M&A Monday – Goldman’s Golden Goose

by Phil - September 27th, 2010 7:18 am

Hope springs eternal at Goldman Sachs.

This morning our favorite Banksters goosed the EU markets by upping targets on international mining operators Kazakhmys, Lonmin and BHP and that got the European markets off to a flying start out of the gate, despite the fact that UBS had just DOWNgraded the same sector on Friday. UBS said on Friday that the sector is facing difficult times concerning potential growth with government rulings on mineral leases and the proposed supertax on mining profits in Australia set to hinder metal-based stocks.

We also have a lot of M&A activity, also courtesy of GS, who are leading the resurgence this year with 225 deals to date worth $401.6Bn, accounting for about 20% of all activity going through Goldman’s sticky fingers. In a sign of the times, however, GS only generated $961M in revenues as an M&A advisor as they cut a lot of discounts in order to land the top spot in dealmaking. Although outdealt by GS, MS, Rothchild, JPM and DB all made more in fees than the Uncle Lloyd show.

In a sign of the end of times, GS’s London Headquarters has been taken over by lenders after the owner fell into receivership. GS’s landlord, Antedon, is an offshore real estate firm that bought the building for $500M at the top of the market in 2007 and GS has locked up the building through 2026 at what seems to be not enough money to keep Antedon liquid – it would be very interesting to trace the web of deals that led to this massive default.

Meanwhile, the consortium of Irish investors that own GS’s other London building are also bailing out, this action is coinciding with what Ireland’s Independent says is a campaign by Wall Street Hedge Funds to short sell Irish Government Bonds. US hedge funds Groveland Capital and Corrientes Advisors are thought to have taken major positions against Irish debt. Giant €60bn asset-manager Pictet also revealed that it had earlier bet against Irish government bonds. JP Morgan is also thought to have taken a bearish position on Irish debt. The International Monetary Fund estimated that up to €3bn of Ireland’s debt was being targeted by speculators through the uses of derivatives.

So, plenty of reasons to be cautious this week although it will be hard to cut through the fluff as our hedge fund heroes…

Tags: 5% Rule, AA, ACN, AM, APP, ATU, BLUD, COST, DB, Dollar, FDO, GS, HELE, JBL, JPM, MAR, MCK, MDRX, MON, MS, MU, PAYX, PEP, RT, SPY, STZ, UBS, UL, WAG, WOR, Yen, YUM, ZZ

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Optimistic individual Initiates Mammoth Bullish Risk Reversal Play on Conseco

www.interactivebrokers.com

by Andrew Wilkinson - March 31st, 2010 6:20 pm

Today’s tickers: CNO, OSIP, HIG, FXI, JDSU, ARQL, GNW, TEVA, KO & UBS

CNO – Conseco, Inc. – The holding company for a number of insurance companies, such as Colonial Penn Life Insurance Co. and Washington National Insurance Co., popped up on our ‘most active by options volume’ market scanner late in the session after a massive bullish risk reversal was established on the stock in the January 2011 contract. Conseco’s shares declined 0.80% during the course of the trading day to stand at $6.18. It looks like one optimistic options player sold 33,727 puts at the January 2011 $5.0 strike for a premium of $0.50 apiece in order to partially finance the purchase of 33,727 calls at the same strike for $1.80 each. The net cost of the transaction amounts to $1.30 per contract. Thus, the investor responsible for the reversal is prepared to amass profits if Conseco’s shares rally through the breakeven price of $6.30 ahead of expiration day in January. The 67,454 contracts involved in the spread trump existing open interest on the stock of 48,756 lots.

OSIP – OSI Pharmaceuticals, Inc. – The outline of a slightly lopsided iron condor appeared in the May contract on OSI Pharmaceuticals, indicating one options investor expects shares of the biotechnology company to trade within a specified range through expiration. OSIP’s shares surrendered 0.85% during afternoon trading to stand at $59.55 perhaps after The Wall Street Journal reported that Astellas Pharma, Inc. is extending its tender offer for OSI Pharmaceuticals – valued at $3.5 billion – by three weeks to April 23, 2010. The investor responsible for the iron condor play essentially enacted two credit spreads, one using put options and the other calls, in order to pocket options premium. On the call side, the trader shed 4,000 contracts at the May $60 strike for a premium of $1.90 apiece, spread against the purchase of the same number of calls at the higher May $62.5 strike for $0.90 each. As for the puts, the investor sold 4,000 lots at the May $55 strike for a premium of $0.94 per contract, marked against the purchase of 4,000 puts at the lower May $50 strike for $0.62 each. Notice that the put credit spread is wider than the spread on the call side, which creates a lopsided iron condor in this case. The net credit pocketed by the trader amounts to $1.32…

