-Volatilities are still in the higher percentiles.
Biggies are:
-Retails sales-13.08
-PPI-14.08
-CPI-14.08
-Industrial Production and Capacity Utilization-15.08
-Housing data-16.08
-No position on equity options rolling into this week.
Possible plays:
-Scalps on ETF or Index options
-Equity option spreads
EDITED: I have asked someone to post this one for me and I am not sure what he did but he combined an old draft with some stuff I wrote last week. So this post has been updated for the econ biggies.
Sunday, August 12, 2007
Friday, August 10, 2007
Yeah, just deny it so investors won't be scared LOL
There is a guy on Bloomberg now and he just denied that his company is invested in anything that might be affected by the subprime crisis. Great strat, just deny it all so the investors won't pull out their money. Hahahaha!
Subprime `Tsunami' Hits Asset-Backed Commercial Paper Market
This was foreseeable....
By Mark Pittman and Elizabeth Stanton Aug. 8 (Bloomberg) -- Companies are extending payments on commercial paper backed by home loans for the first time as thesubprime mortgage crisis spreads to debt perceived to be amongthe safest in the market, according to Moody's Investors Service. Units of American Home Mortgage Investment Corp., theresidential-mortgage lender that filed for bankruptcy, Luminent Mortgage Capital Inc., facing margin calls from lenders, and Aladdin Capital Management LLC, this week exercised an optionallowing them to delay repaying the debt, Moody's said.
The three issuers are probably the only ones to deferpayments since extendible asset-backed commercial paper was firstsold 12 years ago, according to New York-based Moody's. Thefailure of some companies to pay on time has cast a pall over thesecurities, which are considered to be almost risk free, said LeeEpstein, chief executive officer of Money Market One.
``The subprime tsunami has come to the beach, as it were, tothe safest of the safe,'' Epstein said. Money Market One is a San Francisco-based broker-dealer of short-term securities. Commercial paper is bought by money market funds, mutual funds that invest in short-term debt securities and hold money for everything from individual savings to the coffers of Standard& Poor's 500 companies. The cash from money market accounts islent to entities such as those owned by American Home and Luminent to buy mortgages, bonds, credit card and tradereceivables as well as car loans. Extendible notes allow theissuer to delay repayment for as long as 397 days, the maximumU.S. money market funds may hold.
Higher Rates
Asset-backed commercial paper comprises about half, or $1.15trillion, of the $2.16 trillion in commercial paper outstanding,with extendible notes making up about 15 percent of the asset-backed portion, or about $172.5 billion, according to Moody's. Investors are demanding higher interest rates on so-calledasset-backed commercial paper, extendible or not, than oncommercial paper issued by companies like General Electric Co.and Citigroup Inc. to fund their operations, because of concernabout the value of the collateral. Extendible asset-backed commercial paper yesterday carriedyields of 5.75 percent to 5.95 percent, compared with 5.45percent for asset-backed commercial paper that isn't extendibleand 5.25 percent to 5.30 percent for corporate commercial paper,Epstein said.
``Commercial paper buyers are notoriously risk aversebecause they have such thin margins,'' said Simon Adamson, aLondon-based bank analyst at CreditSights Inc., an independentdebt research firm. Debt markets rebounded today after the Federal Reserve easedconcerns that a slump in credit markets would derail the economy.The perceived risk of owning corporate debt fell to the lowest inmore than a week, based on credit-default swaps, and at least 13companies lined up debt sales.
Luminent, Aladdin
Luminent Star Funding, sponsored by San Francisco-basedLuminent, is a securities program that invested in AAA ratedmortgages. Luminent this week extended its commercial papermaturities and canceled its dividend payments after bankersissued margin calls. The company today said two lenders sent default notices. Luminent Chief Financial Officer Christopher J. Zyda didn't calls seeking comment. Ottimo Funding Ltd., a securities program run by Stamford,Connecticut-based Aladdin, also invested in the highest ratedassets. George Marshman, a co-founder and chief investment officer of Aladdin, declined to comment. American Home Mortgage's Broadhollow Funding LLC extendedmaturities on commercial paper after being unable to roll over$150 million of the debt, Moody's said. The program can beextended by 120 days, Moody's said.
