Margin Stanley, China, And High Yield: Mix It All In, And Let Simmer (With An Aussie Accent?)
by Zero Hedge - September 30th, 2011 1:32 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
This week’s trifecta of key financial developments, that go far deeper than superficial headlines, namely China, Morgan Stanley (and European bank exposure in general) and the equity-credit disconnect, just got another major push. CNBC just interviewed Tim Backshall (of Capital Context) to discuss the dramatic moves in MS credit risk (which we mentioned earlier) and in an undeniably convincing accent (British, Aussie, South African?), he managed to bring many of our broader concerns into focus including global financial contagion, bank funding, Chinese growth, and high yield credit. We also learned that ZeroHedge is a blog.
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Mid-Day Update
by TrendTrader - September 30th, 2011 1:28 pm
Reminder: Harlan is available to chat with Members, comments are found below each post.
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Agenus Announces 1-for-6 Reverse Stock Split
by Insider Scoop - September 30th, 2011 1:01 pm
Courtesy of Benzinga.
Agenus Inc. (Nasdaq: AGEN) today announced that its board of directors has approved a 1-for-6 share consolidation, or reverse stock split, that will become effective on October 3, 2011.
The primary objectives for implementing the reverse stock split are to enable the company to comply with NASDAQ’s minimum bid price requirement of $1.00 per share, to reduce the number of shares outstanding to be more commensurate with the company’s size and market capitalization and to reduce transaction costs for investors.
The company’s common shares will begin trading on a split-adjusted basis on The NASDAQ Capital Market at the opening of trading on Monday, October 3, 2011.
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Radiohead To Play At #OccupyWallStreet Event At 4 pm
by Zero Hedge - September 30th, 2011 12:56 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
The scrappy #OccupyWallStreet movement, which is now into its second week, will get some high caliber reinforcements today at 4 pm, when as the official web site indicates, will see Radiohead play a surprise (or not so surprise anymore) for the event. Assuming this actually does transpire, will Radiohead become a harbinger of the interest that other musical bands (and other media organization) will express in the activist venue as a promotion for their own interests, and thus bring much more popular focus to the events in lower Manhattan?
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Navistar Announces Redemption Notice of Senior Notes
by Insider Scoop - September 30th, 2011 12:38 pm
Courtesy of Benzinga.
On September 28, 2011, Navistar International Corporation (NYSE: NAV) issued a redemption notice to holders of its 8.25% Senior Notes due November 1, 2021.
Navistar intends to redeem $50 million of its Senior Notes on November 1, 2011 at a price of 103 and to redeem an additional $50 million of the same Senior Notes at a price of 103 on November 2, 2011. The company intends to borrow under its Asset Based Revolving Line of Credit to finance the redemption of the Senior Notes.
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Morgan Stanley CDS – Is China Part Of The Problem?
by Zero Hedge - September 30th, 2011 12:25 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Via Peter Tchir of TF Market Advisors
The move in Morgan Stanley CDS has been grabbing some attention. It has moved wider than any of the other banks. Its exposure to French banks in particular has been part of the reason. Potential hedging of counterparty exposure has also been listed as a reason. (Once again I can’t help but wonder why derivatives in general, and CDS in particular, didn’t get forced into clearing or exchanges after Lehman).
Those are both valid reasons, but I wonder if there is concern about its exposure to Asia and Asian property markets are playing a role as well. Here is a graph showing the CDS spreads of MS, GS, BAC and Citi. BAC underperforms whenever mortgage lawsuits are in the headlines. All the banks have moved wider as the problems in Europe have continued to escalate, but the underperformance of Morgan Stanley is fairly recent. It is only in the past 2 weeks that it has blown through BAC.
Since the European problems have been around for awhile, I’m not sure it makes complete sense to blame the underperformance on their exposure to French banks. Just below the radar screen of what is trading out there, are problems with Emerging Market corporate bonds in general, but specifically for Asian Property bonds. These bonds have been dropping in price over the past two weeks and have been part of why China CDS is blowing out. The price drop for assets tied to Asian properties is big enough to have an impact.
This graph has MS CDS along with SocGen, France, and China CDS. SocGen CDS has actually improved a lot in the past 2 weeks. If MS was just going wider on the back of French banks, it should have seen more relief. Even French CDS has been relatively stable, so it doesn’t explain the move particularly well either. On the other hand China started widening right around the same time as Morgan Stanley started underperforming. MS CDS is currently at 470 at China is above 200.
I tried looking through the annual report. I could see exposure there for French banks but I remain confused about how much net exposure there really is as the reported numbers are based on Federal Financial Institutions Examination Council’s rules –…
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Margan Stanley CDS – Is China Part Of The Problem?
by Zero Hedge - September 30th, 2011 12:25 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Via Peter Tchir of TF Market Advisors
The move in Morgan Stanley CDS has been grabbing some attention. It has moved wider than any of the other banks. Its exposure to French banks in particular has been part of the reason. Potential hedging of counterparty exposure has also been listed as a reason. (Once again I can’t help but wonder why derivatives in general, and CDS in particular, didn’t get forced into clearing or exchanges after Lehman).
Those are both valid reasons, but I wonder if there is concern about its exposure to Asia and Asian property markets are playing a role as well. Here is a graph showing the CDS spreads of MS, GS, BAC and Citi. BAC underperforms whenever mortgage lawsuits are in the headlines. All the banks have moved wider as the problems in Europe have continued to escalate, but the underperformance of Morgan Stanley is fairly recent. It is only in the past 2 weeks that it has blown through BAC.