Tags: ARQL, CNO, FXI, GNW, HIG, JDSU, KO, OSIP, TEVA, UBS

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TGIF – Greece Fixed AGAIN!

by Phil - March 26th, 2010 8:04 am

It’s amazing – it’s fantastic – its… stupid!

Not STUPID, like Spain, Turkey, UK, Portugal, Italy and Dubai – who are also in major financial crisis but stupid like because a boy put a finger in the dike we don’t have to evacuate the town anymore and, in fact, we’re going to build a whole new section of town out of paper houses right next to the dike to show how much we don’t worry about getting wet any more. That’s the global economy in a nutshell - we freak out if anyone says a bad word about it but then we are overjoyed if someone else says it’s all fixed – even if it’s the same person both times…

Manic depression is a disorder where people are subject to extreme mood swings, going from feeling very sad, despairing, helpless, worthless, and hopeless (depression) to feeling as if they are on top of the world, hyperactive, creative, and grandiose (mania). This disease is called bipolar disorder because the mood of a person can alternate between two completely opposite poles, euphoric happiness and extreme sadness. The extremes of mood usually occur in cycles and tend to become closer together with age and, according to EMed: "Extreme mania can lead to aggressive behavior, potentially dangerous risk-taking behaviors." Hmm, does this sound like any markets we know?

The behavior of the EU and other world leaders is starting to look more and more insane every day. Yesterday Greece was literally saved in the morning, screwed in the afternoon and saved again in the evening (holding up so far this morning) and the Dow went from 10,830 to 10,950 and back to 10,840 during it’s session. I’ve dated girls like this – that’s why we moved to CASH last week! More and more our World leaders are starting to sound like the Joker in the last Batman movie, who said:

"Do I really look like a guy with a plan? You know what I am? I’m a dog chasing cars. I wouldn’t know what to do with one if I caught it. You know, I just… do things… Nobody panics when things go "according to plan." Even if the plan is horrifying! If, tomorrow, I tell the press that, like, a gang banger will get shot, or a truckload of soldiers will be blown up, nobody panics, because it’s all "part of

…

Tags: Bailout, GDP, Greece, JPM, UBS

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Swiss Minister: UBS At Risk Of Collapse If America Plays Hardball With Tax Evasion Case

by ilene - February 1st, 2010 10:59 am

Swiss Minister: UBS At Risk Of Collapse If America Plays Hardball With Tax Evasion Case

UBS - clusterstock Courtesy of Vincent Fernando at Clusterstock

Swiss mega-bank UBS could collapse if the U.S. plays hardball with its tax fraud investigations.

If true, it’s a pretty sad admission about the state of UBS right now. Perhaps the end is near for the ‘Swiss model’ of banking, by which we mean Swiss tax evasion services.

AFP:

"The actions of UBS in the United States are very problematic. Not just because they are punishable but also because they threaten all of the bank’s activities," Eveline Widmer-Schlumpf told Le Matin Dimanche newspaper.

"The Swiss economy and the job market would suffer on a major scale if UBS fails as a result of its licence being revoked in the United States," she said.

Testy Tuesday Morning – Big Data Day

by Phil - November 24th, 2009 8:26 am

Busy, busy today with lots of data!

At the moment (8am), I only know that retail sales were flat to last week, which was 1% better than last year but this week is 3.3% better than last year because LAST YEAR TOTALLY SUCKED! That’s right, we are now comping to numbers that are so atrocious that in order to miss them we would have to all dig holes in our backyards, cover them with tarps (no, not the bailout package but a good conceptual image) and drink only rainwater and eat earthworms. Anything better than that will give us more economic activity than we had last November, when the market was completing a 50% dive off the previous year’s highs and we weren’t sure there was going to anything to be thankful for on November 27th.

