They Get the Joke
April 30, 2010 at 4:04 pm | Posted in wall street | Leave a commentTwo weeks ago, I summarized the legal corporate murder racket thusly:
You can put any financial business into bankruptcy by denying them credit. And you can deny any company credit by buying enough protection in the CDS market.
Today, as I checked out my favorite places to cruise for business news/gossip, I caught a post on the unofficial biggest thorn in Wall Street’s side, Zero hedge. In it, pseudonymous Tyler Durden let fly with the musical question: Did Paulson have a $2 billion Bear Stearns CDS short in late 2006?
Trading Gremlins
April 30, 2010 at 1:13 pm | Posted in wall street | 1 CommentThey’re back!
Those pernicious gremlins that watch me trade. I’m sure you know them, too.
If I want to buy a stock, they flash an attractive price on my screen, only to snatch it away before I can enter the buy order. If I add a few pennies to my bid, they dangle the stock just a bit higher for the next ten minutes, only filling my order if I really, really won’t chase it.
I’ll Be Listening
April 29, 2010 at 3:18 pm | Posted in wall street | 3 CommentsI tried to add to an already-oversized ANH position today ahead of the conference call that starts an hour after the close.
I have a suspicion that their low leverage and preference for ARMs will serve them better than expected in what was a tough quarter to trade.
Certainly the buyouts by Freddie in March, and the coming buyouts of bad loans by Fannie over the next few months will hit their book value a little, but the market seems to be forgetting that they assumed a faster prepay rate than has actually occurred.
Dendreon Payoff
April 29, 2010 at 12:32 pm | Posted in wall street | 2 CommentsIt finally happened, after years and tens of thousands of deaths that might have been delayed or avoided.
But as late as two days ago, the Dendreon bears were still getting their reporter mouthpieces to put out negative press, as usual, without thinking about what they were printing.
Why is it that so many people reporting on investment topics print stories they get without finding out whether the story makes sense?
Tail Wags Dog – Again
April 28, 2010 at 2:13 pm | Posted in wall street | 2 CommentsToday is the launch of the Primex index of credit default swaps on prime “jumbo” mortgage-backed securities. This index was ready to go in late 2007, but got delayed after the damage its junkier cousin, the ABX, did to the dealers, and to the MBS issuers.
Reading the commentary on the launch, I found myself muttering “What kind of economic theory would say that existence of a liquid, visible hedge instrument should make the value of the underlying market sector decline?”
amREIT Lesson
April 27, 2010 at 2:46 pm | Posted in wall street | 2 CommentsMy friend Dan, a veteran of the last round of amREIT wars, posted a nice piece that reminds us that humility is sometimes the most important lesson the market teaches us.
With permission, I repost it here.
Is Any One Bear Smarter than the Market? –
A long long time ago in a place far far away (that I would prefer to forget), there were two agency mREITs. The first REIT was very conservative in its projections and stated the risks to the strategy very clearly.
The Biggest Lie
April 27, 2010 at 1:15 pm | Posted in wall street | 3 CommentsIt’s hard to pick the biggest lie when the room is full of politicians and investment bankers defending their actions.
My personal nomination is for Mr. Sparks (head of mortgages at Goldman) with this gem:
“At the time we did those deals, we expected the deals to perform.”
Glimmer Gets Brighter
April 26, 2010 at 8:31 pm | Posted in wall street | Leave a commentAfter a weekend off, I’m back in the MoM command center. I’m beginning to read some of the books that came out over the past two years about the meltdown, in preparation for refreshing and publishing my own version.
Friday we saw the first residential mortgage deal since the crisis began. A glimmer of hope, in other words.
The problem, as I saw it, was the extraordinary quality of the loans in the Redwood pool.
Magnetar Redux
April 23, 2010 at 9:59 am | Posted in wall street | Leave a commentReuters blogger Felix Salmon just nails it today with his post explaining (again) the Magnetar trade.
I thought I would add a little market color around it, and put numbers in place so you can see just how huge an influence this previously completely hidden trade had.
First, as noted, the Magnetar strategy of investing long in CDO equity drove $40 billion in issuance.
That’s a big number for a single market participant to drive in a single market segment. But the effect was multiplied far more than you might think, enough to drive the core of the US economy (housing and finance) off the cliff at maximum speed.
Call Central Casting
April 23, 2010 at 9:12 am | Posted in wall street | Leave a commentIf a movie producer told her assistant to call central casting for a New York real estate developer, they could only hope to get Ivan Kaufman.
Kaufman is the CEO and Chairman of Arbor Realty (ABR), and he took his company public in the mortgage REIT market in 2004, when that was the strategy du jour.
From their offices in suburban Long Island, Ivan and his crew at Arbor offer mezzanine and bridge financing for commercial real estate. They lend on what they know – higher end suburban New York office and retail mostly, the kind of properties Ivan made his money on in the 80′s and 90′s.
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