$$$ Bruce Wasserstein: looking GOOD. [Cityfile]

$$$ Awww, look who made up. [CNBC]

$$$ 55 Out Of Control traders [WSF]

$$$ Don’t forget to bid on the dearly departed Bella’s ID card. Proceeds from the auction will be going to charity for either laid off Lehmans or canines.

$$$ Job of the Week: Highland Capital, which sounds like an awesome place to work, is hiring. [DB Career Center]

Don’t ever email this kind of thing again. Really. I’m… going to go lay down.

Jump at your own risk.

Seriously. When you can’t use a little “adult entertainment,” some competitive dwarf tossing, racing lessons, and $50,000 to pay down your client’s bachelor party nut in order to drum up a little business, then what the hell is the point of banking? I mean, we might as well work in the commercial banking group of a regional if we give up those perks. Right?

Lazard Capital Markets, the broker dealer, on Thursday agreed to pay more than $2.8m to settle civil charges accusing the firm of letting its employees improperly entertain traders at Fidelity Investments to win business.

The SEC on Thursday also charged the three ex-employees and a supervisor for their roles. They have agreed to collectively pay $210,000. The firm and the individuals neither admitted nor denied wrongdoing.

Note to aspiring financial journalists: The individual that admits no wrongdoing probably also failed to deny any wrongdoing. Kudos to the FT for spinning that one.

Lazard Capital Markets settles charges [The Financial Times]

As of October 30’s close
LP:
MTD: -17.55%
YTD: -20.14%

Offshore LTD:
MTD: -18.14%
YTD: -20.42%

Seems Volkswagen has worn out its welcome and might be asked to leave the DAX.

Deutsche Boerse AG, operator of the Frankfurt stock exchange, said in a statement today that from Nov. 3 it may at any time remove a DAX stock whose weighting exceeds 10 percent and whose share price over the preceding 30 trading days had annualized volatility of more than 250 percent.

Don’t they realize that this move is just letting the Porsche Terrorists win?

Volkswagen May Face DAX Ouster as Deutsche Boerse Changes Rules [Bloomberg]

Which alternative asset manager only pays his babysitter $12/hour? Clearly times are tough for the once mega-successful financier but if he thinks the vast array of snacks and opportunity to see the infamous ice smoother up close and personal make up for such an insulting rate, he is sorely mistaken.

[Calculated Risk] via [Abnormal Returns]

Oil is down. The markets are rallying. Let’s build more Trucks and SUVs! Brilliant, man. Brilliant! Gutsy contrarian play if ever I saw one!

Ford Lays Bet on New Truck By Rehiring 1,000 Workers [The Wall Street Journal]

Apparently Lemming Lazard is canceling its holiday party this year, though the employees don’t know yet. I don’t think I’m alone here in saying god damn you, people. You’re supposed to be doing better than everyone else (relatively speaking of course, let’s not get ahead of ourselves). And what’s more, now that the artists formerly known as investment banks have become hideous pedestrian bank banks, you are supposed to be picking up the slack and spending excessively no matter how “inappropriate” it might seem given the state of things. For all intents and purposes you are the new Goldman and would the old Goldman pull a stunt like this? Clearly I have to spell it out for you but the answer is no, they most certainly would not. Not only would they throw a party but they’d burn the place down and shout “we’ll buy you another one” over their shoulders to the owners as they stumbled out of the place. Jesus. You know, we were considering gifting you with a prime brokerage and prop desk for the holidays but if you can’t get the freaking holiday party right, how can we expect you front run clients?

Okay. Now that I’ve regained my composure what I’m thinking here is that there perhaps ‘stein is planning on sending a follow-up letter to his Jewish employees once the news hits the tape that says “don’t worry, we’re just getting rid of the Christmas party. On the down low, 8-day Hannukah Bacchanal is proceeding at a pace. Keep it kosher, Bruce.” We’d have no problem with this.

[via Wonkette]

The Big C is said to be making cuts in convertible sales and trading this morning. No word on whether or not holiday parties are getting whacked but I’d be extremely surprised if the firm went the way of BarcLehs, Morgan Stanley et al. It’s been pretty well-documented that 90 percent of the reason Vikula took the job as CEO was so he could don a beard and have employees line up to be bounced on his knee next to a tree without judgment. That’s not the sort of thing he’d give up without a fight. He’ll get rid of half the staff, phones and non-color copies before he surrenders the suit.

We kicked your teeth in yesterday with the news that both BarcLehs and American Express were canceling their holiday parties. Now for the crowbar to your ribs—Morgan Stanley has announced that there will be no company-sponsored petting come December this year. Sayeth MS:

“As you know, in terms of the global economy, it now appears that the environment will remain challenging for the foreseeable future. In times like these, as difficult as it may seem for people in our industry, it is the charities and nonprofits that depend explicitly on donations, many from the financial services sector, that will come under the most pressure in the coming months.

To help ease that pressure, we have asked all divisions to forego their Firm-sponsored holiday parties this year and instead help us apply those designated funds toward helping those most in need. Employees who are personally funding their own holiday events are still free to do so; this request is strictly with regard to Firm-sponsored employee events for the holidays.”

Not included in the note though circulated through the ranks yesterday was the tip that layoffs are a’ coming. Think two or so weeks from now, across the board.

“I have hedge fund managers literally in tears on the phone,” says one London-based car analyst. [FT]

Firm: Tactic With Respect to VW Holdings

Perry: Sticking It Out
Henderson: Sticking It Out
OZ Overseas Fund II, Ltd: Exited in October With ~1% Exposure
Greenlight Capital: Unknown
SAC: Unknown
Och Ziff: Unknown
Marshall Wace: Unknown
Odey Asset Management:Unknown
York Capital: Unknown
Glenview Capital: Unknown
Deutsche Bank: Unknown
Commerzbank: Unknown
Société Générale: Unknown

Final Tally:

Sticking It Out: 2
Exited: 1
No Clue: 10 (DB, Com, Soc adds)

What’s this we hear about you wanting out?

Dolls—I noticed that you’ve worked yourselves into a lather trying to figure out what the impetus was for the slightly unorthodox dialogue that down yesterday afternoon. Just so we can move on—there was no insane Merrill Lynch story that had to be killed. I have it on very good authority—let’s call him one of “my sources“—that the problem was one man’s issue with the other asking “What have you got?” as opposed to something to the effect of “Hereeeeee’s Charlie with the big, huge, earth shattering Merrill story!” Apparently this was not the first time that crazy interrogative statement has been used between the two parties on-air, but it was certainly the last straw.

The next 30 days are lining up to be difficult for hedge funds. The results of September and October will soon be glaring sores on the upper lips of a number of funds looking for a date via the “capital raise” speed dating end-of-year event. That, on top of dramatic dislocations in markets like the Volkswagen spanking, backwards credit markets and the like, promise to freeze up any number of managers. To wit:

Deephaven Capital Management LLC, the hedge-fund unit of stockbroker Knight Capital Group Inc., froze a $1.6 billion fund after investors asked to get back 30 percent of their money.

Withdrawals from the Deephaven Global Multistrategy Fund were suspended so managers wouldn’t be forced to sell assets in falling stock and debt markets, the Minnetonka, Minnesota-based firm said yesterday in a letter to investors. Lenders and trading partners also imposed stricter financing requirements, according to the letter.

They aren’t the first. They won’t be the last.

You can add:

Basso Capital, which reportedly postponed redemptions recently. Ore Hill Partners put certain restrictions back in August according to Reuters.

So, we are starting a new feature here at Dealbreaker. “Bring out your dead.” We know you know where the bodies are. (Even the ones that aren’t quite dead yet). Drop us a line. Tips at dealbreaker dot com is your path to unrecognized and unappreciated journalistic glory.

Deephaven Freezes Multistrategy Hedge Fund to Avoid Asset Sales [Bloomberg]

Color, after the jump.

Barclays raises boatload of money in Middle East. (Bloomberg)
Wanting to stay afloat post Lehman (properly pronounced Lay-Man with a long, southern draw, like the Congressman say) Barclays, has decided to tap the Middle East for some Oil money (early reports* have it that this decision may have come after watching Arabian Knights; is it possible that John Varley has a man crush on Ali Ben Ali?). After raising the £11.8 B the company is reportedly valued at £16; Barclays has seen a 61% drop (post infusion) since the beginning of this recent slip.

Japanese fail, bases formerly ‘are belong to us’ may be returned at pennies on the dollar. (Reuters)
The Japanese, caught up in the emotion of being important again on the world stage, recklessly drove their markets up over the past couple of days just to shamelessly slam them to the floor today. The Nikkei lost 5% today after the BOJ downsized their rate from 0.5% to 0.3%, which according to Reuters means the largest monthly loss they’ve faced as of yet. Ric Flair would be proud, boys.

The British are losers once again. (Reuters)
The FTSE had a bit of a rough night after BT Group announced it wouldn’t make its estimates. On top of the technology issues weaker crude led the Oil companies to losses across the board, one wonders if they’re trying to price Q4 now rather than later. Everyone appears to have stayed upbeat however, as the British have eons of losing to look back on I don’t think this one will hit them particularly hard.

Government bailout loans to be used for bailout. Not kidding. (WSJ)
This entire article is about how the money that the banking system begged for is going to be used to issue loans (re-establish liquidity), which makes me believe this: they really did think we were lying. You remember that don’t you? Back like, I don’t know, about 2 months ago when we were jumping up and down waving our hands back and forth yelling “Dear sweet bearded heavenly father give us some money” and the plebeians were crying about whatever poor mid-lander’s cry about (I think it had to do with VD or the fact that they can’t afford the 3 SUVs they have, I wasn’t paying attention)? I think they really did think we just decided that we wanted the money, and being the fans of humiliation and public scorn that we are turned to socialism to get a loan. Makes sense.

We’re lapsing into a recession, but the mother of all stories is going to be the inflation chaser. (FT)
The idea that the Federal Government can release a trillion and a half dollars into the Ms, lower the interest rate to nothing (effectively) and be responsible enough to reign it all in before inflation swallows us whole is absolutely absurd. They couldn’t get food and water to New Orleans for two full days after Katrina hit and they knew it was coming.

The argument goes like this: with the giant write downs in the credit markets we’ve seen the effective depletion of cash - it just disappeared - and now we’ve got to re-introduce liquidity over a term while the mortgages actually become worth something again. When they do become worth something, we’ve got to figure out how to pull the money back out of the economy so that we don’t have a bunch of extra. That’s the basics of shoring up a liquidity crunch. Here’s what’s happened: politicians got involved because they realized there was some power somewhere that they didn’t have, and at the very same moment they saw there was a camera involved. The result: we’re releasing about 2x as much money as we should be. Let’s be frank: the government buying houses for the people is socialist, it doesn’t matter how you spin it or what you name it**. More over, and more to topic, it introduces a whole boat load of capital into the money supply that we damn well know you’re never going to take out.

And don’t think that we haven’t noticed that you’re swaying monetary policy. The only reason you were given that ability is because we all believed you’d be too inept to use it: the relative inefficiencies of the political market have long been known. You are the vanguards of emotion and the reason that contrarian theories exist. The current system works with the tacit trust of the FED, because well, the FED doesn’t actually set interest rates. They (the FED) adjust the amount of money in the system and the banks turn around, compile the available data, sit for a minute and ponder how trustworthy the FED is and whether they’re gong to do anything stupid, and then everything is updated. You, Congress, are ruining that harmony. Let’s just see what happens when you decide you’re the kings of monetary policy.

This isn’t ground breaking news. (NYT)
What is of interest however, is that given it’s Halloween I would love to see pictures of Cuomo. Not actually pictures of him necessarily (though I wont turn those down) - but if you’re out over the weekend and you should see something particularly obscene feel free to send it in with the best caption you can muster to tips (AT) dealbreaker (DOT) com. It doesn’t have to Rockwell’ian people, just snap the thing with your blackberry paste a comment on it (I’m pretty good at reading drunkenese), close one eye, focus, and hit send.

—William Richards

Barclehs, ever the strange emo child of finance, has decided to go it alone, and will tell the UK to take its bailout money and go pound salt. Taking bailout money is so conformist, yeah. They want nothing to do with it. Cool emo kids take their not quite $12 billion from the much cooler capital sources, like Qatar (that’s Kay-Tur to you, pal), Abu Dhabi and such.

Of course, the decision has nothing to do with the UK executive bonus restrictions that come with taking bailout money. Making decisions based on bonus payouts is conformist. The 14% on preferred shares Barclehs will have to shell out to keep their adoptive parents from taking away the guitar and forcing a trip to Supercuts looks to us like an expensive expense (see what we did there?) to existing shareholders for the luxury of keeping senior bonus pools intact. Take that you UK financial authority conformists!

