Skip to main content

Opening Bell: 01.27.09

Senate Confirms Geithner (MarketWatch)
The Senate overlooked a minor tax inconvenience and relative inexperience to pull behind Mr. Geithner late Monday in a 60 to 34 vote. As has been pointed out before, Geithner carries on in the Goldman legacy (even if it is once removed), so there's no worries for the Broad boys. President Obama on Geithner's uniqueness:
"The president believes he [Geithner] has unique experience, unique intelligence and a unique background to tackle the economic crises that we face right now. He will be a tremendous leader,"
A Bad Showing At Nomura Holdings (Reuters)
The Japanese powerhouse showed down $3.8B Q4 on the heels of buying Lehman Brothers' operations, exposure to Iceland, and Madoff.
"Nomura said it would cut some executive bonuses and salaries, not pay a dividend for the current quarter and may sell businesses as it integrates the Asian, European and Middle East operations it bought last year from failed Wall Street bank Lehman Brothers"
Tuesday's Pirate Update (BBC)
The head of the Indian Ocean Tuna Commission is screaming bloody murder over the 30% decrease in Tuna production due to piracy, which (according to some economic law or another) means higher Tuna prices.
Yes, ladies, it appears the damn Pirates are snatching up all the Tuna.
Fannie/Freddie May Have To Seek Additional $51B (Reuters)
Freddie is probably going to have to absorb another $35B (we're going high side here) in preferred capital after its rather large subprime portfolio took another round of losses in its most recent quarter, leaving a paltry $16B for Fannie. The loss will mean that Freddie has still only used about half its initial $100B allowance, though the need tramples the expected needs as predicted by Barclays ($26B).
Paulson & Co. Scores Big On RBS Loss (Bloomberg)
In a move sure to draw ire from some corner of the universe, Paulson has effectively shorted the shit out of RBS for a gain of $420MM over the trailing Quarter (roughly).
"Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson's disclosure indicates he borrowed almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday."

Putin: Destruction Of Oligarchies A Complete Accident (Bloomberg)
Putin is holding fast that the media has missed its mark in portraying him as some Czar hell bent on power, intent on destroying the ruling class that might oppose him. In an interview with Bloomberg, he appears to lay down the following edicts to avoid destruction:
1) Acquire your money legally.
2) Contribute to the social good of your country.
Rules we could all live by, Mr. Putin; well done sir.
AIG Seeks To Sell Fund Management Business (Reuters)
AIG is working with BAC/Merrill to spin off and sell its fund management business, which controls around $12.4B across 15 funds. There's no mention yet of a price point for the fund management segment, though if BAC/Merrill has anything to do with it it'll be priced at about 10x what it's worth, with the purchasers only realizing the discrepancy about a month after the closing.
"The fund management business, part of AIG's global real estate business, is based in New York and operates globally. Funds include equity capital that has been funded or is to be funded partly by AIG Global Real Estate."
Related, AIG is taking bids on ILFC (its aircraft leasing arm) which is valued at roughly $10B. The group controls about $55B worth of aircraft, and initial bidders included PE firms "Carlyle Group, TPG Capital LP and Kohlberg Kravis Roberts & Co."
Layoff Spread To More Sectors Of The Economy (NYT)
That this was once seen as a "Wall St." problem is absolutely bewildering; the lack of foresight inherent in considering this a localized problem, even 6 months ago, is something that can't be accounted for with any grace what-so-ever.
That said, yesterday saw a remarkable move as roughly 11 companies across sectors were united in announcing cuts to the effect of 75,000 people. Recession to date, that puts the numbers at 2.55MM and the most recent unemployment figure at 7.2%.