S&P revised its outlook on Citi to negative from stable today, but we’re told that no one is losing sleep over it at the bank and this is pretty much a non-event. They all can go back to their blog writing and uber-derivatives-creating safely.

S&P’s rationale is that if Financial Armageddon 2.0 were to come, they’re not too sure about “the U.S. government’s willingness to provide additional extraordinary support to highly systemically important financial institutions.”

Bernanke won’t be able to testify tomorrow before the House Financial Services Committee on the Fed’s exit strategy, because he’s “snowed in.” Right.

What should Ben do with his snow day, besides snow angels with Timmy?

As you’re aware, John Thain has a substance abuse problem. The substances are fabulous chaise lounges, antique desks, and curtains that cost $1,000/yard. John’s brain is wired to think he needs these things and more to perform at the top level shareholders of the companies he’s run have grown accustomed to. Obviously this isn’t a healthy addiction JT’s struggling to overcome, and clearly he’s still in the early stages of recovery, as noted by what he told Bloomberg, on the news he’d accepted the job to run CIT Group, and the executive suit that comes with the gig.

“I think I’ll keep my office exactly the way it is,” he said.

This is something addicts say in their first go at rehabilitation, when they think they’re bigger than the drugs. They want to overcome their demons, sure, but they have no idea how truly brutal and demanding the road ahead will be. It’s not realistic to say you will categorically never use again because, statistically speaking, almost everyone has at least one or two relapses, especially when put it high risk environments rife with triggers. Such as, the hideous office of one’s predecessor, which I don’t think John actually got a look at before taking the job, and certainly not prior to speaking with Bloomberg.

Macquarie employees, feel free to do what you will with her out in the open.

The Brits are jumping on the Volcker Rule-hating bandwagon, because a) the rule is stupid, b) it’ll make them lose a boatload of money, and c) screw you US, (Obama, Timmy, Paul) if you think you can just go at it alone. Barclays’ CEO John “profits are not satanic” Varley said that the proposal was “completely irrelevant” and that the idea of breaking big banks was just dumb as “size is irrelevant.”

I don’t think something simplistic like prohibiting proprietary trading in banking is the answer.

Varley, who’s getting more irritated by the week, would also like to remind people that he never asked anyone - and certainly not the FSA- the permission to buy Lehman. So he doesn’t really see the point of responding to anyone now, especially since Barclays is the best bank ever.

UBS Posts First Profit In More Than A Year (Bloomberg)
UBS earned 1.21 billion francs in the fourth quarter, its first profit since the third quarter of 2008, helped by lower costs tied to the company’s debt and a tax credit. The bank is paying 2.9 billion francs in bonuses for 2009, up 34 percent from the previous year. Chief Executive Officer Oswald Gruebel said in a statement that the return to profitability “will increase clients’ confidence in UBS.”

Time For Bonus Round At Banks (Charlotte Observer)
At Foreign Cars Italia of Charlotte, where cars run from about $100,000 to $1 million or more, bank bonus season used to provide a boost every February. But Gary Furnas, a sales consultant at the dealership, said he hasn’t been involved with a sale to a bank employee since November 2008. That customer, a Bank of America employee, bought a black Ferrari, but then kept it on the lot for two months because he worried that it was too flashy. It wasn’t a matter of money - “he could have bought four or five of them if he wanted,” Furnas said. In the end, the customer asked the dealership to resell the car, and he opted for a less showy Maserati instead. “He said he was getting too much grief from his co-workers, that he couldn’t be seen driving it around his neighborhood or in the bank parking lot,” Furnas said.

S.E.C. Enforcers Focus on Avoiding Madoff Repeat (NYT)
In the headquarters of the SEC, Mr. Madoff’s name is rarely spoken. More than seven months after he was sentenced to prison for orchestrating a global Ponzi scheme, shaken employees are still struggling to come to grips with how they failed to catch him before it was too late.

Nassim Taleb: Warren Buffett May Just Be Lucky (CNBC)
“I don’t want to spend too much time on Buffett. George Soros has 2 million times more statistical evidence that his results are not chance than Buffett does. Soros is vastly more robust. I am not saying Buffett doesn’t have skill—I’m just saying we don’t have enough evidence to say Buffett isn’t doing it by chance.”

Wall Street’s Race To The Bottom, By Elizabeth Warren (WSJ)
Banking is based on trust. The banks get our paychecks and hold our savings; they know where we spend our money and they keep it private. If we don’t trust them, the whole system breaks down. Yet for years, Wall Street CEOs have thrown away customer trust like so much worthless trash.

UBS bankers’ 2009 cash bonuses up a third on year (Reuters)
UBS will pay about 2.9 billion Swiss francs ($2.7 billion) in cash bonuses for 2009, up about a third from depressed payouts a year earlier.

Goldman’s Response To The New York Times, By Lucas Van Praag (Huffington Post)
NYT assertion: “Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash.”
The facts: Relative to the size of AIG’s overall business, Goldman Sachs was a small counterparty. We don’t believe our marks were “aggressive,” they reflected market prices at the time. We requested the collateral we were entitled to under the terms of our agreements. The idea that AIG collapsed because of our marks is not credible. In any event, the story later asserts that, by the spring of 2008, AIG’s dispute with Goldman Sachs was just one of its many woes.

$$$ The history man and fatwa girl: Niall Ferguson has deserted wife Sue Douglas for Somali feminist [Daily Mail via Daily Intel]

$$$ German pensioners ‘kidnapped financial adviser’ [BBC]

$$$ Cash Money Records Founders Start An Oil Company [BI]

$$$ Should Individuals Be Regulated Like Wall St. Banks? [The Atlantic]

$$$ Toy Mogul Said To Buy Madoff Penthouse [Dealbook]

We don’t have to tell you bitching about bonuses is getting boring. Thankfully, the good people of Greenwich have nothing bad to say about them, and are actually just happy things are getting back to normal. They are spending like it’s 2005 all over again, although they admit that they’ll have to go about their business in a more demure manner this time around. Decency, and whatnot. “Last year was a big downer,” said Michelle Brunwasser, a partner in the chic Weber art gallery. “Things are definitely better now, and a lot of it has to do with the bonuses.”

The following post is by a hedge fund manager friend of DB who shall remain nameless. He runs the emerging markets desk at his firm.

It’s the financial version of Montezuma’s revenge! The meltdown in Western European sovereign credit has led to a Great Colonial Spread Reversal. Until now, only select Anglosphere colonies had posted tighter spreads than the old metropolis. Sovereign spreads embodied the tradition order when it came to Latin America. When Latam hit turbulence, investors looked at European bank and corporate exposures to the old colonies, or figured on expensive support packages and pushed the colonizers a tad wider. But the shades of some conquistadors this week are weeping in Hades, for their world has been turned upside down. Cortez and Cabral, call your office! Pizarro, take a peek at your portfolio! Mexico and Peru now trade tight to Spain. Brazil is sitting well inside Portugal. For the moment, the sacred memory of the Raj is safe - State Bank of India still trades 50bps wide to UKT - but Gandhi’s ghost may be rubbing his hands with anticipation while Clive sweats, as the spread is narrowing. France maintains a safe lead over francophone Africa as does Belgium with respect to Democratic Republic of Congo - for now!

IT GETS BETTER.

The guys at Citi are smarter than anyone else on the Street, which is why they are about to launch the first derivatives EVER that will pay out in the event of a financial crisis.

As Chris Whalen, at Institutional Risk Analytics, told us about the news: “It’s cute. Though a bit ironic coming from them.”Yes, it’s ironic and the mere concept could be funny if it weren’t that scary.