Barclays to Raise $11.8 Billion From Investor Group [Bloomberg]

$$$ AIG borrows another $20.9 bill [SEC]

$$$ Schumer Challenges IRS Rule Sparking Bank Mergers [Bloomberg]

$$$ Halloween costume ideas. [Cityfile]

$$$ Don’t forget to bid on the dearly departed Bella’s ID card. Proceeds from the auction will be going to charity for either laid off Lehmans or canines.

We just spoke with Charlie re: whatever the hell went down on CNBC earlier. He said “no comment” but offered that he is in “zero trouble” with the network, which is a relief. No word on Ratigan. QUITE shadily, someone sent us a clip of the brouhaha, but within minutes it had been removed. Whoever is responsible: STOP SUPPRESSING THE TRUTH! We can handle it!

UPDATE: It works now, and it’s after the jump.

In re: Perry Capital, and losses not related to the Porsche raping. Apparently PC has shifted to credit over the past six months, and has been mauled by the severe turbulence in bank debt.

Earlier: Larry Robbins, Who’s Been Carrying A Murse For Years, Takes Offense

9181

That makes this:

Posted by StillNoCouch, Oct 30, 2008 12:15PM

9,240.25

(I’m an optimist)

The winner. Despite being 59 points off.

Get it together, people. This isn’t a Lehman prop desk here.

So, okay. The “Closing Bell” team of Dylan Ratigan and Melissa Lee just cut to Charlie Gasparino who supposedly was going to give us some information on “turmoil” at Merrill Lynch. Those of you watching, though, know that didn’t happen. We don’t have a clip— someone, anyone, for the love of No Sleeves and his BoFlex, send it to us now— but paraphrasing, I shit you not, it went like this:

So, the last 15 minutes of trading have been quite entertaining the last few sessions. Are we going to see another case of the market pissing itself in the final minutes? S&P 500 at 945 or so right now. Tempted to short index futures?

Tick… tick… tick….

Update: Not To Plunge.

[via Daily Intel]

So, it’s been widely reported that Perry Capital is one of the hedge funds Porsche made sweet rape to the other day. Allegedly Perry is saying they are down approximately 8% on their Volkswagen position (this seems low to us given that the stock spiked 400% at one point and is still more than double its pre-Porsche penetration) which was 5% of PC’s portfolio (presumably this was before it got inflated by the massive spike in VOW). The portfolio is supposedly down over 12% MTD and 20% YTD. Richard P. is apparently telling people that nothing is fucked, and he still believes in the position, which they are keeping. Man Purse expects (hope, pray, please, god) to recoup the losses.

So that $1 billion fund of funds that Citadel used to run? Yeah, not so much anymore. The “Fusion Fund” is no more, the capital now assigned to “emerging talent” or the like. Citadel is, apparently, moving to the incubator business. I guess we are supposed to think Tiger Cubs and the like?

It seems that 5% of the fund is outside capital. That will be “returned.” (At par? You got me).

Citadel to Wind Down $1 Billion Fund of Funds, Shift Capital [Bloomberg]

We’ve been bracing ourselves for this one but, god, nothing could’ve prepared us for searing pain and sense of loss we feel. I hesitate to even mention it because the consequences could be just catastrophic. And yet, I cannot in good conscience keep this to myself, because it’s the sort of thing that doesn’t just affect the people involved, but counterparties, as well, like bums used to sneaking in a side door and taking part in the free buffett and cash bar. Okay, here it is: we’re told that our favorite Chicago hedge fund has canceled its holiday party this year, adding itself to a growing list now populated by BarcLehs, American Express, Bear Stearns and counting. I’m holding out hope that this a dirty, baseless rumor that will not come to pass but I’m truly terrified. For our friends in the Midwest, yes, but mostly for Gary Busey. It’s well-known in the industry that he works the hedge fund party circuit every year as a member of the catering staff, all culminating with the Everest of shrimp puff serving in Southern Connecticut. If he loses this gig, it’s all over.

Which two London hedge funds have gotten the “lights out” blow from Porsche’s deft Volkswagen move?

So noon Dow was 9006, which makes this:

Posted by Strabo, Oct 30, 2008 10:56AM

9010.05

The winner.

Nice job, Strabo. Double points for actually logging in with a username. Unfortunately, today the prize was just a bop on the head.

So, that was just the warmup. Dow at close… closest without going under. Duh.

GO!

Bartending school enrollment is up! Bloomberg, in a fit of glee over finally finding a reason to use the word ‘hooters’ in a headline, reports that laid off bankers finding it difficult to bounce back with new jobs at the firm down the street are signing up to learn out to mix drinks as a means of alternative employment. According to Bryan Gunderson, previously of JPMorgan, it was sort of a no-brainer to sign up for a course at New York Bartending School, when his severance ran out in August. “It’s come to the point where, yes, I need another job,” BG told the ‘berg. “I always frequent bars, so why not be on the other side?” At NYBS, which has had an 18 percent jump in enrollment, Bryan took a 40-hour, $695 course that culminated in a 6 minute test in which he had to mix 20 drinks, one of which was purple jugs. And Joe (the Barkeep) Bruno, director of the American Bartending School in Manhattan is practically kvelling over his good fortune. “This will be a huge year for us,” Bruno said.

Of course, getting into an industry that capitalizes on the vices of others, which are in peak flare-up during these tough times, makes sense. In addition to serving drinks to drunks attempting to ease their pain, we’re told that a small group of laid off Merrill workers have started a meth-lab out of a midtown apartment and are making a killing tempting certain egret-loving junkies, and that the same business model is being used by former Pirate Capital staffers who just happen to show up on a secluded Stamford road by the water populated by a once mega-successful lover of sponge-y goodness-cum-cream every day at 2 bearing Twinkies, which have been keeping the demons (Ring Dings) at bay.

Certain seals-of-approval have vastly diminished in the last 36 months. Rumsfeld’s Iraq suggestions: low approval. Fannie Mae policy papers: low approval. Dick Fuld’s Feng Shui guide: low approval.

Others, however, have grown rather substantially in the public eye. Your mother’s paranoia about debt: high approval. Your father’s advice to become a doctor and ignore that banking thing: high approval. William Ackman’s advice on anything: high approval.

So when Ackman gives the Fed Reserve a gold star, well, you just want to smile at Beard after weeks of cat-calling him. Don’t you?

What I like is I think stocks are cheap and I think the Federal Reserve has taken some very important steps that will improve liquidity—the banking system—and that in turn will help the economy,” Ackman said on CNBC. “I think the most significant thing the Fed has done is committed to putting $250 billion in the banking system. I think they’re doing it the smart way.

Fed Taking Measures ‘the Smart Way’: Ackman [CNBC]

It seems a few big players were bitten a bit harder than you would expect by the recent whip-saw action at Volkswagen. Funds including SAC, Och Ziff, Perry Capital, Greenlight Capital, Marshall Wace, Odey Asset Management, York Capital and Glenview Capital seem to have taken a slap or two, and, if the Times Online is to be believed, some funds out there are near bankruptcy because of the swing. (Sloppy risk management, that).

Perhaps the bigger losers are the prop-desks at big investment banks (what remain of their number). Deutsche Bank and Commerzbank have suffered from rumored exposure along with Société Générale. (Hah hah! Sorry, we couldn’t help it. They’re French).

Porsche, on the other hand, is sitting on something like EUR 6 billion in paper profits.

At issue is the German regulatory environment, which does not require the disclosure of large stakes in cash-settled options. As a result, Porsche could end up with effective control of Volkswagen without so much as a 13D filing.

Mongrel General: WRONG! Porsche. What is best in life?

Porsche: To crush your financial enemies. See der capital driven before you. Hear the lamentations of dee regulatory relations women.

Hedge funds fear bankruptcy after Porsche squeeze [Times Online]

Cuts are said to be going down in BarcLehs operations circa now. Severance is 2 months pay plus two weeks for every year with the firm, and a lump sum based on some percentage of 2007’s bonus.

Ok, typically we only do the Dow contests when the markets are nuts. But since they are always nuts lately, you guessed it, you can call Dow 12:00 noon. We’ll cut off the bets at about 11:30 or so. Maybe.

You know the rules. Closest without going under.

GO!

American express plans to cut around ten percent of its global work force, a reduction that represents about 7,000 jobs, in an effort to save $1.8 billion in 2009, according to the Journal. Apparently the number one bullet point in a memo sent to employees highlighted a need to “reduce the amount we spend on consulting services” and later in the note, quite hideously, the bomb was dropped that there will be no holiday parties.. At this time, it’s unclear if today’s announcement is in reaction to the failure of the “Speak Up and Speak Out” program announced in August in which the company encouraged employees to get each other fired, or if the tactic will be a cornerstone of the upcoming cuts.

The Journal reports that Bank of America has filed a lawsuit against the asset-management unit of Bear Stearns that oversaw the two ridiculously named funds—High Grade Structured Credit Strategies Fund and High Grade Structured Credit Strategies Enhanced Leverage Fund— invested in can’t miss asset class, subprime. Managers Ralph Cioffi and Matthew Tannin have also been named in the suit, for allegedly misleading B of A about the “financial health” of the entities. According to an indictment from June, in March 2007, Tannin e-mailed a member of his team to say, “[b]elieve it or not— I’ve been able to convince people to add more money.” Unfortunately, the two weren’t arrested (again) today, but let’s get a replay of the dream team being taken downtown this summer.

Oh yeah, here’s Ralph being escorted to federal court in Brooklyn:

‘member this? It’s Matthew, patiently waiting his turn for the same:

Memories. That’s what it’s all about. These kids know what we’re talking about.

What’s a girl to do? The opposing pressures of popularity (or coin) and purity have plagued the female sutler since before the Napoleonic campaigns. Certainly, there is a good bit of the camp slop that spills over into the waiting mouths of such campaign hangers-on, and it is often far too tempting to resist, even for the reluctant (but curious) victualer hopeful.

Yes, the first time hurts, but it gets much easier after that. And, $10 million later, you are an old hand. Even the notion of uttering “no” seems a far away and naive fantasy.

So, we sympathize with Harvard Alum Mudd. Crossing the line was probably hard, but once past, your legs are in the air more often and for less and less than you bargained for. Everyone is doing it, you know.

But, when the gig is up, the campaign lost, the soldiers packed up and headed back to their war brides, or fled back to friendly lines to find another, your virtue is long since gone. No daring solider in retreat to pull you up on his horse and gallop back West. And all those promises made by the troops when plunder was plentiful, broken and lost, yes? Were you naive to believe them rather than take cash in advance? Likely. But that’s the least of your worries, your forgone, bonus betrayal. Your forfeited golden parachute. Now the enemy has closed in. And you will face collaborator’s justice. History is written by the victors, and you overstayed your welcome, missed the signs of the turning battle, did you? Or were you just trying to squeeze out the last few tricks before the front lines folded for good?

Former Fannie Mae Chief Executive Daniel Mudd wished he said “no” to more of the things the company was asked to do, he told the Wall Street Journal in an interview. “We were asked — or required — to expand lending, to conserve capital while providing liquidity, to meet housing goals for the underserved, to serve shareholders and homeowners alike,” Mudd told the paper.

Ex-Fannie CEO Wishes he Said “No” More Often: Report [CNBC]

Bella is dead. I’m not kidding. We found out last night Lehman Brothers’ main bitch, who was laid off by Barclays, was rushed to the hospital on her last day at 745, and diagnosed with a very aggressive cancer. She died on Sunday. Apparently she didn’t want live in a world in which Lehman didn’t exist. The silver lining here is that B-dog had been scheduled to make an appearance in Washington the third week in November, at which time Waxman was planning on grilling her about her role in the bank’s downfall, and shame her over eating Kibbles ‘n Bits when she should’ve been taking one for the team and going generic (Elijah Cummings had copies of PetSmart receipts ready to fire off and Rosa DeLauro had been practicing her Crazy Bitch on Bitch monologue for months). I’m just glad she won’t have to dignify that shit with an answer. Anyway. Go bid on the now invaluable ID card. It’s what Bella would’ve wanted.

The only real upside is that the 0.3% annualized contraction in the third quarter was less than the 0.5% that was generally expected. I’m not really sure how to take that, other than as a sign that the market is hopelessly clueless. But that’s not really new, is it?

Economy Shrinks as Consumers Retreat [CNBC]

And it has nothing to do with my investment in wind power. No. Seriously. Nothing. It is going to the sky. Seriously. Like, sometime next year. Without a doubt. Be ready, this time. Better buy wind now, before its too late. This time for real. Yeah, yeah, it was on CNBC. So what? They were the only people who take my calls anymore. That’s how much of a contrarian I am.

(Oh, yeah, and I’m totally out of the market. That’s how sure I am).

Pickens: I’m On Sidelines … $100 Oil in 2009 [CNBC]

Reputation is everything, it seems. So while others are closing shop, the likes of SAC, Greenlight, Elliott Management and Brevan Howard Asset Management have raised billions. Of course, Stevie Boy isn’t taking money until January, since his idiot portfolio managers forced him to close most of SAC’s operations in disgust earlier this month.

