US Moving to Certificates

Discussion in 'Wall St. News' started by patchie, Mar 17, 2009.

  1. patchie


    AET Aetna -- After continuing to struggle surpassing
    its 20-day ema off the open, stock slips to fresh intraday lows as it comes into Friday's low near 23.66 (23.73 -0.58)

    13:06 TALKX Floor Talk: Surge in financials continues

    The recent surge in financials is continuing today, with the
    group leading the market higher (XLF +5%) along with the energy sector (OIH +5%). There are a number of factors helping the financials to extend their recent rally, including news over the weekend that included positive comments from Barclays (co said it had a great start to the year and has talked with several interested parties regarding the sale of its ETF business) and encouraging remarks from Fed Chairman Bernanke, who said in a rare 60-Minutes interview that the recession could end in 2009, and that there have been signs of stabilization.

    What's most interesting is that we're seeing significant strength in the distressed companies that the govt has taken a big stake in: AIG +55%, C +33%, FRE +30%, FNM +30%. There are rumors in the market today suggesting that the government will request delivery of stock certificates held by AIG and other institutions in which it has a major investment, thus preventing short-sellers from borrowing the shares they hold... To get a better understanding of the implications of such a move, we'd note that financial institutions that hold large positions of securities have historically participated in the business of securities lending. This process allows the institution's holdings to be borrowed by a securities lender to facilitate a short seller. While it is hard to quantify the impact of a move to call in the borrowed securities, such a move (or the possibility of such a move) could create a major short squeeze as the supply of securities available to be borrowed would shrink. We'd caution that this is purely a rumor at this point and there have been no official comments on the idea.

    However, in the event that any sort of announcement to this effect was made, watch for momentum in the most heavily shorted stocks (see March edition of highly shorted stocks - click on image to enlarge)... Outside of the most distressed companies, a number of banks and insurers are showing strong gains today: BCS +19%, MET +18%, FITB +16%, BAC +15%, ZION +12%, AFL +11%, HIG +10%, KEY +9%, RF +9%, USB +7%, JPM +5%, GE +6%. The financial sector ETF (XLF) has gained ~38% in the past 5 sessions... Dow +153, SPX +17, Nasdaq +9.
  2. If this is a surprise to anyone, you're in the wrong biz.

    Won't matter...check in three moves.
  3. Yeah lots of money in shorting dollar stocks.
  4. What's most interesting is that we're seeing significant strength in the distressed companies

    lmao, I'm telling ya, that Obama wasn't kidding around. "Significant strength" :D
  5. patchie


    By my calculations, 10% is still 10% whether it be a $100 stock or a $2.00 stock.

    I see that you guys also missed the bigger picture in the story but to some degree that is not surprising.

    The reason I posted this was to illustrate the hypocricy of the federal government. For years they have been working with the DTCC and member firms to restrict investors from moving shares to physical custody despite the concerns raised by such investors. Now that the US is a major stakeholder in select companies they suddenly find such a maneuver necessary to protect their position. If the rumor is true, THAT is the bigger picture as it reflects on how the US government perceives the safety of the market trade system.