Today’s closing comments come courtesy of Greg Solomon. “The Fly” is too busy bathing in victory, with great humility, of course.
[youtube:http://www.youtube.com/watch?v=xj9_I2Yr3L8 450 300]As a point in fact UPDATE: Note the carnage in the infrastructure criminals, specifically Vulcan Materials Company [[VMC]] , Martin Marietta Materials, Inc. [[MLM]] , Eagle Materials, Inc. [[EXP]] and Texas Industries, Inc. [[TXI]] . Another Fly win.
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I love the smell of burnt waste and corruption at market close especially with a sountrack of Washington morons yucking it up.
I banked a little coin today, how about you?
Is that an Aloha Shirt?
… I’d beat him in Chess. But I’m sure I’d lose to him in Poker.
Doug Kass
Cuttin’ Time
4:13 PM EDT
I am expecting a series of large and coordinated worldwide rate cuts on Monday.
The buyers were there today, but the Bears put all their weight on the market. Short term Bottom is very close imo.
Welcome back Fly
Question: would you run a “game” (fake stock market) and not allow shorting of any stocks?
What kind of b.s. is that?
I agree with oj burtons post .. I wouldn’t be surprised if there was a cut monday, which may trigger a mother of a short covering rally … considering I still have plenty of shorts, I’m concerned
Agree w Cubs … very close to a rally point .. I’d love to see SPX 1050 +/- 15 . I think you must go 200% long there.
Check out the 5 min chart for SNV … wild action the last 15 mins …
Sold all my AGM for avg price 9.25 (basis 4.50) … may re-enter if gap1 at 7.75 is filled …gap2 is down at 4.50.
Thursdays OEW summary:
“We continue to feel the market is very close to the Primary wave A low. The price projections set forth a couple of days ago suggest a bottom in between the two lower support pivots 1061 and 1090. Preferably in the SPX 1070’s.”
I’ll post today’s as soon as it’s available …
A Few Favorites
Doug Kass
10/3/08 3:02 PM EDT
Favorite long: Freeport McMoran (FCX)
Favorite short: Aeropostale (ARO)
Position: Long FCX, short ARO
Bennet Sedacca
03:35:00 PM
Position in FITB options
Some more corporate color…
I just saw some Fifth Third Bancorp (FITB) 14 month paper trade on a 64% yield. Nice 3 month Morgan Stanley (MS) paper at 26%.
Earlier on I mentioned Zions Bancorp. (ZION) 7 year at 20%.
The preferred shares aren’t any better.
As much as I would like this to be over, it isn’t. But at least I now own all of the Street’s paper I have been trying to avoid. Yippee.
Sorry to those of you that bought JPM on my recommendation the other day. After all, I am just an asshat, albeit a 10th degree asshat.
Guy
Fast Money
Lombardi said we play to win
In case anyone missed the first post and made it to Friday alive – replay!
http://www.myconfinedspace.com/watermark.php?src=wp-content/uploads/2008/09/jumpyoufackersuo1.jpg
Juice,
Where can I find this commercial paper that Sedeca keeps talking about ? If I can buy some MS 3 month paper at 26% that a no lose situation ( hedged with some puts).
“The Fly” came down from Mount Olympus a few too many times recently – this was the source of some minor setbacks – he should remain high on Olympus and exhibit disdain to all third tier bloggers, no?
To be fair, Guy Adami said only buy JPM if you can handle wild short-term swings.
CAP – call up MS and try to get that deal … there’s a reason its 26% – and not a good one .. they’ll default on that . They’re just trying to buy time. They’re digging a deeper & deeper hole. No one is taking that offer for a reason. The spread is huge .. nothing is getting done.
Hey – when you (certianly not i) have the cojones to post here and you’re right, you should be treated like the gods that you are …but when you make bad call after bad call, you should shut your stinking pie-hole the mother flick up (think getting drop kicked so hard, your prostate falls out). So, I CAP – or whomever the fuck- will shut my egregious (ever think of starting a drinking game – – whenever some dipfung types egregious, you drink) loosetoothed-gratin-mouth the fuck up from now on….
“wish” “sigh”
Reggie M with a pile of Comm RE shorts. Some are too thin to bother but quite a few worth tagging along on the ride to nil.
I hope Bob steel was beaten senseless by his dad when he was a kid for the shit he’s pulled with Citi.
Not only do you have to try and get the direction right, you have to also figure out what homos like steel are going to do.
I had that same satisfied feeling you get after after (sex all week) as a result of citi buying wachie. Steel just ruined it for me.
