LEH deal done ?
- Thread starter Bootsie
- Start date
-Trading Technologies TT Trader shows the bid/ ask regardless of your broker and regardless of whether the market/ exchange is open/ trading. -
oh really ?
do you mind telling us on ET what is being shown or has been shown for say YM or ES as pre market indications
since 10 am EST on TT ?
oh really ?
do you mind telling us on ET what is being shown or has been shown for say YM or ES as pre market indications
since 10 am EST on TT ?
what the heck....from the link....
Jim Bianco e-mailed to tell us that the idea that Lehman can be wound down in an orderly fashion, with counterparties continuing to trade with it as assets are sold, is a non-starters:
Why does a deal have to be done today?
Moody's warned last Wednesday that they will downgrade Lehman if they donât either merge of raise capital immediately.
http://www.reuters.com/article/fundsFundsNews/idUSN1047904220080910
Why is a downgrade important?
âA downgrade would likely force Lehman to post additional collateral, increase short-term and long-term funding costs, and limit its ability to transact with partners which demand certain credit ratings,â Goldman Sachs Group Inc. analyst William Tanona wrote in a note today. http://www.bloomberg.com/apps/news?pid=20601087&sid=alIffXk3Sb2I&refer=home
So, if nothing gets down, Moodyâs downgrades them tomorrow and itâs over. To control the process, Lehman may file for bankruptcy tonight if nothing happens.
If Lehman does file, Moodyâs has to downgrade their counter-party rating to junk. This forces everyone to stop doing business with Lehman. If you do business with a junk counter-party, you risk your rating falling to junk as well (you are only as good as your shakiest counter-party). Most buy-side accounts have fiduciary rules that bar them from doing business with a junk rated counter-party. Recall that this was the trigger that buried bear.
No way that Moody's will agree to keep a bankrupt broker with an investment grade counter-party risk rating.
Update 11:40 AM:
Bianco's comment suggests a narrower form of government support might work. Could the powers that be merely guarantee the actively traded counterparty exposures? You'd keep credit default swaps out of this. since there is (presumably) no good reason for firms to enter into new CDS agreements with Lehman at this juncture. But how would you draw the line between old exposures and new positions? If a simple trade date cutoff would work, that might be fine, but it isn't hard to imagine how this could be gamed. (On further thought, the rating agency issue would be with exposure to Lehman, period, so the approach might be guaranteeing those counterparty exposures that need to be traded and/or would be subject to a quick exit).
The idea would have the advantage of giving the deal a different appearance to the public, even if the amount at risk was the sam. Paulson & Co. could stress that bondholders would take their lumps too. It would prevent rating agencies from downgrading firms that continued to trade with Lehman. In theory, the exposure ought to be less. but if this angle wasn't already under consideration (almost certain not to have been, given Paulson's unwilingness to consider a rescue), could a narrower backup plan be crafted on short notice?
Jim Bianco e-mailed to tell us that the idea that Lehman can be wound down in an orderly fashion, with counterparties continuing to trade with it as assets are sold, is a non-starters:
Why does a deal have to be done today?
Moody's warned last Wednesday that they will downgrade Lehman if they donât either merge of raise capital immediately.
http://www.reuters.com/article/fundsFundsNews/idUSN1047904220080910
Why is a downgrade important?
âA downgrade would likely force Lehman to post additional collateral, increase short-term and long-term funding costs, and limit its ability to transact with partners which demand certain credit ratings,â Goldman Sachs Group Inc. analyst William Tanona wrote in a note today. http://www.bloomberg.com/apps/news?pid=20601087&sid=alIffXk3Sb2I&refer=home
So, if nothing gets down, Moodyâs downgrades them tomorrow and itâs over. To control the process, Lehman may file for bankruptcy tonight if nothing happens.
If Lehman does file, Moodyâs has to downgrade their counter-party rating to junk. This forces everyone to stop doing business with Lehman. If you do business with a junk counter-party, you risk your rating falling to junk as well (you are only as good as your shakiest counter-party). Most buy-side accounts have fiduciary rules that bar them from doing business with a junk rated counter-party. Recall that this was the trigger that buried bear.
No way that Moody's will agree to keep a bankrupt broker with an investment grade counter-party risk rating.
Update 11:40 AM:
Bianco's comment suggests a narrower form of government support might work. Could the powers that be merely guarantee the actively traded counterparty exposures? You'd keep credit default swaps out of this. since there is (presumably) no good reason for firms to enter into new CDS agreements with Lehman at this juncture. But how would you draw the line between old exposures and new positions? If a simple trade date cutoff would work, that might be fine, but it isn't hard to imagine how this could be gamed. (On further thought, the rating agency issue would be with exposure to Lehman, period, so the approach might be guaranteeing those counterparty exposures that need to be traded and/or would be subject to a quick exit).
The idea would have the advantage of giving the deal a different appearance to the public, even if the amount at risk was the sam. Paulson & Co. could stress that bondholders would take their lumps too. It would prevent rating agencies from downgrading firms that continued to trade with Lehman. In theory, the exposure ought to be less. but if this angle wasn't already under consideration (almost certain not to have been, given Paulson's unwilingness to consider a rescue), could a narrower backup plan be crafted on short notice?
Quote from SethArb:
-Trading Technologies TT Trader shows the bid/ ask regardless of your broker and regardless of whether the market/ exchange is open/ trading. -
oh really ?
do you mind telling us on ET what is being shown or has been shown for say YM or ES as pre market indications
since 10 am EST on TT ?
248pm eastern time bid ES is 125575 and ask is 125900 with almost no weighting. After 5pm it will get heavy and tighten up the bid/ ask.
LEH deal done ?
Why yes, it is done. So done, in fact, you can stick a fork in it!
Why yes, it is done. So done, in fact, you can stick a fork in it!