`Extraordinary'
Melville, New York-based American Home's secured liquiditynote program may be cut by Moody's from its top rating of Prime-1. Broadhollow had $138 million of subordinated notes cut to Ba1,the highest speculative grade, from Baa2. The notes remain onwatch for further downgrade. The change followed American Home'sfiling for bankruptcy on Aug. 6. American Home spokeswoman Mary M. Feder didn't return a call seeking comment. ``To my knowledge, there have been no extension events''until this week, said Everett Rutan, a senior vice president atMoody's Investors Service. ``What's happened recently has been extraordinary.''--With reporting by Joseph DiStefano in New York. Editor: MoodyTo contact the reporter on this story:Mark Pittman in New York at +1-212-617-3767 ormpittman@bloomberg.net;Elizabeth Stanton in New York at 1-212-617-5937 orestanton@bloomberg.netTo contact the editor responsible for this story:Emma Moody at +1-212-617-3504 or emoody@bloomberg.net.
By Mark Pittman and Elizabeth Stanton Aug. 8 (Bloomberg) -- Companies are extending payments on commercial paper backed by home loans for the first time as thesubprime mortgage crisis spreads to debt perceived to be amongthe safest in the market, according to Moody's Investors Service. Units of American Home Mortgage Investment Corp., theresidential-mortgage lender that filed for bankruptcy, Luminent Mortgage Capital Inc., facing margin calls from lenders, and Aladdin Capital Management LLC, this week exercised an optionallowing them to delay repaying the debt, Moody's said.
The three issuers are probably the only ones to deferpayments since extendible asset-backed commercial paper was firstsold 12 years ago, according to New York-based Moody's. Thefailure of some companies to pay on time has cast a pall over thesecurities, which are considered to be almost risk free, said LeeEpstein, chief executive officer of Money Market One.
``The subprime tsunami has come to the beach, as it were, tothe safest of the safe,'' Epstein said. Money Market One is a San Francisco-based broker-dealer of short-term securities. Commercial paper is bought by money market funds, mutual funds that invest in short-term debt securities and hold money for everything from individual savings to the coffers of Standard& Poor's 500 companies. The cash from money market accounts islent to entities such as those owned by American Home and Luminent to buy mortgages, bonds, credit card and tradereceivables as well as car loans. Extendible notes allow theissuer to delay repayment for as long as 397 days, the maximumU.S. money market funds may hold.
Higher Rates
Asset-backed commercial paper comprises about half, or $1.15trillion, of the $2.16 trillion in commercial paper outstanding,with extendible notes making up about 15 percent of the asset-backed portion, or about $172.5 billion, according to Moody's. Investors are demanding higher interest rates on so-calledasset-backed commercial paper, extendible or not, than oncommercial paper issued by companies like General Electric Co.and Citigroup Inc. to fund their operations, because of concernabout the value of the collateral. Extendible asset-backed commercial paper yesterday carriedyields of 5.75 percent to 5.95 percent, compared with 5.45percent for asset-backed commercial paper that isn't extendibleand 5.25 percent to 5.30 percent for corporate commercial paper,Epstein said.
``Commercial paper buyers are notoriously risk aversebecause they have such thin margins,'' said Simon Adamson, aLondon-based bank analyst at CreditSights Inc., an independentdebt research firm. Debt markets rebounded today after the Federal Reserve easedconcerns that a slump in credit markets would derail the economy.The perceived risk of owning corporate debt fell to the lowest inmore than a week, based on credit-default swaps, and at least 13companies lined up debt sales.
Luminent, Aladdin
Luminent Star Funding, sponsored by San Francisco-basedLuminent, is a securities program that invested in AAA ratedmortgages. Luminent this week extended its commercial papermaturities and canceled its dividend payments after bankersissued margin calls. The company today said two lenders sent default notices. Luminent Chief Financial Officer Christopher J. Zyda didn't calls seeking comment. Ottimo Funding Ltd., a securities program run by Stamford,Connecticut-based Aladdin, also invested in the highest ratedassets. George Marshman, a co-founder and chief investment officer of Aladdin, declined to comment. American Home Mortgage's Broadhollow Funding LLC extendedmaturities on commercial paper after being unable to roll over$150 million of the debt, Moody's said. The program can beextended by 120 days, Moody's said.