May he hairs out of his eye sockets.
Here’s a legal opinion on the citi/wache/wells deal which sounds pretty good to me. Says that the Wells deal will be stopped by a court.
Conclusion first, always: Citigroup has a binding contract which will prevent the sale/merger of Wachovia to Wells Fargo, regardless of the Wells Fargo deal’s economic merits. The only way for Wachovia to get out of that agreement with Citigroup will be for Wachovia’s parent company to file a Chapter 11 bankruptcy. Anyone who is selling Citigroup stock based on this situation should think twice. Anyone who is buying Wachovia stock based upon Wells Fargo’s bid is very, very foolish. Anyone who is buying Wells Fargo’s stock based upon Wachovia’s appearance of agreement to sell/merge itself with Wells Fargo is equally foolish.
To preface my comments on the contract between Wachovia and Citigroup, and my comments on the conduct of Wells Fargo, let me say that:
(A) I am a New Yorker and therefore I hate Citigroup as a matter of birth obligation and
(B) I have dealt with Wells Fargo many times and I hate them equally, based upon their conduct.
With those facts disclosed, I make the following comment on this situation based on 30 years of going to court to attack or defend the sorts of conduct exhibited by Wachovia and Wells Fargo today. The people in the financial media writing about the situation between the three banks are simply clueless about what will happen in a New York court, which Wachovia has agreed is the only location where a court has jurisdiction over this matter.
Last Monday morning, Wachovia’s senior management did not sign a binding contract to sell selected assets to Citigroup. That binding contract was supposed to be negotiated, written and signed on or before October 6, 2008.
However, Wachovia’s senior managment DID SIGN a binding contract which some people call an “exclusivity agreement”. The binding exclusivity agreement is crystal clear. You can read it for yourself at the Wall Street Journal’s website:
http://online.wsj.com/public/r…..nt2008.pdf
The binding exclusivity agreement is a masterpiece of legal drafting, from Citigroup’s point of view. Print it and save it for your form files.
The binding exclusivity agreement’s wording is perfect from a legal point of view, in terms of Citigroup being able to get an injunction against any merger or sale of Wachovia, or any significant part thereof, into any entity other that Citigroup. The binding exclusivity agreement contains the four key paragraphs which will allow Citigroup to stop a merger or sale of Wachovia to Wells Fargo:
1. A very detailed description of conduct by Wachovia which is prohibited, i.e. making any deal with anyone other than Citigroup.
2. A recitation by Wachovia that damages payable to Citigroup (for breach of contract) are an inadequate remedy to protect Citigroup from losses if the agreement is breached. That is the “magic legal language” to entitle Citigroup to a temporary restraining order, preliminary injunction and permanent injunction to stop the sale or merger of Wachovia into Wells Fargo.
3. An acknowledgment that Citigroup is entitled to the remedy of “specific performance”, meaning that it can force the cancellation of the Wachovia-Wells Fargo contract.
4. A paragraph reciting that New York law applies to the enforcement of the contract and reciting that the only court with jurisdiction over Wachovia is the federal or state court in Manhattan. Specifically, Wachovia waived the right to remove any litigation with Citigroup to any other court.
As a result, the comments printed in today’s online Wall Street Journal from the unnamed source, that “the Wachovia Directors were obligated under their fiduciary duty to shareholders to accept Wells Fargo’s higher offer, even though that leaves Wachovia legally vulnerable” are the m@r@nic babblings of a person who is not a lawyer, and who has never seen the inside of a court room on an injunctive relief hearing.
The fiduciary duty of Wachovia’s officers and directors existed on Sunday night and in the wee hours of Saturday morning. However, once that exclusivity agreement was signed, the sole remedy of the shareholders for any breach of fiduciary duty became a lawsuit against the officers and directors. Under well established case law, Wachovia’s own officers and directors cannot use their own breach of fiduciary duty as a defense to the issuance of a TRO/injunction against any Wachovia/Wells Fargo merger or sale, nor can they use their own breach of fiduciary duty to prevent enforcement of the exclusivity agreement by Citigroup. Similarly that breach of fiduciary duty cannot be used by Wells Fargo as a sword to invalidate the exclusivity agreement or to defend its own tortious conduct in interfering with Citigroup’s rights under the exclusivity agreement.
Proving, once again, that Wells Fargo’s senior management are presumptuous scum not to be trusted, ever, the Wall Street Journal’s online article today contained the following text: “We think that this deal is solid,” said Wells Fargo Chairman Richard Kovacevich. “We are not aware of any merger agreement that has been consummated at the time and as far as other issues, I haven’t seen anything in terms of issues that Citigroup had or doesn’t have. We feel very confident that this transaction has been done appropriately and will continue and be consummated.”
He added: “We believe that regulators would also be comfortable with what has transpired here.”
As I write this Maria B. on CNBC is interviewing Kovacevich. He stated that ‘We have a signed merger agreement and no one else does’. Kovacevich’s interview also make a raft of other statements that the New York court will find to be incredibly useful in issuing an injunction against the Wells Fargo/Wachovia merger.
In his interview with CNBC Kovacevich also admitted that his company submitted the merger agreement to Wachovia’s management and got it signed without first clearing what he was doing with the FDIC.
New Yorkers hate Citigroup because they are the most litigious, aggressive company in the state. There is absolutely no doubt that Citigroup will do whatever it takes to drive a gigantic stake into Richard Kovacevich’s heart, and to destroy Wells Fargo. If Wachovia ends up in a Chapter 11, that will merely be collateral damage.
The conduct of Kovacevich, the Wells Fargo legal team, Wachovia’s management and the Wachovia legal team goes beyond reprehensible because it is conduct which will wildly destablize the banking system.
Where is that linked from, j?
j–
You have completely redeemed yourself. That is a thing of beauty. I love nothing more than to see a good LOI acutally come to the test. If it perseveres here, I may frame it, or even gild it, in order to shove it in the face of every asshole lawyer I’ve ever dealt with who’s assured me “Oh, the LOI means nothing.”
Do me one more favor and change your name to something more memorable.
__
Looks like that was a good call, selling the WB, Fly.
__
Jake
I don’t quite get your point. You think the legal argument is worthless?
I read the Citi agreement and it appears pretty water tight to me. Wachie guys were doing the deal behind Citi’s back while they were negotiating with C. Furthermore the foundations of the deal had been agreed earlier in the week brokered by the FDIC. I can’t see how Wachie can walk away and I can’t see how Wells can get in between.
My only question before reading the above opinion was how much weight a judge would place on the agreement and the importance of the wachie shareholders getting a better deal. It seems they normally do put on a lot of weight on that.
However if the guys reading of this is that Citi has a watertight agreement then we’ll have to see.
OH Sorry Jake, I thought you were suggesting the guy was kidding, as I read “LOI” to mean “lots of laughs”. It obviously means “letter of intent”.
Contractor:
I was skulking around webworld and it came from
http://implode-explode.com/forum/viewtopic.php?p=209145
There’s a couple of other comments that seem to support it.
I’ve been scurrying around trying to find legal opinions as the I thought any journo’s opinion meant for shit unless they know the law. I’m also pretty shocked that I only found a few legal opinions but they didn’t seem to have even read the agreement. They just seemed to be giving opinion out of thin air.
I even ask my kid who’s doing law to translate the legalese. Funny enough he thought it looked really water tight but didn’t know enough about American law to offer an view despite me throwing a couple g his way if he got it right.:-)
Thanks, j. That is a great find on your part.
How many golden para does Steel collect for this then.
1. citi deal No.1
2. the Wells deal
3. and back to citi.
He may even try to argue there was a 4th in an attempt to include the FDIC as a separate deal.
http://www.youtube.com/watch?v=wK2QjMydQpU
Bail out will not be enough? How will we know if it is working?
Steel is truly a space alien magician.
Contractor.
I think the thing Ron P misses is that this could be another papering up of the problem until the next mal-adjustment. In other words we could be setting the seeds for the next boom and bust.
This is a fuck the creditor or fuck the debtor situation and as always the debtor gets fucked through inflation in a fiat currency.
The problem with guys like Ron P is that they look back to previous times and see that monetary expansion didn’t work. However what he neglects to see is that it is a planet since the entire world is on fiat currency and happy to be so. Previously if one country fell off the gold wagon there were other places with gold backing where you could hide. Not now.
It’s a different world since Nixon went off gold. I’m not suggesting there won’t be a recession, but it’s not going to be a 30’s type thing.
Funnily enough i actually think land and stocks are the best places to protect your money over the longer term as inflation will eat away the value of cash.
The Fed is doing all it can to inflate, and in fact they are inducing people to borrow if the can. My bet is that the stock market will be up on nominal terms in 12 months.
No one should look at financial history anytime before the Nixon de-linking to gold.
