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
The weather in the UK is very volatile at the moment. Thankfully, the snowball fights are moving away from hedge funds, where there is little to report over the weekend, to other players in the markets. The gloom and doom merchants are having a field day ripping off fintag themes of old and attacking old men like Greenspan for crimes against the economy.
Greenspan is a bit like the late Charlton Heston. Heston started out as a great hero, with plaudits from everywhere. As he got older, he started to focus on his own ego and lost the plot - just like Greenspan. The old man of the Fed may have been the catalyst to the current market woes, but we have to continue our onslaught at the inadequate credit controls, the issuer-paid-credit rating agencies and the private equity houses for abusing their excel models and making a mockery out of stock valuations. They are the true culprits.
But you have heard all this before.
My recent weekend thoughts are that this crisis has just started. The Fed has sat back and watched the bubble blow and is now clearing up the mess. It has been reactive. Bernanke is Greenspan's poodle. Central banks have been too late to the table. The CRAs are to blame for skewing risk premiums. The coupling and contagion is still to come. Europe and Asia will be hit. Regulatory and political reaction is kicking in but as always is too too late. Asset dependent consumers and cheap goods from China. Export dependent economies will suffer. Bye bye Asia.
Once again the world makes its paper profits on bricks and mortar. Real Estate is only ever worth what consumers are willing and able to afford. At the moment, consumers would prefer to wait for equilibrium. Obvious but true. As in all markets, climbing a mountain is slow, the peak often not visible, but the ascent can be controlled. Falling down and trying to hang on for dear life is more difficult; especially when the cloud stops you from seeing where the bottom is.
I have an apology. The cartoons are bad. The comments are bad. I am having an off day. Please come back tomorrow. [Editor: Yes, I will.]
For those wanting serious analysis, Alpha Magazine has a long article on the new world quants live in.
Up to $220 billion of Bear Stearns assets can be excluded from J.P.Morgan's risk-weighted assets. Up to $400 billion of Bear Stearns assets can be excluded from the denominator of the tier 1 leverage capital ratio.
JPMC also has requested that the Board provide JPMC with relief from the Board's risk-based and leverage capital guidelines for bank holding companies. Specifically, JPMC has requested that the Board permit JPMC, for a period of 18 months, to exclude from its total risk-weighted assets (the denominator ofthe risk based capital ratios) any risk-weighted assets associated with the assets and other exposures of Bear Stearns, for purposes of applying the risk-based capital guidelines to the bank holding company. In addition, JPMC has asked the Board to permit JPMC, for a period of 18 months, to exclude from the denominator of its tier 1 leverage capital ratio any balance-sheet assets of Bear Stearns acquired by JPMC, for purposes of applying the leverage capital guidelines to the bank holding company. The Board has authority to provide exemptions from its risk-based and leverage capital guidelines for bank holding companies. JPMC has agreed to several conditions that would limit the scope ofthe relief request.
Fintag says When central banks intervene and mess up the markets, people get cross.
THE SHARP bite of the credit crunch has slashed $2trn (£1trn) off the credit available for companies, according to the latest calculations from boutique investment firm Oppenheimer.
Influential Wall Street analyst Meredith Whitney, who last year sent markets into freefall with a downbeat report on Citigroup, warns the news will intensify the US economy's woes.
She said: “As more than 80 per cent of corporate funding came from the capital markets during 2007, we can't help but believe that such a massive extraction of liquidity from the market will have a profound impact on the US economy.”
The amount of credit available globally has now reduced for nine successive months, the greatest consecutive decline since 1990. “Not only is the length of contraction remarkable but so too is the severity,” Whitney added.
Fintag says Well that is stating the obvious.
Talking of falling, here is a nice summary of the rise and fall of the Useless Bank of Switzerland:
Alan Greenspan has responded to his critics who blame the Federal Reserve under his chairmanship for causing the US housing bubble by keeping interest rates too low for too long in the early 2000s, saying the evidence of any link between monetary policy and the bubble was “statistically very fragile”.
Writing in today's Financial Times, Greenspan says he is “puzzled” why so many commentators seek to explain the US housing bubble in terms of Fed actions when many other economies with different central banks and different monetary policies also saw rapid house price gains.
The former Fed chairman says the most likely cause of this global house price boom was a “dramatic fall in real long term interest rates” around the world, which he believes was caused by abundant global savings.
Fintag says At least the guy is still around to fight off his detractors. He is too blame but he had one tool. Interest Rates.
Bush had many more tools but he chose Sarbanes - Oxley (to give more work to the accountants) and the US Patriot Act / Homeland Security (to piss off investment bankers at JFK).
If you give cheap money to poor people and the rich make money from it including the guilt ridden Hank Paulson who so much wants to save them and yet has made millions from his goldman stock options, then what do you expect?
Bear Stearns employees are flooding Wall Street with their resumes as the firm is acquired by rival JPMorgan Chase , but the job market looks bad, investment bankers and recruiters said.
On Friday, JPMorgan announced its first top-level management jobs since the banks initially reached their agreement to merge on March 16. Of 26 executives named to executive positions in the investment banking and trading division, only five are from Bear Stearns.
Business line executives will announce the next level of management decisions by mid-April, but many Bear Stearns employees aren't waiting that long.
Options Group, a financial recruitment and consulting firm, started getting resumes from Bear employees "the Sunday the $2 share offer was announced," said Michael Karp, its chief executive. "We started seeing flow in Asia right away. All night we were seeing flow from Europe."
"All investment banks and commercial banks have interviewed people from the investment bank in Bear Stearns," he added.
Fintag says You bet. The rise in calls and emails by headhunters (should be renamed headsellers) has increased 10 fold.
From a basic analysis of the resumes and cvs we have been receiving the main banks are:
Bear Stearns Merrill Lehman UBS Citi WestLB DB
In that order.
independent says " RBS rank and file braced for further job cuts "
CBI ATTACKS TREASURY OVER GROWING TAX BURDEN ON UK PLC
Business is facing a £4.2bn tax hike thanks to the Budget, the CBI will warn today, as the British Chambers of Commerce prepares to publish a bleak diagnosis of the UK's financial health.
The CBI's research, based on Treasury figures, shows the huge tax rise has come despite the 2p cut in the headline rate of corporation tax. The organisation said the figures "undermine the Government's claim to be boosting the UK's international tax competitiveness".
Its analysis of this month's new tax rules shows that companies will pay an extra £1.84bn in tax in the 2008-09 tax year, with a further £1.24bn in 2009-10 and £1.13bn in 2010-11.
The CBI said the majority of the extra tax comes from the loss of plant and machinery investment allowances and the abolition of tax relief on empty properties. It insisted that the extra burden would not just fall on big companies but would hit small firms as a result of the penny-in-the-pound increase in the small-business tax rate to 20 per cent last year, due to rise to 22 per cent in 2009-10.
The deputy director-general of the CBI, John Cridland, will today say: "When the economy is slowing the last thing a Government should do is raise taxes on the part of society that creates jobs and wealth, but that's what's happening."
This view will be underlined when the BCC publishes its quarterly economic survey on Thursday - the day the Bank of England is due to announce its decision on whether to cut interest rates.
A listed fund of hedge funds run by Goldman Sachs may issue new shares, it said Friday.
Goldman Sachs Dynamic Opportunities, which launched in July 2006, is mulling the share offer “in response to both new investor and existing shareholder demand,” according to a note sent to the London Stock Exchange. The fund provided no other details about the possible share sale.
The £202.4 million (US$403.5 million) fund of funds—the largest of its kind at launch when it debuted on the LSE—is essentially flat year-to-date, after returning 13.3% last year.
Fintag says I am not a fan of Catherine Tate. I thought Doctor Who was pretty weak [Editor: Wrong blog]
The hedge fund industry is thought to have suffered its first net quarterly outflow in years as investors demanded billions of dollars back from the managers in which they had invested.
One of the largest fund administrators said its hedge fund clients had suffered net outflows equal to more than 1% of their assets under management as redemptions exceeded subscriptions. Most of this took place last month, according to a managing director at the fund administrator.
The overall hedge fund industry reached about $2 trillion (€1.27bn) of assets under management at the end of last year after record inflows.
Quarterly inflows declined in the second half of 2007, with $30bn raised in the last three months of the year.
Chris Mansi, a hedge funds specialist at investment consultant Watson Wyatt, said: “I am told that capacity is the best it has been for years, implying that there have been redemptions and managers see great investment opportunities.”
Hedge funds overall recorded losses in the first quarter, particularly in January and March.
They lost 2.78% of their value in the quarter after dropping 2.46% last month, according to the investable global hedge fund index published by US data provider Hedge Fund Research.
Fintag says Yes, you can say that again. Redemption requests were high in all my funds. There is no correlation between performance and redemptions. Investors are turning back to cash so I will be launching a new fund soon called "Global No Stock, No Derivatives, No Fixed Income, Enhanced high grade Cash Fund" in the near future.
financial times says " Hedge funds find silver lining in debt gloom "
ame info says " Hedge funds key to riding out market turmoil "
According to the Securities and Exchange Commission, Pentagon Capital Management CEO Lewis Chester is guilty of scheming to defraud U.S. mutual funds. If some of its evidence is to be believed, he's also guilty of first-degree sexism.
In its claim against Chester and London-based Pentagon, the SEC included several e-mails allegedly sent by the hedge fund chief, and they do not paint a pretty (or innocent) picture. According to the regulator, Chester fired off a missive to a pair of brokers who didn't want to stick around to place late mutual fund trades for Pentagon, which are illegal under U.S. law.
“We're sending you some leverage money,” Chester allegedly wrote. “Hopefully, this should stop your endless pathetic, pitiful [sic] moaning that I've been subjected to for years... poor souls, working past cookie and milk time... for once in your lives, you can work like real mean and do a proper day's work. (You really are a bunch of women of the first order).”
In another e-mail, the SEC says Chester made his illicit demands unambiguously.
“I really EXPECT you guys to go out of your way to make sure I get late trading,” the SEC alleges the e-mail read.
Fintag says These days you have to talk in code. People say things on the spur of the moment. Courts realise this so why does the SEC have to interpret emails like they are looking for clues in an Agatha Christie? However, I am not condoning any fraudulent activity.
If he is innocent, he should sue the SEC for everything it hasn't got. If he is guilty, I will personally throw snow balls at him for bringing down the good name of hedge funds.
Comparisons between the US today and Japan in the 1990s are misleading and could lead to the wrong conclusions for economic policy, Richard Fisher, the president of the Federal Reserve Bank of Dallas, has told the Financial Times.
Mr Fisher, an inflation hawk, said: "To say we are falling into the Japan trap, that we are like Japan was in the 1990s, is in my view very misleading. It would be a mistake for us to do now what we advised them to do back then."
The Dallas Fed president, who spent much of the 1990s in Japan as a hedge fund manager and later as co-chairman of the US-Japan commission on deregulation, said the microeconomic foundations of the two economies were completely different.
"You are not even comparing apples with oranges," he said. "These are totally different societies, different economies, different political systems."
His comments, in an interview, challenge the assertion that Japan in the 1990s offers a useful template as to what could happen to the US as a result of the house price bust.
A number of experts - in particular in Japan - believe the parallels are close enough that the US should implement the kind of policies it pressed Japan to deploy then, including the use of public funds to recapitalise the banking system.
Yoshimi Watanabe, minister for financial policy and administrative reform, told the FT recently that "given Japan's lesson, public fund injection is unavoidable".
Fintag says Of course the Fed would say this. The USA is already the new Japan. Long live Japan.
4 comments
anonymous said ...
You are right. This is pretty crap today.
07 Apr 08 - 11:06 gmt
Dan said ...
I go away for a week to come back to this drivel? Eh, what's another week w/o the Finbars?
07 Apr 08 - 17:37 gmt
anonymous said ...
I haven't be laughing so hard at your illustrations in times past. Today I spit my lunch out onto my monitor. That's the effect you're going for right? My IT guy isn't amused. Oh, and you need some new meds.
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Up to $220 billion of Bear Stearns assets can be excluded from J.P.Morgan's risk-weighted assets.
Up to $400 billion of Bear Stearns assets can be excluded from the denominator of the tier 1 leverage capital ratio.
JPMC also has requested that the Board provide JPMC with relief from the Board's risk-based and leverage capital guidelines for bank holding companies.
Specifically, JPMC has requested that the Board permit JPMC, for a period of 18 months, to exclude from its total risk-weighted assets (the denominator ofthe risk based capital ratios) any risk-weighted assets associated with the assets and other exposures of Bear Stearns, for purposes of applying the risk-based capital guidelines to the bank holding company. In addition, JPMC has asked the Board to permit JPMC, for a period of 18 months, to exclude from the denominator of its tier 1 leverage capital ratio any balance-sheet assets of Bear Stearns acquired by JPMC, for purposes of applying the leverage capital guidelines to the bank holding company.
The Board has authority to provide exemptions from its risk-based and leverage capital guidelines for bank holding companies.
JPMC has agreed to several conditions that would limit the scope ofthe relief request.