Just a guess, but do you think Bloomberg has it right? Do high water marks have anything to do with it?

SAC’s Cohen, Einhorn Raise Money as Most Hedge Funds Shrink [Bloomberg]

“Analysts welcomed the move but said it had already been priced in and the outlook remains grim.” (Reuters)
This has all the grace of a blind dog running head first, full speed, into a brick wall. Sure Bernanke, you say there’s a treat on the other side, but we both know there isn’t. We’re floating dollar liquidity in concert with the IMF to the EMs until April 30th, and there’s a 600B Mortgage Billthat might be coming to the table in an exercise of insanity worthy of worship. But, at least this has nothing to do with fear or emotion, it’s completely logical.

Economic Fundamentals set the stage for Oilrebound (Bloomberg)
The question wasn’t ever whether Oil would rebound, but rather how long the illiquidity issue would keep it depressed.

Trading Markets provides the information to get on to the Exxon call this morning.

It’s (almost) always a good thing to beat the Street’s expectations. (WSJ)
Deutsche Bank beat expectations this year in spite of posting a 73% fallback this quarter “as results were boosted by a reclassification of assets under new European Union accounting rules and a tax benefit”.

Empire of the Sun. (BBC)
The Nikkei pushed ahead nearly ten percent (9.96%) last night in the third day of gains posted by the Japanese exchange. US liquidity injections into the EMs, the rate cute, the projected rate cut by the BOJ, and a 5 trillion yen stimulus package that includes highway toll (seriously?) cuts were listed as the primary culprits in the “rebound”.

FTSE 100 relatively flat overnight. (FT)
Promising indicators as to what Exxon might say came out of Shell, as they reported earnings overnight (71% rise in Q3 profits). The British banks are calling for rate cuts similar to those seen in the United States yesterday, and optimism about the move appears to be crutching the market, for now.

Best and brightest future of Government number crunching? (Reuters/Trading Places)
I’m torn between crying and laughing here:

“Yet another sign of tough times on Wall Street, dejected financial professionals were among those lined up yesterday for a shot to work for none other than the IRS, the New York Times reports.”

—William Richards

$$$ Who will Morgan Stanley acquire? [The Deal]

$$$ Top 55 out of control traders [WSF]

$$$ More Thoughts on the Merits of Mark-to-Market [Dealbook]

$$$ Banker wins lottery. [NYP]

By now you’ve likely heard the news that Attorney General Andrew Cuomo has joined the war on bonuses, sending letters to nine banks demanding that they hand over information on past and future pay packages for top employees, and threatened that he might be forced to sue them. Cuomo wrote: “Specifically, corporate expenditures and payments, made in the absence of fair consideration of undercapitalized firms, may well violate NY Debtor and Creditor Law 274, which deems such payments illegal fraudulent conveyances.” I know gigantic bonuses that reward ineptitude can’t continue, and that the firms just got a bunch of taxpayer money and blah blah blah but honestly, you know Andy is loving this shit. Can’t you see him having a team stashed outside of Citi (Goldman, wherever) on November 5, the day the 411 is due, stop watch in hand, counting down to noon and at stroke after 12 declaring Vikula too late and motioning to everyone, “we’re goin’ in,” at which point his performs a raid on the place, assaulting anyone who gets in his way with a night stick?

ATTORNEY GENERAL CUOMO SEEKS BONUS POOL INFORMATION FROM BANKS RECEIVING FEDERAL FUNDS [OAG]

Muffie Benson-Perella (muffie AT muffmarkets.com) was an Associate in the Investment Banking Division of a “Bulge Bracket” bank. She holds a B.A. in French and Art from Vassar College and an M.B.A. from Harvard Business School. She concentrated in Contemporary French Poetry at prep school where she was awarded the exclusive premiership of the school’s “French Club.” Today, Ms. Benson-Perella is the Founder and Managing Director of “Muffie on Markets” (http://www.muffmarkets.com), a deep dive into capital markets, finance and investment strategy. She is also the Founder and Managing Director of Muff Cap, LLC., an invitation only, private investment vehicle for non-existent, prestigious and accredited investors only, employing an actively managed, long-short strategy.

I am sick and tired of all the doom-sayers going around and trashing the economy. Someone please explain to me how the economy can be “tanking” when an automaker is the largest market cap stock in the world, eclipsing an oil company? Does that sound like recession to you? When a middle-class yuppie car with so-so gas mileage is putting the black gold people to shame? I don’t think so.

Then there is the hint that says all that needs saying: certain highly prestigious investment banks are back into the triple digits where they belong. Yahoo and AOL are in talks that will permit Yahoo to finally overpay for AOL. Casinos are back in vogue. Don’t give me that “dead cat bounce” thing either. That is so, so tired.

Look, it is beyond depressing when Cramer is the only person who agrees with me. Let’s get on the stick ok?

As you may or may not be aware, my birthday is this week. I’m expecting big things from the ‘rents this year. As such, you people need to get on it and start buying some shares. Get off the sidelines. The nation is looking to us for leadership. My birthday presents are looking to you for leadership. We have to set the pace. Sprint for the first few miles. Then we can relax, let the pack follow along, and lag back until a taxi comes along to take us to the finish. You know what I mean. I’m talking about consumer confidence. I’m talking about spending. I’m talking about boosting the debt loads again. I’m talking about patriotism.

I realize that it looks a little like we have to behave ourselves and be good while Waxman is watching, but its just temporary. This is no time to cancel plans for Lech. This is not the time to postpone the engagement. This is absolutely not the time to cancel the sailing trip.

As for your fear-factor rhetoric, I don’t want to hear it. Get your ass in gear and start buying baubles for your loved one. That is what is needed today. Purchase courage.

Ok, you people, you are not listening. Just since I’ve been typing this you bombed the entire market. We were up to 970 on the SAP for god sake. You killed 40 points in 4 minutes. That is not cooperation. That is not the kind of leadership I am talking about. Is there a man among you? Even one? Am I going to have to find a date from Citibank for the Christmas party this year?

I’m done for the day. I am going to borrow Aunty’s oxygen tank for a few minutes and then I am going for a well deserved spa day.

I feel totally nauseous. You people make me sick.

Congratulations to the 45 percent of you who called it, and the 9.5 percent of you who picked option F, the “1 Night With Bernanke” auction, which is proceeding at a pace.

We were not so nice to the Sands the other day. They had been trounced by the market. So today, when they are up 95% on news that the Singapore government will help complete their in-limbo downtown Singapore casino project, well, it makes us all warm and fuzzy inside.

Las Vegas Sands Corp. almost doubled in New York trading after the Singapore government said it was in talks with the casino company to help finish a $4 billion casino project.

Hope you covered your shorts.

Las Vegas Sands Soars After Talks With Singapore Government [Bloomberg]

The Wall Street Journal points out that MGM is in full meltdown mode.

MGM Mirage reported third-quarter net income fell 67% and said it was suspending plans to build new casino properties in Las Vegas and Atlantic City because of the credit crunch.

Predevelopment work has been done on the MGM Grand Atlantic City, but the company will halt development until the economy and capital markets “are sufficiently improved,” said Chairman and Chief Executive Terry Lanni.

We sort of thought that when Kirk Kerkorian said he was packing up his automotive (ahem) bet in order to focus on MGM (he’s the largest shareholder) it was just a cover story to save face. Well, maybe MGM really was in need of the Kirk’s full attention after all.

It is not a good time for mega-resorts (Kirk is the King thereof). Gas prices alone make Las Vegas an even more annoying destination than usual.

Our crankiness about Kirk aside, we are rooting for him. If he prevails it would sort of be like your grandfather (or great grandfather, perhaps) taking over RJR.

MGM Mirage Suspends Casino Projects as Profit Falls [The Wall Street Journal]

Announcements: Policy 29 Oct 2008

Seasonal Parties

I would like to inform you that we will not be holding our annual Seasonal parties this year. I know this might come as a disappointment to many of you, who look forward to the opportunity to relax among colleagues and celebrate a year of hard work and accomplishment. Perhaps more than any other year, you can be proud of your achievements despite extreme market conditions. Your focus, resilience, and attention to clients have allowed us to outperform the competition and continue to build the business as a result. The acquisition of the North American businesses of Lehman Brothers and the UK authorities’ recent endorsement of our current capital strength and future capital raising plans would not have been possible without that performance. However, in the current difficult environment for our industry and for the economy as a whole, which affects not just financial services firms but our clients as well, it is not appropriate for us to do anything that might be seen as inappropriate by any of our stakeholders. We have therefore decided that there will be no firmwide or departmental Seasonal parties funded by the firm this year.

1:28: Nothing happening yet. Jazz is playing

1:31: Ackman in the house. “I’m supposed to say we have a 75 cash settled call position on Target…inside joke.”

1:31: This is not “activist v company.” We’ve had a wonderful dialogue. This is a great management team.

Where do we stand now? In May we made a presentation. We’re trying to iterate a solution to a problem we’ve identified. The company has raised some concerns. We’ve made adjustments to the transaction

- Shout-out to advisors UBS and Sullivan & Cromwell

- Real estate side of Target = “superb assets.” 95% of the buildings are owned. Own 84% of distribution centers. Known for keeping stores and parking lots clean.

- Target owns highest percentage of its real estate compared to other big box retailers.

- What if Target were to rent its real estate?

Okay, people—we’ve set up the eBay account. You can now vie to purchase the hottest, most in-demand calling card since Sam Israel’s egret hit the market. That’s right, the bidding on former Lehman Brothers employee Bella’s ID begins now. After mentioning that perhaps the proceeds would go to laid off Lehmans, the peanut gallery, in an uproar, said it would prefer canines. That’s still a possibility, but if I might, let me just say that perhaps a certain Bearded fellow and his friends might be the most hard up at the moment, and in need of our charity? We’re the only ones who can save him from being auctioned off “Win a Date with Ben, Save the Fed” style.

Bella’s ID Card [eBay]

UPDATE: Bella has passed on (making this ID all the more valuable. Proceeds now definitely going to some sort of dog charity).

This Volkswagen thing is getting serious.

The Wall Street Journal is running a piece now challenging the credibility of German regulators in the incident, intimating that the huge spike in Volkswagen shares was the result of some regulatory failure. That’s the other shoe dropping right there. Shares drop 50%, it’s a regulatory failure. Shares spike 400%, its a regulatory failure. And, of course, the Wall Street Journal drops the nuclear bomb of regulatory justification. The incident might “enfeeble banks.” To wit:

The repercussions may be more significant. Any major losses suffered by hedge funds which have scrambled to cover short positions in VW at ever more exorbitant prices could end up enfeebling counterparty banks, already hard hit by the credit crunch.

When are we going to let risk be risk? These are all big boys playing with Volkswagen. Had it gone right, they would have made big profits.

Germany’s Crash-Test Dummy [The Wall Street Journal]

How’d you like to be an investor in only the second (and third) money market fund to “break the buck.” Yes, we decided we’d pass too.

The Reserve Fund, “the nation’s oldest money market fund” has gone mostly-quiet for the many investors who’s cash is anything but forthcoming, at least since it “broke the buck.” A lawsuit lingers, allegations of tip-offs to large investors allowing them to get their money out before the crisis are floating around. We are sympathetic. To a point.

There is a reason these funds yield greater returns than other “cash or cash equivalent” instruments. Much of the financial consumer population has gotten quite complacent about the term “cash or cash equivalent.” This, coupled with the deep rooted certainty that Americans are entitled to ever higher riskless returns, and enough sob stories might just cause you to forget that you are investing in a risky instrument. Seriously, folks. The Reserve Fund is in trouble because it had substantial holdings in Lehman debt. Oops.

It was only a matter of time before another money market fund broke the buck. You knew it could happen. It had once already. At the risk of going all Taleb on you, just because there hasn’t been a collapse in recent memory, doesn’t mean that one isn’t right around the corner.

In the end, it is the free lunch that is most expensive.

Reserve Fund’s Investors Still Await Their Cash [CNBC]

October 29, 2008 Goldman Sachs Announces the Partner Class of 2008

We are pleased to announce that the following individuals have been invited to become partners as of November 29, 2008, the start of our next fiscal year. These appointments recognize the contributions and potential of some of the firm’s most valued senior professionals.

Beard arrives at the Fed building earlier this morning. [via Reuters]

We think David Einhorn is dreamy. So you can imagine our alarm when rumors reached us to the effect that Greenlight was involved in this shabby Volkswagen business. Greenlight, apparently, was betting against Volkswagen via short positions. Not a bad play early in the game of a budding global recession. Equally deft given the powerful union at Volkswagen, a force preventing any sort of cost mitigation during a downturn. So when Porsche, which has been quietly and not so quietly angling for control (“domination” in the German) of Volkswagen for some time, surprised the market with a set of rather aggressive announcements, panic set in, shares quadrupled and shorts scrambled to cover. You can be fundamentally right and still take it on the chin.

We hope David comes through. Don’t let us down, Einhorny!

Panicked Traders Take VW Shares on a Wild Ride [The New York Times]

Who said the Russians don’t know bailout? When Mikhail Fridman (close ally of Putin’s administration) got himself on the wrong side of Deutsche Bank and friends to the tune of $2 billion, the Kremlin simply wrote him a check, which he steadfastly refused twice before finally giving in.

In Former-Soviet Russia, bailout begs for you.

Russia Tosses Life Preserver to One of Its Richest Men [The Wall Street Journal]

Europe Gains, DAX recedes
The DAX was alone across major indices overnight -128.62, led down largely by the volatility in VW while the rest of Europe saw gains led largely by financials. Additionally, it would appear that the FTSE is looking across the pond for a rate cut, after posting modest gains (5.1%).

Nikkei goes activist
The Nikkei rose 7.7% overnight on rumors that BOJ would be posting a rate cut at Friday’s meeting. Gains are of course welcome in the Nikkei, which after a rough month of trading somewhat resembles a hooker trapped in a snow storm.

Porsche to sell part of VW
Porsche reports that it will “sell 5 per cent of VW to try to avoid “further market distortions” that had threatened the survival of some hedge funds.” It appears that the Frankfurt exchange will be adjusting the weighed value of VW from 27% to 10% to limit future exposure/volatility.

Wall St Leaders Say New, Not More, Regulation Needed
Adventures in patently obvious statements:

“One thing is clear within firms and externally: no one knew just how leveraged these firms were,” Mr. Pitt said, observing that chief executives announced write-downs within weeks of denying they had an exposure problem.

US Futures down
After yesterday’s rise, the second biggest in DJI history, it looks like we could be off to a slow start this morning. We’ve got earning reports from a slew of food and household staples manufactures, not to mention the Wachovia wunderkind, Prudential. Other highlights of the day include: the possible Federal Reserves rate cute, durable goods numbers for September are down 1.2%, and The Mortgage Bankers Association is going to release their data on lending figures.

FT has an article by George Soros that addresses such scintillating topics as the asymmetric effects of the current credit crunch, and possible IMF resolve to help periphery countries through the turmoil.

In Chicago, Trump Hits Headwinds
Caption Contest Wednesday:

—William Richards

$$$ HBK Investments lays off 60 employees [HFMWeek]

$$$ Treasury’s 25 garbage men [The Deal]

$$$ Artist Paints Over WaMu Branch [City File]

I love mornings! I clap my hands pinchers every morning and say, ‘This is gonna be a great day!’

Barclays Plc, the U.K.’s second-largest bank, is seeking bids for $1.5 billion of bonds and $3.5 billion of credit-default swap contracts held by a hedge fund.— Bloomberg

As you’ve likely heard, Henry Waxman has sent letters to nine banks demanding that they justify pay and bonuses. The representative from California wrote, “I question the appropriateness of depleting the capital that taxpayers just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry’s worst years on record. Some experts have suggested that a significant percentage of this compensation could come in year-end bonuses and that the size of the bonuses will be significantly enhanced as a result of the infusion of taxpayer funds.” Apparently the institutions are to get back to him by November 10 with answers. I have to say, this legitimately frosts my cookies.

I’d have more respect for the chairman if he pulled a Barney Frank and got on his megaphone and called for a ban on bonuses outright. But this meddlesome bull shit is actually quite disturbing. I’d like to know what Wax would consider acceptable justifications (which presupposes he’s thought about this and isn’t just winging it). Do the banks that fail to refer to him as Herr Henry get automatically disqualified from bonuses this year? What about the ones that rail against the “excessive and outrageous greed that permeates Wall Street” and include pictures of their first year analysts being bent over a desk? Are they up this year? For every paragraph that doesn’t include a footnote complimenting Waxy on his distinguished chin and Roman nose, do bonuses drop five percent? No one should respond this request. As a compromise, a la NFL challenges, Waxman can pick three employees’ bonuses each year that the banks have to give good reason for distributing. But that’s it.

Chairman Waxman Requests Compensation and Bonus Information for Employees of Major Banks [Committee On Oversight And Government Reform]

Charlie Gasparino reports that Citi is “entertaining lots of offers but not in formal talks with anyone right now.” That’s fine. Just so long as you remember who loves you, bitch.

I love Morgan Stanley, I really do, but I’m sort of beside myself right now on behalf of the bank’s prime brokerage clients. We’ve just been informed that while in year’s past, customers have received free copies of Zagat’s during the holidays, management has decreed that the gravy train is o-v-e-r. Supposedly, all you’ll get for allowing the Mackettes to clear your trades this year are “Christmas cards and calendars.” The saving grace here would be if the latter featured CEO pinups in debased positions. And to be honest, considering that now, more than ever, they need to work for their money, I can see that happening. But we’re not getting our hopes up. Not this time.

The Las Vegas Sands (LVS) has neatly lopped a quarter of the value off its shares today. That’s brutal. Worse when you realize that the stock was in the high $30s earlier in the month. We thought gambling was supposed to be recession proof. Well, maybe they were 90s-style recession proof, but this is entirely different. (Just ask Kirk Kerkorian).

My own theory is that all the casino stocks move in unison with the projected size of Wall Street Bonuses. (But the effect is stronger for the Atlantic City properties).

We don’t agree with Charlie Gasparino on everything (namely, deli meats) but on the topic of one of two entities formerly known as investment banks needing to make a gal-pal of Citi asap, we are on board. Problem is, CG is not certain who would go best with a jolly elfin’ CEO—Blankfein or Mack. On the one hand, it’s fairly well-documented that Lloyd loves to give belly rubs, so that would be a natural fit. On the other, as Gaspar points out, Mack and Vickula both worked at Morgan Stanley, so there’s a familiarity there. And of course, there’s this:

So has your local bank announced an infusion by the Treasury yet? No? Then the Treasury might not think it is going to survive the crisis. That’s how the New York Times plays it, anyhow. There is a certain bitter smell to the article. I strongly suspect that some of the people involved in the piece over at the New York Times were, long ago, left standing in line after the list of the people picked for the baseball team was read.

But, you know, there are other reasons your bank might not have rushed out a press release. Perhaps they just don’t like the terms the Treasury has to offer, and now they have to spend the rest of the month explaining that no, they did qualify, but they just chose not to take the money. Good luck with that, guys. Let us know how it goes.

Which Banks Won’t Make Henry Paulson’s Cut? [The New York Times]

Bloomberg reports that Credit Suisse will eliminate 500 jobs in securities and support staff in response to “market conditions and projected staffing levels required to meet client needs.” The new reduction in workforce is on top of 1,565 cuts announced earlier in the year.

Goldman Sachs and Morgan Stanley may be getting lightly pounded this morning but thanks to a being dubbed possibly insane, Sam Israel is not. Yes, ladies, the hedge fund industry’s biggest M*A*S*H fan has seen his prison sentence delayed for a third time. The Bayou Group founder, who ran into some trubs when he ripped off his investors for $450 million and then faked his own death in an attempt to avoid the big house, has been ordered to undergo 90 days of medical and psychological evaluation in North Carolina. Israel’s plea hearing has now been delayed until next year (the last time he got out of it was because his lawyer convinced the judge the process of weaning Israel off of fentanyl patches wasn’t complete yet; the time before that apparently had to do with the fact that Sammy’s smack habit rendered his ability to think clearly at about “60 to 70 percent”). Obviously we welcome this moment of reprieve with open arms, though we are a bit nervous about some quack doctor trying to “cure” SI of his attraction to birds. Fingers-crossed, some opened minded saint who understand that there’s nothing wrong with inter-species sex is assigned to his case.

David Faber suggested earlier that Goldman Sachs is down today because people were wondering if GS was in the Volkswagen trade. That could be it, or perhaps it has something to with people being pissed about the hold up of a little announcement. Whichever, we’ll buy either. Pretty boy unfortunately did not do any hypothesizing vis-à-vis what’s up (/down) with Morgan Stanley. We invite you at this time to pick up the slack.

Related? Morgan Stanley Takes Page From Stamford’s Play(a)book

Update: Fabes has heard from sources inside GS that there are “no significant losses tied to trading in Volkswagen.” Also: digging the title of the graphic the network just put up on the topic of the automaker (“This Makes No Sense”).

Despite erroneous reports to the contrary, Goldman Sachs’s new partner managing directors will not be announced today. Yes, this is disappointing. BUT. Because we know we’ve got at least 24 hours until the big list comes out, we’d like to take this opportunity to make a last minute plea to whoever is in charge of orchestrating the event that it be rung in with ridiculous, almost embarrassingly crass fanfare. And I know you’re going to object, citing “inappropriateness,” given what we’re going through, and the fact that there were a lot of issues last year surrounding the matter of how to put Lloyd Blankfein inside a cake to jump out of without suffocating the little guy, not to mention infighting amongst the team contracted to fashion the full body suit he wore during the launch, with respect to whether or not flesh colored fabric made the CEO look too much like a penis. But I’m going to ask you to put all those reservations and old wounds aside, because now, more than ever, we need hoopla.

Here’s the rub: we’re always excited about masters of the universe becoming that much more masterful, and we don’t even stand to benefit from the distinction. Something just feels a little more somber this time around. I can’t quite put my finger on exactly what the source of the overwhelming sadness permeating the DB HQs is but I can tell you it’s bad. And I just feel like now is the time for Goldman to go over the top with this one. It’s not going to make anyone who doesn’t work at GS, or work at GS in the capacity of PMD feel better, but it’ll make things as they should be. I don’t want to tell you how to run things but I’m just saying that if the names happened to be announced via one of those airplanes that writes stuff in the sky, and first year analysts were tasked with shooting PMD t-shirts out of those guns they use at sporting events, it wouldn’t be such a bad thing. Also, think about confetti, and piñatas. At the very least, the fact that you’re not being named partners of Golditi Group is cause for celebration.

Those looking for retribution against the executives of failed companies will quickly see that prosecutions won’t come easy. The law gives executives wide latitude to run their business, no matter how terrible their decisions. And even convictions would seem an incomplete conclusion given that a system — political and regulatory — also failed the public.

Be afraid. Be very afraid.

Volkswagen has defied explanation for a long while. VW’s powerful labor union has made it difficult to deal with, expensive to operate and therefore subject to severe shock in any economic downturn, where it would lack the flexibility to quick reduce its cost structure, and made the prospect of control by Porsche, a minority holder since before 2005, seem unlikely. That in conjunction with 20% ownership in Volkswagen by the state of Lower Saxony, which grants it veto power over any merger, made the auto maker the stuff of short dreams. Porsche had been trying to protect Volkswagen as one of its major suppliers for years, but that was beginning to look like an expensive bet.

Shorts piled on Volkswagen. Something like 12-15% of the common float was borrowed for shorting as recently as last week, a strategy buoyed earlier in the year by Porsche’s insistence that it was not interested in control (or “domination,” in the local parlance. If nothing else, you have to give the German’s credit for getting into the militarism of corporate control).

Then the dam broke. First, there was talk that the law granting Lower Saxony veto power could be struck down by the EU. Then, surprising everyone, Porsche revealed that it held options that would bring their control up to just shy of 75% of Volkswagen. Said the firm:

“The disclosure should give so-called short sellers… the opportunity to settle their relevant positions without rush and without facing major risks.”

A reminder, I suppose, that the German penchant for sly understatement after a Blitzkrieg like stroke remains intact.

Volkswagen shares jump and short-sellers pounce [The International Herald Tribune]

Couldn’t have happened to a nicer bunch of guys. OPEC’s credibility being about as valuable as Managing Director in a dataroom, their “dramatic announcement” of production cuts after an “emergency meeting” earlier resulted in bored yawning from markets. This has prompted talks of an “emergency emergency meeting” which apparently can’t wait until December.

But, for self-serving quotes that remind you how much financial idiocy helps OPEC, and to what extent they are willing to wield that power to befuddle, this missive from Kuwait’s Oil Minister Mohammad al-Olaim has got to take the cake:

OPEC does not interfere in setting the price but what sets the price is the mechanism of the market…. OPEC always seeks to stabilize the market and availability of the product.

If they get panicky enough, (and remain cohesive enough) OPEC might… er… “over-stabilize” the market right back up to the stratosphere. How desperate are they? Quiz for the oil gurus in the audience: before this year, when was the last time an emergency meeting was called without a single dissenting vote?

OPEC officials say ready to act again to boost oil [Reuters]

Iceland’s central bank Tuesday pushed its key interest rate up to a record high of 18% from 12%, reversing a hefty rate cut earlier in the month.

[…]

Trade in the Icelandic krona is at a virtual standstill and is fixed by the central bank in a daily foreign currency auction. Monday, the rate was fixed at 152 kronur to the euro and 120.69 kronur to the dollar.

It is as if the unwinding of the carry trade that blew them up in the first place was the thin shadow of a distant memory. Apparently, the massive hike is the IMF’s bright idea.