`Extraordinary'
Melville, New York-based American Home's secured liquiditynote program may be cut by Moody's from its top rating of Prime-1. Broadhollow had $138 million of subordinated notes cut to Ba1,the highest speculative grade, from Baa2. The notes remain onwatch for further downgrade. The change followed American Home'sfiling for bankruptcy on Aug. 6. American Home spokeswoman Mary M. Feder didn't return a call seeking comment. ``To my knowledge, there have been no extension events''until this week, said Everett Rutan, a senior vice president atMoody's Investors Service. ``What's happened recently has been extraordinary.''--With reporting by Joseph DiStefano in New York. Editor: MoodyTo contact the reporter on this story:Mark Pittman in New York at +1-212-617-3767 ormpittman@bloomberg.net;Elizabeth Stanton in New York at 1-212-617-5937 orestanton@bloomberg.netTo contact the editor responsible for this story:Emma Moody at +1-212-617-3504 or emoody@bloomberg.net.
Fire spreads!
By Gavin Serkin and Gavin Finch Aug. 9 (Bloomberg) -- The British Bankers Association said the overnight lending rate that banks charge each other toborrow in dollars rose to 5.86 percent today from 5.35 percent. The so-called London interbank offered rate in dollars isthe highest since the start of 2001. The benchmark borrowing rate is rising on concern banksface growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is ``closely monitoring thesituation and stands ready to act to assure orderly conditionsin the euro money market.'' ``Liquidity in the market has completely dried up asinvestors aren't recycling their money back because of subprimeconcerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramaticallysince yesterday as issuers are trying to entice investorsback.'' BNP Paribas SA, France's biggest bank, today halted withdrawals from three investment funds because it couldn't``fairly'' value their holdings on concern about subprimemortgage losses. The ECB in Frankfurt said in its statement today that``there are tensions in the euro money market notwithstandingthe normal supply of aggregate euro liquidity.'' Three-month dollar Libor increased to 5.5 percent from 5.38percent.--Editor: Barrett
Chinese government goes bezerk on the eve of subprime crisis
I got this as an email from a fellow trader:
China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
LastUpdated: 6:00pm BST 07/08/2007 (Telegrahp.co.uk)The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of UStreasuries if Washington imposes trade sanctions to force a yuan revaluation.Two officials at leading Communist Party bodies have given interviews in recentdays warning - for the first time - that Beijing may use its $1.33 trillion(GBP658bn) of foreign reserves as a political weapon to counter pressure from theUS Congress. Shifts in Chinese policy are often announced through key thinktanks and academies.Described as China's "nuclear option" in the state media, such action couldtrigger a dollar crash at a time when the US currency is already breaking downthrough historic support levels.It would also cause a spike in US bond yields, hammering the US housing marketand perhaps tipping the economy into recession. It is estimated that China holdsover $900bn in a mix of US bonds.Xia Bin, finance chief at the Development Research Centre (which has cabinetrank), kicked off what now appears to be government policy with a comment lastweek that Beijing's foreign reserves should be used as a "bargaining chip" intalks with the US."Of course, China doesn't want any undesirable phenomenon in the globalfinancial order," he added.He Fan, an official at the Chinese Academy of Social Sciences, went even furthertoday, letting it be known that Beijing had the power to set off a dollarcollapse if it choose to do so."China has accumulated a large sum of US dollars. Such a big sum, of which aconsiderable portion is in US treasury bonds, contributes a great deal tomaintaining the position of the dollar as a reserve currency. Russia,Switzerland, and several other countries have reduced the their dollar holdings."China is unlikely to follow suit as long as the yuan's exchange rate is stableagainst the dollar. The Chinese central bank will be forced to sell dollars oncethe yuan appreciated dramatically, which might lead to a mass depreciation ofthe dollar," he told China Daily.The threats play into the presidential electoral campaign of Hillary Clinton,who has called for restrictive legislation to prevent America being "heldhostage to economic decicions being made in Beijing, Shanghai, or Tokyo".She said foreign control over 44pc of the US national debt had left Americaacutely vulnerable.Simon Derrick, a currency strategist at the Bank of New York Mellon, said thecomments were a message to the US Senate as Capitol Hill prepares legislationfor the Autumn session."The words are alarming and unambiguous. This carries a clear political threatand could have very serious consequences at a time when the credit markets arealready afraid of contagion from the subprime troubles," he said.A bill drafted by a group of US senators, and backed by the Senate FinanceCommittee, calls for trade tariffs against Chinese goods as retaliation foralleged currency manipulation.The yuan has appreciated 9pc against the dollar over the last two years under acrawling peg but it has failed to halt the rise of China's trade surplus, whichreached $26.9bn in June.Henry Paulson, the US Treasury Secretary, said any such sanctions wouldundermine American authority and "could trigger a global cycle of protectionistlegislation".Mr Paulson is a China expert from his days as head of Goldman Sachs. He hasopted for a softer form of diplomacy, but appeared to win few concession fromBeijing on a unscheduled trip to China last week aimed at calming the waters.
