28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 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
Especially if that loser is Citi which is taking over Bear Stearns as the most useless bank of 2007. As pointed out by hf-implode.com, the media is kicking hard at this lumbering giant and its press office is struggling to cope. Citi is the new Gordon Brown.
Onto more important matters, rate setters are facing abuse from all angles. An ex-Amaranth trader loses his touch, the credit markets are in a "poor state" (as we have been telling you for most of 2007), Option One closes, and the UK's FSA prepares for the worst.
Oil production is held up, for obvious reasons, and Credit Suisse launch a replicating clone index thingy.
And I am just about to board a plane to somewhere in Europe.
CITIGROUP'S MILLS SAYS BANK'S REPUTATION AT RISK ON SIVS
The head of Citigroup Inc.'s (C) European investment banking arm said Tuesday that the bank faces reputational damage if it doesn't keep funding seven structured investment vehicles it manages, as the market value of the vehicles' portfolios continues to deteriorate.
The U.S. bank has previously said it won't follow in the steps of some of its peers by taking the SIVs onto its balance sheet.
In testimony to the U.K. Treasury Committee, William Mills, Citigroup's chairman and chief executive for markets and banking for Europe, Middle East and Africa, said the bank manages its seven structured investment vehicles, or SIVs, at "arms' length" and on commercial terms.
But when queried on the bank's responsibility to the SIVs, Mill said: "From a reputational point of view, if we don't step in and support these vehicles, will that somehow hurt our reputation in the market?"
Fintag says Things are not looking too good.
here is the city says " Another Top Boss Said To Have Turned Down Citi Soundings "
bloomberg says " Citigroup SIV's Junior Sedna Debt Cut to CCC by Fitch "
reuters says " Deutsche Bank CEO Turns Down Citigroup Job "
cnn says " Citigroup sells 2 NY buildings for $1.6B "
The Bank of England is coming under increased pressure to cut interest rates as more evidence emerges that economic conditions may be worsening.
The Bank is due to start a two-day rate setting meeting and will announce its decision at midday on Thursday.
Many observers are now calling for the Bank to cut rates to 5.5% from 5.75% to help shore up demand in the housing and retail markets.
Surveys have shown falling house prices and a slump in consumer confidence.
Consumer demand is one of the main drivers of the UK's economic growth, while rising house prices have been the main factor underpinning a "feel-good factor" that has allowed shoppers to keep spending.
Fintag says So what are Interest Rates for? To help irresponsible creditors? To helpe savers or borrowers? To fix the risk free rate? Control inflation? Keep currencies strong? It must be a tough job being a rate setter and something I would hate to do.
bloomberg says " Ex-Amaranth Traders Lose 15% at Moore Capital's Canada Unit "
CREDIT MARKETS IN POOR STATE, SAYS LEGG MASON CHIEF
Chip Mason, chief executive and founder of Legg Mason, one of the world's largest money managers, said yesterday that the credit markets are in the worst state he has seen in his 47 years in the business.
"It is a very unusual situation. I have not seen anything like this, where nothing is traded," said Mr Mason. Legg has more than $1,000bn in assets under management, including several large money market funds.
Mr Mason said the US Treasury should put $20bn into the planned structured investment vehicles superfund, in an indication that the government was standing behind it. That would boost confidence, he said at Legg Mason's annual media event in New York.
The fund was planned by several banks, with the support of Treasury, in a bid to restart trading in SIV paper.
Ken Leech, chief investment officer of Western Asset Management, a Legg subsidiary which is a big fixed income manager, said of the superfund plan: "Every little bit helps."
Fintag says Shocking stuff. Most of the market have known about this for most of 2007. It is funny when nobody believes a blogger or the head of the US Treasury. The markets just will not accept that the fundamentals are built on history. The future is not looking good.
financial news says " Barclays Capital issues warning against unwinding CPDOs "
OPTION ONE SHUTS UP SHOP AS $800M SALE FALLS THROUGH
Option One, America's sixth-biggest lender of sub-prime mortgages, has become the latest victim of the credit crunch, having closed its doors yesterday after its owner H&R Block failed to finalise a sale of the unit to Cerberus, the investment firm.
The lender, once expected to fetch $1.3 billion (£632 million), stopped taking new loan applications, with the loss of 620 jobs, after the $800 million sale agreed in April fell through in the wake of America's mortgage melt-down.
H&R, America's biggest tax adviser, said that it would try to sell Option One's loan servicing business, which bills and collects payments from the borrower for the lender, as a separate entity. It hopes that it will fetch more than a renegotiated deal with Cerberus for the whole unit.
Richard Breeden, the former head of the US Securities and Exchange Commission who was appointed chairman of H&R last month, said: “The mortgage market has undergone vast changes since last April.
“We could not find a way to restructure the original transaction to mutual satisfaction. The company is determined to complete our exit from sub-prime mortgage lending without delay.”
H&R bought Option One for $218 million in 1997 from Fleet Financial, which is now part of Bank of America. The aim was to cushion the seasonal nature of the group's tax advisory business, which typically makes little or no money for three quarters of every year.
As America's mortgage market boomed, Option One contributed significantly to H&R's profits, accounting for more than half in 2004. As defaults on sub-prime loans jumped this year, lenders and investors have collectively lost tens of billions of dollars. This has pushed down the price of houses and resulted in the closure of lenders, hedge funds and other investment businesses, with the loss of more than 100,000 jobs.
Fintag says Not good. What happens if you already have a mortgage?
financial times says " MF pays $75m to settle 'fraud' dispute "
portfolio says " Ex-Morgan Stanley analyst and husband get 18 months "
Due to a widespread lack of transparency and all sorts of behind-the-scenes maneuverings, its been hard to get a good grip on where all the dead bodies lie in the wake of the spreading meltdown in global credit markets.
The obvious casualties, of course, are firms that have already gone to the wall or that have been forced to throw themselves into the arms of vulture investors. More important, however, is trying to figure out who might be next or which firms could be at greater risk than others.
Unfortunately, in an environment where hard data is lacking, sometimes the best you can hope for are back-of-the-envelope-type calculations derived from snippets of publicly available information....
Fintag says You are telling us. Despite sar-box, basel 2, ucits 3, this and that accounting standard, nobody has a clue when all around you are press offices spinning like crazy.
Britain's mortgage lenders should brace themselves for a double-whammy of funding shortages and rising bad debts next year as conditions in financial markets look set to worsen, the Financial Services Authority warned yesterday.
The FSA warned lenders to prepare for the worst, amid fears of rising customer defaults, frozen wholesale funding markets and a surge in withdrawals of retail deposits that would force some institutions to wind down or sell up.
Clive Briault, head of retail at the FSA, told the Council of Mortgage Lenders that, to ensure their survival, companies would need to get liquidity funding in place even if that meant paying a higher price that reduces profits.
Mr Briault's dire warnings pointed out that at least 1.4 million short-term fixed-rate mortgages to customers who have stretched themselves will end next year. Those customers "will find it difficult (if not impossible) to refinance their mortgage on favourable terms... which may prove too much for many of them to afford". Sub-prime borrowers may not be able to borrow at any price, he added.
Fintag says ..and less clients equals less fees.
SWISS FIRM TO OFFER ENVIRONMENTAL FUND OF HEDGE FUNDS
After spending the last 12 months researching alternative energy hedge funds, Systematic Absolute Return is ready to roll out a dedicated environmental fund of hedge funds in January. The SAR Environmental Fund is a global and unleveraged vehicle, targeting returns of above 15% net for investors, and is set to launch with assets of between US$25 million and US$50 million.
The firm estimates that the universe of environmental hedge funds now includes approximately 70, with the vast majority having track records of 18 months or less and showing “sustained growth in both the number of players and strategies emerging in the space.”
“We're kind of the first movers in this space in that a lot of other funds of hedge funds around that are doing more socially-responsible investing,” said Andrew Perry, director of business development Zurich, Switzerland-based SAR. “Those are typically long-only and aren't hedged against market movements so we're quite unique in that sense.”
The Environmental Fund will initially invest in 10 underlying managers utilizing a variety of green strategies, including renewable energy, clean technology, carbon finance, water, agricultural and timber projects, as well as ecological microfinance. It will have exposure to European, U.S. and Asian managers. Co-founder Arne Schmidt is the portfolio manager for the fund.
Fintag says Nice one. Does this mean it will be long green companies and short polluting ones?
finalternatives says " Institutions Set To Ramp Up Alternative Investments "
financial news says " Och-Ziff hedge fund returns tumble in November "
financial news says " Foreign companies flee US bourses at record level "
Oil prices were on the rise today after the Organisation of Petroleum Exporting Countries decided not to increase production.
Major consumers of crude, especially the United States, have called on the cartel to open the pumps and help rein in prices. But the rejection of those pleas helped force London Brent crude back above $90 a barrel.
At a meeting of Opec oil ministers in Abu Dhabi, it is thought that Saudi Arabia pushed for a small rise in output. But Saudi, Opec's biggest producer, faced opposition from Iran,
Venezuela, and new member Ecuador. Opec ministers will meet again in January to review output.
In early trading US crude was up 50c to $88.82 a barrel and Brent crude rose 49c to $90.02.
Fintag says I got my prediction wrong but have been proved right that OPEC are still very irritated at the USD falls as they have less on fx conversion.
CREDIT SUISSE TO LAUNCH PRODUCT THAT MIMICS HEDGE FUND RETURNS
Credit Suisse Group plans to launch a product to replicate hedge fund performance with more liquid securities by the first half of 2008, said Oliver Schupp, a managing director in the firm's alternative investments business.
The product, the first of its kind for Credit Suisse, will seek to mimic hedge funds that bet on a market going either up or down by using ``directional equity strategies,'' New York-based Schupp said in an interview during a visit to Hong Kong.
Switzerland's second-biggest bank is joining peers including Merrill Lynch & Co., Goldman Sachs Group Inc. and Swiss manager Partners Group to offer low-cost clones that use listed securities such as futures contracts to replicate hedge fund returns.
``We find that there's increasing demand for indexation and replication strategies,'' said Schupp. ``Investors want to understand the sources of return and the risk of their hedge fund portfolios and, as such, we expect hedge fund replication to grow in importance.''
The market for products that mimic hedge-fund performance has taken off in the last two years after pension funds and insurance companies baulked at the high fees charged by hedge funds and demanded greater transparency and liquidity. Index-based products are an alternative to investing in a single, actively managed fund of hedge funds.
Fintag says I don't understand these things. It is a bit like painting a Ford red and pretending its a Ferrari. What is the point? What do you benchmark it against? They might as well put it all in cash and pretend that LIBOR is the average return of hedge funds?
ALTERNATIVES BECOME MAINSTREAM, SAYS RUSSELL INVESTMENTS
Pension funds, endowments and foundations that responded to a recent survey across the world are forecasting that over the next two years they will dedicate an even larger slice of their total investment portfolio to private equity, hedge funds and real estate, according to the eighth global report on alternative investing released today by Russell Investments.
As a percentage of total fund assets, institutional investors in North America, Europe, Japan and Australia expect increases in all of these alternative investments, with the one exception of Australian institutional investors keeping their mean strategic asset allocation to hedge funds steady.
Since 1992, Russell has surveyed large tax-exempt institutions in North America, Europe, Japan and Australia to gauge their participation in and expectations for core alternative investing strategies. The results, based on responses from 326 organizations worldwide, are published in a detailed report, 2007-2008 Russell Investments Survey on Alternative Investing.
Fintag says So I am now a normal citizen? Does this mean I have to work in Investment Banking again?
IS BRITAIN'S ECONOMY HEADING FOR THE PERFECT STORM?
The storm clouds are gathering over the jobs market; the climate on the high street is growing distinctly chilly; a typhoon of bad debt is buffeting the banks. Could a "perfect storm" be about to hit the British economy?
The signs couldn't be much bleaker. The switchback in sentiment since the credit crisis began in the summer has been violent. The Nationwide Consumer Confidence Index recorded its largest drop yesterday, and joins the GfK/NOP survey earlier this week in suggesting that a wave of pessimism not seen for years is washing over the economy.
House prices have begun to fall, albeit slightly; commercial property is seemingly on the brink of collapse on a par with that seen in the early 1990s. The buy-to-let market is vulnerable. The Bank of England has, unprecedentedly, voiced concerns about the grim prospects for real estate. And the Financial Services Authority has warned of the "very real prospect" of the global credit crunch getting much worse. It is that bad.
Shopkeepers are looking forward to a black Christmas. Sir Philip Green, the boss of Top Shop and BHS, said last night on Sky TV that "business is very, very tough". The British Retail Consortium says that sales grew only marginally in November, having slowed markedly in October. JD Sports, ScS furniture and Greene King are the latest household names warning of setbacks. About 4.4 million credit-card customers still haven't cleared debts they ran up last Christmas, according to MoneyExpert.com.
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