Oh, what I wouldn’t give for a foreign exchange account, access to the kronur and a big hunk of liquidity right now.

Iceland Raises Key Rate Six Points [The Wall Street Journal]

From the mailbag:

Barclays Capital today “surprised” all of their IT contractors in the US (and quite a few permanent employees on both the Lehman and Barclays sides) with an end of shift termination notice, in typical Lehman fashion. Managers and vendors alike were forbidden to disclose this info in advance.

Given that the most senior members of just about every IT team with any sort of production support responsibilities WERE contractors (web, server, database, messaging, networks) - it should be interesting to see how the ongoing Lehman integration efforts (and even just BAU activities) proceed after today.

Rescue Plan Faces Delays In Hiring Asset Managers (WSJ)
The Journal reports that Bald’s plan has hit a few roadblocks, mostly related to the hiring of financial firms to oversee the program, and the fees the government will pay asset mangers for their services (which will probably end up at about 0.15% to 0.20% of assets). Unreported tensions also apparently threatening to undermine things include infighting over who put the empty bottle of Turtle Wax back in the cabinet, and several awkward occasions on which Bald and Beard showed up to open mic night wearing the same outfit.

BP posts 83 percent rise in 3Q profits (AP)
BP PLC reported a net profit of $8.05 billion (42.56 cents/share) for the third quarter, up from $4.41 billion (23.07 cents/share) last year. Revenue was up 45 percent, to $103 billion, from $71 billion.

GM, Chrysler request $10 billion in aid (Reuters)
General Motors (which continues to tell us bankruptcy is not an option, so that settles that) and Cerberus have requested $10 billion from the Treasury to facilitate a merger between GM and Chrysler. The funding would include approximately $3 billion in exchange for preferred stock in the merged company. The Treasury is apparently mulling it over.

German Financial Regulator Is `Analyzing’ Volkswagen Trading (Bloomberg)
BaFin, Deutschland’s financial regulator, is “in the process of analyzing Volkswagen trading” but hasn’t opened a formal investigation into possible stock manipulation because “pure cash-settled options do not require disclosure” under German law.

Funds’ October Surprise (NYP)
JPMorgan Asset Management has lost $7 billion in assets since the beginning of July. Assets at Ray Dalio’s Bridgewater Associates dropped to $38 billion from $43.5 billion.

Boeing reaches deal with machinists’ union (FT)
BA reached a four-year agreement at “should” allow production to recommence following the little strike by 27,000 members of The International Association of Machinists, which has cost Boeing around $5bn in lost revenue. Tom Wroblewski, the president of the union’s District 751 said that the workers had “gained important and substantial improvements over the Company’s last, best and final offer that was rejected on September 3.” From Boeing’s view, the company “retained the flexibility necessary to manage its business, while making changes to the contract language to address the union’s issues on job security, pay and benefits.” There’ll be a ballot by Machinists in three to five days.

CNBC has sent Squawk Box’s Carl Quintanilla to report from Florida. Ostensibly its in anticipation of November 4 but he’s in Clearwater so fingers crossed we’ll get a tour of the Scientology castle at some point this week, with split screen commentary from Charlie Gasparino. In related news, the $Honey will be interviewing McCain and Palin this morning at 9:30, and Joe Kernan has thrice banged on the desk and nearly (completely?) lost it over the suggestion that the network is endorsing the McC/P ticket.

$$$ Follow the Money [CFO]

$$$ Financial Collapse Inspired Halloween Costumes [WSF]

$$$ Ken Lewis wins Banker of the Year award for acquisitions of asbestos company. [DB]

Confirmation bias alone isn’t enough to explain this market. You also have to add in a healthy dose of irrational optimism with respect to the prospects for future earnings and several flavors of personality disorder. It is almost as if the market is lulled (if you can call 60-70% implied volatility in index options ‘lulled’) into some conviction that this is the ground state, only to find, at some date in future, that the market is nestled in a false vacuum. Throw enough energy into it the right way, and you’re in for a nice bit of vacuum decay.

The market has absorbed so much marginal news as “cause” for celebration, relief and joy (today’s housing stats for instance) in the face of darker and more imposing clouds no longer hidden over the horizon, that it just doesn’t seem prepared to endure much in the way of a shock. A loud enough sneeze is enough to twitterpate this market beyond all hope of immediate repair.

That said, a slow climb by the indexes today followed by the now trademarked plunge before the close (sometimes with a last-second recovery, sometimes not so much) just tells you buying on the dips is like building on mud.

The VIX, a vastly overused and yet misunderstood metric, has been pegged to “record highs” (whatever that means for an index that hasn’t been around for even two decades yet) for days now. And maybe it’s just me, but backdating VIX calculations just rubs me the wrong way.

In these circumstances, it seems almost useless to comment that the S&P 500 closed down over 3%. That the Dow was down to 8176. It seems more interesting to point out that the S&P 500 traded in an 5.5% range. The Dow across a similar spread.

Sure, your mom will call you tonight and tell you that she’s been watching CNBC to “keep abreast of the markets” in the face of the “chaos.” Yes, you’ll just have to cope while she tells you what the VIX is (“the ‘Fear Factor.,’” she heard Cody talking about it, you know. She always watches Fox Business now. “Just in case.”) That’s the price you pay for taking her money to go to B-School. You’ve got to listen to her when it comes to Fox Business.

Take heart. In this market she knows as much as anyone. Including, Cody on Fox Business. Seriously.

That would be this poster:

Posted by guest, Oct 27, 2008 1:14PM

851.44
Hoodrat Hoochie Mama

Of course, we’ll have to figure out how to authenticate you.

Earlier: Morning Contest Results, Closing Contest Rules

Morgan Stanley endured $46 billion in September money market redemptions, forcing the firm to buy $23 billion in instruments from the various money market funds hit by the cash siphon. One presumes that these instruments were then to be laid off onto the world’s largest sovereign wealth fund.

This leads us to believe that the “greater fool theory” has been flawed all these years. Clearly there is a trump card in the deck of greater fools. Specifically, there are greater fools and then there are governmental greater fools.

Morgan Stanley bought the fund assets to “ensure that redemption obligations were met amidst illiquid trading markets,” Erica Platt, a spokeswoman for the firm, said in an e-mailed statement. Fed spokeswoman Susan Stawick declined to comment on whether Morgan Stanley had used central bank financing to aid its money-market funds.

This sounds suspiciously like code for “we aren’t taking any chances having these instruments marked with transaction prices we don’t control,” but we are rather notorious cynics on this particular topic. There’s also the issue of reputation. A clearing failure by a firm of this magnitude would be disastrous. As it is, Morgan Stanley is likely to take a bath on the transaction, if prior experience is any measure.

Morgan Stanley reported $10 million of third-quarter losses on securities it previously purchased from structured investment vehicles, or SIVs. Over the past nine months, the bank has recorded $283 million of losses related to SIVs.

Note also: “Individuals and institutions use money-market funds to earn a yield until the cash is needed. They are considered the safest investments after bank deposits and U.S. Treasuries, in part because they buy only highly rated fixed-income securities with an average maturity of 90 days or less.”

…is the new…

“Credit Default Swaps are insurance-like instruments which give the insured (the holder) protection against default on debt instruments. Such protection is paid out by the insurer (the writer) when certain default conditions are met.”

Morgan Stanley Supported Money Funds With $23 Billion [Bloomberg]

Morgan Stanley Funds Hit By $46 Billion Withdrawal [CNBC]

We haven’t called on our brothers and sisters in management lately to get creative with the various ways in which employees are fired (a game of Assasin, something having to do with a lethal strain of syphilis that can’t be treated, etc) but it’s good to know they’ve been thinking outside of the box even without our gentle reminders. While it’s probably a good idea to work under the assumption that you could get fired at any minute, no matter how secure you think your job is so it doesn’t come as a surprise when you get canned, I appreciate the initiative of higher ups with the foresight to let people know cuts are a’ comin’. Before the weekend, natch.

From: Ryan, Tim

Sent: Friday, October 24, 2008 12:38 PM

To: SIFMA - All Staff

Subject: Important Message From Tim Ryan

All,

As we are all aware, recent events have resulted in an extremely challenging market environment and have presented us with some difficult decisions. As such, we will be implementing a reduction in force. Notifications of this reduction will be presented on Wednesday, October 29. Please modify your schedule accordingly to be present in the office on that day.

We appreciate everyone’s continued cooperation and patience as we work through these difficult times.

Tim

BarcLehs equity bonus numbers are out today. One “lucky” employee whose total compensation was down seven percent was informed by HR that his number was “better than average.”

Most people are aware of the fact that Eddie Lampert’s investment in Sears Holdings probably wasn’t his best idea to date, and I would include the hooker community in that group of people. In the hierarchy of who is the first through the last to know your fund is taking a bath cause you thought the crock pot business was booming, call girls come just after your most trusted advisors and light years before your investors.

Outrageously, the Post has been laboring under the impression that the ladies of the night have had no idea what’s been a’ poppin and, more to the point, a’ droppin over at Lampert’s ESL Investments. This would explain why the paper broke it down in terms the girls can understand today: by the hour. According to the Post, Big E has seen his nine largest holdings fall an average of $30 million an hour in just over 26 trading days,* with the “the biggest hit— by far— coming from the steep drop in Sears Holdings, which fell from $103 in mid-September to $47.67 on Friday, a drop of 53.7 percent that translated into a paper loss of $3.6 billion for Lampert’s 65.3 million shares.”

*1 day = 6.5 hours

Noon gave us the S&P 500 at 868.60.

We believe that qualifies this…

Posted by guest, Oct 27, 2008 9:45AM 869.00 - NAS Keflavik boi Beaver and Broad, son … and bring a baggie for ya teef!!

…as our winner. Nice job.

That was warm-ups, people. Now for the main event.

Bank of America is said to be planning on canning half of its New York equity trading desk in the next 2-4 weeks.

…which means that the consensus for oil is $80 $92 $97 $99.75 $100 $114 $142 $150 $155 $185 $200 per barrel.

Beutel: Crude Could Hit $20 A Barrel [CNBC]

CNBC’s David Faber reports that our favorite Chicago firm is apparently approaching fund of funds and other hedge fund investors, asking them to take their cash out of whatever money pit it happens to be languishing in at the moment, and hand it over to Citadel. In exchange, KG will give them their old high water mark.

As you likely know, over the next several months (days, hours) we’re going to witness the failure of a lot of hedge funds. A whole lot. Many of the managers slash traders slash P&L analysts who read Dealbreaker have never experienced such catastrophic humiliation (though obviously that statement is not without exception) and don’t know how they should carry themselves following the implosion of their firms. Because we care, as often as we can, we’ll be offering little tips that might spare you any further embarrassment or ridicule.

Over the last several decades, the Middle East had little choice but to attempt to diversify its economy, particularly in the finance arena. The development of the finance sector in the likes of Kuwait and Dubai, or real estate and resort projects, are valiant attempts to avoid the perils of “extraction economies.” Gulf States had hoped to avoid the complete integration of their economies with the fate of the many tiers of petroleum pricing attached to their chief export. After twenty years, the result has been mixed. At best.

Much of the Gulf has budgeted for much lower oil prices. Gulf states, on average, need prices above $47 a barrel to keep from running budget deficits. But some states are more vulnerable than others: Bahrain’s so-called break-even price is $75 a barrel, compared with Saudi Arabia’s $49 and Kuwait’s $33, according to the International Monetary Fund.

The speed of crude’s tumble — to about $64 a barrel — has unnerved officials despite the apparent cushion. At an emergency meeting on Friday, the Organization of Petroleum Exporting Countries hastily decided to cut output by 1.5 million barrels a day, the biggest single cut in almost eight years. After that move failed to curb crude’s fall on Friday, some oil officials suggested over the weekend that another cut was in order.

We speculated last week that OPEC would push as hard as it could. The smell of panic was in the air. The effect on actual prices (over the long-term, where it actually matters) is just about as unpredictable a problem as international economic relations has to offer. The consequences to certain states, however, would be pretty clear.

Weeks of sliding equity prices have wiped out billions of dollars of wealth for the region’s influential clique of local retail investors. Saudi Arabia’s main stock-market index is down by more than 50% year to date. The fall has wiped some $205 billion of value off the region’s biggest exchange by market capitalization since June.

It’s hard to feel sorry for them, however, when you read this:

On Sunday, Kuwaiti traders, clad in white flowing robes and waving placards, staged their second stock-exchange walkout in as many trading days. (Kuwait’s market is closed on Fridays and Saturdays.) Protesting before a government building in downtown Kuwait City, they demanded more state intervention in the markets to prop up share prices. The chief executive of the National Bank of Kuwait, Ibrahim Dabdoub, called on authorities Sunday to close the exchange altogether.