China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
LastUpdated: 6:00pm BST 07/08/2007 (Telegrahp.co.uk)The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of UStreasuries if Washington imposes trade sanctions to force a yuan revaluation.Two officials at leading Communist Party bodies have given interviews in recentdays warning - for the first time - that Beijing may use its $1.33 trillion(GBP658bn) of foreign reserves as a political weapon to counter pressure from theUS Congress. Shifts in Chinese policy are often announced through key thinktanks and academies.Described as China's "nuclear option" in the state media, such action couldtrigger a dollar crash at a time when the US currency is already breaking downthrough historic support levels.It would also cause a spike in US bond yields, hammering the US housing marketand perhaps tipping the economy into recession. It is estimated that China holdsover $900bn in a mix of US bonds.Xia Bin, finance chief at the Development Research Centre (which has cabinetrank), kicked off what now appears to be government policy with a comment lastweek that Beijing's foreign reserves should be used as a "bargaining chip" intalks with the US."Of course, China doesn't want any undesirable phenomenon in the globalfinancial order," he added.He Fan, an official at the Chinese Academy of Social Sciences, went even furthertoday, letting it be known that Beijing had the power to set off a dollarcollapse if it choose to do so."China has accumulated a large sum of US dollars. Such a big sum, of which aconsiderable portion is in US treasury bonds, contributes a great deal tomaintaining the position of the dollar as a reserve currency. Russia,Switzerland, and several other countries have reduced the their dollar holdings."China is unlikely to follow suit as long as the yuan's exchange rate is stableagainst the dollar. The Chinese central bank will be forced to sell dollars oncethe yuan appreciated dramatically, which might lead to a mass depreciation ofthe dollar," he told China Daily.The threats play into the presidential electoral campaign of Hillary Clinton,who has called for restrictive legislation to prevent America being "heldhostage to economic decicions being made in Beijing, Shanghai, or Tokyo".She said foreign control over 44pc of the US national debt had left Americaacutely vulnerable.Simon Derrick, a currency strategist at the Bank of New York Mellon, said thecomments were a message to the US Senate as Capitol Hill prepares legislationfor the Autumn session."The words are alarming and unambiguous. This carries a clear political threatand could have very serious consequences at a time when the credit markets arealready afraid of contagion from the subprime troubles," he said.A bill drafted by a group of US senators, and backed by the Senate FinanceCommittee, calls for trade tariffs against Chinese goods as retaliation foralleged currency manipulation.The yuan has appreciated 9pc against the dollar over the last two years under acrawling peg but it has failed to halt the rise of China's trade surplus, whichreached $26.9bn in June.Henry Paulson, the US Treasury Secretary, said any such sanctions wouldundermine American authority and "could trigger a global cycle of protectionistlegislation".Mr Paulson is a China expert from his days as head of Goldman Sachs. He hasopted for a softer form of diplomacy, but appeared to win few concession fromBeijing on a unscheduled trip to China last week aimed at calming the waters.
Something is burning, federal banks better bring some water!!!
