1-2 Knockout

Merry Christmas!

excuse the crappy blackberry pic, too much espresso!

Who wants to see I.O.U.S.A?

Thursday, the Warren Buffet/Pete Peterson-backed documentary film, I.O.U.S.A. will be released in theaters across the country, with a live (or so we're told) q&a with the Oracle of Omaha (and whatever Peterson's nickname is) themselves after the film's conclusion.

I'm debating seeing it, if for no other reason then to see if its just another fluff piece full of vagaries and relatively empty accusations.

Thoughts?

Wall Street Analyst Immortalized with New Opera

Confessions of a Wall Street Analyst author Dan Reingold (the Luke Skywalker to Jack Grubman's Darth Vader) has been given arguably the biggest honor that any 'Streeter could ever hope to achieve:  his life's work made into an opera, Das Reingold to be preformed by the famed New York Metropolitan Opera.

In a story "traversing the realms of nymphs (uh...), dwarves (Grubman), gods (Weill), and giants (Ebbers), the Opera highlights all of the seemingly-unbelievable details of the life of the former star telecom Analyst.

Das Reingold shows in March and April, 2009.  Tickets go on sale this August at www.metopera.com

Finance Meets Fashion, or not.

Last night I winged-up with fellow commenter Investor Cluzzo at Pocketchange NYC: Finance Meets Fashion. Investor Cluzzo did a great recap on behalf of Dealbreaker (Bess asked us both to attend, and I can't turn down her beauty or witt).  I highly recommend you read his synopsis, but I had to add my two cents on the comment boards:

I'm still waiting to see the Post's recount of the event though. Let's just say Bill Ackman and David Einhorn made appearances and had some great one liners. Whether they saw through my facade (doubtful), didn't think anyone in the post would get my jokes (50/50), or they themselves had no clue what it meant to be "long CDS on interns" or arguing that the "fashion girls must have shopped their ratings around town because there's no way any of them were investment grade" I'll never know.

Also, best exchange from the International Intimates girl:
Girl: "Victoria's Secret outsources 65% of their underwear designs, and do 55% internally."
Me: "Do you mean 65/35 or 55/45?"
Girl: "Oh, yea, 65/45"
Me: "That's still not an option"
Girl: "Why not?"
Me: "Math"
Girl: Embarrased and clearly still not comprehending why she's wrong "oh yea, haha, totally"
Me: "So which is it then?"
Girl: "What's what?"
Me: "Nevermind.  I need a drink."

C'est la vie.

Merrill Lynch is Focused on the Important Stuff

In the midst of losing oodles of money, raising more money (presumably so that they can lose it all over again), and whatever else it is that gets done at World Financial Center #4 these days, Merrill Lynch is reportedly in talks to relocate its Headquarters.

It wasn't that long ago that Merrill was in talks with Vornado to relocate to the lovely area that is west 34th street (near Penn Station and Madison Square Garden), but when the credit crisis (and I use that term regrettably) shook the markets late last summer/fall, talks ceased, presumably since ML had many bigger, more important things to deal with. 

Key word: "presumably".

I guess we should take this as a sign that ML has totally cleaned up their mess from their forays into LBOs, structured finance, and other fun (read: disasterous) activities, and has returned to a healthy, profitable state.

On the other hand, maybe they're just jealous that Goldman's new building is bigger. 

The Walk of Shame

One of our many random interests here at 1-2 Knockout is following trends in Advertising and Marketing, especially insofar as they allow us to observe broader trends affecting modern society.  In that vein, I'd like to share with you a commercial that begs to be talked about. 

Touche to the 'folks at Omnicom's BBDO for producing arguably the most honest commercial I've seen in years.  Frankly, I'm surprised Pepsico got behind such an aggressive - and blatantly suggestive - commercial for Amp, but it seems pretty clear that in the ultra-crowded Energy Drink market, being bold (read: sex) sells.  Write that down.

As far as I can tell, this commercial debuted only in the past week or so, and only on select channels at certain times (e.g. during Comedy Central's Colbert Report).  I'd imagine if this ad were to air during an episode of American Idol or some other family-oriented show (and really, what else could bring the family together like Paula Abdul's drug & alcohol-fueled antics?), it'd generate a fair share of controversy.  Of course, that may in-fact be a part of Pepsi's marketing plan, because the only thing that sells better than sex, is controversial sex.  Or something.

Presented without further comment for your viewing pleasure:

Bank of America's Bryant Park Building Blues

Later this year, Bank of America (together with the Durst Organization) is set to open the doors to their swanky new Platinum-L.E.E.D-certified office tower in Midtown Manhattan.  The project, a ~$1BN project, 50/50 joint-venture between the two organizations was set up with BofA to occupy 1.1 million square feet of the tower, with another ~1m sq ft of office space for other tenants above.  Only a very limited amount of space is left, with asking office rents reaching $200 per foot. 

When BofA began construction on this tower a few years back, things were looking fan-tas-tic; the economy was recovering nicely from the lows of 2001/2002, the Corporate and Investment Bank was expanding, things were looking up UP UP!  Unfortunately, the fates simply had other plans for Kenny Boy and his Merry Men From Charlotte.

From my research, by 2007 Bank of America had roughly 10,000 non-retail banking employees in NYC, +/- a few 'k here-or-there.  Since then however, they have lost - through the combination of layoffs and attrition - about 5,000+ of these employees, with rumours that even more will be layed off as soon as this week. 

Now, the problems for BofA here are twofold:

1. 1. They have a boat-load (technically speaking) of office space to which they are committed for the next 20 years.  Among which are 6 high-tech trading floors ranging from ~50,000 to ~100,000 sq. ft.  Even with very liberal assumptions as per the density of employees within the space, and the amount of actual "usable" space, BofA has committed to occupying FAR more space than their current (and for the foreseeable future) staffing situation requires.  However, due to the lack of new commercial space coming to market, a sub-lease situation could provide BofA with a solid alternative to utilizing ALL of their space, especially given the popularity of the building, the tight Midtown Manhattan office market, the quality of product, quality of tenants who’ve already signed leases (Akin Gump, Marathon Asset Management, HBK Investments), Green elements, and last-but-not-least, its location.

2. BofA received a number of "subsidies" for the construction of this building, many of which have drawn scrutiny from critics.  However, some of these subsidies are tied to specific employment numbers, which BofA has to reach by certain dates, lest they forfeit, or are forced to pay-back some subsidies.  From Site Selection:

 

These numbers are faily old (2004, I believe) and could very-well have been re-negotiated.  Also, there are other claw-back provisions (see the Site Selection report, link above).

Given these realities, I'm curious whether with BofA as both lessor AND lessee, if "they" have sub-lease or assignment rights per the contracts in-place.  Sources in the NYC commercial real estate game whom I've spoke with tend to doubt that BofA would do this, and if not, by my rather liberal calculations, they're going to be sitting on about 100,000-200,000 sq. ft. of empty office space for the foreseeable future, not to mention giving back a few million $'s in subsidies.

On a positive note, any Analysts still stuck around (assuming, of course, any in fact, are) might be getting that corner office alot sooner than they though.