30SEP08:
31DEC08 INDICES:
FTSE100:3550
DOW30:7550
# HEDGE FUNDS:4425 30JUN08: Oil to be USD200 by 30OCT08 USA Inflation to be 7.5% by 30OCT08
...oops 23APR08:
Next Rights Issue:
HBOS...yes
All & Lec ...
...1 Nil. 17APR08: Oil to be USD127 by 30SEP08
...16MAY08 losing my touch 27FEB08:
2 Banks go bust by 30JUN08
BS down, Lehman (a bit late I know) 20NOV07: Northern Crock to be sold for 15p
Nationalized 01NOV07: Oil to be USD103 EOM
...peaked too soon 08OCT07:
SEC to fine Goldman for pricing issues
...still waiting 15JUN07: ML to buy-out BS
JPM got there first 06JUN07: The Big Crash: 17OCT07
...well it's here
FiNTAG has 3 predictions and it is close to getting them all right.
Tomorrow we have a spectacular market drubbing as we foretold last June.
The SEC is to investigate and fine Goldman for pricing irregularities - as we predicted last week and confirmed today.
Merrill to buy out Bear Stearns - as we predicted in the summer: CITIC looking to help them out.
Meanwhile we have the top 3 banks with the worst exposure to Asset Backed Securities trying to diversify this risk away by creating a bailout fund to delay the inevitable. The only reason they are doing this is because the Auditors are coming in for the year end audits and "fair pricing" is the main theme. So if you have a few potential write downs, what a better way than dumping them into a murky pool and getting a rating agency, for a large fee, stamping it Triple A and the bad debts to go away for a little while longer.
As an investor, I wouldn't go anywhere near this. And I won't; better to short Citi, JPMorgan and Bank of America big time.
Today we have heaps of news from another fund blowing up to women traders being better than men.
A Goldman Sachs filing with the US Securities and Exchange Commission has led to allegations that it may have inflated profits in the third quarter to a spectacular $8.23bn (£4.03bn) by booking paper gains on mortgage derivatives at too high a value.
Analysts cited by Fortune Magazine claim that almost a third of the bank's revenue came from "short" positions on the lowest tier of mortgage derivatives and other forms of toxic debt.
These assets are extremely hard to price, and were not in fact realised. More than $2.62bn of declared profits were made entirely on house estimates at the underlying value.
Charles Peabody, an analyst at Portales Partners in New York, said there were concerns that Goldman had set optimistic values on instruments for which there was in reality little or no functioning market.
"Common sense tells me that a lot of these losses were real and a lot of their gains were paper, and that's something we'd like to know more about," he said.
Goldman Sachs bet correctly that mortgage securities would crash during the summer, but this has been a very erratic market. A hedge fund of rival Bear Stearns collapsed in June after making such bets earlier.
It was caught out by a snap rebound in the lowest tier of this debt, causing its complex arbitrage strategy to blow up.
A Goldman Sachs spokesman said suggestions of inflated paper gains were preposterous.
"We do this for a living. It is impossible to manage your risk if you don't know the value of your assets," he told The Daily Telegraph.
He added: "Besides, the regulators live in our building.
"We have some exotic assets, but if there is any debate about the value, we order a sale.
"In any case, these assets are not just contracts. They are secured by collateral. We can issue margin calls if we see the value going south," he said.
The bank said in its SEC filing that "valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence."
Fintag says I was tipped off about this a couple of weeks ago when I was hob-nobbing in New York after a tip off from a well known newspaper (why didn't they believe me!).
As I have mentioned, why is it Goldman somehow missed the subprime bullets and every other bank was shot? Investors are complaining that their fund investments were valued at market but the internal Goldman partners' funds have been valued at make-up to keep them happy for lest us not forget, Goldman is not here to keep its shareholders happy.
This explains why Goldman is moving the grey beards into its Asset Management business.
financial news says Goldman Sachs moves top traders into asset management.
naked shorts says Misratted AND mispriced: a twofer!
fortune says Questions arise about Goldman's blowout quarter.
China Citic Bank is hoping to buy a stake in Bear Stearns, the Wall Street investment bank, a senior Chinese official said on Tuesday.
Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission, said that Chinese banks were increasingly making moves overseas, citing Citic's interest in Bear Stearns as an example.
His comments are the first confirmation that Citic has offered to buy a stake in Bear as part of a partnership that would help the Wall Street bank expand in China. Mr Jiang however did not reveal any details such as the size of any potential stake.
