on the upside, on the downside
This market is all over the map, swinging from extreme pessimism/desperate selling to extreme optimism/manic buying. Crazy, that's for sure. So to be fair and balanced this fine morning, let's look at the upside and downside news on the wires.
On the upside ...
-- Buyers are coming back into the corporate debt and derivatives markets. Bloomberg says "Corporate Bond Risk Drops By Record, Halting Three-Day Rout." It cites a sharp decline in the price of credit default swaps, which offer protection against bond defaults.
On the downside ...
-- Yet another hedge fund seems to have suffered a ... er ... minor hiccup. Sowood Capital Management reportedly managed to vaporize more than 50% of the value of two of its funds in July, about $1.5 billion, according to reports. Alpha Fund Ltd. was down 56% so far this year, while Alpha Fund LP was down 51%.
On the upside ...
-- Another firm, Citadel Investment Group, stepped up to buy Sowood's assets as part of the unwinding of the two Sowood funds. No details on the terms, but this is the second time Citadel has swooped in to scoop up distressed assets. It teamed with JPMorgan Chase last year when Amaranth Advisors blew up due to natural gas bets that soured.
On the downside ...
-- Mortgage insurers MGIC Investment is potentially facing a total wipeout on its investment in Credit-Based Asset Servicing and Securitization, fondly known as C-Bass. According to Reuters ...
"C-BASS said its lenders had been demanding that it put up more cash all this year, with lender margin calls totaling $290 million in the first six months of the year amid turmoil in home loans for borrowers with poor credit histories.
"The situation worsened in July, though, as C-BASS, which at the beginning of the year had capital of $926 million and $302 million of liquidity, had to meet another $260 million in margin calls during the first 24 days of the month, the venture said.
C-BASS, which is co-owned by MGIC and Radian."
On the upside ...
-- It doesn't seem to be spooking the market like the last round of bad mortgage news did. Stock futures are up sharply, the yen is declining, and risk-taking measures have picked up. Dead cat bounce or something more? That's the question on everyone's mind ...
On the upside ...
-- Buyers are coming back into the corporate debt and derivatives markets. Bloomberg says "Corporate Bond Risk Drops By Record, Halting Three-Day Rout." It cites a sharp decline in the price of credit default swaps, which offer protection against bond defaults.
On the downside ...
-- Yet another hedge fund seems to have suffered a ... er ... minor hiccup. Sowood Capital Management reportedly managed to vaporize more than 50% of the value of two of its funds in July, about $1.5 billion, according to reports. Alpha Fund Ltd. was down 56% so far this year, while Alpha Fund LP was down 51%.
On the upside ...
-- Another firm, Citadel Investment Group, stepped up to buy Sowood's assets as part of the unwinding of the two Sowood funds. No details on the terms, but this is the second time Citadel has swooped in to scoop up distressed assets. It teamed with JPMorgan Chase last year when Amaranth Advisors blew up due to natural gas bets that soured.
On the downside ...
-- Mortgage insurers MGIC Investment is potentially facing a total wipeout on its investment in Credit-Based Asset Servicing and Securitization, fondly known as C-Bass. According to Reuters ...
"C-BASS said its lenders had been demanding that it put up more cash all this year, with lender margin calls totaling $290 million in the first six months of the year amid turmoil in home loans for borrowers with poor credit histories.
"The situation worsened in July, though, as C-BASS, which at the beginning of the year had capital of $926 million and $302 million of liquidity, had to meet another $260 million in margin calls during the first 24 days of the month, the venture said.
C-BASS, which is co-owned by MGIC and Radian."
On the upside ...
-- It doesn't seem to be spooking the market like the last round of bad mortgage news did. Stock futures are up sharply, the yen is declining, and risk-taking measures have picked up. Dead cat bounce or something more? That's the question on everyone's mind ...
posted by Mike Larson at
8:18 AM
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