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Obviously, this is not Zero Hedge investment advice. Hat tip Jared.
The Treasury Price Matrix
by Zero Hedge - May 28th, 2009 12:17 pm
Courtesy of Tyler at Zero Hedge
The Treasury Price Matrix
A useful chart showing the historical levels of the various prices along the Treasury curve. Whoever put the steepener trade on in late 2006 (about the time Bernanke started calling the sho(r)ts) is by now rich, retired, sitting on a beach, collecting 20%.
hat tip Günter Leithold
Must Read: Ira Sohn Conference Notes
by Zero Hedge - May 28th, 2009 12:14 pm
Courtesy of Tyler at Zero Hedge
Must Read: Ira Sohn Conference Notes
For the latest and greatest thoughts in the investment community. Created by Mike O’Rourke of BTIG.
Daily Highlights: 5.28.09
by Zero Hedge - May 28th, 2009 12:11 pm
Courtesy of Tyler Durden at Zero Hedge
Daily Highlights: 5.28.09
- US is considering the possibility of a single regulator for banks.
- April Existing-home sales climbed 2.9% as buyers took advantage of foreclosures.
- Treasury Yield curve steepens to record as sales of govt debt surge.
- AutoZone’s Q3 net rises 9.5% to $173.7M, revs up 9.3% at $1.66B.
- BofA says has raised $26B in capital plan to date.
- GM bankruptcy is considered ‘inevitable’ as bondholders reject swap offer.
- GM has asked for an addln $415M for its Opel unit, stalling talks with Fiat, Magna Intl.
- Jo-Ann Stores beats by $0.19, posts Q1 EPS of $0.30 as revs rise 3.1% to $460M.
- PNC Fincl Srvcs raised more than the $600M after stress-test results.
- Polo Ralph Lauren Corp.’s Q4 net tumbled 57% amid $69M in write-downs.
- RF Micro Device: Demand for products in Jun qtr is better than expected.
- Samsung, SanDisk agreed to a patent licensing deal that heads off the threat of litigation between two players.
- Staples profit falls 33% in Q1 to $143M despite a 19% rise in sales to $5.82B.
- Terex announced that it is seeking ~$600 mln in new financing.
- Time Warner plans to separate AOL.
- Visteon files for bankruptcy protection.
- Warburg Pincus said to mull $1.4B sale of cable operator, FiberNet.
- Zale misses by $0.27, posts Q3 loss of $0.73/sh. Revs fell 20.5% to $379M.
- Economic Calendar: Data on Durable Goods Orders, Initial Claims, New Home Sales & Crude Inventories to be released today.
Earnings Calendar: BIG, BNS, COST, DLIA, FRED, FRO, GCO, HNZ, JCG, JTX, NOVL, OVTI, PERY, SAFM, TD, WTSLA.
Companies to watch: Bank of Nova Scotia, Big Lots, Costco Wholesale Corp, dELiA*s, Fred’s, Genesco, H.J. Heinz Co, J.Crew Group, Novell, Perry Ellis Intl, Sanderson Farms, The Wet Seal, Toronto Dominion Bank.
Recent Rating Actions by Egan-Jones
ALLEGHENY TECHNOLOGIES INC (ATI)
KEYCORP (KEY)
STAPLES INC (SPLS)
HORMEL FOODS CORP (HRL)
GOODYEAR TIRE & RUBBER CO/THE (GT)
GENERAL MOTORS CORP (GM)
RADIOSHACK CORP (RSH)
CON-WAY INC (CNW)
YRC WORLDWIDE INC (YRCW)
SUNTRUST BANKS INC (STI)
GREAT ATLANTIC & PACIFIC TEA CO (GAP)
CAMPBELL SOUP CO (CPB)
GAP INC/THE (GPS)
Data provided by Egan Jones
Frontrunning: May 28
by Zero Hedge - May 28th, 2009 12:09 pm
Tyler Durden’s Frontrunning: May 28
- Time Warner approves spin off of AOL (AP)
- Initial claims drop, continuing claims rise for 17th "record" week (AP)
- Commerce department says soon to be downward adjusted durable goods order rose by 1.9% in April, after a [surprise, surprise] huge downward revision in March, from -0.8% to -2.1% (AP)
- Oil holds above $63, aircraft companies/gas guzzlers luvin’ every minute of it (Bloomberg and Reuters)
- The financial version of the swine flu in Germany (Absolutideas)
- Will Bernanke get four more years at the fed (RealClearMarkets)
- Weil: Morgan Stanley bullying is least of SEC’s woes (Bloomberg)
- America sneezes and the world is germ-free (TimesOnline)
- Never profitable Christian Lacroix files for bankruptcy (NYT)
- California budget blues (The Nation)
- Is a commercial real estate bust inevitable? (Fortune)
- Is the Geithner plan still necessary? (The New Republic)
- Groupthink: China won’t dump our debt (WSJ)
Treasuries Massacred; Yield Curve Steepest On Record
by ilene - May 28th, 2009 11:06 am
Courtesy of Mish
Treasuries Massacred; Yield Curve Steepest On Record
Bernanke cannot have his cake and eat it too. If the economy is recovering the yield curve should steepen. And steepen it has. The Yield Curve Is Steepest On Record.
