Opening Bell: 11.26.08

Posted by Dealbreaker, Nov 26, 2008, 8:37am

Kramer_turkey.gifAIG's Cassano Under Investigation (Reuters)
The ex-head of AIG Financial Products is under Federal investigation for his role in the loss of Billions of dollars, which many see as the catalyst leading AIG to financial ruin.

The announcement comes on the heels of AIG's announcing that they had completed the $40B sale of preferred stock to the US Treasury under the terms of the TARP. Also newsworthy of AIG: FT is reporting that AIG's Edward Liddy has agreed to accept a $1 salary as some symbolic move.

"This gesture by AIG is appropriate and I encourage other firms to wake up to the new reality on Wall Street and follow AIG's step quickly," Mr Cuomo said in a statement."

I'm sure you meant "quickly follow AIG's step" Mr. Cuomo, but that aside, what's the rush?

Porsche backs away from buying VW majority this year (Reuters)
Something about "ridiculous prices."

EU Stimulus Plan Proposal (DJNewswires)
"The European Commission proposed Wednesday a sweeping stimulus package worth EUR200 billion, European Union sources said.

The sum, the equivalent of 1.5% of the European Union's gross domestic product, was more than the EUR130 billion that commission chief Jose Manuel Barroso had said previously that he was looking for."

Russia Threatens To Step Down Oil Production, Prices Respond (BBC)
While the Price reaction was minimal, there's the off chance that this could have a lasting effect. Russia has been rogue to the policies of OPEC in recent years, acting effectively as it saw its own best interests. We're seeing a stepping in line, however, as Russia is positioning itself with OPEC in Oil production cuts.

Some issues here to pay attention to: they're not actually aligning themselves with OPEC, merely following OPEC's most recent move. Also: they're probably drunk.

108bps Drop In China Key Rate (Bloomberg)
I've always been a fan of odd-lot cuts, as they seem remarkably arbitrary. I don't, for instance, see how one comes to the 108 number: why not 109 or 110?

"The cuts are aimed "at ensuring sufficient liquidity in the banking system and to promote steady loan growth so that monetary policy can play an active role in supporting economic growth," the bank said in a statement."

Inbursa buys 26MM share block of C (CNBC)
The big question here is whether or not this signals Carlos Slim's tacit nod of approval for Citi.

Why CNN Can't Cover The Credit Crisis (Infectious Greed)
IG is covering what amounts to an organized rant on how MSM is botching the coverage of the liquidity crunch, and as a bonus there's a Suze Orman bashing.

Goldman's FDIC Backed Bond Issue (DJNewswires)
For those of you without access:

"Demand for the bonds was strong, with 300 investors placing orders for the deal that is likely to serve as a benchmark for other banks lining up to raise funds under the Temporary Liquidity Guarantee Program, or TLGP.

The program aims to ease the process of refinancing bank debt, and in turn possibly free up lenders to extend new loans to customers and businesses again. It's only one weapon in the government's arsenal to battle frozen debt markets that threaten to make a recession in the U.S. economy much deeper.

Goldman sold $5 billion of three-and-a-half year notes at a risk premium of 200 basis points over the 1.75% Treasury due November 2011. This put the interest rate at just 3.367%, significantly lower than the bank's outstanding debt that isn't backed by the government. Goldman's 5.7% notes due 2012, for example, are currently trading at a yield of 8.5%, according to one bond trader.

Some 40% of the issue was placed outside of the U.S., according to a spokesman at Goldman Sachs."

Toyota's Credit Rating Cut By Fitch (Bloomberg)
The move by Fitch drops Toyota from AAA to AA, which increases the cost of Debt. Wait.. People still trust ratings companies? How have they not been put out of business?

--William Richards

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