Financial Storm Hits Gulf [The Wall Street Journal]

More bloodbaths in Asia? Check. (25 year lows in Japan would have been amusing just a pair of decades ago, you know). Moderate to heavy bloodletting in Europe? Check. It is poised to be another slap in the face of an opening, that is, if you think such things, and the index futures markets, have predictive value. Then again, index futures are rallying after having cratered to 825 around o’dark-thirty this morning, adding fuel to the “It’s Different This Time^TM” crowd.

So who should we root for? A massive rally to end this downturn nonsense for the last time, and a return to the old-order, where investment banks ruled The Street and Goldman ruled the rulers (according to themselves anyhow). The kind of rally that the pessimists would say just prolonged the inevitable, is that what we want?

A dramatic, tumbling fall, complete with piles of broken ski equipment littering the hill above, drawing a long trail of graphite, injection molded plastic, and margin calls to the scene of the final “thud.” At least this might get it out of the system. No?

So which is it? You know the rules. A switch of index this time. S&P 500 Index at 12:00 noon. Closest without going under wins it. We will call a “no more bets” around 11:30 or so in comments here.

Consider this a warm-up. Our closing edition will include a prize. No, really. A real prize. Stay tuned.

Reuters has updated yesterday’s story on Citadel. The new iteration includes the following paragraph, which seems to downplay counterparty discussions (by noting that KG isn’t alone in his trubs):

The Fed has been speaking with dozens of prominent hedge funds and their counterparties in the past weeks to monitor trading and liquidity issues as the financial crisis deepened, industry sources have said.

Apparently, such discussions are a regular feature of the Fed’s monitoring practices, especially over the last several months.

CORRECTED - UPDATE 2-Fed questions counterparties about Citadel [Reuters]

Yes, yes. We know. We were on the conference call too. You guys are totally fine. Lots of credit. No problems. Just a little hitch. Nothing to fear but fear itself.

Hey, wait. What’s this…?

Examiners with the Federal Reserve have questioned Wall Street counterparties about their exposure to debt and other holdings of Citadel Investment Group, The Wall Street Journal said on Saturday, a report Citadel denied.

Citing people familiar with the matter, the Journal said the Fed questioned the counterparties in at least two instances in recent days.

Fed questions counterparties about Citadel: report [Reuters]

In recent days, examiners with the Federal Reserve questioned Wall Street counterparties in at least two instances about their exposure to debt and other holdings of Citadel Investment Group and Sankaty Advisors LLC, the credit-investment affiliate of private-equity firm Bain Capital, said people familiar with the matter.

[…]

The rumors were so acute for Citadel that its chief Kenneth Griffin held a conference call Friday afternoon for holders of $500 million in Citadel debt. As many as 1,000 other callers jammed a listen-only line for the call, leaving Citadel scrambling to add more phone lines.

[…]

Citadel in recent days has repurchased as much as 20% of its debt held by outside investors, according to a person familiar with the transaction.

Citadel Seeks to Reassure Investors [The Wall Street Journal]

In other words:

“This firm has a history of facing adversity and delivering. We have a long track record of pulling together when times are tough and then taking advantage of global opportunities,” he continued. “We are now on the right track to put these last two quarters behind us.”

Oh, wait. That was Dick Fuld.

$$$ Treasury Allows Banks to Announce Equity Injections [WSJ]

$$$ Remember the Titans [LSO]

$$$ Harsh Math for Wall Street’s Young: Stay or Go? [NYT]

D.E. Shaw seeks foosball player for “extraordinary compensation” and free food. [DB Career Center]

3:29: Hold music. Hopefully I won’t get mysteriously kicked off.

3:34: Now operator is saying we’ll be starting in “approximately ten minutes.”

3:41: The hold music is some techno-y, New Age stuff.

3:43: The conference will begin “shortly.” Now the music kind of sounds like what you’d hear in a Sharper Image.

3:46: Radio silence

3:48: Gerald Beeson, Chief Operating Officer, starts call.

3:50: Kenny in the house
-Grateful to be surrounded by incredible team
-gives the mic back to Beeson

3:51: we have seen the near collapse of the world’s banking system. we wont go into the details. we’re going to talk about how Citadel has weathered the storm.Wellington Kensington down 35% ytd as of last Friday.

3:54: Dollars losses sustained in 4 weeks following LEH’s bankruptcy

3:55 We’ve seen the importance of diverse counterparties

3:57: The firm’s liquidity remains strong with more than 30 percent of investment capital held in cash.

3:58: Significant capacity in lines that have NOT been utilized. As of today, 8 bn of undrawn capacity in tri-party lines.

Oh to the yeah, people. You might not be getting a bonus for a job done this year, but Bloomberg reports that Bank of America is offering Merrill brokers sort of a sweet deal if they promise not to leave (ever). Brokers who generate over $1 million will receive one hundred percent of the revenue brought in, though it’ll be paid out over seven years. Those producing $500k-1million will receive “smaller” goodie bags.

If you’re downtown and not up to anything today, Geoffrey Raymond, the greatest artist of our time, is displaying his latest masterpiece, “The Fallen Prince,” behind Goldman. He’s soliciting annotations from various passersby but has also graciously offered to collect any thoughts on the topic of the Maestro left below. Bidding for the Preacher starts at $15,000.

Which exchange floor did a trader just vomit all over?

Which fund is rumored to be looking for buyers for its CMEGroup seats?

I’m sure there is someone less deserving of Treasury assistance than the likes of MBIA. There are, after all, still some felons out there that could use a couple extra million. Still, since everyone else is slurping at the bailout well, might as well throw in insurers. Right?

MBIA, the largest U.S. bond insurer, and its No. 2 rival, Ambac Financial Group, met with regulators earlier this week to push for a way to tap into the federal government’s bailout plan.

New York Insurance Superintendent Eric Dinallo, the main regulator for MBIA, and Wisconsin insurance commissioner Sean Dilweg, Ambac’s primary regulator, convened in New York to discuss the matter with the firms.

Both companies have seen business grind to a near halt after large losses on mortgage debt guarantees, and subsequent rating cuts.

Watch out MBIA shorts.

U.S. Treasury mulls insurer aid program-sources [Reuters]

Yeah, I thought it was redundant too, but you people in the comments are asking for it. Fine. But this time there are going to be some serious rules. M’kay?

1. Closest guess to the Dow closing number, without going under wins.

2. Guessing will be cut off when we post the “no more bets” comment in this post. That will be right around 3 pm Eastern.

Ready? Go.

Update: 8379. That makes this:

Posted by guest, Oct 24, 2008 12:59PM

8380 up up down up down

Our winner.

8425. That would make this entry (#55):

Posted by guest, Oct 24, 2008 10:53AM

8425.01

Rather impressive.

“Highbridge Capital cut 25% of its workforce yesterday and closed for the rest of the year. Conference call with Glenn and Henry today.”

UPDATE, 12:48: We’re told that the figure is ten percent, or about 30 employees, and that Highbridge has added new employees recently. Additionally, the bit about closing is said to be categorically false.

The markets seem to have an almost Churchillian “Never give up, never give up, never give up” stamina today. The down-limit on index futures going into the morning was at least a hint that the big crash we needed to finally call the ambulance and check into the rehab via the emergency room was just around the corner. As it goes, it looks like we still have the big meltdown to look forward to. I suppose it was the fact that it was Asian firms, and not local firms, warning on earnings that permitted traders to shrug off the bad news and “buy the dips” again. Or maybe it was just a deep, pathological need to satisfy confirmation bias in the perma-bear “but this time it’s different,” beautiful and unique snowflake investor base out there.

“But AIG is slurping $90 billion out…”

“Bah! P/E on the S&P is 11x! BUY BUY BUY!”

“Well sure, but ‘earnings’ in that number is horseshit.”

“Yeah, but Housing doesn’t suck.”

“What? That’s one month’s figures! Most of those are foreclosure sales! And, OPEC is in a panic, they are going nuts.”

“OPEC, SCHMOPEC. Who cares? Some guy in Italy just won $125 Million in the lottery there. I’m going to go buy some deep, out of the money call options on Dow futures.”

From: Deven Sharma, President

Sent: Friday, October 24, 2008 9:59 AM

To: *Global-S&P

Subject: Testimony to U.S. Congress Committee on Oversight and Government Reform

On Wednesday I joined with leaders of the two other major credit rating firms in appearing before the US Congress at the House Committee on Oversight and Government Reform. It was at times a spirited hearing with our integrity and credibility questioned on more than one occasion. I was proud to have presented our perspective on the ongoing global credit situation and to have the opportunity to say what I deeply believe: namely, that at Standard & Poor’s independence, integrity and the importance of our role in the marketplace are things that we take very seriously. I would like to share with you a few points from my testimony to the Committee about the role we can play in the recovery of the markets.

National City to be acquired by PNC Bank. Well that’s just ducky!

Then there is the sort of ancillary news that surrounds the announcement. Like the deafening silence that follows when PNC is asked if the government forced the deal. The muted snickering that could be heard when its pointed out that the purchase price was below NCC’s stock price at the time. The $5.6 billion price tag. The $7.7 billion of PNC preferred shares and warrants being sold to the Treasury.

PNC to buy ailing National City for $5.6 billion [Reuters]

Which midwest hedge fund are Fed officials rumored to be paying a visit to right now, to deal with its impending implosion?

UPDATE, 10:00: Not that we meant Cit necessarily, but a Citadel spokeswoman called DealBreaker to say that the rumors are “Categorically false. Citadel continues to invest and operate business as usual across the globe. The firm’s liquidity remains strong with more than 30 percent of investment capital held in cash.”

From: Lowenthal, Albert

Sent: Oct 24, 2008 8:47 AM

Subject: Today

It has never been more difficult to come to work and face overnight market reports and the continuous cacophony from market pundits telling us how the world as we know it is coming to an end. This morning, we face markets that were down 7-10% around the world in the overnight, the Japanese yen at new highs versus every currency (only slightly ahead of an increasing U.S. dollar) and U.S. stock futures down the limit, projecting an opening down more than 6%. Meanwhile, commodities are dropping like a stone with oil down, despite OPEC announcing a cut in production.

Commentators are saying that “Wall Street is wallowing in despair after being beyond the panic stage.” The fundamental problem of a seized credit market is being resolved by the infusion of capital and guaranty of liquidity to the system. While we are in a recession of unknown duration, the world is in fact not coming to an end. Stock prices have gone beyond predicting a period of weaker earnings and now only reflect unremitting selling pressure without committed buyers. We need to recognize that unwinding of leverage is a painful process and that it is taking place in real time. Margin selling by hedge funds, individual investors and corporate chieftains is creating indiscriminate selling of financial assets with sellers focused on where they can get bids, as opposed to selling positions that they don’t believe will perform. While there is no way to predict the bottom for markets, many indicators show that it is not far off.

Alright. It’s going to be ugly in about 5 minutes, in all likelihood. Information sentiment test time.

DOW at 12:00 noon today. You know the rules. We just did this. Closest without going under.

GO!

As an aside:

“Futures can trade down (only) as much as 10 percent. If they hit this limit, they can trade at (or exceed) this limit for 10 minutes. If they’re still limit down after 10 minutes, there’s a two-minute trading halt and we move to the next level (20 percent).” is the new “A credit default swap (CDS) is a swap contract in which a buyer makes a series of payments to a seller and, in exchange, receives the right to a payoff if a credit instrument goes into default or on the occurrence of a specified credit event, for example bankruptcy or restructuring.

Of course, we loved bringing you the marijuana defending, tired-of-you-stupid-limited-partners-already, I’m picking up my toys and going home farewell letter of former hedge fund manager Andrew Ladhe. Our referring you to the coverage of said letter by Michael Lewis (really, don’t you think he’s gotten very bittery-sour-grapes-like about markets since Liar’s Poker?) is more a duty-bound kind of obligation. Still, it has its moments.

We fully expect that the likes of Lewis (and market schadenfreuden everywhere) will get quite vocal in the weeks to come. Might as well get used to it now.

This Hedge Fund Manager Tries to Short Himself [Bloomberg]

Russia decided to pull a SAC after a 10 percent on the “technical index” triggered a halt. Looks like that’s going to be the story of the day all over. Circuit breaker Friday.

Russia’s Micex Halts Trading Until Next Week After Stocks Slump [Bloomberg]

U.S. stock futures blasted after Asia plunge (Marketwatch)
U.S. futures are getting smashed up this morning after a nightmare trading session in the Asian markets (see next article). Dow futures are off 546 points, while Nasdaq futures are falling 82.5 points; S&P futures are down 60 points, at 855.20. There’s a lot of technical analysis that says the S&P has to hit 800 before we see a decent rebound; more and more, that’s looking the right analysis. That said, with the extent of this selloff, and the huge volatility, the potential for short squeezing has never looked so ominous or looming. Opec cut production by a whopping 1.5million barrels a day, not that that’s likely to have a huge effect: once a commodity market enters freefall, there’s little stopping it.

