite der CIT abgewendet werden soll.
Die Firma scheint bereits schwer beschädigt zu sein. Ihr Wert könnte sich daher ohnedies auf das beschränken, was im Zuge ihrer Abwicklung eingesammelt werden kann. Die Höllenqualen zu verlängern, indem neue Kredite gewährt werden, scheint also nicht darauf hinauszulaufen, dass mehr beigetrieben werden kann. Eine Zerschlagung, ob innerhalb eines Insolvenzverfahrens oder außerhalb, scheint daher immer wahrscheinlicher zu werden.
Some more observations on the stock market bubble: Joe Saluzzi raising hell at Bloomberg as his nemesis, Irene Aldridge, gets interviewed by a cow.
Goldman's NFP forecasts have an eerie ability to be +/- 3 people of the actual payroll number. Which is why those expecting an upside surprise to tomorrow's payroll number may be unpleasantly surprised. Just released by Jan Hatzius of GS:
Downgrading Our Sept Payroll Forecast
BOTTOM LINE: We are changing our forecast for the September change in nonfarm payrolls to -
250,000 from -200,000. We continue to think that the unemployment rate will be reported at 9.8%.KEY POINTS:
1. The latest data points on the US job market have been disappointing on balance, including the Monster index of on-line hiring, the ISM employment index, consumers’ assessments of job availability, and the total number of individuals receiving continuing claims for unemployment insurance, including those for extended benefits. Accordingly, we now expect nonfarm payrolls to be reported at -250,000 in tomorrow’s labor market report for September versus a previous forecast of - 200,000.
2. Although many of the same indicators would suggest a larger increase in the unemployment rate than the 0.1-point we have been expecting, the new information is not quite enough to warrant a change, especially since the 9.7% reported for August rounded up to that level. However, risks lie to the side of a higher figure.
h/t H.I.
Gefunden bei fr-online.de:
Internet-Auktionshaus
Ebay schreibt Kündigungen
Hamburg/Berlin. Das Internet-Auktionshaus Ebay streicht an seinem einzigen deutschen Standort in Dreilinden bei Berlin 400 der 1000 Arbeitsplätze. Die Kundenbetreuung werde künftig in einem europäischen „Kompetenzzentrum“ in der irischen Hauptstadt Dublin gebündelt, teilte der US-Konzern mit.
In Dreilinden sollen nur noch Nutzer aus Deutschland beraten werden. Dieser Schritt sei notwendig, um in einem schwieriger werdenden Markt wettbewerbsfähig zu bleiben. Das Unternehmen befinde sich aber „nicht in einer wirtschaftlichen Notsituation“, betonte ein Sprecher.
Der Stellenabbau soll nach den Worten des Ebay-Sprechers bis Mitte 2010 über betriebsbedingte Kündigungen erfolgen. Diese würden aber erst ausgesprochen, wenn die Verhandlungen mit dem Betriebsrat über einen Interessenausgleich und einen Sozialplan abgeschlossen seien.
„Gleichzeitig geht Ebay davon aus, dass neue Arbeitsplätze bei externen Dienstleistern in Deutschland entstehen werden“, heißt es in einer Mitteilung. In Dublin würden zudem 100 neue Arbeitsplätze geschaffen, auf die sich auch Mitarbeiter aus Deutschland bewerben könnten.
Der Sprecher betonte, es gehe nicht um Kostensenkung, sondern um eine bessere und effizientere Kundenbetreuung, die künftig in „Kompetenzzentren“ konzentriert werde. Die Stellenstreichung sei „keine Entscheidung aus der Not heraus“. Deutschland ist der zweitgrößte Markt für Ebay weltweit. Das Internet-Auktionshaus muss sich zunehmend gegen Konkurrenten wie Amazon behaupten. (dpa)
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Copyright © FR-online.de 2009
Copyright © dpa – Deutsche Presseagentur 2009
Dokument erstellt am 01.10.2009 um 16:22:47 Uhr
Letzte Änderung am 01.10.2009 um 16:58:22 Uhr
Erscheinungsdatum 01.10.2009
I have been buying and selling millions of dollars worth of GLD, SSO, and TWM all day, with very good results. I am - at the moment - buying up a big ol' hunk of SSO (the ultralong S&P ETF), but it's just a day trade. I've set the stop at the day's low. Having a really, really good day in both directions.
Submitted by Nic Lenoir of ICAP
Risky assets are not having a very good day. In fact it's their worst day since March. Not losing 130 points on the Dow Jones is anything to write your relatives about, but there is definitively a combination of developments in the markets today that are worth noting.
The S&P 500 future has broken the overlap around 1,037/38 and is now well established below the trendline joining the lows. After attempting to retest the 1.6165 break out of the H&S neckline 2 days ago at 1.6125 and failing, GBPUSD is back down below 1.60. The Nikkei, after a failing to breakout higher out the wedge around the tops and also failing to fill the gap left open in October, is plunging quite abruptly. The Nasdaq future fell short of challenging the overlap with the lows of July 2008 at 1762, and came back to test 1670 this morning. This last level is quite pivotal, and we would use that as a good guidance for further acceleration lower or conversely a hold could mean we reached downside potential. Personally I remain convinced that medium term we are going a lot lower in equities, a break of 1670 would only make my view nearer term than I originally thought.
