Sure, the Greenlight founder is disappointed with Obama and Co, which he believes is “following the same path as the Bush administration,” as it attempts to bring us back to the heady days of 2006 (“by propping up asset prices and reflating the popped credit bubble, subsidizing bank creditors and shareholders, and delaying needed bank recapitalizations, while hoping for an economic recovery”). But! Einhorn is confident Bush II is smart enough to wake up and do the right thing. Here are his closing remarks from the Ira Sohn conference. Have to say, we are loving this passive aggressive side. Notice how throws the campaign’s favorite word back at them?
“I am optimistic because even though I believe that Secretary Geithner is leading us down the wrong path, President Obama has demonstrated an ability to change his mind in other areas. To me, this reflects the work of an intelligent pragmatist acting upon fresh understanding. I am optimistic that President Obama is capable of making similar reassessments of the economic rescue plan, and changing direction there as well.”
David Einhorn Strikes Again [Daily Intel]
Just in case you had not yet gotten your fill of the Cross Pond Classic, another event is introduced: The 400 meter stress-test hurdles. GO!
Analysts Olivia Frieser and Andrea Cicone concede the test is a “real one”, in so far as the parameters – 12 per cent unemployment, 50 per cent fall in house prices and a six per cent decline in GDP from peak to trough – are reasonably demanding:
The assumptions seem severe enough to us and therefore the stress test seems real…
However, they note:
…if we were picky, we would say that they remain static tests, and that these assumptions are merely in line with the base case of our admittedly bearish economists.
The US and the UK stress tests have two very different objectives [FT Alphaville]
Target Corp.’s shareholders have re-elected the company’s slate of directors, rejecting a hedge fund’s alternate slate, according to preliminary vote totals.
The head of Pershing Square Capital Management has argued that the struggling retailer needed new perspective, especially in the areas of retail and real estate so it can better compete with rival Wal-Mart Stores Inc.
Shareholders rejected those arguments at Target’s shareholder meeting outside Milwaukee on Thursday. Shareholders also sided with the company in approving a measure that sets the board’s size at 12 members.
Target shareholders reject Ackman board slate [AP]
Update: Margaret Brennan: “Reportedly Ackmann himself is very disappointed with the results; he in fact choked up during his presentation today.”
Are you into impersonating executives? Inventing hundreds of millions of dollars out of thin air? Staging fictional conference calls? Have we got the place for you! Curbed reports that Marc Dreier’s One Beacon Court condo will be up for grabs this July. You’ll get: 3,000 square feet, four bedrooms, five baths, a 750 square foot terrace and the sense that you’re in the presence of greatness.
We’ve been informed that a Barcap banking analyst (tech, a legacy Lehman employee) killed himself over the weekend of the 15th. One account claimed that he’d been up for three days working and was berated by a superior, but that has not been confirmed and may simply be a product of the rumor mill. The layoffs that went down yesterday were apparently supposed to occur last week but were pushed back because of the tragedy. Barclays has not yet returned calls for comment.
Because it’s unlikely Pequot’s going to need the room they took over at 187 Danbury Road just last month. Art Samberg and Co. had previously been bunking in a building shared with Bridgewater, but Ray Dalio needed the space to expand and apparently “made Art an offer he couldn’t refuse” (never took Dalio for the murderous type but sure, we’ll buy it) and off Art went. Sad news for the landlord in Wilton, who “did a ton of build-out” in preparation for the Pequot people but possibly happy news for those of you interested in taking over the four year lease? (Of course, the wind down of the funds will take some time, but we’re assuming Art and the Sambergettes don’t need more than a few thousand feet and the space for a crying room.) The digs are apparently “quite plush” and include “lots of fancy-schmancy artwork” and sweet furniture, though those items will likely not come with, but rather be sold to the highest bidders (we’re told John Mack has already called shotgun on the chaise lounge).
We are sure you’re like us and just skip to the David Einhorn section when it comes to the Ira Sohn Conference notes that Zero Hedge has posted, courtesy of BTIG’s Mike O’Rourke. Here’s the take on Einhorny:
The theme of Davd Einhorn’s presentation was the curse of the AAA. Obama administration is following the same policies of the Bush Administration. The administration is reflating the economy back to 2006 levels. For the economy to recover underwater entities need to restructure their debt. The willingness for banks to negotiate in this environment depends upon where the positions are marked. The Obama loan modifications lack the most important aspect of restructuring: debt reduction. The debate in the banks was too narrow with only two options discussed- Nationalizing versus Taxpayer Bailout. There is a 3rd option, debt or preferred equity conversion to common equity. Attempt to induce debt of equity conversions without creating a downdraft in the group. Banks are not materially more solvent today than they were two months ago. Regulatory forbearance has created this rally in banks. We should be overcapitalizing the banks and direct them to restructure the debt of their borrowers. The Government spending and guarantees put the U.S. AAA credit rating at risk. US debt needs to be managed responsibly.
Einhorn goes on to nuke Moodys, his short. Good play!
Ira Sohn Conference Notes [Zero Hedge]
Is anyone else looking forward, really looking forward to The Safecracker’s Beijing trip next week? We certainly are. Reuters says this:
U.S. Treasury Secretary Timothy Geithner has a chance next week to persuade anxious Chinese authorities their investments in huge and growing volumes of U.S. debt securities are safe and sound.