With presidential and congressional campaigns in full swing, Chinese investment into the US is increasingly subject to intense nationalistic scrutiny.
Fintag says Although I predicted Merrill would take out Bear, my understanding is that CITIC will be organising a consortium which will be led by a big US bank, so to appease the US government, and that bank will be Merrill.
Oil prices surged to a record high yesterday on the back of tension between Turkey and Iraq, adding to concerns over global supplies before the northern winter.
The oil price has risen steadily in recent months after dipping below $50 a barrel at the start of the year. After its recent gains, the crude price has quadrupled since 2002, although it still trails the inflation-adjusted peak of more than $90 a barrel set in 1979 during the Iranian revolution.
However, the price is seen as likely to match that record in coming weeks as several factors drive up the cost of crude. On the New York Mercantile Exchange (Nymex), crude prices soared past $85 a barrel for the first time to trade at $85.44. In London, the benchmark Brent crude closed at a record $82.75, passing $82 for the first time.
Citigroup, the US investment bank, said that a run at $90 a barrel is now seen as "reasonable" due to the weakness of the US dollar and resilient demand. James Neale, an analyst with Citi-group in London, said: "The higher near-term oil price reflects the current macro cocktail of tightening inventory balances in crude and particularly refined products." The bank raised its Brent oil price forecasts for the second time this year, adding $10 a barrel to its 2008 and 2009 forecasts to $70 and $65 a barrel respectively.
Analysts attributed yesterday's rise to the threat of conflict between Turkey and the PKK Kurdish separatists in northern Iraq. The Turkish parliament is expected this week to approve the use of military force against Kurdish rebel camps in northern Iraq after claiming that the Kurdish separatists have killed 30 Turkish soldiers and civilians over the past two weeks.
Fintag says So why have I predicted tomorrow as a market turning point? Well it is quite obvious really. Volumes are low on the markets and this is not supporting the overvalued stock prices. Oil price is moving towards USD100 and my gold watch is worth more than when I bought it 10 years ago. Steel is in short supply and the corrupt Chinese are hoovering up the world's resources while we look on as if its ok. Add this together with the fears of SWF's and the credit crunch has only just started, you can see that the party is over.
If not, it will be in February. [Editor:Is that a Hedge I see?]
Some of Wall Street's biggest banks are still haggling over vital details of a rescue plan which they hope will stave off tens of billions of dollars in losses from secretive off-balance-sheet vehicles.
Citigroup is leading a consortium of financial institutions that will create a new $80bn-$100bn fund to buy up mortgage-backed debts that few other Wall Street investors now want to buy.
But several banks are still to decide whether to join the rescue plan, and participants had yet to hammer out important questions about what sort of assets the fund will buy and how much it will pay for them. Meanwhile, the whole idea faced criticism from outsiders who argued it was delaying an inevitable day of reckoning, when the fin-ance industry will have to crystallise many billions of dollars of losses on the obscure mortgage-backed debt instruments created over the past few years.
The scale of the rescue deal reignited concerns that the global debt markets, far from returning to normal after the convulsions of the summer, could again be thrown into turmoil, as problems at banks' off-balance-sheet vehicles cascade through the financial system.
The aim of the new fund, called the Master Liquidity Enhancement Conduit ( M-LEC ), is to prop up dozens of off-balance-sheet vehicles - known variously as structured investment vehicles, SIV s, or conduits - which might otherwise have to be taken over by the banks that created them, crimping their ability to do other types of business and hitting their profits.
Citigroup is the biggest manager of SIVs, controlling vehicles with an estimated $80bn in assets, although European banks such as Barclays and HSBC have also created such vehicles in recent years, and there is an estimated $400bn invested in SIVs in total. HSBC sources said it has not decided whether to participate; Barclays declined to comment but is known to not be on board at present. JPMorgan Chase and Bank of America were the only other named investors in M-LEC.
Fintag says You have to be cynical even though it is a good idea. If you are a market manipulating socialist that is. Why the US is stooping to the sort of things the Japanese and French do, I have no idea. For years, the markets knew that Nomura and Soc Gen were state owned puppets and it looks like Citi is going the same way.
For the rest of the private world, this stinks.
