Four notes for the evening: first, on Lehman Brothers: Deal Journal wrote a piece earlier this week on Lehman potentially selling their subsidiary Neuberger & Berman . I generally agreed with the piece, and wrote the following response:
Be wary when managements sell their best/safest assets to stay alive. It means that the remaining firm is more risky, and that should the downturn persist, the firm will be in greater jeopardy.
Firms that sell their troubled assets (really sell them, not park the assets in affiliated companies) can survive the harder times. Trouble is, that requires taking losses, and sometimes the balance sheet is so impaired that that cannot be done.
So, selling the good assets may be a necessity, but it does not imply a good future for Lehman.
The same applies to Merrill regarding their stakes in Blackrock and Bloomberg. Also, I am skeptical that Lehman was truly able to reduce its risk assets as rapidly as they claimed in the midst of a b...
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NYC Bartending School attendance is up 20-25%.
Just who is attending?
“People see bartending as a way to get through a bad stretch,” said Tom Sisson , director of the New York Bartending School , which charges $695 for a 40-hour class.
Several bartending schools say they’ve enrolled dozens of students from banks and financial firms in recent weeks - including now-defunct Bear Stearns and Lehman Brothers - in addition to older people looking for extra cash.
Pos... more
European credit markets continued their slide Tuesday, as credit default swap indexes headed out towards the record wides last seen in the days after the collapse of Lehman Brothers.
Poor macro numbers and corporate earnings have begun to provide tangible evidence that companies are only now feeling the real effects of the crunch....... more
SNGAPORE : Several Singapore town councils may have lost a small part of their sinking funds through exposure to failed Lehman Brothers-linked investment products.... more
The bond market has had quite a shift since the last Fed meeting. What are the common themes?
Outperformance of credit, especially high yield.
Return of the carry trade.
Tax-free Munis have run.
Underperformance of Treasuries (longer= worse), and foreign bonds, particularly carry trade currencies like the Yen and Swiss Franc.
The willingness to take risks in fixed income has returned, particularly in the last two weeks. I don’t want to tell you that this is a trend tha... more
A word before I start: I’m averaging two book review requests a month at present. I tell the PR people that I don’t guarantee a review (though I have reviewed them all so far), or even a favorable review. They send the books anyway.
Included in every book is a 2-6 page summary of what a reviewer would want to know, so he can easily write a review. Catchy bits, crunchy quotes, outlines…
I don’t read those. I read or skim the book. If I skim the book, I ... more
Eight Fed Notes From: feeds.feedburner.com Post Date: 2008-04-24 23:23:15
1) Let’s start out with my forecast. I’ve given it before, but it has become the conventional wisdom — at the next FOMC meeting at the end of April, the Fed will cut by 25 basis points. They will make the usual noises about both inflation and economic weakness, as well as difficulties in the financial system, and comment that they have done a lot already — it is time to wait to see the power flow. The only difficulty is whether we get another blowup in the ... more
Sometimes we forget how bad it can be, and then we howl over minor bad times in the markets. We may be past a mania in residential housing, but we have not really experienced a panic or crash yet. People squeal over how bad the equity market is, but recently we haven’t had anything like the 2000-2002 experience, much less the 1973-1974 or 1929-1932 experience.
Two books come to mind when I think about disaster in a non-fear-mongering way: Manias, Panics, and Crashes, by Charles Ki... more
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