His visit to Beijing must deal with tough economic realities: the United States is issuing new debt in record volumes as it seeks to finance an array of programs to right its economy, while China is growing nervous about whether its U.S. “nest egg” is secure.
Of course, much hinges on the Timster’s visit. A small error could spell big problems. So we’ve put together a little “DOs” and “DON’Ts” list. We know Tim reads us, so we’re confident this will smooth things over and keep things on the up and up.
DO: Make sure your visa is in order before getting on the government jet.
DON’T: Bring sunscreen. The smog takes care of that for you.
DO: Bring Treasury brochures and marketing materials. We are particularly partial to the “Safe Savings For Education” series.
DON’T: Try to avoid the VAT. We know it is tempting. Just trust us. They aren’t as forgiving as confirmation committees in the United States. And, no, Tim, there is no “TurboTax 2009: The Chinese VAT” software add-on.
DO: Bring enough lubricant. Xie Xuren will want some minions to try before he buys.
DON’T: Present a Publisher’s Clearing House sized check for “Six Dollars” marked “Paid In Full” at the bottom. Chinese humor can be difficult to manage and the consequences of failure are extreme.
DO: Beg. It works in the East.
DON’T: Bow when the cameras are rolling. Duh.
DO: Be polite to your secret-police minder.
DON’T: Ask him about the execution/organ harvesting vans unless you want a personal tour.
We are pretty confident that, if he follows our advice, Timmy will manage his way back just fine. (Though sitting on the plane for double digit hours on the way home might be a tad painful).
Geithner to Beijing: Keep buying our debt [Reuters]
In the latest GM clusterfuck drama, the Wall Street Journal flashes the pressing news that a group of unsecured GM noteholders has agreed to the latest 10% debt for equity swap amusement. Outstanding work guys and gals! How many votes have you got in the bag?
We have been informed by the advisors to the unofficial committee of unsecured GM Noteholders, Houlihan Lokey Howard & Zukin Capital, Inc. (financial advisors) and Paul, Weiss, Rifkind, Wharton & Garrison LLP (legal counsel), that the unofficial committee and other large Noteholders (who collectively hold approximately 20% in aggregate principal amount of the Notes) support the economic terms of the Proposal. (emphasis added)
Oh. Need we point out that this appears to suggest you have failed to obtain agreement from 80% of the unsecured debtholders? So, do the ad hoc and the official credit committee agree? Any news on secured debt holders. Anyone? Anyone? Bueller? Bueller?
Maybe we were a bit quick ordering the Presidential Suite for the weekend.
GM’s SEC Filing on the Treasury Offer [The Wall Street Journal]
The new surge in government jobs combined with the sudden shortage of finance positions was bound to create some interesting secondary effects. A great deal of interest in positions at the IRS and SEC, for instance. But there are a number of three letter agencies boosting their hiring in expectation of ballooning budgets. It shouldn’t surprise you then, oh deposed finance guru, that if you always wanted to get your bond (girl) on, now might be your chance.
Wall Street wizards may soon be plying their trade on the James Bond market.
The CIA is looking to hire the same investment bankers and financial gurus that many hold responsible for sinking the economy to help President Obama pick up the pieces — and also catch a few millionaire terrorists.
The spy agency started advertising the jobs on Bloomberg Radio, hoping to recruit investment bankers, top analysts and hedge fund honchos to use their “intelligence for the work of a nation.”
The $160,000 salary is probably a huge pay cut for many of the disgraced masters of the universe.
Sure, but think of the sideline in insider trading and the popularity you could enjoy by being Dealbreaker’s best informed tipster! (tips -at- dealbreaker -dot- -com- of course).
Also, if anyone scores an interview at the secret Manhattan location (we’re not kidding) we’d love the scoop on the quality of the coffee and bagels.
CIA Is Bullish On Wall Street [The New York Post]
The tag team prostitute/pimp married couple that screwed DuPont heir Stephen Dent out of a bunch of money after he met the wife on a straight and narrow website called SeekingArrangements.com (where Dent was a regular, natch), pled guilty yesterday to charges of larceny and extortion. Dawn Jessop was one of several lovely ladies Greenwich-based Dent met online a couple years back, who he offered to pay a few G’s for several in-person meetings per month (in addition to cash for other personal expenses and whatnot).
Imagine Dent’s surprise when he found out these girls were just using him! You think you know a person you’re paying for sex, and then they threaten to expose the situation you’ve got going on unless you send them a bunch more unmarked bills, which you do (Dent wired Dawn and husband Christopher Jessop $100,000 to “make the issue go away”). After such a betrayal– and after Dawn and Chris asked for another $50,000– it’d be only natural to get bent out of shape and call the cops. If they think they can walk all over you, they’ve got another thing coming, am I right? You’re nobody’s fool (even though this was the second time you got blackmailed by a lady-friend you met on the same website, and not that last).
Dawn was sentenced to three years probation, while husband/talent agent Christopher got 18 months in the big house and three years probation as well. According to the Jessop’s lawyer, Mickey Sherman, the whole thing was “one of those bad decisions that people make, bad judgment and downright stupidity.” In related news, Dent has not been charged with anything, lest other victims debating whether or not to come forward be scared off.
Earlier: Greenwich-Area “Financial Titan” Screwed, Screwed Out Of Money
