Reflections on Being and Non-Being
Fashion Week, Fantasy Football and An Encounter With A CDO Cowboy
Last night we found ourselves at some stupid fashion week party where we learned two things. First, fashion week is just fantasy football for girls. Second, there is no CDO business on Wall Street these days.
The latter became crashingly clear when we ran into a guy in the structured credit products business who we haven't seen for years. He's been too busy. But last night he told he hasn't worked a night in weeks.
"It's over. Everyone is getting fired. Entire divisions. Think vast empty wastelands," he said.
We ordered him his favorite drink: a very dry, Hendrick's martini on the rocks. He took the top half off it off in one swig. Then he took the bottom half off. We ordered him another.
"Right now CDO stands for Close the Door on you way Out," he said.
Comments
The arbitrage is dead! Long live the arbitrage! RBS Greenwich fired a few employees on SUNDAY with a phone call a couple of weeks ago.
Posted by: wrong time wrong place | September 6, 2007 10:34 AM
Alright so these RBS layoffs are the first that seem to have been confirmed. Where are these other "entire divisions" that are being let go? Work is slower but we certainly don't hear any talk of looming layoffs just yet!
Posted by: 3rd year cdo analyst | September 6, 2007 10:41 AM
"We ordered him another." and didn't pay for it.
Posted by: Anonymous | September 6, 2007 10:41 AM
Alright so these RBS layoffs are the first that seem to have been confirmed. Where are these other "entire divisions" that are being let go? Work is slower but we certainly don't hear any talk of looming layoffs just yet!
Posted by: 3rd year cdo analyst | September 6, 2007 10:42 AM
Alright so these RBS layoffs are the first that seem to have been confirmed. Where are these other "entire divisions" that are being let go? Work is slower but we certainly don't hear any talk of looming layoffs just yet!
Posted by: 3rd year cdo analyst | September 6, 2007 10:42 AM
Agree with 3rd year analyst: it seems that predominately CDO buy side is getting canned, not so much sell side.
Posted by: Anonymous | September 6, 2007 10:44 AM
So is this why Cramer pitched a hissy fit on friday? (Besides his usual spazzy personality.) "Bernanke has NO IDEA. NO IDEA! how bad it is out there!"
Posted by: Heh | September 6, 2007 10:52 AM
http://www.forbes.com/markets/2007/08/30/rbs-cdo-barclays-markets-equity-cx_ll_0830markets11.html
Posted by: Warren Spector | September 6, 2007 12:19 PM
3rd Year,
It's common practice in American business to not let people know they are being fired until they are fired.
Posted by: 4th year analyst | September 6, 2007 12:25 PM
@anon 10:44 - Farbeit from me to to extend your logic another step out, but wouldn't it seem that if there are no longer any buy-siders left to buy CDOs, then there is really no reason to keep anyone structuring/selling them on the sell side?
Posted by: Mike Hunt | September 6, 2007 01:25 PM
"Agree with 3rd year analyst: it seems that predominately CDO buy side is getting canned, not so much sell side."
Obviously, as one side bought while the other sold the crap.
Posted by: nm | September 6, 2007 02:01 PM
Actually, there are still people out here buying CDOs. Me, for instance.
The bid price for middle tranche CDOs backed by sub-prime first mortgages
is 1% of face value. Asked price is 20% (yeah, right, good luck with that one).
Who's selling? Pension funds.
Mark-to-market? Over here it looks more like mark-to-martyrdom.
-dave
Posted by: Dave D'Rave | September 6, 2007 02:09 PM
Decreased trading volume on CDOs includes decreased trading volume on synthetic CDOs. This would mean decreased CDS trading volume, since those CDOs are synthesized from hedging with CDS. I think it's fair to assume that CDO origination will slow down in the near time, costing many CDO structurers their jobs. The question is what, percentage of trading in other credit derivatives (such as CDS) was due to synthetic CDO origination? Will the recent CDS boom end along with the CDO boom?
Posted by: Anonymous | September 6, 2007 03:14 PM
yes, though we prefer the www.FantasyFuturesExchange.com
Posted by: Ptrades.com | September 6, 2007 04:19 PM