30JUN08:
Oil to be USD200 by 30OCT08
USA Inflation to be 7.5% by 30OCT08 23APR08:
Next Rights Issue:
HBOS...yes
All & Lec ... 17APR08: Oil to be USD127 by 30SEP08
...16MAY08 losing my touch 27FEB08:
2 Banks go bust by 30JUN08
BS down, whose next? ... 20NOV07: Northern Crock to be sold for 15p
Nationalized 01NOV07: Oil to be USD103 EOM
...peaked too soon The Big Crash: 17OCT07
...well it's here 08OCT07:
SEC to fine Goldman for pricing issues
...still waiting 15JUN07: ML to buy-out BS
JPM got there first
People react in different ways when the pressures mount. Sammy Israel, a hedgie on the run, decided to take his own life - and as we predicted when the news came out, he faked his own demise. Goldman stun us all again, and as someone commented yesterday on fintag it is all a bit "enron" beating these estimates, and then calms the bulls down by saying capital raising and write offs will continue.
At the last minute I have to go on a world tour and my plane leaves this morning. Investors have hidden into their shells and I need to pull them out. Asset owners are petrified. Inflation means asset value erosion and they want to preserve value plus get a return too. With rates going up, cash looks like a good option. If only hedge funds could perform a bit better ...
In 1972, the world was boogeying to Marc Bolan on the tail end of the 1960's boom party. Only 4 years later and the Sex Pistols released Anarchy in the UK as unemployment and inflation ripped the heart out of the UK. The UK went from coolest place on the planet to the "Sick Man of Europe". Flares were replaced by skinny jeans (back in fashion I see) and governments tried to fix prices (I see they want to limit oil contracts and force disclosure of shorts during rights issues). Oil prices went through the roof and people started to cycle everywhere (sounds familiar). The parallels are uncanny.
So I reckon we are reliving 1974. [Editor: You had more hair then]
Today we look at tough news.
[Apology for reusing the Life magazine picture but I like it.]
A former hedge fund manager convicted of fraud is alive and on the run a week after staging a suicide on a bridge above New York's Hudson River, U.S. authorities said on Monday.
The U.S. Marshals Service confirmed that Samuel Israel III, who engineered the $2 trillion (1 trillion pound) hedge fund industry's most brazen and long-running fraud, did not leap to his death last Monday when his GMC Envoy was found on a bridge above the Hudson River, its engine idling and the words "suicide is painless" etched in dust on its hood.
"Suicide has been ruled out," William Dundon, a spokesman for the U.S. Marshals Service, said in an e-mail to Reuters.
Goldman Sachs announced a better than expected second-quarter profit of $2.09 billion (£1.07 billion) yesterday, a decline of 11 per cent on the year before, helped by a strong performance in commodities, services to hedge funds and asset management, which offset losses relating to bonds.
Second-quarter net revenues at the world's biggest securities firm fell by 7.5 per cent to $9.42 billion, as the group took $775 million of writedowns relating to the credit crunch.
Lloyd Blankfein, the chief executive, said: “Given the difficult market conditions, we are particularly pleased to be able to report strong results for the second quarter.
“We are realistic about the market challenges we face, but times of market dislocation also produce opportunities.”
Fintag says Should I laugh, cry or sell my shorts?
One thing I know is I would make a bad undercover surveillance officer. Here is my picture of Goldman staff in the London office going into work at 9:30 a.m.... who said Goldmanders worked silly hours?
HERE'S OUR NEW POLICY ON A.P. STORIES: THEY'RE BANNED
The A.P. doesn't get to make it's own rules around how its content is used, if those rules are stricter than the law allows. So even thought they say they are making these new guidelines in the spirit of cooperation, it's clear that, like the RIAA and MPAA, they are trying to claw their way to a set of property rights that don't exist today and that they are not legally entitled to. And like the RIAA and MPAA, this is done to protect a dying business model - paid content.
So here's our new policy on A.P. stories: they don't exist. We don't see them, we don't quote them, we don't link to them. They're banned until they abandon this new strategy, and I encourage others to do the same until they back down from these ridiculous attempts to stop the spread of information around the Internet.
