Archive for September 2011

Opening Bell: 09.23.11

US House passes spending bill as showdown looms (Reuters)
Republicans in the U.S. House of Representatives regrouped on Friday to approve a must-pass spending bill, but the prospect of a government shutdown loomed as Democrats said it would go nowhere in the Senate. Even in the face of rock-bottom approval ratings, the dispute suggested that lawmakers may not be able to bridge their differences to pass even the most essential legislation. Aid for victims of tornadoes, wildfires and other disasters could dry up by Monday if Congress does not replenish a dwindling relief fund. Funding for everything from national parks to law enforcement could expire in a week. By a largely party-line vote of 219 to 203, the Republican-controlled House in an after-midnight vote approved a bill that would keep the government running through Nov. 18 and provide $3.65 billion for disaster relief in one of the most extreme years for weather in U.S. history.

Moody’s Downgrades 8 Greek Banks (WSJ)
National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA, Agricultural Bank of Greece and Attica Bank SA were downgraded by Moody’s to Caa2 from B3. Emporiki Bank of Greece and General Bank of Greece were downgraded to B3 from B1. All of the banks’ debt ratings carry a negative outlook. “The government faces significant solvency challenges and historical experience shows that small sovereign debt restructurings have often been followed by larger sovereign defaults,” Moody’s warned.

BofA To Seek $800 Million In Deal To Sell Pizza Assets (Bloomberg)
BofA is in exclusive talks to sell its stake in the biggest U.S. Pizza Hut franchisee for more than $800 million, said two people with knowledge of the discussions.

Economic Signals Heighten Worries Of A Double-Dip (WSJ)
“The world is in a danger zone,” said World Bank President Robert Zoellick. His confidence in major economies avoiding another recession, he said, was “being eroded daily by the steady drip of difficult economic news.”

French, German Bank Credit Default Wagers Soar (Bloomberg)
Deutsche Bank was the most- traded company of 1,000 issuers tracked by the Depository Trust & Clearing Corp. in the week through Sept. 16, up from 12th the week before. Credit Agricole SA (ACA) climbed to seventh place from 43rd, while Societe Generale (GLE) SA soared to eighth from 58th. Banks hold more than half of the bonds issued by other lenders and are hedging that risk in the credit-swaps market. U.S. lenders Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS) also jumped into the top 10 most-traded companies, according to the DTCC, amid speculation the world’s largest economy is headed for another recession.

Report: Ex-labor chief’s 1-day rehire nets $158,000 city pension (MSNBC)
A retired Chicago labor leader secured a $158,000 public pension — roughly five times greater than what a typical retired public-service worker in the Windy City receives — after being rehired for just one day of active duty on the city payroll, local news reports said. According to The Chicago Tribune, Dennis Gannon stands to collect approximately $5 million in city pension funds during his lifetime. He now draws the pension while working for a hedge fund, the Tribune reported.

Prison In Bluffs Cat Sex Case (AP)
A Council Bluffs, Iowa, man who told police that he performed a sex act on a cat and then threw it out of a seventh-floor window has been given two years in prison. Thirty-year-old Gerardo Martinez was arrested after officers found the dead cat on a sidewalk outside a Council Bluffs apartment building on Aug. 3rd. Officers say Martinez was naked and told them he used methamphetamine and had engaged in sex with the cat. Read more »

Write-Offs: 09.22.11

$$$ Meg Whitman Is Named Hewlett-Packard Chief (NYT)

$$$ EU to speed recapitalisation of 16 banks (FT)

$$$ All Eyes on Bernanke’s Next Move (WSJ)

$$$ US banks hit by Fed and funding fears (FT)

$$$ Bank of America Said to Seek $800 Million in Sale of Pizza Hut Franchise (Bloomberg)

$$$ Glenn Beck: I’m boycotting Levi’s because of their ‘Go Forth’ ad that ‘glorifies revolution’ (NYDN)
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Mayor Bloomberg is on record claiming that riots are caused by unemployment among college graduates. But I suspect that Occupy Wall Street is overweight degrees and underweight 9-to-5 employment, and it’s not taking down the regime so much as it is taking down a lot of pizza. So one might question Bloomie’s conclusions and seek someone with more rigorous statistical training to explain Where Do Riots Come From.

Fortunately we have that in Yaneer Bar-Yam, a physicist, complex systems theorist and general man-about-town with a pleasing CV that includes writing a book called “Making Things Work” and telling Slate that “the shortcomings of the U.N. humanitarian-response system in Haiti have a lot to do with a 50-year-old mathematical theorem known as Ashby’s Law of Requisite Variety.”

He and some friends wrote a paper, released yesterday, arguing that increases in food prices over the last few years can be explained almost entirely by two factors: financial market speculation and the growing use of corn for ethanol production rather than food.

Now these arguments have been made before, and also disputed or minimized. The new paper rejects a lot of those criticisms; more interestingly, it constructs a fairly simple four-parameter model that can pretty closely match the actual trends in food prices over the last few years:

So, neat. Also disturbing. Also also disturbing is this: Read more »

Though some might argue otherwise, Raj Rajaratnam is a pretty lucky guy. In the beginning of July, at which time he was slated to be sentenced in mere weeks, Judge Richard Holwell agreed to postpone a decision until September 27, granting the convicted Galleon founder one last summer of love. Today, Holwell tossed Raj yet another bone, putting off next Tuesday’s sentencing for October 13. Knowing the guy better than most, how would you suggest he make these next few weeks count? Read more »

The SEC’s administrative action against Spencer Mindlin & Dad yesterday had me scratching my head, and not just because TD Ameritrade managed to record a conversation between Mindlins père and fils when they had Ameritrade on hold. That should not be possible.

From what I’ve seen of this case it really doesn’t look like insider trading to me, though I’m always less willing to see insider trading than, say, the SEC is. But more interesting to me is what the case shows about the ETF market.
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Remember This Tomorrow

Shitty climate got you down? Getting your ass kicked every day? Feel like the market is making you its bitch? Obviously, you have options. You can cry about it. You can jerk the wheel into a god damn bridge abutment. Or you can act like a winner. You can realize that there is no substitute for winning and you can get out there and play the other team quote unquote, with its pussy mustard yellow shit volatility, and not just beat it but grab it and fuck its sisters in the cunt. ARE YOU LISTENING??? Read more »

Did FTP maybe commit a crime? Yes. Was the crime it committed a Ponzi Scheme under the strict definition of the term? No. Read more »

The Brits hate to be the bearers of bad news but if they have to, they have to. Read more »