Our market hit rock bottom on November 21st, the Friday before Thanksgiving (and an option expiration day) at about 7,500 on the Dow. People were generally shell-shocked but we did bounce back to 8,500 and drifted around there through Jan 1st (9,000) before plunging to 6,500 by March 9th. THAT my friends, is the period we are comping against! So beware "improvements" being sighted in the MSM as we are now comparing our weak recovery to a total train wreck and yes, it’s much better now, but better in the way that the Chicago Bears (4-6) are better than the Detroit Lions (2-8), not the way the Minnesota Vikings (9-1) are better than the Lions.

Later today we have an update (and downgrade) of our Q3 GDP followed by Redbook Chain Store Sales and Case-Shiller Home Prices at 9. At 10 we get Consumer Confidence (or lack thereof), the FHFA Housing Price Index, the Richmond Fed Report and State Street’s Investor Confidence Index. Later today we have the results of a massive $39Bn 3-year Note Auction, the Fed Minutes at 2pm along with Industry Charge-offs and, finally, at 5pm we get the ABC Consumer Confidence (if any) Index.

It’s a very brave bunch of bulls who have run the futures up half a point off their lows this morning with all that data coming up. When I say brave of course, I mean the disgustingly manipulative and should be thrown in jail kind of brave but, since none of our regulators seem to care about the nonsense that goes on every day at the commodity and futures exchanges – I guess they are…

Tags: C, DB, DIA, DXD, EDZ, FAZ, ING, LYG, RTH, TZA, UBS, VIX

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Tuesday: The Brown Booster Shot

by Phil - September 22nd, 2009 7:58 am

What a morning already!

The futures were drifting along until 3 am and the Shanghai Composite had closed down 2.3% at 2,897. At 3:23 the Hang Seng was looking to close down as well but then Gordon Brown, the UK Prime Minister, on his way to the G20 meeting in Pittsburgh this week said:

The stimulus that we have still got to give the world economy is greater than the stimulus we have already had. What we want to do is safeguard a recovery from a recession we feared would develop into a depression… By meeting at Pittsburgh, we are looking at how we can put in place for the future the mechanism or path that can lead us to either making decisions about better ways of creating growth that is sustainable in the future, a better early warning system for the world economy about potential crises, a better way of resolving difficulties or imbalances around the world.. I have been talking to many countries in Asia as well as in Europe, and I have been talking to President Obama and others, and I believe that there is support for that framework.

WooEee! More free money!!! No sooner did the words come out of Mr. Brown’s mouth than the Hang Seng began to climb, reversing a down day to finish up 228 points, right at the 21,700 line they have been struggling to hold since last Thursday. Gold flew up to $1,020 and oil jumped to $71 worthless-looking dollars and, as usual, once Asia closed, the dollar was free once again to drift down to 91 Yen (Japanese markets were closed today). But, despite his performance, Gordon Brown may not win today’s Globey Award for blatant market manipulation.

Brown’s performance was great – make a bold statement that indicates another $13Tn or more may be dumped on the Global economy and insinuate the the whole G20 is behind him before jumping on a plane, leaving the British tabloids (owned by Gang of 12 member Rupert Murdoch) to boost the market for 2 days in a row – BRILLIANT!

But, he does have serious competition this morning by not one, not two but THREE Gang of 12 members as UBS, GS and JPM triple teamed up and all issued reports saying "Russian stocks are poised to surge, extending an 88 percent rally this year, as the economy’s recovery spurs profits." "Earnings growth is set to be…

Tags: bailouts, DIS, Fed, GS, JPM, LOW, Redbook, retail sales, UBS

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Who’s on the List?

by ilene - August 21st, 2009 1:45 am

Who’s on the List?

Courtesy of John Rubino at Dollar Collapse

Yesterday’s Wall Street Journal ran an article on Washington’s ongoing attempt to discover where its citizens keep their money. Here’s a quote that illustrates the complexity of the cat-and-mouse game:

“At one point, the Swiss lawyer recommended to Mr. McCarthy that he set up a Liechtenstein foundation that would serve as an umbrella over a Panamanian or Hong Kong corporation. That ‘would allow for an extra layer of privacy and help to conceal’ Mr. McCarthy’s identity, said the statement of facts.”

