28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 27AUG09:
Mini Crash 21SEP09 Predicted correctly:
Bailout=Bonuses
Demise of Bear Stearns
Demise of Lehman Bros.
Demise of AIG
Subprime would cause problems
Date of 2007 crash
CRAs were to blame
G20 riots were a party
Northern Rock run
Northern Rock Nationalization
HBOS and RBS demise
UBS really was Useless
I recently bought an original 1974 lava lamp. It is pretty tasteless. It is beside me now as I type this and reminds me of the economic carnage of the 1970's. Of course we don't have quite the same economic issues thanks mostly to China keeping manufacturing inflation down but seeing a nice uptake in oil call options later this year at USD200 has got me thinking.
Unlike subprime which has been something that impacted only the banks and a few reckless borrowers in California, oil impacts us all as it did in the 1970's. There was a programme on the BBC last night from 1978, one of the world's first ever reality TV efforts where a group of Britons lived for 13 months in an iron age village and ate nothing but wheat and ran around naked.
The upshot? We have to use our head to find alternatives to our present lifestyle. In the meantime, we have to make a decent living to be able to fulfill a hippy dream and making money from the markets is where we are at.
So I am pleased to see clever people making the most of the supposed gloom. Reech Capital produce stellar returns on UK Real Estate and hedgies are up 228 bips in April.
Bobby Geezer spreads false market rumors and a Russian fails to outbid my house in Greenwich.
Prediction: Chelsea 2 Manchester United 1 in the all Brit final of the Champions League.
The Fed blames oil, the CRA's blame a dodgy spreadsheet and the bears blame CDS's. Man blames a rogue loaf of bread and Yahoo takes it up the [Editor: No].
REECH REAL ESTATE HEDGE FUND RETURNS 29% IN FIRST YEAR
Last May was not an auspicious time to launch a real estate hedge fund, but Reech Alternative Investment Management has no regrets.
The London firm's US$160 million Iceberg Alternative Real Estate Fund, a joint venture with commercial real-estate giant CB Richard Ellis Group, returned 29.12% in its first year. Iceberg edged up 0.87% last month, and is up 4.09% year-to-date.
“Despite the more challenging investment market for real estate throughout the 12-month period in which Iceberg has been operating, we have been particularly well-placed to benefit as a relative-value market-neutral fund,” Christophe Reech, CEO of Reech AIM, said. “We have been successful by capitalizing on periods of uncertainty and volatility in the market with outperformance driven primarily by value realization throughout the year.”
Iceberg remains heavily weighted to British real estate, although it has been boosting its exposure to mainland Europe.
Fintag says There you go. Somebody who has shorted some REITS and made a nice turn. It is so obvious. So why are most hedge funds still playing around with the S&P 500 and trying to guess its next move?
reuters says " Reech bucks weak Europe property trend "
GREENWICH PLANNERS SEND KOGAN MANSION BACK TO THE DRAWING BOARD
Russian millionaire Valery Kogan's plans for a 54,000-square-foot (5,000-square-meter) mansion in Greenwich, Connecticut were voted down by a city board after neighbors objected that the house would be too big.
The Greenwich Planning and Zoning Commission voted yesterday to reject a permit for the project, which would be the largest single-family home built since the New York suburb began reviewing plans in 2001.
Fintag says 20,000 square foot is quite a big house. Thankfully my 25,000 square foot mansion was built without a problem in Greenwich. I think the issue is related to the person concerned being a money laundering Russian.
With oil prices fast approaching USD130 a barrel and a global food crisis looming, the US Senate Committee on Homeland Security and Governmental Affairs is scrutinising the role of financial speculators in the commodities markets.
This week senators have been listening to testimony on how speculative investment by hedge fund managers and others may be contributing to food and energy price inflation.
Hedge fund manager Michael Masters, of Atlanta-based Masters Capital Management, argues that commodities prices are being driven up by institutional investors, including pension funds, sovereign wealth funds and university endowments, which are investing in commodity futures based on indices as a hedge against inflation.
Fintag says That is original. I wrote something like this a few months ago. Maybe I should start suing these people or turning this into a subscription only site. Or maybe a site where I only allow people I like to read it?
How about if a person comments at least 10 times a month they get to read this for free. Otherwise you pay.
That has got me thinking about my other project sageGauge ....
On this matter, I would like someone to design a logo. In fact a lot of people to design logos and the "people" can choose which one they like. Democracy in action - but I get to keep the IPR [Editor: If you want to be a hippy you need to drop the greedy bit ]
FED WARNS ON INFLATION AS OIL PRICES CONTINUE TO RISE
The vice-chairman of the Federal Reserve has warned that the US faces serious economic problems if the public comes to expect higher inflation in the future.
Donald Kohn said he continued to believe that high energy and food inflation would moderate later in the year, and expressed satisfaction that wage pressures have not been rising, but he sounded his warning note as crude oil prices surged to another record and producer price inflation data for April was stronger than expected.