Fintag says And I was so excited that my fight with Dow Jones would end peacefully. The Associated Press want to shoot me and the x billion blogs out there down.
DISMAL HEDGE FUND PERFORMANCE REPORTED IN FIRST QUARTER OF 2008
Net hedge fund industry inflows fell to $2.62 billion in the first quarter of 2008, according to the latest Lipper TASS Asset Flows Report. Together with a negative performance of around $36 billion, this means estimated net hedge fund industry assets totalled $1.75 trillion at the end of March. This is down from an estimated $1.79 trillion at the end of December 2007.
Inflows in the first quarter fell 81% ($11.1 billion) compared with the fourth quarter of 2007 ($13.7 billion). This is the fourth consecutive quarter reporting a decline. The report attributes the decline to the credit crunch, liquidity fears and global growth concerns that have hit hedge fund performance particularly hard as investors pull back from putting money into funds.
The largest inflows in US dollar terms went into event driven sub-strategy ($4.65 billion), followed by global macro ($3.82 billion) and convertible arbitrate ($1.29 billion). These three accounted for $9.76 billion of new money and was significantly different compared with Q4 2007 when directional and relative value strategies were in favour. Emerging markets, managed futures and multi=-strategies attracted sizeable inflows, with a combined total of $9.1 billion.
The biggest hedge fund sub strategy outflows in Q1 2008 were in long/short equity (minus $7.03 billion), multi-strategies (minus $1.53 billion) and fixed income arbitrage (minus $59 million).
Fintag says Many of my hedgie compatriots are facing a very tough time. The hedge fund party is truly over. Time to diversify and turn this blog into something more interesting. [Editor: That shouldn't be too difficult]
NORTHERN ROCK PAYS BACK BOE LOANS FASTER THAN EXPECTED
Northern Rock is paying back its loans to the Bank of England much more quickly than expected, new analysis shows, though the rapid repayment could mean extra pain for the mortgage market and the economy.
Northern Rock owed the Bank of England £24.1bn on 31 March, a reduction of £2.8bn in three months, helped by a sale of mortgages to JP Morgan for £2bn. However, the Bank's balance sheet shows that "other assets" - which include the Northern Rock loan - have fallen by £7.9bn since 2 April.
Simon Ward, chief economist at New Star Asset Management, calculates that declining foreign currency lending could have fallen by £4bn, leaving £3-4bn of the drop to repayments by Northern Rock. A fall of that size would put the bank close to its £20bn target for the end of the year already, though observers said that while repayment was ahead of schedule the rate was not as quick as the Bank of England figures implied.
Fintag says That is good news although with news that house prices are to fall 35% (source: Capital Economics) they better hurry up.
US regulators have announced plans to impose limits on oil trades overseas.
The US Commodity Futures Trading Commission said the London-based electronic exchange would have to comply with US rules.
The move comes as oil prices notch up record highs, amid fears that speculators are distorting the market.
As a result, fuel costs have shot up hitting the global economy. Airlines have been hit badly, with near record losses expected for 2008 in the US.
US airlines were forecast to report $10bn (£5bn) of losses this financial year as sky-high fuel costs erode profits, according to the industry group Air Transport Association (ATA).
Oil prices slipped from their record highs near $140 a barrel reached during Monday trade as investors were cautious ahead of plans by Saudi Arabia to increase production in July.
Fintag says Funny how in boom times, making money off stocks is fine. When its something that impacts a country that has little of that stock it tries to manipulate the market.
The oil market is already manipulated by OPEC. Playing around with markets leads to serious distortions.
Communism in the USA? Looks like it. What next? All US citizens must wear orange jump suits?
SHORT-SELLERS NOT TO BLAME FOR HBOS PRICE FALL, SAYS ISLA CHIEF
The level of borrowing of HBOS stock, a key measure of short-selling, has been lower since the bank began a £4bn rights issue than it was beforehand, undermining claims by bankers and regulators that the shares were attacked by hedge funds.
The Financial Services Authority introduced surprise new rules last week demanding disclosure of significant short-selling - bets that shares will fall - during rights issues, and said it was "as certain as certain can be" that sellers were abusing the market.
The FSA admits the rule may "become moot and fall away" after this round of rights issues, when it has had time to consult.
But it insists it does not have a problem with short-selling in principle, only with abusive shorting designed to push shares below a trigger price that would put a company in -difficulty.
Fintag says Why the FSA didn't consult the ISLA I have no idea? Its because they think they know what they are doing when they don't. Please read as it just shows up the FSA to what they are. Civil servants who failed at investment banking playing policeman.
guardian says " Fund managers press City watchdog to postpone tougher disclosure rules "
BANK OF ENGLAND SIGNALS INTEREST RATES WILL BE AT 5PC FOR SOME TIME
Investors have scaled back their expectations for interest rate rises at the fastest speed in 14 years after Meryvn King indicated that borrowing costs may remain on hold for some time.
Markets are now pricing in only one rate hike before the end of the year, compared with the three borrowing cost increases they were anticipating only yesterday.
In a co-ordinated move, the world's big two central banks, the Federal Reserve and European Central Bank, also gave warning that investors were in danger of getting carried away with their expectations of higher rates.
Fintag says A bit higher than 5% meez thinks.
here is the city says " Layoffs - The Definitive Job Loss League Table "
Here is a nice picture of inflation being imported into the USA:
32 comments
anonymous said ...
GS about to go down?
18 Jun 08 - 07:18 gmt
MsR said ...
Fintag, 1974 was a vintage year for forming bands: Blondie, Ramones and Talking Heads. See not so bad? Your favourite Dolly Parton brought out Jolene and Mick n Keith sang "It's only rock n roll" . Worth remembering.
On that note it must be the seventies since I have been invited to a poetry launch in Bloomsbury with other starving literary types.
18 Jun 08 - 09:20 gmt
anonymous said ...
If GS goes down- it will take a few more with it. Would it be allowed to go down?
18 Jun 08 - 09:23 gmt
ozgerbobble said ...
Today's word is Globe-Flation.................we're all doomed
18 Jun 08 - 10:07 gmt
Moron said ...
i think its more just a long delayed rebalancing of the world accelerated now by technology, cheap flights etc....if the same job that is done in london can be done out of eastern europe cheaper and better then it will migrate to eastern europe and this creates demand for houses, cars, fuel, clothes etc there....also take a look at buffett's theory of spendville and thriftville to contrast emerging vs developed markets.....in another 20 years mumbai or shanghai may be the new new york or london!
18 Jun 08 - 10:16 gmt
Potential Goldman’s candidate. said ...
hi everyone, i'm a student - got an interview at Goldman and they have asked me to do a presentation on global food prices. Obviously first step is to outline the reason for this rise. Does anyone have some interesting insight on this.
Many thanks.
18 Jun 08 - 10:28 gmt
Moron said ...
poeple in emrging markets moving up the value chain from agriculture to services for a better standard of living...not enough farmers left...supply constraints side by side with increasing demand created by the higher living standards that half the world which is now coming out of economic isolation can enjoy...google jim roger's opinions on higher food prices....he has some good insights
18 Jun 08 - 10:32 gmt
Potential Goldman’s candidate. said ...
Moron, thank you very much, if i may ask one more question... with regards to investment strategies how could an equity fund manager use this to their advantage? I’m guessing investing in farm machinery manufactures such as catt…????
18 Jun 08 - 10:42 gmt
Potential Goldman’s candidate. said ...
i mean caterpillar...
18 Jun 08 - 10:46 gmt
Moron said ...
invest in agricultural commodities
18 Jun 08 - 10:50 gmt
Potential Goldman’s candidate said ...
In the words of George Osborne "Yup Yup & Yup" Many thanks
18 Jun 08 - 11:31 gmt
Tradebot said ...
Dear Potential Goldmanite,
the correct answer to your Goldman question of course is : "of course they will go up because Goldman Sachs says so".
For your presentation, bit of copy+paste of latest Goldman research report will do you fine.
18 Jun 08 - 11:43 gmt
Tradebot said ...
oh and buy some cattle-related trackers for ISA, son. Beef will become luxury again like in the 1800's. Also go long Top Hats.
Grains are sooo yesterday, bit like Big Brother 8.
18 Jun 08 - 11:45 gmt
future goldmanite! said ...
ha amazing I love top hats. Where do I go for the goldman's research?
Tradebot, legend thanks very much.
I'm actually really looking forward to this; I couldn't have been a more juicy subject. I’ll be checking this all day anymore unusual ideas would be incredible.
Cheers.
18 Jun 08 - 12:05 gmt
future goldmanite! said ...
given a more juicy subject!
18 Jun 08 - 12:06 gmt
Buy-side Analyst said ...
Dear PDc,
1. Goldman IS NOT interested in learning the obvious reasons why something has occured. They already know why.
2. Goldman IS VERY interested in learning of currently unobvious and therefore arbitrageable reasons why something WILL occur in the future.
3. If you are to be judged worthy of a Goldman paycheck, your presentation must be centered on something that originated between your ears and not the internet.
18 Jun 08 - 12:08 gmt
PGC said ...
Is that potential doomed candidate?!! Yes for sure, But surly there is nothing wrong with asking chaps like you for a little inspiration… and secondly if someone is kind enough to reply I’m hardly going to tell them that what they have said is obvious - that would be hugely rude and totally unnecessary.
18 Jun 08 - 12:15 gmt
Top Cat said ...
Finbar - If you can no longer continue with GLG-enders due to the infamous letter, how about a sequel - Curzon Street. A gritty northern drama (Cadburys may sponsor it). I'm sure you could think of some characters...
18 Jun 08 - 13:10 gmt
Manny Roman said ...
GLG will not end! You will end! The world will end! The sun will end! But GLG is forever!!!!!!!
18 Jun 08 - 13:37 gmt
anonymous said ...
Anyone know what Coffey's new venture will be called?
18 Jun 08 - 14:01 gmt
anonymous said ...
starring Arkwright Busson and his 30 second attention span
18 Jun 08 - 14:27 gmt
anonymous said ...
This character would obviously be a hit with the nicer ladies of Curzon Street....
18 Jun 08 - 14:41 gmt
Moron said ...
ho ho...there are no nice ladies on curzon street!!
18 Jun 08 - 14:46 gmt
Finbar said ...
Coffeys new venture - Starbucks Capital?
18 Jun 08 - 16:12 gmt
Moron said ...
ho ho ....or maybe capuccino capital:)))
18 Jun 08 - 16:18 gmt
ozgerbobble said ...
WindowLicker Capital?
18 Jun 08 - 16:33 gmt
Moron said ...
why windowlicker???
18 Jun 08 - 16:50 gmt
anonymous said ...
Hm, that didn't work
18 Jun 08 - 19:38 gmt
Top Cat said ...
If his middle name is Lance (likely - he is an Aussie), then perhaps he could go for GLC. He could pinch some stationery on his way out the door and simply use a small amount of tippex - hey presto!
18 Jun 08 - 20:40 gmt
MsR said ...
TC: I am Australian and I haven't met many called Lance. But then I never really went for Aussie boys.
Aspiring Goldman person: Forget regurgitation: Ms R has advised many a business presentation. What they want is Do you have a point of view? Can you back it up? Can you present it with flair and conviction?
So grab a loaf of bread - talk about what it meant last year, this year and what it will mean in terms of world foodenomics.
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A former hedge fund manager convicted of fraud is alive and on the run a week after staging a suicide on a bridge above New York's Hudson River, U.S. authorities said on Monday.
The U.S. Marshals Service confirmed that Samuel Israel III, who engineered the $2 trillion (1 trillion pound) hedge fund industry's most brazen and long-running fraud, did not leap to his death last Monday when his GMC Envoy was found on a bridge above the Hudson River, its engine idling and the words "suicide is painless" etched in dust on its hood.
"Suicide has been ruled out," William Dundon, a spokesman for the U.S. Marshals Service, said in an e-mail to Reuters.