And three observations:

1) The deal between the IRS and UBS apparently requires the latter to hand over thousands of names of U.S. citizens. It’s a safe bet that hundreds of those are major donors to the campaigns of the politicians currently running the country — and a few dozen are the politicians themselves — which creates some amusing moral dilemmas for the enforcement folks and the media.

2) In the wake of the UBS fiasco, it’s going to be even harder for U.S. citizens to get foreign bank accounts, which is exactly what Washington wants.

3) China might be a little harder to push around than Switzerland.

UBS Tax Crackdown Widens to Hong Kong

By CARRICK MOLLENKAMP

The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.

For the first time in the government’s long-running bid to ferret out the names of U.S. tax-evaders from the Swiss bank’s client list, plea agreements entered in the case are providing a clearer picture of UBS’s sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.

On Friday, John McCarthy, a UBS client in California, agreed to plead guilty to one count of failing to file an annual report to the Treasury Department. A document filed with the plea shows the tax scheme relied in part on channeling funds to a Swiss UBS account held in the name of a Hong Kong entity, the second time accounts in the Asian financial hub have figured in

…

Tags: IRS, moral dilemmas, Swiss banks, UBS

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Testy Tuesday Morning – $1.70 for a Pound? I Don’t Think So…

by Phil - August 4th, 2009 8:12 am

Has the dollar fallen too far?

The British Pound is now fetching $1.70, a huge break-out and well above the June highs, now valued higher to the dollar than any time since last October. Britain has aggressively cut rates and expanded their money supply and Britain had banks falling like dominoes before being taken over by the government. The UK’s budget deficit as a percent of GDP is forecast to be 11.6% this year, the second worst on the planet, exceeded only by the US’s projection of 13.5% but the UK is forecast to catch up in 2010 with 13.3% of their GDP taken up by debt. Why then, you may wonder, is the British Pound up 25% against the dollar this year and almost 10% this past month?

The answer to that is the same as the answer to many irrational market moves – SPECULATION. The dollar in general has been pushed back down to 1-year lows by currency speculators and the Pound is benefiting from their No-Euro policy that makes the UK a relatively safe-looking investment for currency traders who are worried that Eastern Europe will eventually prove to be a weight that drags the rest of the EU down. With a population and economy about the size of California and the independence of a sovereign nation, any small sign of improvement (like the recent uptick in manufacturing data in the UK) can quickly pull money back to the Pound who, just 30 years ago, were the second strongest currency in the world and, for 500 years before that, was the undisputed global leader. The UK, as it was 500 years ago, is still ruled by its powerful banking sector and again the fishbowl-like nature of the island nation tends to magnify small improvements we’ve seen in the UK banks, which causes Japanese housewives (who are very into FOREX trading) to push more money into British currency.

Japan Housewife forex Today it may become apparent that the Japanese housewives have become a little irrational in their Pound exuberance as nationalized British Bank, Northern Rock, showed a 31% increase in first-half losses to $1.25Bn as bad loan provisions jumped to over $1Bn from under $300M last year. Even worse for the bank – deposits fell 17% despite the bank’s 100% government guarantee while mortgage delinquencies rose 10%. This is a pretty clear indication that Britain is not quite out…

Tags: BMW, BNP, Dollar, Forex, MSCI, Personal Income, Pound, UBS, UK

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Merrill: “Retail REITs – Tough But Stabilizing”

by Zero Hedge - May 20th, 2009 10:49 am

Courtesy of Tyler Durden

Merrill: "Retail REITs – Tough But Stabilizing"

In his first note released in the post Sakwa world, Craig Schmidt continues to attempt to restore confidence in retail REITs. It would, after all, seem prudent to bang clients’ heads into their desks until they see the light at the end of the tunnel (oncoming bullet train?) at a time when the only cash, and equity value, REITs can create is by raising expensive, dilutive equity in order to repay the cheapest form of capital (that of secured loans previously held by Mr. Schmidt uber parent, Bank of America). This is especially true, after these same clients have plunked down about $20 billion in new equity in companies that at this point exist on fumes of hope, speculation and short covering. not surprisingly, the report comes just prior to Realtors’s release which indicates that Commercial Real Estate activity in Q1 fell 4.8% from Q4 of 2008 and 12.9% year over year, while vacancy rates are poised to rise to 12.1% from 9.7% last year.