First Bear Stearns, then this. Federal banks, also on an international level, increase the money supplies.
BNP Paribas Freezes Funds as Loan Losses Roil Markets (Update2)2007-08-09 05:40 (New York) (Adds analyst comment in eighth paragraph, BNP Paribas'sPapiasse in 12th, fund manager in 13th).By Sebastian Boyd Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank,halted withdrawals from three investment funds because itcouldn't ``fairly'' value their holdings after concern over U.S.subprime mortgage losses roiled credit markets. The funds had about 2 billion euros ($2.76 billion) ofassets on July 27, including 700 million euros in subprime loansrated AA or higher. The Paris-based bank said today that it willstop calculating the net asset value for the funds, ParvestDynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. The bank's announcement sent its shares down as much as 4.5percent, pulled the benchmark European stock index lower by morethan 1 percent, and helped U.S. Treasuries rally for the firsttime in four days. Bonds backed by home loans have lost value aslate loan payments by borrowers with poor credit histories roseto the highest since 2002. ``The complete evaporation of liquidity in certain marketsegments of the U.S. securitization market has made it impossibleto value certain assets fairly regardless of their quality orcredit rating,'' BNP Paribas said in the statement. The French bank joins Bear Stearns Cos. and Union InvestmentManagement GmbH in stopping fund redemptions. Dutch investmentbank NIBC Holding NV said today that it lost at least 137 millioneuros on U.S. subprime investments this year. BNP Paribas shares were down 2.56 euros, or 3 percent, to82.89 euros by 11:38 a.m. in Paris, valuing the bank at 77.6billion euros. The stock is little changed this year. Losing Value Global stock indexes gained over the past three days,lifting the MSCI World Index of shares in developed countries by3.1 percent, as concern over the subprime meltdown eased. Chief Executive Officer Baudouin Prot said the bank'sexposure to U.S. subprime was ``absolutely negligible'' when thecompany reported a 20 percent increase in second-quarter netincome last week. BNP Paribas Investment Partners oversees about356 billion euros. ``On BNP's scale this isn't too significant,'' said Benoitde Broissia, an analyst at Richelieu Finance in Paris. ``It willimpact clients. It's more of an image problem.'' The Hague-based NIBC, which is owned by a group includingJ.C. Flowers & Co., said ``severe instability'' in U.S. creditmarkets reduced the value of its U.S. asset-backed securities. Itexpects ``further mark-to-market losses,'' the company said.
`No Prices'
Union Investment, Germany's third-biggest mutual fundmanager, stopped withdrawals from one of its funds on Aug. 3after investors pulled about 10 percent of the assets. FrankfurtTrust, the mutual fund manager of Germany's BHF-Bank, haltedredemptions from a fund after clients removed 20 percent of theirmoney since the end of July. Two hedge funds run by New York-based Bear Stearns filed forbankruptcy protection in the Cayman Islands on July 31 followingsubprime losses. The New York-based securities firm then blockedinvestors from withdrawing money from a third fund. ``For some of the securities there are just no prices,''Alain Papiasse, head of BNP Paribas's asset management andservices division, said in an interview. ``As there are noprices, we can't calculate the value of the funds.'' Blocking investors from withdrawals ``was a very gooddecision because it avoids huge redemptions,'' said Jean-EdouardReymond, who helps manage $63 billion at Union Bancaire GestionInstitutionelle SA in Paris. ``If they had had redemptions theywould have been obliged to sell the securities they might have intheir portfolio at very cheap market prices.'' Reymond doesn't hold any BNP Paribas stock, he said. The ABS Euribor fund's assets dropped 18 percent to 850million euros between July 24 and Aug. 7, according to datacompiled by Bloomberg. The ABS Eonia fund's total assets dropped7 percent to 73 million euros over the same period.--With reporting by Hortense Bioy in London. Editor: Connelly(rlh)To contact the reporter on this story:Sebastian Boyd in London at +44-20-7673-2075sboyd9@bloomberg.netTo contact the editor responsible for this story:Adrian Cox at +44-20-7673-2334 or acox2@bloomberg.net
