Archive for November 2008

  • 30 Nov 2008 at 11:11 AM

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  • 28 Nov 2008 at 2:24 PM

Opening/Closing/Holiday Bell: 11.28.08

Picture 258.pngWorker Killed In Wal-Mart Stampede (NYP)
You don’t have to vacation to Mumbai to be savagely murdered. Just position yourself in front of a throng of sale-crazed animals. Anytown America will probably get the job done but if you really want to up your chances, you gotta go with epicenter of batshit blood-thirsty insanity, i.e. Long Island. A 34-year old Wal-Mart employee was trampled to death this morning at a WM in Valley Stream after being knocked to the ground while trying to restrain the throng of “savages” trying to get their hands on a deeply discounted flat screen. In the same stampede, a pregnant shopper was pushed over and may have suffered a miscarriage.
Update: The Post has added fairly disturbing video footage of paramedics attempting to revive the employee.
Citigroup Chairman Says New Bonus Systems Aren’t ‘Magic Bullet’ (Bloomberg)
Sir Win Bischoff, speaking from experience, told a bunch of Swiss bankers in Zurich today that, “By itself, more and retention-based compensation is not the magic bullet because it certainly didn’t stop us from running up very large losses…You here in Switzerland, and particularly our friends at UBS, have done a lot of good work in this area [of shrinking bonuses]. However, it’s not the only answer.” SWB sagaciously added that “two consecutive quarters of profits without any major writedowns at the world’s major financial institutions would be enough to restore confidence,” and then put the under/over on how many years before that’d happen at ten, and took the over.
Firm Shuts Hedge Fund After Losses (NYT)
BlueBay is shuttering its Emerging Market Total Return fund, and Satellite is said to be winding down all funds.
We Hear…(Page Six)
As previously reported, Billy Macklowe’s wife, Julie, has been dismissed from Steve Cohen’s lair. Page Six wonders if this will affect the former Sigma portfolio manager’s spending habits. Not if the e-mail J to the M sent out to family, friends, and foes is to believed. According to Macklowe, she left Stamford on her own terms, and is starting a new fund, to be named JMACK Capital.
Rescue Plan Strained by Lack of Staff (WSJ)
Anyone need a job? Surely there are 40 unemployeds reading this. You’d have to move to Washington, and report to the follically-challenged, but at least it’s work.

The current Treasury has so far struggled to keep up with the task of hiring enough people to handle the $700 billion financial rescue package passed by Congress in October. The man now in charge of running the Troubled Asset Relief Program, Assistant Secretary Neel Kashkari, said the department’s Office of Financial Stability, with about 40 full-time employees, is operating at half-staff.
Federal banking regulators, who must approve the applications from banks before they go to Treasury, said there is a backlog of unprocessed applications for relief. Outside observers said the difficulty of quickly building a qualified staff may be one reason the Treasury abandoned its original plans to use the TARP to purchase assets from financial institutions, deciding instead to inject capital into the banking system.
“I don’t think that was a small part of why Treasury in the end abandoned the asset-purchase program. It’s very people-intensive,” said Wayne Abernathy, executive vice president of financial-institutions policy and regulatory affairs at the American Bankers Association.

New York City to Celebrate 75th Anniversary of the Bloody Mary on Red Monday (PRNewswire)

NEW YORK, Nov. 28– Thousands of bars and taverns in the Big Apple will be celebrating Red Monday for the 75th anniversary of the Bloody Mary. The drink which is an American institution originated in Manhattan by a famous French bartender named Ferdinand Petiot when he came here in 1933. New York State and local officials will proclaim Bloody Mary Day and honor the granddaughter of Petiot with a citation and a Bloody Mary toast on Monday, December 1, 2008 at 11:30 a.m. in the middle of Times Square at 1552 Broadway.

  • 26 Nov 2008 at 12:36 PM

Write-Offs: 11.26.08

Kramer_turkey.gif$$$ Extreme Makeover at Morgan Stanley [NYT]
$$$ The Agony of Dan Zwirn [II]
$$$ Daimler Faults Cerberus in Talks Over Chrysler [Dealbook]
$$$ Morgan Stanley to sell $5.25 bln in notes Wednesday [Reuters]
$$$ That’s it for us today. Happy Thanksgiving. Brief posting/moral support for those of you working on Friday. Remember, it could’ve been worse– you could have been on the Indians’ side of the encounter. (Sporadic holiday updates may find their way in if EP drinks too much.)