"My expectations for moderating inflation and limited spillover effects from commodity price increases depend critically on the continued stability of inflation expectations," Mr Kohn said, in a speech to a pensions conference in New Orleans. "If longer-term inflation expectations were to become unmoored - wheth-er because of a protracted period of elevated headline inflation or because the public misinterpreted the recent substantial policy easing as suggesting that monetary policy makers had a greater tolerance for inflation than previously thought - then I believe that we would be facing a more serious situation."
Fintag says The funniest story I have read this year.
The Fed controls inflation by putting up interest rates. So why did it put them down so aggressively? Oh yes, because Bernanke wants a job at Goldman Sachs.
You cannot have your inflation cake and eat it.
CREDIT DEFAULT SWAPS LOSSES ESTIMATED AT $150 BILLION
Note that Fed only has access to regulated bank CDS exposures, but not that of investment banks or hedge funds, both of which are significant protection writers. Hedge funds, for instance, are estimated to have written 31% in CDS protection ... plus lots of Bloomberg quotes
Fintag says Last time I quoted verbatim from a Bloomberg Story, they tried to close my blog down. Anyway, CDS is something that has concerned me for about a year. I know personally the person in charge of the world's largest CDS book and he has recently gone completely bald (although he wears a wig now). It is that stressful.
A CDS is a made up insurance policy based on what a Credit Rating Agency has decided the underlying's risk of default should be. Now don't tell me the CRA's are totally independent.
financial news says " Sub-prime lawsuits to rise as regulators probe Wall Street "
MF Global, one of the world's largest commodities brokers, yesterday reported a net loss for the first quarter of $71.1m due primarily to unauthorised wheat trades carried out by an employee in its Memphis office.
The loss for the first quarter compared with a profit of $76.1m for the same period last year. It also took the company to a net loss for the year ended March 31 of $57.6m compared with a profit of $188m for the year before. The company announced further steps to shore up its capital base with private equity house JC Flowers committing $300m to the company.
MF Global said it had signed an agreement with JC Flowers to provide the commitment of $300m towards buying equity-linked securities.
Fintag says That is always a good one. Blame a rogue trader or risk manager or anyone except the trading strategy.
FT ALPHAVILLE EXCLUSIVE: MOODY'S ERROR GAVE?TOP?RATINGS TO?DEBT?PRODUCTS
Moody's awarded incorrect triple A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, an Financial Times investigation has discovered. Internal Moody's documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower.
News of the coding error comes as ratings agencies are under pressure from regulators and governments, who see failings in the rating of complex structured debt as an integral part of the financial crisis. While coding errors do occur there is no record of one being so significant. Moody's said it was “conducting a thorough review” of the rating of the constant proportion debt obligations - derivative instruments conceived at the height of the credit bubble that appeared to promise investors very high returns with little risk. Moody's is also reviewing what disclosure of the error was made.
Fintag says I can hear lawyers' phones ringing right now. Shocking. So shocking my lava lamp has fallen off the table. Red oil and wool carpets. Nice. That will keep my cleaner busy today.
Central banking exists because Ponzi and speculative financing exist.
Central banking is a learning game in which the central bank is always trying to affect the performance of a changing system.
A minor, but not insignificant, structural reformwould have the specialized institutions –FDIC, the Comptroller of the Currency, and the specialist insurance and supervisory agencies for thrift institutions– become departments within the Federal Reserve.
The Federal Reserve should stop relying upon open-market operations to determine reserves of the banking system. As an alternative to open-market operations, the Federal Reserve can furnish bank reserves by discounting bank assets. I nthe discount technique, bank reserves are furnished when the central bank buys or lends on specified, eligible types of paper that are a rsult of financing business.
The discount window method for creating the reserve baseinduces favorable terms for the hedge financing of short-term positions and blunts the tendency toward fragile financing structures.
The Federal Reserve should have two controls over bank financing. One would be capital requirement, the second the reserve requirement. The capital requirement is a longer-run constraint, with a penalty on dividends and perhaps on the discount rate for falling below target, whereas the reserve requirement is a shorter-term control.
The more the Federal Reserve can tilt banking toward financing trade and production inventories with short time spans, the more stable the financial system and the smaller the special refinancing neded to prevent a full-blown crisis.
Taxpayers' money tied up in Northern Rock is more at risk than first thought, the nationalised lender's chairman, Ron Sandler, has conceded, as the credit crisis threatens to undermine its restructuring.
Appearing before the Treasury Select Committee yesterday, Mr Sandler admitted: "If house prices decline 5pc, 10pc, 15pc, it would certainly put a great deal of stress on how we would deliver the plan. I don't want to pretend it is without risk and I don't think we should take anything for granted at this stage.
Northern Rock's plans could be further damaged by rival mortgage lenders leaving the market
"The key risks are what is happening in the wider economy. If we suffer a downturn and this leads to higher levels of unemployment, then this would place considerable strain on the ability of the company to deliver the plan."
