Gerry Sullivan

Why Congress Is Asking Bernanke Bogus Questions

Bernanke repeatedly states that BAC would not have
been successful invoking the "material adverse change" (MAC) clause. That opinion is a convenient explanation for why the Fed jawboned BAC to keep the deal together.

In my opinion it seems that BAC might well have prevailed in court if they used MAC.

Several times the Fed Chairman stated that he is not an attorney, but in the case of BAC invoking MAC he gives a legal opinion anyway.

Mack-Cali Late to the (Follow-On) Party

REITs continue to go up and everyone seems to be mad about it.
They must be short.

People who bet on sports know that the most important thing is
to be on "the right side of the fix." The right side of this fix is to
continue to buy the REIT offerings until they no longer work.

Remember VNO a couple of weeks ago at $43? It's at $52 now.
LaSalle Hotels LHO up 40% in less than 2 weeks. Duke Realty DRE?
Hope you are still not short.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Two more good deals last night: LHO and HST. Both popped.
Both are up 15%. Makes 8 in a row for Merrill.
What's not to like. This is the new game. REITs need to raise
capital. Hedge funds are underperforming and grab the deals. Lenders want to be repaid.
Seriously, what's not to like. You can complain about it, but it's like complaining about professional wrestling. It's fixed. So what.
We are here to make money. While CNBC is talking about MSFT and YHOO, this is the real Fast Money.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

These may be bad companies but the stock offerings have been good.
Add VNO@43 (offered this week), and CIM@3 (235,000,000 shares last week) to the list and all 6 Merrill Lynch led REIT offerings are up.
Buy them, sell them. Make money.
If you want to invest, buy P&G and Exxon Mobil.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

There is an opportunity here for traders to buy the new shares on the
offering and flip them. All 4 of the stocks mentioned are trading above
the offering price.

Merger Arbs Balking at Merrill/BofA Deal

I don't think that 18% is enough spread. If BAC doesn't do this deal, Merrill is toast.
Merrill wouldn't even be $5 now without this deal.

The Financial Storm of the Century

Corzine is correct about the US consumer in general and credit cards specifically. We have only seen the tip of the iceburg.
AIG is "technically solvent" but their credit protection costs 12%/year.
In the World Series of Poker, AIG would be referred to as the "short stack" and this is the "degree moment."
AIG, like Lehman, has huge corporate hubris. Where on Earth will AIG come up with $100 billion?
The Fed was right to let Lehman go and should do the same with AIG.
Then, work on saving the banks, which will be the financial survivors, and the financial powers of the future.

And Then There Were Two: Securities Firms Come Crashing Down

Bank of America + Merrill Lynch, it looks more and more like Citigroup.
Why did BAC pay so much? They could have had Merrill for $10/share later this week.

A Critical Market Juncture (Again)

Years ago, at the peak of their power, the NYSE Specialists might have been able to move a stock intra day. More often they profited by taking large blocks of stock when a stock halted and reopened lower and then feeding it out at higher prices.

They also made money from the spread, usually 1/8 or 1/4.

Those days are long gone. Most NYSE listed stocks also trade in 8-10 other places. There are much tighter spreads and much less opportunity for the Specialists. Their last big payday was when the NYSE went public.

Mid-Year Picks and Pans From Barron's Roundtable

It didn't look like any of these roundtable participants had great
results for their Jan 4, 2008 picks. That includes many of them that made both long and short recommendations.

Brokers Should Unlock Their ARSes

Where is Habeas Corpus when you need it?

One additional problem is that if the firms allow the securities to be sold at a discount that establishes a price and that price might have to be shown as the market value on the customer's statement.

I remember a similar situation in the late 1980s, early 1990s when brokerage customers wanted to sell real estate limited partnership interests at lower prices and the firms resisited.

Of course, those securities were not marketed as "money market equivalents."

Bank of America: Better Than Treasuries

BAC doesn't want to cut the dividend just as Citigroup and Wachovia didn't want to cut their dividends. What happens to the BAC dividend in the next 2-3 years is just something that isn't predictable.

The US Treasury "cuts" the value of the US Dollar over time but
that isn't comparable to a dividend cut by a corporation.

I own BAC personally, but as an investor I understand that it might make more sense to own a bank that has already cut and been punished like Citigroup or a bank that is unquestionably stronger like
JPM Chase.

In the end it is like Ben Graham said about Mr. Market. He is open but you decide when/if you want to trade with him.
Like Warren Buffet says about Mr. Market, "he has incurable emotional problems."