Two contrasting stories on Bloomberg: Federal Reserve Governor Randall Kroszner made the most explicit statement by a Fed official to date, saying that further rate cuts aren’t needed to get the economy through its “rough patch.” Although Fed futures declined, the implied expectation of a rate reduction is 84%. Yesterday, Goldman’s chief economist Jan Hatzius […]
Read more...A colleague was so kind as to send me the text of a speech given at the Graham & Dodd breakfast a few weeks ago by David Einhorn, CEO of hedge fund Greenlight Capital. The speech has gotten play only in some personal-investment-oriented blogs like Seeking Alpha and Naked Shorts. Even though they are fine […]
Read more...Bloomberg reports that the net asset value of SIVs rated by Fitch continue to fall. It is important to understand that a fall in net asset value is NOT the same as a fall in value of the fund’s total assets (according to Fitch, they stand at 97.7% of the face amount). As an earlier […]
Read more...Bloomberg reports today that a downgrade of the monoline bond insurers MBIA and Ambac, which had been the subject of concern for some time (see here and here), may cost investors as much as $200 billion. If they lose their AAA rating, then any securitized deals that relied on them for credit enhancement will be […]
Read more...Did you think the Bear Stearns hedge fund drama of the summer was over? We may see a low-budget sequel. The Financial Times reports that aggrieved shareholders of one of the failed Bear funds, High-Grade Structured Credit Strategies Enhanced Leverage (Overseas), have assumed control. US based investors get to vote on Friday (no guess as […]
Read more...As readers probably know, because Fannie Mae was found to have engaged in “extensive” fraud, its CEO and CFO were fired late in 2005 and the government sponsored agency was put on a short leash by its regulator, the Office of Federal Housing Enterprise Oversight. So it is a bit surprising to learn in a […]
Read more...A $5 billion General Electric institutional cash management fund is now offering investors only 96 cents on the dollar. Note, as discussed in the CNBC article below (hat tip pjfny), this was NOT a money market fund. However, this news, which appeared first on Barrons, was one of the reasons the stock market retreated into […]
Read more...Nouriel Roubini, in his latest post, announces the “massive forthcoming losses” in commercial real estate. Note that the frothiness of commercial real estate has been reported for some time (Fitch first warned about it in April; Roubini made noise about it in July, when Fitch issued a second warning) but the financial media has chosen […]
Read more...Time for comic relief. Hat tip Credit Slips:
Read more...Members of the Fed officialdom are doing their best to preserve the Fed’s policy options (i.e, not cave in to market pressures at the next FOMC meeting) by talking down expectations of another rate cut. Dallas Fed President Richard Fisher, in Sydney, spoke of solid US economic fundamentals and increasing inflation risks. Note that Fisher […]
Read more...Bloomberg reports that at a Merrill Lynch sponsored investor event, both BlackRock CEO Larry Fink and Goldman CEO Lloyd Blankfein gave negative readings for the credit market, particularly CDOs and subprimes. Goldman is putting its money where its mouth is and is short mortgage-related debt. BlackRock also said it was in contact with the Treasury […]
Read more...A reader pointed to a link that shows that an Ohio judge rejected the foreclosure on 14 properties by Deutsche Bank because they failed to establish that they had the right to foreclose. Before readers get too excited, remember this is only 14 mortgages and this sets a precedent only for Ohio (foreclosure is a […]
Read more...Monday, the Financial Times’ MergerMarket blog (hat tip Felix Salmon) gave a sighting of CDO market prices, and it wasn’t pretty: However, AAA rated subprime CDOs currently trade from the high single digits on junior tranches to 60% of face on super senior tranches, according to a sellsider and a buysider….. Merrill Lynch in the […]
Read more...This quote, from Countrywide’s CEO Angelo Mozilo, has the potential to be one of those career-death-wish utterances, in the same league as Citigroup ex-CEO Chuck Prince’s “We’re still dancing,” when asked in July if he saw any cause for pause in the recent wobbles in the credit markets. The worst is that Mozilo’s proclamation isn’t […]
Read more...We had noted earlier that one of the motivations for launching the SIV rescue plan sponsored by Citigroup, JP Morgan, and Bank of America wasn’t only to help save the banks who sponsored SIVs from having to tie up their balance sheets by extending funding to them, but also to save money market funds from […]
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