Fintag says Not more of my tax payers money wasted ... please
One upshot of the credit crunch is that some of the smaller or troubled banks look vulnerable to takeover. Only last week Bank of America CEO Ken Lewis said that he thought it will be more difficult for stand alone investment banks (like Goldman, Lehman, Merrill and Morgan Stanley) to survive, and that they may be swallowed up by commercial banking rivals with bigger balance sheets, better capital-structures and deeper pockets. Well, it didn't take long for the rumour mill to kick into life.
The Daily Telegraph has come out Tuesday and reported that Barclays President Bob Diamond is trying to twist his board's arm to make a bold bid for an investment bank. And, according to the newspaper, top of his wish-list is Lehman Brothers and under-fire UBS.
Fintag says Bobby Geezer is a sneaky one. Barclays has lied its way out of the subprime (actually it was saved by losing the ABN AMRO deal) and is trying to go all Goldman and posture. However, going for Lehman is an interesting idea as would get them into the USA properly.
Why they want to look at UBS, the world's fastest shrinking bank is beyond me.
Still, I expect the stock prices to bounce around a bit. Will the SEC and FSA arrest Geezer for false market rumors? Unlikely.
financial news says " UBS suffers mass defection of wealth advisers "
Third Point LLC, a $5.7 billion hedge fund headed by activist Dan Loeb, has recently accumulated a stake of over 5 million shares in Yahoo Inc (NasdaqGS:YHOO - News) and is supporting investor Carl Icahn's proxy battle, a source familiar with the matter said on Tuesday.
Third Point, which held 1 million shares in Yahoo as of March 31, may build a stake of up to 10 million shares in the company, the source said.
Icahn's proxy contest, launched last week, is aimed at pressuring Yahoo to agree to be sold to Microsoft. The software maker broke off talks earlier this month after Yahoo rejected its offer to buy the company for $47.5 billion, or $33 per share, but the companies said Sunday they have revived talks.
Another investor said he was backing Icahn. Oil investor T. Boone Pickens told broadcaster CNBC he has acquired 10 million shares in Yahoo, saying: "(Icahn) jumps in first, I jump in behind him."
For his part, Loeb "strongly supports Icahn and supports his slate and thinks that he is shining a bright light on the botched process at the Yahoo board in negotiating the deal with Microsoft," said the source, who requested anonymity because Loeb's position has not been publicly disclosed.
Fintag says This is going to be the big fight of 2008. [Editor: And?]
Citigroup is coming under pressure to bail out investors in one of its troubled hedge funds, in another embarrassment for a company already among the biggest losers from the credit crisis.
The company has begun quietly asking private clients to accept a $250m compensation package, in return for dropping legal claims against the company. Banks which have sunk an estimated $1.6bn into the fund are also examining their legal options.
The problems stem from Citigroup's Falcon Strategies hedge fund, an investment vehicle that traded mortgage bonds, government debt and a range of credit derivatives, which began experiencing big losses when the credit markets ran into difficulties last summer. Thousands of Citigroup clients - advised to invest in the fund by brokers at its Smith Barney wealth management division - face being wiped out.
Hedge funds bounced back in April, rising 2.28%, according to new figures from BarclayHedge.
Sixteen of the firm's 18 indices were in positive ground last month, led by strategies buoyed by April's equity market rally. Technology funds returned 6.41% after losing 5.58% in the first quarter. Emerging markets funds also rallied after a tough first three months and returned 3.87% in April, with Pacific Rim equities funds adding 3.75%.
“Global equity markets enjoyed a broad-based rally in April, raising stock prices in both developed and emerging markets,” Sol Waksman, BarclayHedge president, said. “Stock markets in Brazil, China and India saw double-digit increases for the month.”
The long arm of US securities law has stretched, for what SEC staffers believe to be the first time, to the UK and Italy, with legal actions against alleged hedge fund fraud and insider trading.
The US Securities and Exchange Commission said last night it had obtained an order from the High Court of Justice in London to freeze the UK assets of Glenn Manterfield, a UK citizen residing in the city of Sheffield.
LeeAnn Gaunt, responsible for the case at the SEC, said: "We think this is a first. It is certainly the first time in recent memory we have done this. Ordinarily, we would not be extending ourselves across the shore, but in these circumstances we thought it was important because the assets happen to be there."
The SEC has accused Manterfield, his business partner Evan Andersen and their SEC-registered firm, Lydia Capital, of engaging in a scheme to defraud more than 60 investors of $34m by "materially overstating, and in some cases completely fabricating the fund's performance... Manterfield and Andersen misappropriated millions of dollars of investors' funds by withdrawing investor monies to which they were not entitled."
Fintag says Is it possible to have your DNA regenerated? Just asking ...
3 comments
anonymous said ...
we've been short property for what feels like an age. Property derivatives are not that liquid and expensive, so it's hard to do it in scale.
21 May 08 - 08:59 gmt
anonymous said ...
Why do you need DNA regeneration when you are a fake?
21 May 08 - 11:00 gmt
ozgerbobble said ...
Why would Kogan's "single family home" need 26 loos in it?
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