Since the European problems have been around for awhile, I’m not sure it makes complete sense to blame the underperformance on their exposure to French banks. Just below the radar screen of what is trading out there, are problems with Emerging Market corporate bonds in general, but specifically for Asian Property bonds. These bonds have been dropping in price over the past two weeks and have been part of why China CDS is blowing out. The price drop for assets tied to Asian properties is big enough to have an impact.
This graph has MS CDS along with SocGen, France, and China CDS. SocGen CDS has actually improved a lot in the past 2 weeks. If MS was just going wider on the back of French banks, it should have seen more relief. Even French CDS has been relatively stable, so it doesn’t explain the move particularly well either. On the other hand China started widening right around the same time as Morgan Stanley started underperforming. MS CDS is currently at 470 at China is above 200.
I tried looking through the annual report. I could see exposure there for French banks but I remain confused about how much net exposure there really is as the reported numbers are based on Federal Financial Institutions Examination Council’s rules –…
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A Free Lunch for America
by ilene - September 30th, 2011 12:24 pm
Courtesy of Brad Delong, Grasping Reality with Both Hands
We are live at Project Syndicate:
BERKELEY – Former US Treasury Secretary Lawrence Summers had a good line at the International Monetary Fund meetings this year: governments, he said, are trying to treat a broken ankle when the patient is facing organ failure. Summers was criticizing Europe’s focus on the second-order issue of Greece while far graver imbalances – between the EU’s north and south, and between reckless banks’ creditors and governments that failed to regulate properly – worsen with each passing day.
But, on the other side of the Atlantic, Americans have no reason to feel smug. Summers could have used the same metaphor to criticize the United States, where the continued focus on the long-run funding dilemmas of social insurance is sucking all of the oxygen out of efforts to deal with America’s macroeconomic and unemployment crisis.
The US government can currently borrow for 30 years at a real (inflation-adjusted) interest rate of 1% per year. Suppose that the US government were to borrow an extra $500 billion over the next two years and spend it on infrastructure – even unproductively, on projects for which the social rate of return is a measly 25% per year. Suppose that – as seems to be the case – the simple Keynesian government-expenditure multiplier on this spending is only two.
In that case, the $500 billion of extra federal infrastructure spending over the next two years would produce $1 trillion of extra output of goods and services, generate approximately seven million person-years of extra employment, and push down the unemployment rate by two percentage points in each of those years. And, with tighter labor-force attachment on the part of those who have jobs, the unemployment rate thereafter would likely be about 0.1 percentage points lower in the indefinite future.
The impressive gains don’t stop there. Better infrastructure would mean an extra $20 billion a year of income and social welfare. A lower unemployment rate into the future would mean another $20 billion a year in higher production. And half of the extra $1 trillion of goods and services would show up as consumption goods and services for American households.
In sum, on the benefits side of the equation: more jobs now, $500 billion of additional consumption of goods and services over the next two years, and then a $40 billion a…
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David Stockman: Blame The Fed!
by Zero Hedge - September 30th, 2011 12:12 pm
Courtesy of ZeroHedge. View original post here.
Submitted Chris Martenson
David Stockman, former US Representative and Director of the Office of Management and Budget under Reagan, does not mince words. He sees the monetary systems of the world coming apart.
How did we get here? He identifies the root cause as the intentional over-leveraging of world economies by central planners in a misguided effort to enjoy growth without consequence.
I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let the dollar float. Because out of that has evolved — or morphed — a central banking policy in the world that absorbs unlimited amounts of government debt. And so we went on what I call the "T-bill standard" or the "federal debt standard." And the other central banks of the emerging mercantilist Asian economies — Japan, Korea, and now, especially, the People’s Printing Press of China — have absorbed this massive emission of debt that otherwise would’ve created powerful negative consequences that would’ve forced politicians to act long ago. In other words, higher interest rates, pressure for inflationary monetary policy, and the actual appearance of price inflation. But because all the bonds on the margin were being absorbed by the central banks, we got away for twenty or twenty five years with “deficits without tears.”
And he’s just getting started. The only thing more impressive than Stockman’s CV of insider roles in public economics and private finance is his talent for colorful metaphor.
On The Fed
As far as I’m concerned, Bernanke is the monetary Darth Vader. He has destroyed the bond market. Because fundamentally, in a healthy capitalist system, the interest rate in the money market and in the longer-term capital market is the price of money and the price of capital. And if the pricing system isn’t working, if it’s been totally crushed, disabled, manipulated, rigged, medicated, everything that the Fed has done with QE1, QE2, zero interest rates, Operation Twist – all the rest of this insanity – then we’ve destroyed the ability of the capital market to function and we’re giving false signals in every direction.
On The Economy
We effectively had, over the last thirty years, a national LBO – a leveraged buyout of the whole economy. And this is important because if you look
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Banks Raise Fees on Same People Who Bailed Out Their Asses
by ilene - September 30th, 2011 12:09 pm
Introduce New ‘Thank You’ Fee on Debit Cards
NEW YORK (The Borowitz Report) – The largest banks in the US made history today by hiking fees on the same people who bailed out their asses three years ago.
“We would not exist today without the generosity of the American taxpayers,” said CEO Brian Moynihan of Bank of America, which received billions of dollars of Federal bailout money. “And we want to thank them by assessing a special monthly ‘thank you’ fee on all of our debit cards.”
Becoming emotional, Mr. Moynihan added, “We think of the taxpayers every time we vacation on our yachts or visit our third homes, and we want them to think of us every time they try to spend $20 on groceries.”
Keep reading: Banks Raise Fees on Same People Who Bailed Out Their Asses « Borowitz Report.
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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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