Opening Bell: 12.11.08

Posted by Dealbreaker, Dec 11, 2008, 7:49am

Picture 322.pngHouse Approves Auto Bailout Bill (AP via NYT)
237-170, roll call here.

Cox Takes Capitalistic Stance (Reuters)
There's been quiet a bit of talk lately about whether or not the U.S. government can gracefully retreat from the positions it's taken in various corporate entities, and moreover, whether it will seek to do so. Cox taking an important step, namely the first one, in leading us to believe that the Government does in fact have ever intention of actually withdrawing:

"Cox said if prolonged, this will threaten private ownership, which is directly tied to America's dedication to individual freedom and its rise to being a global superpower.

"Maintaining the arm's length relationship between government, as the regulator, and business, as the regulated, is essential," Cox added."

Occasionally hearing the patently obvious from the people drawing their salary from tax dollars isn't a bad thing: it reassures us that they do in fact understand the patently obvious.

Swiss Bank Cuts Rate To 0.5% (Bloomberg)
"The Swiss National Bank's Governing Board in Zurich, led by Jean-Pierre Roth, lowered the three-month Libor target by 50 basis points, matching the median of 18 estimates in a Bloomberg survey. The rate for borrowing francs for three months in London was at 1.14 percent yesterday."

AIG Announces Possible Delay In Asset Sales (Reuters)
AIG CEO Liddy is looking to slow down the firm's current plans to sell off $152B worth of assets world wide. The issue is one of timing: (roughly) the same shit that got AIG into this mess is creating an environment whereby AIG can't sell its units for anything resembling fair market value - the liquidity issues and capital requirements are causing firms that would normally bid to sit quietly.

Goldman To Change Retirement Rules (FT)
Goldman's retirement formula has worked like this: You get restricted stock that vests over a three year period (you get to keep it if you leave, vested or not) as a majority of your bonus. If you age and years of service combine to 55 (40, 15 years with the company, etc) then your stock vests immediately on retiring. Goldman is upping the "Rule of 55" to 60 after this year - thus gently prodding some of the more Sr. members of the staff to the door.

It could be worse: they could be telling you to just get the fuck out.

Morgan Stanley To Post Second Quarterly Loss Of The Year (Reuters)
For the second time this year MS is expected to post a quarterly loss, with analysts expecting the loss to be "as high as $1.15 a share, or nearly $900 million". According to Fox-Pitt, Kelton analyst David Trone, the quarterly loss can mostly be attributed to "$4.3 billion in private equity losses and fixed-income write-downs, partly offset by an accounting gain from the falling value of its debt".

Shrinkage Is Often Difficult To Deal With (Bloomberg)
According to Eurekahedge Pte the global hedge fund industry lost $64B in November, owing $18B to pure market losses and $46B to redemptions. The YTD across funds (including redemptions) is only down 13% however, leaving one to believe that some managers are handling their shit a little better than others.

IEA Warns Of Substantial Oil Cuts (FT)

OPEC is threatening to make substantial cuts in the production of oil during their next meeting, as oil demand is expected to contract for the first time in 25 years. While cuts would most certainly push barrels a little higher, a good point is made:

"But many argue that until Opec shows it is better adhering to the 2m b/d cuts it has already announced, the market is likely to see any announcements of further cuts as empty rhetoric and prices are likely to fall."

--William Richards

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