Tokyo, Seoul Head Asian Market Train Wreck (CNBC.com)
The overnight dealer notes from Hong Kong were all broadly disbelieving of the last-minute rally in the Dow yesterday … and those sentiments couldn’t have been proved more right. The Nikkei plummeted 9.6%, to 7649.08, more than a five-year low. The yen hit a 13-year high vs. the dollar, at around 91 yen. South Korea’s Kospi was off more than 10%, while everything else in Asia pretty much went belly-up too. Although it looks like a U.S.-led thing, much of the Asian mauling is really more to do with the yen than anything else.

Greenspan Concedes Error on Regulation (NYT)
In a dramatic and humbling mea culpa yesterday, the former fed chairman admitted he was “shocked” by the mess we now find ourselves in, and that he may have got it wrong a little bit with regard to regulation. It’s refreshing to see someone being honest right now, rather than blaming the market, the short speculators, the regulators, the homeowners, or whoever else is possibly in the firing line. It makes you think, actually, that he’s the only guy round who stands a chance of fixing the problem … given that half of it seems to have been in saying “we have a problem” in the first place.

German banks overexposed in Iceland (Daily Telegraph)
It turns out that the counter-parties hardest hit by Iceland’s recent banking turmoil are German banks, which are owed $21 billion. That’s around a third of Iceland’s $75 billion debt. German banks are having a hard time; it was also a major lender to both Spain and Ireland, which have been pretty badly beaten up in the credit crunch. These announcements could not have come on a worse day, either.

Sony Blames Profit Warning on Yen, Weak Demand (Business Week)
A lot of the Asian market selloff was down to a surprise announcement by Sony that its earnings would fall 58% on the year, to $2.04 billion, by March 2009. The article explains that Sony sees the higher yen harming sales. It’s not really the harm in sales that’s the issue here however, but more the margin on exports, which is just wiped away when the yen’s sitting up in the 90’s.

Microsoft earnings beat the Street (NYT)
Microsoft is turning out to be a bit of a contrary indicator. When times are rolling, the software giant is lagging … but now that things are in somewhat of a death spiral, earnings are up. Still, only just, a 48 cents a share vs. 47 cents a share. That’s the advantage of a monopoly: it’s almost recession-proof by default. After all, everyone still needs MS Word, if only to polish their resumes while they look for a new employer.

As of this minute, S&P 500 futures have hit their “limit down” trigger, and are frozen at 855.25. That is a frightening development.

The drop is almost certainly tied to the abysmal performance of Asian and European markets overnight, and the response to what might end up being the United Kingdom’s first recession since 1991.

Friday will be an interesting market, that’s for sure.

Update: Dow Futures are locked limit-down as well at 8224.

$$$ Times Stock Hits 52-Week Low [The Observer]

$$$ Snow Appears to Fall on 2 Sides of Financial Regulation [Dealbook]

$$$ Some HFs going for anal prolapse, others rim jobs. [PDF]

$$$ UTHR [WS]

Steve Liesman reports that the value of the Bear Stearns portfolio held by the Fed dropped nine percent to $26.8 billion from $29.5 billion last quarter.

Alliance Bernstein announced in their conference call yesterday that “there will be layoffs.” First to go? Brad Hintz. No, kidding. But a bunch of nameless employees, for sure.

From: Don Callahan

Date: October 22, 2008

Re: Introducing TelePresence

Given Citi’s global reach, we are continually challenged to find cost effective ways of conducting business across regions. To help us, we are introducing TelePresence - a new, highly advanced form of high-definition video conferencing which creates a life-like, in-person meeting experience. Five locations have been selected to accommodate cross-regional meetings via TelePresence. I have used this technology - it is most effective and should eliminate most need for travel.

I’m starting to freaking love AIG, they of facials, hunting trips, and casual Fridays. Bloomberg reports that CEO Edward Liddy has stated that the insurer might need more than the $122.8 billion already passed out by the government, depending on “what happens to the capital markets. To the extent they continue to go down and we have to keep posting collateral, as it’s called in the vernacular of the industry, it’s possible it may not be enough.” And by “poss” we mean “def.” Just wanted to ease everyone into the idea, though, you know?

Note: despite how labor-intensive the task may be, I’ll be removing any classless, ignorant comments, so don’t bother asking why yours was deleted if you plan on leaving one.

HFA reports that multi-strategy shop Whitebox Advisors has suspended redemptions on the half a dozen hedge funds it runs, informing shareholders of the plan “over the phone while drafting a formal letter for release later this week.” According to HFA, Whitebox “was in a strong position to fulfill any yearend redemption requests until this month, when Goldman Sachs ordered the firm to double the amount of collateral it puts up against margin loans used to trade convertible bonds.” Related?

Apparently, “legal is getting murdered today. Mostly Lehman people, though a few unfortunate Barclettes, as well.”

I’m sure a lot of you probably thought former Citi CEO Sandy Weill was just winging it when he cobbled together the world’s largest diversified whorehouse, so huge it can barely support its own weight and so far off the course of sanity, likely due to a case of undetected syphilis, that it’s under the impression that a ban on color copies can make up for zillions in losses. And that when he would chime in during Chuck Prince’s tenure to say that anyone who tried to veer the firm off the course of achieving behemoth proportions was a communist, and hired the Dallas Cowboy cheerleaders to do a little routine every time a higher-up waded further into the toxic swamp of subprime, and e-mailed Vikram Pandit little tips like “shareholders love bat shit insane mission statements,” he was a crazy, meddling old man who didn’t know what he was talking about. But you thought wrong. The Wall Street Journal reports that Weill is in talks to launch a private-equity fund that would “invest in beaten-down financial companies and assets.” And the more beaten-down, ass-kicked, ridden-hard and put away wet, the better.

12:12 Rep John Yarmuth (D-KY) to Greenspan, Cox, Snow: “With all apologies to my New England colleagues I feel like I’m looking at 3 Bill Buckners who let the ball go through his legs and costs his team the championship. All of you let the ball go through your legs; you didn’t want to let the ball go through your legs but it got through your legs. It’s important to find out why it went through your legs. There’s something fundamentally wrong with the way you three played the ball.”

Earlier: Waxman Witch Trials: The One We’ve Been Waiting For

What’s the quickest way to assure that lenders will never ever buy another asset based on mortgage income streams? Make it clear that, at any time, the income stream of that mortgage could be modified by a regulator, a judge or the like. How would you value that asset now?

Still, foreclosure assistance puts a smile on the face of lots of voters. So, I suppose you had to expect they were going to push it. Especially this year. FDIC’s wiley Sheila Bair has an idea though.

“Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards,” she said. “By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.”

If its going to work, it will have to be voluntary for the security holders, and a government guarantee goes a long way for that.

FDIC’s Bair Suggests Guarantees for Loans [The Wall Street Journal]

Who is surprised that Goldman might buy large chunks of Lehman’s former private equity investments? I mean, to support the conspiracy theory you always need the “follow the money” phrase (and a montage that gets you from the early days at Goldman to the Duke brothers trading orange juice). We just thought we’d mention it and hint provocative that Goldman had something to do with the demise of Lehman.

Goldman Sachs Group Inc., Coller Capital and Lexington Partners Inc. are weighing bids for Lehman Brothers Holdings Inc.’s investments in U.S. and European private-equity funds, people with knowledge of the matter said.

In other rumors, Goldman is bidding on all of Waxman’s assets and looking to hire black-bag men to drug him and leave him penniless and naked in Mexico somewhere.

Goldman, Coller May Buy Stakes in Lehman’s Private Equity Funds [Bloomberg]

Greenspan and Cox. We have it on good authority Big G will be showing up wearing the accessory at left. Stay tuned.

10:11: Rep. Mica and Waxman bitching at each other. Waxman talks over him.

Mica: “This hearing is being hijacked.”

Objectively speaking, Waxman seems like a total dick.

Greenspan:
10:13: Greenspan looks a little scared but hopefully that’s just a fake out for his opening line, “This never would’ve happened if I were still King.”

10:15: Greenspan announces that he plans on “running over an extra few minutes.”

10:16: “We are in a once in a lifetime tsunami.”

“I raised concerns in 2005. The crisis has turned out to be much broader than anything I could have expected.”

“We need to stabilize home prices.” Then, we thaw. Everything will be as it should, and I will come out of retirement to take over for Gilligan, who’s proven he can’t be trusted.

“To avoid retrenchment, we need the substitution of sovereign credit for private credit.”

Something about Black-Scholes not being dead.

10:24: When we get out of this, “investors will be chastened.”

Cox:
10:25: “The SEC is different than the Fed….the SEC sets the rules…the SEC is a law enforcement agency.”

For those of you keeping score: market rallies lightly when Greenspan testifies, sinks when Cox grabs the mic. Big Poppa’s still got it.

10:30: The SEC is using its new authority “to strengthen the ratings process.”

John Snow:
The former Treasury Secretary is glad to finally see that people get this shit is serious.

“I tried to keep my eye on risks when I was working in Washington.”

“I gave countless speeches.”

“I held meetings.”

“I called for:

- A strong regulator
- Disclosure
- A regulator who could limit the lines of business they get into
- A regulator who would have authority over capital standards
- A lovely cheese pizza, just for me”

Market rallies slightly with Snowball

Questions:
Waxman takes 5 minutes to say that Greenspan wanted less regulation. “My question is, were you wrong?”

AG: Partially…it’s important to distinguish the size of this problem and its nature.
Waxy: Okay, where were you wrong then?
AG: I made a mistake in presuming that the self-interest of organizations, mostly banks, were such that they were best capable of protecting their own shareholders.

Market rallies when Greenspan admits he might have been sort of (but not really) wrong.

Waxy: Paul Krugman has basically blamed you for everything. Thoughts?
AG: Let me give you a little bit of history. [Big Poppa- that’s me- has never been wrong. Not once, not twice, not ever. I don’t now what some little shit at the Times has been writing, and frankly, I don’t care. I stopped reading my press probably 20 years ago.]

AG and Waxy debate the definition of ‘ideology.’

Waxman, for like, the 3rd time in the last ten minutes, brings up the fact that they need to move on because they’re pressed for time. Not taking sides here, but what the fuck? You don’t invite a man who strives to take 90 minutes to say what a normal person would get through in two and then ask him to speed things up. Let him cut into Man-Boy’s time.

“I feel like Butch Cassidy and the Sundance Kid. Who are these guys that just keep coming?” — Treasury Secretary Henry Paulson Jr.

We quite like the image of Beard and Bald as the “Banditos Americanos” of Butch Cassidy and the Sundance Kid fame. Racing around on horseback, blowing up safes, being pursued by doggedly determined bounty hunters. Making that huge leap off the cliff to finally shake their tormentors. Fleeing south of the border. Taunting the local army.

I suppose the big question is, which one is Robert Redford and which one is Paul Newman?

Oh, wait, we just remembered how that film ended. Maybe that’s not such a good comparison.

Struggling to Keep Up as the Crisis Raced On [The New York Times]

We’re not going to be one of those assholes who says things like, “It should come as a shock to exactly no one that AIG couldn’t send out a two line memo regarding a move to business casual without fucking it up.” We’ll just pass it on that shortly after informing employees that in an effort to make up for the fact that AG Andrew Cuomo made them get rid of facials and hunting trips, management had decided, starting October 24, that it was permissible to show up wearing jeans so dirty they smell like wet dog,” a follow up went out to “clarify” that the policy is only good on Fridays.

This isn’t nearly as rich as Merrill Lynch’s 1-2 punch of firing everyone and then showing up to Stern asking if anyone wanted a job but we said we’d keep your abreast of who’s a’ firing and a’ hiring and we meant it. Apparently, there are “thirty or so college kids on the MS IED trading floor for some sort of recruiting event.” According to our eye witness, “for some reason, they’re smiling,” presumably because they’ve been promised leftovers from yesterday’s pastry party.

I’m not quite sure how to feel about the letter after the jump, which details the various ways in which Kellogg students embarrassed themselves and threatened to “decrease the value of a Kellogg MBA for [current] and future students” at a recent social function. On the the one hand, “spitting on people”? Seriously? Shouldn’t such behavior left to the future business leaders of the world currently being groomed for the job in Cambridge? On the other— you’ve at least got to give them credit for being realists, who’ve clearly resigned themselves to the fact that job prospects post graduation will be nill, and there’s really nothing to lose. Looking at it that way, they actually showed remarkable restraint.

We are totally, utterly tired of this utterly interminable election. But such things are in the eye of the street. We have tried to pay no attention, but then… “Joe the Plumber.”

Republican John McCain continued to invoke the Ohio man, known now as Joe the Plumber, to charge that Democrat Barack Obama would raise taxes on American workers. Obama countered that his plan would cut taxes for the Toledo-area plumber while McCain’s proposals favor the wealthiest Americans.

“Thanks to him, we’ve finally learned what Senator Obama’s economic goal is. As he told Joe, Barack Obama wants to, quote, `spread the wealth around,”’ McCain said in New Hampshire, referring to Samuel J. Wurzelbacher, who questioned Obama about his tax plan while the candidate was touring his neighborhood.