So all us Hedgies are going to club together with some friendly SWF's and create a USD500bn fund and start taking large slugs in these nationalised banks. I hate Investment Banks even more than I did yesterday (Despite having slaved for years at Goldmorgan Stanley et al in the dark days)
Hedge funds may not be the obvious candidates to run electricity grids or barge fleets, but the race to generate ever greater returns is luring more of them to do just that.
Larger energy and commodities specialist funds are setting up so-called "special opportunities funds" to snap up infrastructure or positions in physical commodities markets.
"Wherever you look, the trend is to move into the physical side of the business," said Gary Vasey at energy and utility consultancy UtiliPoint.
Large Wall Street banks, private equity firms and now hedge funds are jostling to acquire physical assets, he said.
Ospraie Management, a U.S-based hedge fund, earlier this year bought into a barge company in the United States, hoping to ride an expected boom in the need to transport commodities across the U.S. on barges.
U.S. hedge fund groups Adit Capital and Solius Energy Fund are among hedge funds that are reported to control more than 25 percent of the world's physical uranium stockpiles, hoping to profit from revived interest in nuclear power.
From refineries to liquefied natural gas (LNG) import terminals, barges to ships and oil tankers and dry ports, nothing seems to be off limits for these financial players.
Fintag says We are so good.
finalternatives says Baseball Players Seed New Fixed-Income Hedge Fund.
finalternatives says IAM Acquires $1 Billion Fund of Hedge Funds Manager.
RBS has no less than 118 initiatives looking at the integration of the two banks' wholesale banking operations, including reviewing whether to continue ABN's equity capital markets jv with Rothschild, and a possible sale of the Hoare Govett corporate broking unit. And within 45 days, so the story goes, RBS will present its transition plan to De Nederlandsche Bank, the Dutch Central Bank. Job cuts, however, will not take place until April at the earliest as there will be a need for consultation with regulators and Dutch workers' councils.
There have been concerns expressed that RBS has overpaid for its parts of ABN, and there are worries that wholesale banking in particular is heading for a slowdown following the recent market turmoil. RBS has, however, flagged up cost and synergy saving of some $2.55bn, and investors will be watching carefully over the coming months to ensure that the bank makes good on its promises. Although there is unlikely to be mass redundancies as the two wholesale units come together, many feel that hundreds of jobs are likely to go in the City.
Fintag says Another comment I made last Friday about the Dutch having problems firing people due to legislation - so the 30% to be fired will be in London / Scotland. Nice.
Some research suggests that female traders are more likely to make better traders than men, as they are more intuitive, less emotional and not as aggressive. Although they may not make as many big plays, research suggest that female traders are more consistent performers, and don't tend to rack up huge losses. How many 'rogue' or disgraced traders do you know who are women ?
Fintag says Ask the traders at SAC - they can tell you if this is true ...
2 comments
ASZ said ...
I work for BoA and all everyone is talking about is will they have a job at Christmas.
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A Goldman Sachs filing with the US Securities and Exchange Commission has led to allegations that it may have inflated profits in the third quarter to a spectacular $8.23bn (£4.03bn) by booking paper gains on mortgage derivatives at too high a value.
Analysts cited by Fortune Magazine claim that almost a third of the bank's revenue came from "short" positions on the lowest tier of mortgage derivatives and other forms of toxic debt.
These assets are extremely hard to price, and were not in fact realised. More than $2.62bn of declared profits were made entirely on house estimates at the underlying value.
Charles Peabody, an analyst at Portales Partners in New York, said there were concerns that Goldman had set optimistic values on instruments for which there was in reality little or no functioning market.
"Common sense tells me that a lot of these losses were real and a lot of their gains were paper, and that's something we'd like to know more about," he said.
Goldman Sachs bet correctly that mortgage securities would crash during the summer, but this has been a very erratic market. A hedge fund of rival Bear Stearns collapsed in June after making such bets earlier.
It was caught out by a snap rebound in the lowest tier of this debt, causing its complex arbitrage strategy to blow up.
A Goldman Sachs spokesman said suggestions of inflated paper gains were preposterous.
"We do this for a living. It is impossible to manage your risk if you don't know the value of your assets," he told The Daily Telegraph.
He added: "Besides, the regulators live in our building.
"We have some exotic assets, but if there is any debate about the value, we order a sale.
"In any case, these assets are not just contracts. They are secured by collateral. We can issue margin calls if we see the value going south," he said.
The bank said in its SEC filing that "valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence."