Windup Wednesday

Psst: Did you "Fasten Your Seatbelts" after I got my "take" on the market on the Fast Money Crawler last night?

Ok, enough fun, now on to the day's news!

SIVs? Or is that HIV? And does SIV turn into "SIeVe" on your balance sheet, or worse, does it turn into corporate AIDS?

Good question. Want answers? They're hard to find.

"Though few investors realize it, banks such as Citigroup Inc. could find themselves burdened by affiliated investment vehicles that issue tens of billions of dollars in short-term debt known as commercial paper.

The investment vehicles, known as "conduits" and SIVs, are designed to operate separately from the banks and off their balance sheets."

Now tell me this - why the hell do the regulators - the SEC and others - permit this bullshit?

Off-balance sheet? Liabilities undisclosed? Debt undisclosed? Isn't that what sunk ENRON?

And don't you believe for a second that the market says "oh rates are coming down." Bullfuckingshit!

"The Federal Reserve could cut short-term interest rates in the weeks ahead, but right now one key rate is going in exactly the opposite direction, something that could have a big impact on markets and the economy.

That rate is the London interbank offered rate, or Libor. It is an important benchmark for everything from adjustable-rate mortgages in the U.S. to giant floating-rate bank loans taken out by global corporations."

Heh, what's that about? I'll tell 'ya - its people who are tired of getting buttfucked by the game-playing with off-balance sheet garbage and swaps and other worthless paper showing up in places it shouldn't - like asset-backed commercial paper.

MGIC and Radian ended their merger talks "amicably". (Guffaws over here guys - or more succinctly - bullshit!)

"MGIC Investment Corp. and Radian Group Inc. ended merger talks, saying 'market conditions' had scuttled a deal that would have combined two of the three biggest U.S. mortgage insurers.

'Both MGIC and Radian believe it is in their best interests to remain independent companies at this time,' the insurers said today in a joint statement."

How about the truth? That would read something like this:

"We both made a really shitty investment in C-BASS, it blew big smoking holes in our balance sheets, we face an uncertain future, we're both swirling around the bowl and trying to claw our way out of heading into the hole, and well, this is a shitty time to try to combine our companies."

Of course you'll never hear this one out of "The Pigmen".

And in an absolutely fucking STUNNING piece of Hubris, Lehman issued a research note this morning that blew me out of the water. You're gonna love this one guys:

"European investment banks will take a 'material hit' to earnings from writedowns associated with securities related to U.S. subprime loans, Lehman Brothers Holdings Inc. analysts said in a report."

Oh, you mean those securities that you fuckheads created and shoved off on these people, claiming they had credit quality EQUAL TO THAT OF THE UNITED FUCKING STATES SOVEREIGN DEBT?

NOW you claim that these banks will take a "material hit"? How about you guys? What do you think this is going to do to YOUR earnings? You know, not only from the toxic sludge that you have hidden away in off-balance-sheet ENRONesque structures but in addition, the loss of revenue from dealflow that disappears (as it goddamn well should!) when you can't sell that crap any more?

"Shit sandwiches! Get 'em here guys while they're hot! Just one bite and your balance sheet explodes!"

God I hate this sort of crap. The very investment banks that cause the problem...... you gotta love Wall Street.

The ADP Employment Report came in calling for a gain of just 38,000 in non-government employment. This is a VERY weak number. Challenger's report also came in like shit.

This is the second weak ADP report in a row.

The futures thought it sucked as well, although the hit was modest. Of course the futures were already swirling the bowl, so what's a bit more "impulse" down towards the drain?

Oh, and you know my prediction that commercial R/E will follow residential? Looks like its gaining some currency in the media....

"U.S. commercial real estate prices may fall as much as 15 percent over the next year in the broadest decline since the 2001 recession as rising borrowing costs force property owners to accept less or postpone sales."

No, you think?

Oh, Redbook retail sales? Down 0.5%. Is Chuckie feeling good, or is he feeling squeezed? Hmmmm.... heh Chuckie, how's that necktie doing? Feeling like a noose yet?

Pending housing sales came in down 12% month-over-month for July! Ouch! That's NOT GOOD and is going to weigh on things - big time. You think the economy is not going to deteriorate? Ha!

"The number of Americans signing contracts to buy previously owned homes fell in July by the most since records began in 2001, extending a U.S. housing slump that is weighing on credit markets and the economy.

The index of signed purchase agreements, or pending home resales, fell 12.2 percent to 89.9, the lowest since September 2001, after increasing 5 percent in June, the National Association of Realtors said today in Washington. The median estimate of economists polled by Bloomberg News projected a 2.2 percent drop."

I have a bridge for sale boyzzzzzz!

You gotta love these guys on CNBC! They're waking up! What did I hear today? The following:

"If your house has been on the market for six months and hasn't sold? Guess what - The price is wrong!"

Hehehehee... No shit.

Oh, the real crunch here? You know, the real credit crunch? Its from idiots putting crap in the commercial paper they issue. Well, now this pidgeon is coming home to roost and shitting all over people. Check this out:

"The vast majority of about $35-billion of non-bank ABCP is backed by risky bets on credit default rates that are now so far underwater that investors could be looking at losses as high as 50 on the dollar, said Edward Devlin, Canadian portfolio manager for highly respected California-based bond fund manager Pacific Investment Management Co. LLC( PIMCO.)

"You've got to think people are not going to be pleased about that," he said in an interview."

Oh fuck. The safest investments of all are now at risk for 50% losses?

The SEC is now on the case as well (better late than never, right?)

"Banks set up conduits to sell tens of billions of dollars of commercial paper, which is debt due in 270 days or less. Citigroup Inc., the largest U.S. bank, is one of several lenders that may suffer if they're forced to cover losses in conduits and other so-called Structured Investment Vehicles, the Wall Street Journal reported today. Citigroup has about a quarter of the market for SIVs, representing almost $100 billion of assets under management, the Journal said."

Never mind that the "Animal Spirits Folks" just do not fucking get it. STILL. Dig this:

As subprime borrowers began to default on their mortgages in rapidly growing numbers this year, credit card issuers increased their efforts to sign up such customers with tarnished financial histories, according to a market research firm.

Direct mail credit card offers to subprime customers in the United States jumped 41 percent in the first half of this year, compared with the first half of 2006, according to Mintel International Group. Direct mail offers intended for customers with the best credit fell more than 13 percent.

Yeah, ok. That's smart.

Word on the street is that there are some big redemption-led selling waves to come. 'Ya think?

Here's our technical for the day...... think you'll like it.... be warned, its a bit salty!