If you haven’t heard of Joe the Plumber, please lend us the sleeping pills you’ve been using. We’d like to coast through the next many days before the election in a narcotic haze.

At a rally in Richmond, Virginia, Obama responded by saying, McCain “isn’t fighting for Joe the Plumber; he’s fighting for Joe the Hedge-Fund Manager.”

At first we were puzzled, but then it occurred to us: It’s the same Joe. And this has the virtue of explaining much of September’s (non)performance.

Obama, McCain Pit Plumbers vs Hedge-Fund Managers in Tax Debate [Bloomberg]

This is a horrific way to start the morning, so I’m just going to assume that I’m still sleeping and this is a terrible nightmare from which I’ll soon wake up. The Wall Street Journal reports that Goldman Sachs plans to cut about ten percent of its 32,500 employees, even though Chief Financial Officer David Viniar said in September that the firm’s head count for the year would be flat or higher. Obviously he spoke too soon (or said “head” when he meant to say “body” which, admittedly is an easy mistake to make), and now we’re all paying for it. What’s worse, there’s no sign or word from the bank that this is merely part of its yearly exercise in which they lop off the bottom, least Sachy members of the group. I swear, and this should be treated as a threat, someone had better be coming up with a new and inventive way to package this shit, otherwise, I’m really going to lose it. Please. Give us something.

Futures fall as recession fears weigh (Reuters)
There’s no end in sight to the bottom of this week’s selloff — but this morning there is perhaps the beginning of one. S&P futures are down 7.7 points, Dow Jones futures lower by 35 points, and Nasdaq futures are off around 12 points or so. Those numbers are much lower than in futures trading in recent days, but that’s no indication of how bad things can get once the opening bell chimes.

Seoul, Hong Kong extend retreat; Tokyo cuts losses (Marketwatch)
Another spike in the yen and gloomy economic data in Japan overnight brought about a slump in Asian share prices. The Nikkei fell 2.5%, while the Hang Seng dropped 3.6%, to its lowest close since May; South Korea’s Kospi ended 7.5% lower, with trading halted at one point in the day.

Foreclosure Filings Rose 71% in Third Quarter as Prices Fell (Bloomberg)
The title of this piece says it all, really: 765,558 homes either foreclosed, or were auctioned off in the last quarter. As with data from yesterday: no doubt about it, deeply recessionary. In addition, lots of people predicting a rise in foreclosures throughout the rest of the year.

OPEC Faces Worsening Oil Price Drop as Growth Slips (Bloomberg)
Bloomberg is reporting that OPEC’s rumored 1 million barrel a day cut in production tomorrow at Vienna’s meeting will fail to stem a freefall in oil prices … right on the money: love it or hate it, oil is headed for $45 a barrel, where prices were the last time equities were at this level. The two will move in lockstep: just because the marginal cost of extraction has risen due to drilling in ever colder/more cumbersome climates, doensn’t mean everyone will pay that price.

$$$ Ken Griffin: Another U.S. stimulus package needed [Reuters]

$$$ Merrill’s brokerage unit head may not survive [Crain’s NY]

$$$ A (Slight) Pall Descends on Gala for Women Bankers [Dealbook]

$$$ Another Bald Guy Gets Top Bailout Bailiwick [Clusterstock]

$$$ Payment on Lehman CDS only around $5.2 [Reuters]

The hedge fund, which is shuttering its flagship Highland Crusader Fund and Highland Credit Strategies fund, is said to have begun laying off employees in Dallas this afternoon.

Background: Highlander II

AIG is either A. Trying to make its employees feel better about the fact that, thanks to Attorney General Andrew Cuomo, they’ll no longer be enjoying stuff like facials, hunting trips, and everything else that makes life worth living or B. Adopting a dress code that reflects the prevailing sentiment over on Pine Street of just not giving a fuck anymore.

Dow. Call it. Closest without going under. Begin.

1.618 Group is going through a restructuring that will result in a significant change to its core trading business. The company has closed outstanding positions and its participation in energy markets going forward will be greatly reduced. 1.618 Group will remain in operation but will be refocusing its business and trading efforts. Renovatio will remain an active participant in energy markets.

Several employees will be leaving the firm to begin a new venture and are exploring strategic opportunities with RBC Capital Markets. The new company will be actively focused on trading energy markets. The separation is amicable and all parties involved are content with the restructuring and new business.

All of IBD at Morgan Stanley just got free cannolis at 1585, on John Mack’s dime. The subject line alerting the troops to the impending injection of high fructose corn syrup? “Surprise dessert treat.” This is what we’re talking about, people. Treat your employees like they’re valuable members of a team (specializing in Italian pastries) and I guarantee you it’ll get results.

Overshadowed by Merrill’s bloodletting yesterday, apparently a substantial number of heads were cut from banking, including Barcap employees, from all groups. Severance is three months pay and a small percentage (5-10) of last year’s bonus.

The Jewish Rambo first, Third Point founder second, and 15 CPW resident last has put his townhouse at 7 MacDougal Alley on the market for $7 million, down from $7.85 million in the last four days, according to Curbed. [via Cityfile]

Bloomberg reports that Representative Barney Frank (D-MA) has called for a freeze on Wall Street bonuses, at “all firms,” and not just those relying on the kindness of Bald and Bearded strangers. “There should be a moratorium on bonuses,” Frank said yesterday. “They have a negative incentive effect because they are the ones that say if you take a risk and it pays off you get a big bonus…and if it causes losses…you don’t lose anything.” He’s, right, you know. I mean, yeah, it was really only higher ups who perpetrated the monumental fuck ups we’re currently paying for, including but not limited to the barbershop quartet of, say, Dick Fuld, Stan O’Neal, Chuck Prince, and Jimmy Cayne (with back up dancers Angelo Mozilo, Alan Greenspan et al.), but surely something will come of cutting the annual take-home of low-level plebes who were minding their own business placing Seamless Web orders while their boss’s boss’s boss’s boss’s boss was investing in that can’t miss asset class, subprime.

The only thing is, we’re not sure Barns has gone far enough. No bonuses for anyone, yes. But that’s like trying to put out a forest fire with a bottle (essentially) non-alcoholic MHL. We need more power. Off the top of our heads we’re thinking a moratorium that included keyboards, desk chairs, and bathroom passes would make this thing that much more effective. Only when those fuck-sticks learn the value of being allowed to relieve themselves whenever they want will we turn this culture of greed around.

“Accept the ratings agencies for what they are: stupid. Don’t beat up on [S&P and Moody’s] for doing what they have an incentive for doing. Don’t curb it, change it.” And, at the very least, replace all their employees with particularly, or even marginally, talented cows. I promise you, the effect will be palpable.

Is Argentina’s government deliberately trying to fuck its consumers? Off the DJ wire:

Very few bonds had traded yet, but the dollar-denominated Boden 2012 was down sharply to the peso equivalent ARS136 from its open at ARS149.90.

On Tuesday, President Cristina Fernandez signed a bill that, if approved by the legislature, will end the country’s 14-year-old private pension fund system.

The private pension funds are set to receive very limited compensation under the proposed bill, according to a draft of the law which has been sent to Congress for debate.

The companies will “in no case (receive more than) the equivalent of the shareholder capital of the liquidated Administrators,” according to the bill.

In addition, compensation will be paid with government bonds, not cash.

According to Dow Jones, Argentina’s stock market fell 10% in the first 20 minutes of morning trading.

Granted — Argentina is an extreme example, but this is the first of many to come in the emerging market space. How anyone can think that emerging markets are more sheltered from the credit freeze than the giant, federally/huge central bank-backed European and American economies just because they weren’t as leveraged is beyond comprehension.

It doesn’t matter that emerging markets were not leveraged on credit. If the countries whose funds that were propping up their bond markets, equity markets, and growth in general (by buying their products/services) are suffering, they will too. Claiming - as some have - that emerging markets are somehow “decoupled” from America is like saying the Merrill plant-waterer is somehow decoupled from Merrill Lynch’s troubles. If the bottom falls out, the plants go too.

With spiraling oil prices and less and less liquidity around, emerging markets are going to feel pain similar to ‘97 in the not-too-distant future. The fact that a lot of them are running current account surpluses and have enormous sovereign wealth funds won’t matter one iota either, because the point is, there will be no more income to make those surpluses sustainable any longer.

And the sovereign wealth funds that remained tied up in oil cash without diversifying into U.S. equities on the cheap will live to regret it.

Article (No Link): Argentina Stocks Down 10% After First 20 Minutes Of Trading (Dow Jones)

Rep. Mark Souder (R-Indiana) and Sean Egan (of Egan-Jones) are currently debating whether the probs associated with the ratings agencies were a matter of “gross incompetence” or “greed.” They seem to have reached an impasse, and now Egan is back to bovines, telling a story about “cows on the commons.” So:

Some Congressman, not sure who ‘cause I missed his name, just brought up the following IM conversation between two S&P employees, to former residential mortgage ratings managing director, Frank Raiter, from several months back (no name check on the deal but surely the DB brain trust can hazard a guess):

S&P employee #1: By the way that deal is ridiculous
S&P employee #2: I know, right. That model definitely does not capture half the risk
S&P employee #1: We should not be rating it.
S&P employee #2: We rate every deal. It could be structured by cows and we would rate it.

Congressman: What do you think this means, Mr. Raiter?
Raiter: Um…I don’t know…I guess a casual acceptance of these things.
Sean Egan (of Egan-Jones) chimes in: Perhaps that cow was particularly talented?

As you know, today’s Waxman Witch Trial on the Hill pertains to those ratings agencies in the business of taking a few years off to chill and then returning to fuck the globe. Here’s what Egan-Jones’ Sean Egan had to say in his opening remarks/defense: “At Egan-Jones, we downgraded Enron months before our competitors.”

So these Congressional hearings that Rep. Henry Waxman (D-CA) has been holding have been largely pointless and resulted in the individuals in the hot seat coming off better than those grilling them, since our elected officials insist on both a. going circus freak crazy and b. asking questions like “are you telling me Dick Fuld wasn’t the CEO of Countrywide? IS THAT WHAT YOU’RE TELLING ME?” But is it possible that today’s witch trial, the topic of which is the ratings agencies, whose narrative Waxy describes as “a story of colossal failure,” will actually result in something meaningful, like the heads of Moody’s and S&P sodomizing themselves, in an homage to their work, of late? Probably not but our fingers are crossed. It might be too late, but if Wax and Co. would review this interrogation and act accordingly, we think it’d help things along:

“Adventure investor” and George Soros gal-pal Jim Rogers has been fairly outspoken in his contempt for the actions of the government of late, and though his cries have largely fallen on deaf ears (and, in some cases, garnered a few “shut up old man” calls), he is not retreating but blazing full speed ahead. Today on CNBC (Europe, but still) he advised that Treasury Secretary Paulson and Fed Chairman Ben Bernanke do what they did with Lehman— turn the triggers on themselves and resign. Bow Tie also threw a few other officials in the hopper who he feels are guilty of keeping the “zombie banks” alive, including, in Rogers’ words, “Tim Geithner or whatever his name is.”

Maybe! Dan Freed reports that the former Morgan Stanley co-president, who was pushed out of the bank last year when John Mack decided to do the chivalrous thing by firing his lady friend, is “eyeing a role at an asset management firm, or possibly raising money to start a hedge fund.” Apparently big Z would rather join an existing firm, though she has already turned down a job at UBS, ‘cause girlfriend’s got standards.

This is wild. Merrill Lynch, UBS, and JP Morgan have apparently been instructing their senior bankers in Asia to fly coach on flights up to five hours, and cut back on non-essential travel to Vegas, if possible, according to Bloomberg. No word on reductions in travel expenses from Citi, presumably because the ban on color-copies has been enough to do the trick, profitability-wise. These restrictions sound severe, and we completely agree that they are perhaps a bit extreme, but we will remind you that once Ryainair CEO Michael O’Leary’s pioneering efforts come to fruition, coach, while pedestrian, really won’t be so bad.

I’m still trying to get my head around this: What does it mean when the stock you hold that is sitting at $6.00 per share posts a $11.00 per share loss? That’s is the Wachovia shareholder experience.

Punt.

Chief Executive Robert K. Steel said, “Although this has been a challenging quarter, Wachovia’s underlying businesses remain solid and our franchise exceptionally attractive.”

As we pointed out yesterday, we might be outraged, but nothing surprises us anymore. Seriously. Nothing. Really. We saw a cab drive by the other day dragging a burning Christmas tree behind it. Nothing. No bells. No whistles.

Ironically, their net loss of $23.7 billion looks suspiciously close to the $25.5 billion purchase price for Golden West Financial. Funny how that works.

Wachovia Swings to a $23.7 Billion Loss [Wall Street Journal]

U.S. Futures Weighed Down by Gloomy Earnings Reports (TheStreet.com)
Despite good news from the Apple camp after the bell yesterday, an overnight sell