While the title is expected, even Mr. Schmidt is at a loss to present the REIT "green shoots" that would substantiate his note. Amsuingly, Schmidt quotes favorable restaurant trends to back up the stabilization thesis:

Some positive signs included Dr. Mark Zandi’s (Chief Economist, Moody’s economy.com) citing that restaurants reported stronger same store sales gains than supermarkets in the most recent period, which suggests an increase in consumer confidence. Additionally, retail trends, while still negative, have improved from 4Q08, which were so dramatically negative that retailers were behaving like “deer caught in the headlights.”

Now that people are rushing to Nobu, maxing out their Centurions and hoping, very much like YRC, they can apply for and receive TARP funding, all must be good. The other "solid" positive:

Of the most seriously troubled retail markets (Southern California, Florida, Phoenix and Las Vegas), the only market that seems to have improved somewhat is Southern California. We still hear very distressing things about the other markets.

Nothing like Californians spending with reckless abandon, concurrently with voting down Schwarzenneger’s hail mary proposals to scrape up some semblance of a budget. Next stop: California’s utter fiscal collapse, and Geithner fixing that problem as well, by securitizing all default credit cards through a AAA rated TALF issue. Now, as for

…

Tags: Bank of America, REITs, Steve Sakwa, UBS

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Sequenom takes a swan dive

www.interactivebrokers.com

by Andrew Wilkinson - April 30th, 2009 4:33 pm

Today’s tickers: SQNM, YHOO, XLY, XLI, GMCR, NWL, PFE & UBS

SQNM Sequenom, Inc. – Shares of the diagnostic testing and genetics analysis company have plummeted by more than 75%, crashing through the 52-week low for the stock of $6.19, to arrive at the current price of $3.68. The catastrophic decline stems from SQNM’s announcement that the launch of its SEQureDx test for Down syndrome is now delayed due to findings that employees of the company had mishandled crucial test data supporting the product’s validity. The news of the test’s delay does nothing to help the fact that the firm’s first-quarter loss widened to 29 cents per share, and Sequenom received a number of downgrades today including a rating of ‘underperform’ from ‘market perform’ by an analyst at Oppenheimer & Co. Option investors reacted to the bearish move on the stock by picking up 1,500 protective puts at June 2.5 strike price for an average premium of 41 cents apiece. In the near-term May contract, traders shed more than 4,200 calls at the May 5.0 strike for 39 cents each. Investors who were long put options at higher strikes were able to make a killing today by selling the protection. For example, it appears that one trader originally purchased about 3,500 puts for 2.00 apiece on April 1, 2009, and today sold the lots for 6.80 each. The profits garnered on such a trade amount to 4.80 per put option sold. On the flip side, investors who appear to have held a short put position at higher strikes were faced with deep in-the-money premiums. One investor who looks to have sold 3,500 puts at the May 12.5 strike for about 1.20 apiece back on April 1, 2009, today was forced to close out the short position by paying a premium of 9.00 each for the put options. This transaction results in a loss of 7.80. Option implied volatility on the stock sky-rocketed as high as 239% up from yesterday’s reading of 91%, but has since tapered off to the current value of 195.5%.

YHOO Yahoo! Inc. – The global internet brand has experienced a modest 1.5% rise in shares today to stand at $14.27. Options activity was slightly more bullish today with more than 3 call options traded to every put in play on the stock. Optimistic investors targeted the June contract where more than 11,100 calls were purchased…

Tags: GMCR, NWL, PFE, SQNM, UBS, XLI, XLY, YHOO

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Daily Stock and Options Tips & Updates; Get Our Daily Newsletter Here

M&A Monday – Goldman’s Golden Goose

Optimistic individual Initiates Mammoth Bullish Risk Reversal Play on Conseco

TGIF – Greece Fixed AGAIN!

Swiss Minister: UBS At Risk Of Collapse If America Plays Hardball With Tax Evasion Case

Swiss Minister: UBS At Risk Of Collapse If America Plays Hardball With Tax Evasion Case

Testy Tuesday Morning – Big Data Day

Tuesday: The Brown Booster Shot

Who’s on the List?

Who’s on the List?

Testy Tuesday Morning – $1.70 for a Pound? I Don’t Think So…

Merrill: “Retail REITs – Tough But Stabilizing”

Merrill: "Retail REITs – Tough But Stabilizing"

Sequenom takes a swan dive

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