The difference in yields between Treasury two and 10-year notes widened to a record on concern surging sales of U.S. debt will overwhelm the Federal Reserve’s efforts to keep borrowing costs low.
The so-called yield curve steepened to 2.75 percentage points, surpassing the previous record of 2.74 percentage points set on Aug. 13, 2003.
Ten-year notes have lost 10.3 percent this year, according to Merrill Lynch & Co. indexes, while 30-year bonds have lost 27.5 percent. Two-year notes have gained 0.2 percent.
Rising 10-year Treasury yields are pushing yields on mortgage bonds higher, prompting holders of the securities to sell government debt used as a hedge to protect portfolios against rising interest rates.
As mortgage rates rise, the expected average lives of mortgage bonds and mortgage-servicing contacts extend as potential refinancing drops, leaving holders with portfolios of longer-than-anticipated durations. Duration is a measure of bond price sensitivity to interest-rate change.
“The back-up is mostly related to convexity selling by mortgage investors,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York. “This will be a test for the Fed.”
Yield Curve 1999 – Present
click on chart for sharper image
If the economy is recovering, the Fed should welcome this steepening. However, what if the yield curve is simply reacting at the thought of Bernanke monetizing Obama’s massive deficits and the various stimulus plans?
I doubt the economy is recovering but it is may be getting worse at a lesser rate. Moreover, if the curve flattens, it sure will not be because of intervention, it will be because the so-called recovery has stalled. Heaven help Bernanke if the economy worsens and the yield curve continues to steepen.
Regardless why the yield curve is steepening, Bernanke’s belief that he can control both the long and short end of the curve is seriously misguided. The fact is he cannot really control either, at least for long.
Twilight Zone Treasuries
Flashback April 23 2009: Twilight Zone Treasuries
The Fed said at its last meeting it intends to buy
…
Thrill-Ride Thursday
by Phil - May 28th, 2009 8:27 am
Is this fun or what?!
I love it when a plan comes together and we have been nailing these crazy market moves. I have to admit Cramer had me worried on Tuesday night as we were short into the evening as the master said: "Let this be a lesson to all investors: Watch for these kinds of bull-market pullbacks, because they often precede a continued move higher… All they needed was a catalyst, any old excuse, and that’s where consumer confidence comes in." Fortunately, Jim’s jubilation was short-lived (and this is a great flip-flop on last night’s show) and we were able to press our shorts in the morning off my premise that the Consumer Confidence was BS that would be quickly reversed and we made enough in yesterday’s decline to finish the day with some bullish speculation. I don’t mean to pick on Cramer but, as David Fry wisely points out in his chart, it would be nice if he just admitted he has no clue and people should just be cautious.
While we are still mainly in cash and just having fun betting against Cramer’s sheeple, we went a little bullish on the Dow for the overnights (covering our long DIA puts) on the assumption that Obama would probably not have touted economic progress yesterday if they weren’t expecting some good data backing it up. As I said to members before we even got the speech at 2:18: "It’s not the kind of thing you’d want to say if you knew there was some bad data coming up so I have to assume that we’re going to get an upward revision to Q1 GDP on Friday or, in the very least, jobless claims should be below 600K tomorrow so I don’t want to be short overnight."
One thing we did short is oil and we loaded up on the USO puts as they climbed higher ahead of an OPEC meeting that we expected would yield nothing but sound bites. That went about as expected and we had great fun in member chat this morning already shorting the oil futures as they raced up to a failed test of $64. I am really happy with our short oil position as it turns out we can add OPEC to the list of nations that are counting on other nations to pull them out of a slump to the circle now goes like…
The Chrysler Travesty Hearings Continue Tomorrow
by ilene - May 28th, 2009 5:54 am
All show and no substance, Zero Hedge won’t bother to attend the courtroom drama. – Ilene
The Chrysler Travesty Hearings Continue Tomorrow
Nothing too exciting today at One Bowling Green, just 10 hours of cross examinations of Tom Lasorda, former president and Vice Chairman of Chrysler, Alfredo Altavilla, chief executive of Fiat’s powertrain business and, most notably, Robert Manzo of Capstone’s Advisory Group, the de facto financial advisors for Chrysler (yes, Greenhill, we know you are submitting monthly invoices too, a question arises what exactly for, but taxpayers will let that slide for now). I say de facto, because Chrysler’s Liquidation valuation analysis was prepared and submitted as an expert report by Capstone, so one would imagine they would have to be unbiased, objective, and fair. I will get back to this in a second.
I mentioned Robert Manzo, who had a very critical role in today’s hearing. First, i present Robert’s Curriculum Vitae, which is Exhibit A in the above filing.
Based on this, one would imagine that Mr. Manzo may, in principle, pass as an auto expert, even though looking at his debtor representations, which include Cumberland Farms/Gulf Oil, Camelot Music and Virgin Entertainment, one would presume Mr. Manzo is better suited to prepare "expert reports" for the likes of CBS, Omnicom, and other entertainment-related companies.
Now as part of his obligation to find the best and final bid for Chrysler, Mr. Manzo was busy. He was so busy he contacted a whopping 9 entities (presented below, Exhibit B from the above filing), of which he executed a confidentiality agreement with one single party. Presumably Mr. Manzo was busy thinking of what is the best way to invoice 23.5 hours a day for his hard "bankruptcy" work instead of actually trying to see if there are any interested overbidders to the Fiat stalking horse bid.
Confidentiality agreement here.
However, what demonstrates beyond a reasonable doubt how Mr. Manzo (and Capstone) transformed their financial advisory obligation into a complete procedural travesty is the following: Glenn Kurtz, a White & Case attorney who represents the Indiana pension funds, procured an
…
Overalottment: May 27
by Zero Hedge - May 28th, 2009 5:37 am
Tyler Durden’s Overalottment: May 27
- Tom Lauria seeks GM bondholders for new fight (Bloomberg)
- Chrysler asks bankruptcy judge to approve Fiat sale [and seal the farce] (Bloomberg and Reuters)
- Japan’s PPT – Epic Fail: Japan to scrap $520 billion plan to prop up stock market [at least they are open about it] (Bloomberg)
- What’s cheaper than a fire-sale? A government give away (Reuters)
- US to create single bank regulator (Marketwatch and AP)
- Korean Won falls for fourth day on military threats (Bloomberg)
- Germany says Opel talks stalled on GM’s new cash demands (Bloomberg)
- Humor: GM gives out early paychecks to calm fears (Fox Business)
GameStop Update – CFO Buying
by Insider Scoop - May 28th, 2009 5:19 am
Recall our Channel Checker bear spread on GME last week. Yesterday, the CFO bought 25,000 shares of GME at an average price of $22.48. Due to the large market cap, the buy might not dramatically affect the stock, but it might be worth watching tomorrow morning. – Ilene
| Buy(P) / Sell(S) |
P/S date | Filed Date | Company | Symbol | Insider | Relationship | Share Amt. | Unit Price | Total Proceeds | |||
| P | 2009-05-27 | 2009-05-27 18:59:43 | GameStop Corp. | GME | CARLSON DAVID W | CFO | 25,000 | $22.48 | $562,042.00 |
GameStop Corp. (GME) CFO David W Carlson buys 25,000 Shares
Posted at GuruFocus
GameStop Corp. is the world’s largest video game and entertainment software retailer. The company operates 4816 retail stores across the United States and in fifteen countries worldwide. The company also operates two e-commerce sites GameStop.com and EBgames.com and publishes Game Informer? magazine a leading multi-platform video game publication. GameStop Corp. sells new and used video game software hardware and accessories for next generation video game systems from Sony Nintendo and Microsoft. In addition the company sells PC entertainment software related accessories and other merchandise. GameStop Corp. has a market cap of $3.62 billion; its shares were traded at around $22.01 with a P/E ratio of 8.9 and P/S ratio of 0.4. GameStop Corp. had an annual average earning growth of 11.2% over the past 5 years.
Visteon Files For Bankruptcy
by Zero Hedge - May 28th, 2009 5:00 am
Courtesy of Tyler at Zero Hedge
Visteon Files For Bankruptcy
The auto supplier firing squad just had its first casualty. Not surprising, and definitely not the last one. The bankruptcy was filed in Delaware. From the CEO:
"Visteon is taking this step to maximize the long-term value of the company. During the reorganization period, we will seek to address our capital structure and legacy costs that are not sustainable given the current economic environment. The results of these actions, combined with our innovative products and excellent product quality, will allow Visteon to emerge a financially sound and well-positioned company."
Interesting is that Visteon’s DIP comes from none other than primary beneficiary of the supplier’s parts – Ford.
Visteon’s legal advisor is Kirkland & Ellis LLP; its restructuring advisor is Alvarez & Marsal and its financial advisor is Rothschild Inc.
The 3 month chart of Visteon’s Term Loan is below. Now that the uncertainty about the bankruptcy is removed, and as auto suppliers become the next UAW-safeguarded sector, look for this loan to spike in price.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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