Credit is a problem with money and money is longer tied to gold. The government has the printing presses and they will simply print as much as is needed to get out of the problem. In other words they will socialize the losses by transferring wealth from the debtor to the creditor through a depreciation of the value of the dollar. Watch how the rest of the world will follow too and everyone will be none the wiser because we look at stupid indexes like the CPI. The CPI doesn’t measure inflation at all.
Umm should read
A different planet.
So j, what is a safe haven? Currencies of nations with ‘recession weathering’ economies – if there is such a thing?
Integrity is “lACKING EVERYWHERE”. From the congress, to Wall Street , to the banking community, to Wachovia, you cannot trust anyone ! There was a time when men honored aggreements, and a handshake was enough. Those times are gone forever.
The business community is like a bunch of pimps and whores. All eveyone wants is to get “theirs”. Sometimes in the middle of the night they will come in and “fuck you over”
I hope Wachovia gets what it deserves; and that the executive team is sent packing !!!
“It’s no wonder that truth is stranger than fiction. Fiction has to make sense.”
http://www.forbes.com/business/2008/10/03/citi-wachovia-wells-biz-wall-cx_lm_1003deallaw.html
Great FNMA article @ New York Times website:
…Shortly after he became chief executive, Mr. Mudd traveled to the California offices of Angelo R. Mozilo, the head of Countrywide Financial, then the nation’s largest mortgage lender. Fannie had a longstanding and lucrative relationship with Countrywide, which sold more loans to Fannie than anyone else.
But at that meeting, Mr. Mozilo, a butcher’s son who had almost single-handedly built Countrywide into a financial powerhouse, threatened to upend their partnership unless Fannie started buying Countrywide’s riskier loans.
Mr. Mozilo, who did not return telephone calls seeking comment, told Mr. Mudd that Countrywide had other options. For example, Wall Street had recently jumped into the market for risky mortgages. Firms like Bear Stearns, Lehman Brothers and Goldman Sachs had started bundling home loans and selling them to investors — bypassing Fannie and dealing with Countrywide directly.
“You’re becoming irrelevant,” Mr. Mozilo told Mr. Mudd, according to two people with knowledge of the meeting who requested anonymity because the talks were confidential. In the previous year, Fannie had already lost 56 percent of its loan-reselling business to Wall Street and other competitors.
“You need us more than we need you,” Mr. Mozilo said, “and if you don’t take these loans, you’ll find you can lose much more.”
Then Mr. Mozilo offered everyone a breath mint.
http://www.marketwatch.com/news/story/how-wells-fargo-turned-tables/story.aspx?guid=%7B389A18F3%2D913F%2D4F61%2D8CC7%2DEC9C329674D1%7D
Fiona:
We know that the journalists are all saying the same things. However the legal issue is what is important now. In other words, did C have a ironclad agreement with Wachie an would the agreement stand up in a court? This is where the lawyers need to come in. Reading journalist opinion in a waste of time.
J,
Sometimes we can do both – write and represent.
You may enjoy the legal sparring here.http://blogs.wsj.com/law/2008/10/03/in-wachovia-citi-deal-did-sc-overlook-some-small-stuff/
http://blogs.wsj.com/law/2008/10/03/in-wachovia-citi-deal-did-sc-overlook-some-small-stuff/
I’ve been reading it, Fiona. Thanks.
Here’s comment from the Wall Street journal blog you linked to, Fiona.
So Citi was granted an immediate injunction.
Citi Granted Emergency Injunctive Relief Extending Exclusivity Agreement between Citi and Wachovia
NEW YORK–(BUSINESS WIRE)–Citi (NYSE:C) tonight was granted emergency injunctive relief extending the Exclusivity Agreement between Citi and Wachovia Corp. (NYSE:WB) until further order of the court. This relief was granted over the objection of Wachovia. Justice Charles Ramos of the Supreme Court of the State of New York issued the order.
Citi is prepared to continue negotiations with Wachovia on the parties’ previously agreed-to transaction.
As indicated by Citi in court filings, the Exclusivity Agreement, while in effect, unconditionally bars Wachovia from negotiating or entering into a merger/acquisition agreement with any party other than Citi.
Under the Judicial Order, Citi and Wachovia must appear before Judge Ramos on Friday, October 10, 2008. Citi has made clear it is prepared to resume negotiating in good faith to complete the transaction contemplated by the agreement-in-principle that Citi and Wachovia announced on Monday, September 29, 2008.
On September 29th, Citi and Wachovia both announced an agreement-in-principle for Citi to acquire all of the banking subsidiaries of Wachovia. At the time the Wachovia/Wells Fargo transaction was announced, Citi was finalizing the agreements required to consummate its FDIC-assisted open bank transaction with Wachovia. Citi has been providing liquidity support to Wachovia since the day of the announcement.
Citi remains willing to enter into an agreement with Wachovia which Citi believes would deliver powerful capabilities of the two entities to their respective stakeholders.
fuck wells, fuck Steel, fuck wachie and fuck warren. Fuck all of you douchebags. this is our deal so fuck right off.
Here’s my thought from having dealt with this kind of toxic shit before…
The LOI will stand as cause for injunction because the exclusivity is binding.
However… judges really get jazzed about this thing called “equity” which does not mean the same thing as what we traders talk about on these metablogs.
No, “equity” to a judge means “fairness” and in this sense, it’s 99 out of 100 going to mean “fairness” to the “little guy” and the little guy in this scenario is the WB shareholder.
So here’s what I think will happen…. Schitti will take the bank over but for $8 a share, like Wells is offering, because the judge will demand they meet that price for the sake of equity… OR
Schitti will get a nice fat joozy settlement from Wells in exchange for them letting the LOI go.
We’ll see.
__________
Trading wise, it prolly means “buy Schitti on Monday”
btw..
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This Wachovia thing is interesting. The bailout and the new tax relaxations have given loss making banks a new perspective in terms of valuation.
Jake:
I don’t get this. If Citi didn’t step last weekend, Wachie was cactus as the FDIC stepped in. Wells didn’t bid last weekend and walked away. Seeing Wachie was basically in FDIC hands last weekend for all intents and purposes the Citi bid will stand.
The FDIC can’t walk away as from Citi now after they asked them to stand in as it would scare any other bank from pitching a bid in the future.
Even if the LOI is binding it is irrelevant if FDIC withdraws their support. Then Citi may not be able to afford to do it without the Feds subsidizing the deal.
If Feds do the right thing, they should effectively make Citi pay the market value, not punnish the f’ing a-hole taxpayer, again.
FDIC can do what they want. Question is, what do they want?
j:
Speak fuckin’ ENGLISH please, or we will
charge you a sin tax.
Gramm
yea I should proof my stuff, but it’s only a blog after all. I always think it’s not a bad attempt with checking it. Doncha think?
Even if the LOI is binding it is irrelevant if FDIC withdraws their support. Then Citi may not be able to afford to do it without the Feds subsidizing the deal.
They told Citi to bid or at least asked in “the nicest possible way”.
If Feds do the right thing, they should effectively make Citi pay the market value, not punnish the f’ing a-hole taxpayer, again.
How so, the market value was established last weekend when Wachie was worth shit all of nothing. Now that the tax deal and the package has gone through Wells bids. It’s an entirely different market climate.
lastly how the fuck does the FDIC walk away from supporting Citi if they called on citi to make the bid after Wells walked away last weekend. They can’t.
Fuck the wachie shareholders. They should have chosen a better board and management and they wouldn’t be in this mess.
Didn’t you hear, all laws have been suspended in these desperate times. The War on the alkaida short sellers has been declared. They have infiltrated the financial system. Your government has been authorized to use any and all means necessary to eradicate the enemy.
But somewhat seriously, the law is what one judge decides on a given day – nothing more. 1,000 pages of legal mumbo jumbo can be negated with the stroke of a pen.
Boca,
Have you started reading the pork package they passed? Do you have a link to it?
to ?, here’s a link to a pdf file for the legislation, HR1424 The Emergency Economic Stabilization Act (ESSA) of 2008, all 451 pages of it, including the TARP provisions.
http://banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf
I haven’t finished reading all of it as I have family things to take care of today. I’ll post something in the PG if I find anything worth writing up in detail.
The world markets still seem very unsettled, especially Europe. I’m a little hesitant to rush in on any strategy yet. If there is a coordinated rate cut I might feel more positive.
Sir Greg Solomon have you ever been skull-fucked sir?
Just waitin for the markets to open.
R.E.D.E.M.P.T.I.O.N.S……..find out what it means to me.
Go Donkey’s just fucking win!
OEW Summary for Friday:
“The market looks to be very close to completing Primary wave A. The next two support pivots, 1090 and 1061 are major support. Should they fail hold this market could get quite ugly in a hurry. As noted a few days ago, and in January 2008. We expected Primary wave A to bottom in the Sept/Oct time period, with a minimum downside of SPX 1140 and a maximum of SPX 1060. It is October, the minimum as been met, and the market is now right in between these two levels. Some fibonacci relationships exist between SPX 1073 and 1086 short term, medium term and long term. The moment of truth has arrived.”