I saved the best for last: the LQD ETF which is basically a proxy for investment grade bonds which has been on a straight ramp up since October 08 seems to have broken its trend. Tha comes on the back of some observations over the last few weeks of some divergence between the CDS market which has made attempts to move wider while equities kept grinding up. This is by far the most important development. If the price action in the next 2/3 days confirms this break, then really it means the carry trade as a whole is starting to break down. It's one thing to have an equity correction, but with CIT possibly headed for bankruptcy, Saturn shut down, Ken Lewis resigning, regional banks closing faster than schools due to swine flue, and commercial real estate looming, there is enough smoke in credit space to reignite some fire. A lot of fast money moved into credit because it outperformed stocks even after a 60% rally, and that's a problem too if things deteriorate. People view leverage through short selling as evil because it is unpatriotic to bet on the market going down, but propping up the market through leverage beyond sustainable levels is just as good a catalyst for a sell-off... actually it's a better catalyst because it brings about people shorting based on valuation that would not get invlved otherwise.
Crude oil is attempting to defy gravity and fundamentals today. Interestingly natural gas is taking one on the chin, which is perfectly warranted given the level of inventories recorded. There is a story that has not made much noise on CNBC and in the news, but in my opinion sheds very insightful light on the commodity space. The Chinese government has announced they would not invest in aluminium for the next 3 years, nor would they develop any further production capacity, or build any shipyards. There are thousands of idle cargo ships around the globe, and chinese factories work at 60% capacity (that we know of, would not be unreasonable to assume it is in fact worst). Not being a nobel price in Economics, I would still have to think it's a fair bet that commodities could be under pressure here, especially if financially leveraged accounts stop propping the market and need to reverse engines.
So looking around asset classes there are clouds forming here. Keep an eye on credit and the LQD to see if the cracks are sign of a clean break. Fundamentals could well offset the pro-cyclical arguments... and then some.
Good luck trading,
Nic
Nobel prize winning economist Joseph Stiglitz says that Goldman Sachs may have engaged in frontrunning. Ask a Goldman spokesman, and he or she will undoubtedly say that is a conspiracy theory.
Indeed, when Matt Taibbi claimed that Goldman created every bubble since the Great Depression, a Goldman spokesman responded by calling Taibbi's essay "an hysterical compilation of conspiracy theories".
Tyler Durden at Zero Hedge blew the whistle on Goldman's high-frequency trading and other frontrunning activities, and has also been called a conspiracy theorist.
PhD economist, former Assistant Secretary of the Treasury, and former Wall Street Journal editor Paul Craig Roberts says that the government and mainstream media are lying to the American public about how bad the economic situation really is.
PhD economist Dean Baker said in February that the true purpose of the bank rescues is "a massive redistribution of wealth to the bank shareholders and their top executives".
PhD economist Michael Hudson says that the financial “parasites” have killed the American economy, and they are "sucking as much money out" as they can before "jumping ship".
PhD economist Michel Chossudovsky says that the giant banks which received the most bailout money also finance a portion of the government's debt, and are exercising their power as creditors to buy public assets for a song and to impose IMF-style austerity measures on the U.S. government.
The response to Roberts, Baker, Hudson and Chossudovsky is, oftentimes, "conspiracy theory".
Indeed, it is common - when someone claims that anyone has rigged the game - for people to say "that's a conspiracy theory".
"Some Financial Market Conspiracies Are Real"
Time Magazine's Justin Fox writes today:
And Fox, a regular financial writer for one of America's most widely-read "mainstream" publications, adds:Some financial market conspiracies are real...
Most good investigative reporters are conspiracy theorists, by the way.
How Judges Look at Conspiracy Theories
Let's be level-headed about this. How do we assess whether or not claims are crazy conspiracy theories?
We have to start by asking: what is a conspiracy theory?
Initially, federal and all 50 state's codes include specific statutes addressing conspiracy, and providing the punishment for people who commit conspiracies.
But let's examine what the people trained to weigh evidence and reach conclusions think about "conspiracies". Let's look at what American judges think.
Searching Westlaw, one of the 2 primary legal research networks which attorneys and judges use to research the law, I searched for court decisions including the word "Conspiracy". This is such a common term in lawsuits that it overwhelmed Westlaw. Specifically, I got the following message:"Your query has been intercepted because it may retrieve a large number of documents."
From experience, I know that this means that there were potentially millions or many hundreds of thousands of cases which use the term. There were so many cases, that Westlaw could not even start processing the request.