BNP Paribas Freezes Funds as Loan Losses Roil Markets (Update2)2007-08-09 05:40 (New York) (Adds analyst comment in eighth paragraph, BNP Paribas'sPapiasse in 12th, fund manager in 13th).By Sebastian Boyd Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank,halted withdrawals from three investment funds because itcouldn't ``fairly'' value their holdings after concern over U.S.subprime mortgage losses roiled credit markets. The funds had about 2 billion euros ($2.76 billion) ofassets on July 27, including 700 million euros in subprime loansrated AA or higher. The Paris-based bank said today that it willstop calculating the net asset value for the funds, ParvestDynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. The bank's announcement sent its shares down as much as 4.5percent, pulled the benchmark European stock index lower by morethan 1 percent, and helped U.S. Treasuries rally for the firsttime in four days. Bonds backed by home loans have lost value aslate loan payments by borrowers with poor credit histories roseto the highest since 2002. ``The complete evaporation of liquidity in certain marketsegments of the U.S. securitization market has made it impossibleto value certain assets fairly regardless of their quality orcredit rating,'' BNP Paribas said in the statement. The French bank joins Bear Stearns Cos. and Union InvestmentManagement GmbH in stopping fund redemptions. Dutch investmentbank NIBC Holding NV said today that it lost at least 137 millioneuros on U.S. subprime investments this year. BNP Paribas shares were down 2.56 euros, or 3 percent, to82.89 euros by 11:38 a.m. in Paris, valuing the bank at 77.6billion euros. The stock is little changed this year. Losing Value Global stock indexes gained over the past three days,lifting the MSCI World Index of shares in developed countries by3.1 percent, as concern over the subprime meltdown eased. Chief Executive Officer Baudouin Prot said the bank'sexposure to U.S. subprime was ``absolutely negligible'' when thecompany reported a 20 percent increase in second-quarter netincome last week. BNP Paribas Investment Partners oversees about356 billion euros. ``On BNP's scale this isn't too significant,'' said Benoitde Broissia, an analyst at Richelieu Finance in Paris. ``It willimpact clients. It's more of an image problem.'' The Hague-based NIBC, which is owned by a group includingJ.C. Flowers & Co., said ``severe instability'' in U.S. creditmarkets reduced the value of its U.S. asset-backed securities. Itexpects ``further mark-to-market losses,'' the company said.
`No Prices'
Union Investment, Germany's third-biggest mutual fundmanager, stopped withdrawals from one of its funds on Aug. 3after investors pulled about 10 percent of the assets. FrankfurtTrust, the mutual fund manager of Germany's BHF-Bank, haltedredemptions from a fund after clients removed 20 percent of theirmoney since the end of July. Two hedge funds run by New York-based Bear Stearns filed forbankruptcy protection in the Cayman Islands on July 31 followingsubprime losses. The New York-based securities firm then blockedinvestors from withdrawing money from a third fund. ``For some of the securities there are just no prices,''Alain Papiasse, head of BNP Paribas's asset management andservices division, said in an interview. ``As there are noprices, we can't calculate the value of the funds.'' Blocking investors from withdrawals ``was a very gooddecision because it avoids huge redemptions,'' said Jean-EdouardReymond, who helps manage $63 billion at Union Bancaire GestionInstitutionelle SA in Paris. ``If they had had redemptions theywould have been obliged to sell the securities they might have intheir portfolio at very cheap market prices.'' Reymond doesn't hold any BNP Paribas stock, he said. The ABS Euribor fund's assets dropped 18 percent to 850million euros between July 24 and Aug. 7, according to datacompiled by Bloomberg. The ABS Eonia fund's total assets dropped7 percent to 73 million euros over the same period.--With reporting by Hortense Bioy in London. Editor: Connelly(rlh)To contact the reporter on this story:Sebastian Boyd in London at +44-20-7673-2075sboyd9@bloomberg.netTo contact the editor responsible for this story:Adrian Cox at +44-20-7673-2334 or acox2@bloomberg.net
Thursday and Friday wrap up
No trades were executed on Thursday and none will be executed today. The volatility is still in the upper percentile range.
I also see no room for any scalps.
I also see no room for any scalps.
Subscribe to:
Posts (Atom)