  • 26 Nov 2008 at 10:44 AM

These Are Your Tax Dollars At Work

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As Thanksgiving and the holiday season quickly approach, Americans across the country have started to think about what they will do for friends and family this year. Despite challenging economic times, the one gift valued most by consumers costs nothing – expressions of gratitude.
According to a recent Ipsos poll sponsored by Citi’s ThankYou Network, there is a near unanimous agreement – 95 percent of Americans stated they feel “really good when others thank me for something I have done or accomplished.”
Nearly all respondents (19 out of every 20) of the “Rewarding Life” survey stated a belief that “more than anything else, getting a genuine thank you from someone is the best kind of reward that you can get.” In fact, when asked about the most meaningful reward they have ever received, the most common unprompted answer is a “sincere thank you.”
With so many Americans placing great value on genuine appreciation, businesses can tap into this sentiment to expand the ways they thank customers to enhance relationships. Nine in ten respondents (90 percent) agreed that it is more important than ever for businesses to reward loyal customers.
At the same time, 72 percent of Americans said they are surprised when a company thanks them for their business, indicating that there are opportunities for businesses to engage customers by showing more appreciation.
“Now more than ever, businesses should be expressing their thanks and appreciation to their customers,” said Gordon. “Through the Citi ThankYou Network, we have made showing appreciation and thanking our members a core value.”

Heartfelt Thanks, Fulfilling Relationships Top Wish List This Holiday Season [Business Wire]

  • 26 Nov 2008 at 10:37 AM

Memories….

Remember the good old days? The latest financial sporting fad was predicting the imminent death of private equity. LIBOR meant something. Someone was going to make a killing in commodities, you’ll see. Endowments were the BSD’s to emulate on the buy side. Yeah, that’s definitely over with this news:

The dean of Harvard’s Faculty of Arts and Sciences has called for an immediate freeze on staff hiring and strongly encouraged department heads to consider canceling faculty searches.
In an e-mail to department heads Monday, Michael Smith, dean of the largest Harvard faculty, outlined immediate steps in response to the worsening economic climate.
“Given our heavy reliance on endowment income, these losses will have a major and long-lasting impact – one that will require significant reductions in our annual expenses,” Smith wrote.

[...]

Harvard’s endowment before the economic crisis was $36.9 billion. It’s unclear how far it has fallen, but Faust recently referenced a Moody’s projection of a 30 percent decline in the value of college and university endowments this fiscal year.

Ouch.
Then again, -30% is the new “killing it” so, perhaps someone should give those guys a raise.
Harvard freezes staff hiring, scrutinizes faculty searches [The Boston Globe]

  • 26 Nov 2008 at 10:23 AM

Broken?

If you want a measure of:
A. How broken the credit markets are, or;
B. How totally fucked we are,
The fact that credit default swaps for 10-year protection on U.S. government debt have jumped to 56 points is a good candidate. Which one is really at work here, A or B is anyone’s guess.

“There is a lot more money to be spent and it is not clear how it is going to be financed,” said Tim Brunne, a Munich-based credit strategist at UniCredit SpA. “Credit spreads don’t reflect expectation of default, just the uncertainty over the enormous cost to the government.” [emphasis ours]

Yeah, we don’t get that quote either.

The Fed’s new plan to kick-start markets for loans to students, car buyers, credit-card borrowers and small businesses means it will be taking on credit risk by buying debt. The central bank pledged to purchase as much as $500 billion in mortgage-backed securities as well as up to $100 billion in direct debt of Fannie Mae and Freddie Mac, the world’s two largest mortgage buyers, and Federal Home Loan Banks.

Treasury Credit Swaps Soar to Record on New $800 Billion Pledge [Bloomberg via Alea]

  • 26 Nov 2008 at 10:03 AM

And They’re Not Coming Back

That giant sucking sound you hear is your hedge fund liquidating. Or, it is if you are Ross Perot. The former presidential hopeful’s fund Parkcentral Global Hub Ltd., had apparently levered up in a big way and the unwinding is proving to be painful. One surmises from the article that a crash in commercial mortgage backed securities is one cause.
We urge Mr. Perot not to feel too bad. There is a long history in the United States of failed bids for president crippling a man, reducing him to an irrelevance as anything but an object of suspicion, and this becoming so withering that the kilowatts consumed by his (admittedly unwieldy) home consume the attentions of dozens of nay-sayer hanger-ons.

The woes of these funds promise to put more strain on the banking sector. Banks that have made short-term loans to these funds mightn’t recoup all their money even if the funds liquidate. Parkcentral Global Hub Ltd., the fund overseen by Parkcentral Capital Management LP, a Plano, Texas, firm controlled by the Perot family, peaked this year at $2.5 billion in assets. It used borrowed money to amplify its bets, said people familiar with the matter, and began dumping assets last week.
That leverage helped hasten the fund’s meltdown as the commercial mortgage-backed securities, or CMBS, market cratered last week, and the borrowings also could leave lenders with tens of millions of dollars in losses, the people said.
A Parkcentral spokesman Tuesday confirmed that the fund has been forced to liquidate to pay off creditors, but he declined to elaborate. He blamed the “unprecedented upheaval of the capital markets in general and the freezing of credit markets in particular.”