So I searched again, using the phrase "Guilty of Conspiracy". I hoped that this would not only narrow my search sufficiently that Westlaw could handle it, but would give me cases where the judge actually found the defendant guilty of a conspiracy. This pulled up exactly 10,000 cases -- which is the maximum number of results which Westlaw can give at one time. In other words, there were more than 10,000 cases using the phrase "Guilty of Conspiracy" (maybe there's a way to change my settings to get more than 10,000 results, but I haven't found it yet).
Moreover, as any attorney can confirm, usually only appeal court decisions are published in the Westlaw database. In other words, trial court decisions are rarely published; the only decisions normally published are those of the courts which hear appeals of the trial. Because only a very small fraction of the cases which go to trial are appealed, this logically means that the number of guilty verdicts in conspiracy cases at trial must be much, much larger than 10,000.
Moreover, "Guilty of Conspiracy" is only one of many possible search phrases to use to find cases where the defendant was found guilty of a lawsuit for conspiracy. Searching on Google, I got 3,170,000 results (as of yesterday) under the term "Guilty of Conspiracy", 669,000 results for the search term "Convictions for Conspiracy", and 743,000 results for "Convicted for Conspiracy".
Of course, many types of conspiracies are called other things altogether. For example, a long-accepted legal doctrine makes it illegal for two or more companies to conspire to fix prices, which is called "Price Fixing" (1,180,000 results).
Given the above, I would extrapolate that there have been hundreds of thousands of convictions for criminal or civil conspiracy in the United States.
Finally, many crimes go unreported or unsolved, and the perpetrators are never caught. Therefore, the actual number of conspiracies committed in the U.S. must be even higher.
In other words, conspiracies are committed all the time in the U.S., and many of the conspirators are caught and found guilty by American courts. Remember, Bernie Madoff's Ponzi scheme was a conspiracy theory.
Indeed, conspiracy is a very well-recognized crime in American law, taught to every first-year law school student as part of their basic curriculum. Telling a judge that someone has a "conspiracy theory" would be like telling him that someone is claiming that he trespassed on their property, or committed assault, or stole his car. It is a fundamental legal concept.
Obviously, many conspiracy allegations are false (if you see a judge at a dinner party, ask him to tell you some of the crazy conspiracy allegations which were made in his court). Obviously, people will either win or lose in court depending on whether or not they can prove their claim with the available evidence. But not all allegations of trespass, assault, or theft are true, either.
Proving a claim of conspiracy is no different from proving any other legal claim, and the mere label "conspiracy" is taken no less seriously by judges.
Aufschwung wohin man schaut – besonders bei Chrysler mit -42%… 
Gefunden bei marketwatch.com (Ford, Daimler, Chrysler):
Oct. 1, 2009, 12:16 p.m. EDT · Recommend · Post:
Ford total U.S. Sept. sales decline 5.1%
By Wallace Witkowski
SAN FRANCISCO (MarketWatch) — Ford Motor Co. /quotes/comstock/13*!f/quotes/nls/f (F 7.00, -0.21, -2.89%) said Thursday that U.S. auto sales for September dropped 5.1% to 114,655 vehicles from 116,734 a year ago.
For the Ford, Lincoln and Mercury brands: car sales fell 3.9% to 38,890 units, with SUV sales down 9.5% to 7,806 units and truck sales declining 0.9% to 44,656 vehicles. Crossover utility vehicles saw the largest percentage decline by category, down 17.7% to 18,587 units. Volvo sales increased 16.3% to 4,716 vehicles from last year. (Corrects by clarifying car sales for Ford, Lincoln and Mercury sales.)
Oct. 1, 2009, 1:04 p.m. EDT · Recommend · Post:
Daimler U.S. September sales drop 13.4%
By Wallace Witkowski
SAN FRANCISCO (MarketWatch) — Daimler AG /quotes/comstock/13*!dai/quotes/nls/dai (DAI 48.41, -1.90, -3.78%) said Thursday that U.S. September sales fell 13.4% to 17,799 vehicles from 20,557 a year ago. U.S. September Mercedes-Benz brand sales declined 9.6% to 16,985, and Smart car sales plunged 54.2% to 814 vehicles.
Oct. 1, 2009, 1:10 p.m. EDT · Recommend · Post:
Chrysler U.S. September sales plunge 42%
By Wallace Witkowski
SAN FRANCISCO (MarketWatch) — Chrysler Group LLC, which is partnered with Fiat SPA /quotes/comstock/11i!fiaty (FIAT.Y 13.85, +0.90, +6.95%) , said Thursday that total U.S. September sales plunged 42% to 62,197 vehicles from 107,349 a year ago. For September, U.S. Chrysler brand sales plummeted 61% to 9,046 vehicles, Jeep brand sales declined 19% to 17,287 units, and Dodge sales fell 43% to 35,864 vehicles. Total car sales fell 43% to 17,806 units, and truck sales dropped 42% to 44,391 vehicles.
ECRI WLI:
BDI:
CRB
Airstrike on Iran:
California default before Dec 2010:
