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
Sometimes it is the best in the world and other times it is useless. In the long camp we have its auto mobiles, engineering and team spirit. In the short camp we have its prime minister, its soccer team and its love of hairy armpits. So I didn't mention its banking? Well as regular readers know, I am not a fan of German banking but I have to admit that despite the collapse and integration of the lower league banks, DB has held up pretty well and has been voted #5 M&A adviser.
My love of watches (especially the one in the picture; soon to be a collectors item) is helping me escape the market carnage that persists. With damning statistics showing the signals we are on the cusp of a 4 year depression, my demeanour and that of many in my industry is of the contrary and fairly optimistic. Returns are poor, investors redeeming like crazy, and the regulators want to turn us into mutual funds. But at least we have jobs and are ever pushing forward with our seeking of alpha.
Today we look at a weekend of debt, silicon, civil servants, smoking, securitized credit, mtms, oil, clones and complaining HBOS executives trying to hang onto a bust property play bank.
But enough of this gloom for I have 2 new crap cartoons for you to enjoy.
Deutsche Bank has broken into the top five in the US mergers and acquisitions rankings at the end of a half-year for the first time while Goldman Sachs has maintained its number one position.
Fintag says Now everyone expects Goldman to win everything, we have to rejoice the second tier players instead. Well done Spain [Editor: uh?]
Families are more fearful about their financial future than during the depths of the last recession, as they struggle with soaring food and fuel costs.
The drop in confidence, highlighted in new monthly figures, threatens to exacerbate Britain's economic woes as hard-pressed consumers curb their spending, further undermining economic growth. Last week's revised figures found that the pace of growth halved to 0.3 per cent, the lowest level for three years.
The GfK NOP figures for June on consumer sentiment come as fresh evidence emerges that the housing slump is getting worse and now affects most of England and Wales.
A new survey from Lloyds TSB also shows that people are more worried about losing their job than at any point in the past three years, as employers feel the effects of the downturn and may have to lay off staff.
Fintag says When debt has been the new black for he past 26 years, what do you expect? The savings ratio has been declining for years and in true rise and fall of the roman empire history-repeats-itself, the asset rich had better be wary because the millions who are asset poor will revolt.
Sometimes you see a story, read on, and decide that someone, somewhere, has entirely lost the plot.
The headline was “Texting addiction could be a sign of infidelity”. The specialist law firm Pannone claimed that the most commonly cited telltale signs of a wayward wife in divorce cases were a sudden devotion to texts but then went on to add...boob jobs. Pardon?
If a woman with breasts heading south acquires a bit of upward lift and proud perkiness, does it seriously betoken a lover in the offing?
But it is also the case - and it has been a consistent finding of research studies over the past decade - that about 7 to 15 per cent of those who go for surgery have body dysmorphic syndrome and imagine themselves to be ugly. Typically these women are dissatisfied by the outcome of surgery, and if asked about ideal breast size, these women always want larger breasts than those without this syndrome. Cognitive behavioural therapy is more appropriate here, asit helps to tackle their core psychological issues.
Fintag says Sometimes I wake up and think this world we live in is but a dream. And then I watch my bloomberg screen and realise I am in a horror movie.
FUND BOSSES HOPE SOVEREIGN FUNDS WILL PLUG THE GAP
Top fund executives meeting in Barcelona this week will debate how to attract assets from sovereign wealth investors and the merits of absolute return funds as they face up to a tough environment of lower inflows.
The Fund Forum International 2008, taking place from July 1-3, comes during the asset management industry's toughest period since the bear market of 2000-2003, as the credit crisis that began last summer and choppy markets hit investor confidence.
"It's not a great time for new business. People are sitting on their hands," said Robert Lloyd George, chief executive of Lloyd George Management, which runs $12 billion in Asian and emerging market assets.
"There is a lot of ... fear about where the UK economy is going."
Fintag says Where is my mummy? There is always an insurance policy somewhere - no longer do we admit defeat, we sell our souls to the civil servants.
JOINT VENTURE SEEKS TO PROVIDE RISK SOLUTION FOR HEDGE FUNDS
Bridge Consulting has teamed with Independent Risk Monitoring to form Bridge Independent Risk Solutions (BIRS). The joint venture will provide portfolio risk profile monitoring.
The Anglo-Irish venture will provide OTC valuation and advice on how to structure practical risk management processes. BIRS operates independently of fund managers, custodian banks, fund administrators and risk measurement system providers.
David Hammond, a director of Bridge Independent Risk Solutions, believes the timing of the joint venture is good. First, traditional funds, like Ucits III, are using more hedge fund-style techniques like cash and derivatives to gain exposure. The regulatory requirements for Ucits funds dictate that risk systems are in place.
Investors, too, says Hammond, are increasingly looking for greater transparency in valuations and independent verification of values.
Fintag says All very nice. Hedge funds need more than a few pie charts though to survive. They need a decent strategy and to short everything - including commodities and to go long cash (as long as its not held at the PB's who will charge you for looking after it).
We all like cash unless there is inflation when a nice beach in the Caribbean and a Vodka Martini look more attractive.
The nationwide smoking ban has triggered the biggest fall in smoking ever seen in England, a report says today.
More than two billion fewer cigarettes were smoked and 400,000 people quit the habit since the ban was introduced a year ago, which researchers say will prevent 40,000 deaths over the next 10 years.
Smoking was outlawed in all enclosed public spaces in England, including pubs and restaurants, on 1 July 2007 after a prolonged political battle that split the Government and inflamed critics of Britain as a nanny state.
Fintag says No. We need to short life expectancy. Have fun and then die. The average life span of stone age man was 20. Was he unhappy?
telegraph says " Global economy faces deep slowdown, warns central bankers' club "
new york times says " Hoarding Nations Drive Food Costs Ever Higher "
In yet another example of synchronicity, Jim Hamilton provides a chart from Peter Hooper that illustrates why the housing market is in the doldrums: securitized credit has all but vanished. This topic came up in the previous post as a explanation of why the real estate market is coming to look like a war zone.
At last, calm is following the storm of protest by banking interests against the principle of fair value accounting, which values assets at what they would fetch on the market, where there is a market. Until recently, objectors were hostile to fair value at exit price. Their motivation was fear of a potential "downward spiral in asset values". That got them mocked as promoting "Alice in Wonderland" accounting.
Now there is evidence that the bankers are swallowing the mark-to-market pill. This change of mood was reflected in Europe at a meeting in May of various financial interests held at the European parliament Financial Services Forum. The feeling at the Brussels meeting indicated banks are finally caving in to the fair value argument. The discussion is switching to what mark-to-model techniques should be used for evaluating assets in illiquid markets.
Fintag says This will be fun. But guess what? Banks have been discussing this since the last great depression so don't expect any quick solution. Just because I can google what that strange rash on my buttocks is doesn't mean the world's MTM issue can be solved in the same way.
For tens of thousands of recently pink-slipped Wall Streeters, the forecast for the rest of the year calls for rising personal expenses, a storm of bills coming due - and few job opportunities.
At least they can get a good deal on a summer house rental.
Job cuts in the troubled financial services sectors hit 66,031 through May 31, according to Challenger, Gray & Christmas, and are threatening to break last year's grim mark of 153,105.
People caught up in the first few rounds of cuts, back in August and September, were fortunate enough to be hacked at a time when the larger economy had yet to feel the effects of the subprime collapse, experts said.
Fintag says Time to short first class, restaurants and watches made since 2001.
dealbreaker says " Job of The Week: Risk Management For Lehman! "
OIL-PRODUCING nations are getting a double benefit from the soaring price of crude, according to experts. Not only are revenues booming, but their sovereign-wealth funds have been pumping money into commodity index futures, helping to boost the price.
Crude rose to nearly $143 a barrel on Friday, before closing just above $140, after another wild week of fluctuations.
The price dropped below $132 in the middle of the week after the release of data showing rising American crude stocks and falling consumption, but then surged again on a prediction from the president of the Organisation of Petroleum Exporting Countries (Opec) that the price will rise to between $150 and $170 and a threat from Libya to cut production.
Fears that employees are more likely to sue for a bonus if they are fired in the second half of the year than the first have helped fuel the spate of investment banking job cuts in June, say senior bankers.
This month there has been a dash by banks to implement staffing reductions, including the 6,500 cuts being targeted globally by Citi's investment bank as part of a cost-cutting plan announced this year.
Hedge fund performance with mutual fund-sized fees is an attractive sales proposition. Therein lies the promise of hedge fund replication.
The strategy holds particular promise in Asia, where investors have been battered for months by stormy markets. The Shanghai composite index has lost more than half its value since peaking in October and has wiped out almost all of the gains made during last year's extraordinary 141 per cent rally. Absolute returns suddenly look appealing.
Asian investors also show a growing appetite for exchange traded funds. These are usually simple index trackers, but they are opening up the region to the idea of using passive products based on a basket of sophisticated instruments to clone another asset.
Nicu Harajchi, founder and chief executive of N1, a Hong Kong-based fund of funds for Asian retail investors, thinks the recent turmoil is creating the right conditions for a revival in capital guaranteed structured products in general, and for hedge fund replication strategies in particular.
"They stand a good chance of becoming flavour of the month," says Mr Harajchi.
Fintag says Just like 130/30 I don't get these. Their track record is appalling (absolutely no correlation between hedge funds returns). Its like buying a red ford focus and pretending its a Ferrari.
UK IS WEAK ON TACKLING WHITE COLLAR CRIME AND SHORT SELLERS, SAYS HBOS CHAIRMAN
Halifax Bank of Scotland's chairman yesterday took a swipe at City regulators who had failed to discover any evidence of manipulation after a 17% one-day fall in the bank's share price in March.
Lord Stevenson told the HBOS annual meeting in Edinburgh: "There is a strong case for believing that the UK is exceptionally bad at dealing with white-collar crime. Only two weeks ago I was in New York and two people were convicted of insider dealing. We appear not to pursue things in the same way." One shareholder asked the chairman to condemn the lack of action taken by the Financial Services Authority against short sellers. Stevenson said: "I won't tell you what I think about hedge funds, but some might say there is a dislocation between the share price and the underlying performance of the business."
Fintag says ...and competent board directors too.
TREASURY BEAR MARKET TO WORSEN UNDER BERNANKE'S FED (UPDATE1)
The biggest bear market in Treasuries since 2004 may get worse.
Unlike four years ago, when Federal Reserve Chairman Alan Greenspan embarked on 17 consecutive interest-rate increases to contain the threat of rising consumer prices, his successor Ben S. Bernanke is giving investors few assurances that the scourge of inflation will abate anytime soon.
``The Treasury market going forward is more an inflation story,'' said Colin Lundgren, head of institutional fixed income for RiverSource Institutional Advisors in Minneapolis, which manages $100 billion in bonds. RiverSource is reducing Treasuries in favor of securities backed by commercial mortgages and investment-grade corporate debt, he said.
Fintag says I told you so. I have been telling you since early 2007 that the man was a moron.
Separately-managed accounts are becoming a more popular option because hedge fund managers are finding it harder to raise assets and investors are demanding more transparency, liquidity and the ability to negotiate fees. Michael Murray, partner at Shoreline Trading Group, said he is seeing more of these accounts being set up as they give investors more control over their assets. Murray said managers are embracing the option—and are also more willing to negotiate lockups and management fees—because separate managed accounts complement their funds, providing them with another avenue for asset-raising. Managed accounts are also increasingly appealing to small hedge fund firms, as they help assets under management to grow at a faster rate, Murray observed.
Harvest Volatility Management, the new shop set up by Credit Suisse veteran Rick Selvala, is running only managed accounts. The amount of work that goes into a managed account mirrors that of a fund. But in today's economic climate, with so many investors holding cash and hesitant to make allocations, managed accounts are appealing to investors because they provide higher transparency than a pooled fund, said Selvala.
Christopher Wolf, managing partner at San Francisco fund of hedge funds CogoWolf, said that his firm is keen to accommodate institutions by setting up managed accounts; it manages $100 million, one quarter of which is handled this way. Running a managed account allows the firm to customize its top-down macro approach for an investor, he said. By tailoring each account to meet investors' needs, the firm is opening itself up to bigger management fees that stem from successful activity and higher returns.
Murray said he doesn't see this as a fleeting trend, but a more permanent change. “As the hedge fund industry matures, separate managed accounts will continue to grow and become a more acceptable means for investors and managers to partner,” he said.
Fintag says Hat tip to Ms SE for this.
Segregated accounts? I recall a couple of years ago saying this is what would happen (plus some nasty blog war too) ... and here we are.
A week after two Bear Stearns hedge fund managers were arrested for allegedly misleading their investors, prosecutors are looking to add to the indictments, NPR has learned. The new charges — which could come as early as next week — would be related to their relationship with banks.
Officials close to the investigation told NPR that the U.S. Attorney's Office for the Eastern District of New York is pursuing additional indictments against Ralph Cioffi and Matthew Tannin. They pleaded not guilty to an initial round of charges which allege they misled investors about the financial health of two of their hedge funds. Now, investigators are gathering evidence on whether the two men purposely misled banks who were providing lines of credit and guarantees for the two funds in spring 2007. The funds had a great deal of exposure to bonds backed by subprime mortgages.
Fintag says Hat tip to an FB'er.
Many of the Bear Stearns people I ever met were smug and arrogant. They were also mavericks who failed to fit into other investment banks. So is this true? I wouldn't be surprised ...
11 comments
FINTAGER said ...
wHICH BANK GOING BUST TODAY?
30 Jun 08 - 07:36 gmt
Hbust said ...
A bank is bust already, only it just does not know it yet.
30 Jun 08 - 07:57 gmt
Moron said ...
guys this is all going to get nasty.....we are witnessing the end of a 20 year cycle of credut driven expansion in the western world......people have not yet begun to comprehend the severity of the bear market that is ahead of us.....add inflation on top to make things worse....when the going gets tough.....
30 Jun 08 - 10:01 gmt
screwed said ...
What do you mean....going to get nasty.......my arse is hurting already.....
30 Jun 08 - 10:56 gmt
Moron said ...
i mean ...going to get a lot worse than u can even begin to imagine now
30 Jun 08 - 11:44 gmt
Tradebot said ...
Things are going to get a whole lot worse before they get worse... be short stay short. China and India will start importing inflation and there is nothing Gentle Ben can do. Doom doom doom.
30 Jun 08 - 11:51 gmt
Moron said ...
we are standing on the cusp of a black swan event in history...u aint seen nothing yet
30 Jun 08 - 12:28 gmt
Moron said ...
where is Ms R....so boring today:)
30 Jun 08 - 13:15 gmt
GoldNews.BullionVault.com said ...
Securitization's not just dried up in the UK; it's gone into reverse. Banks took back £4.6bn in May...
30 Jun 08 - 13:46 gmt
MsR said ...
Hello darling Moron: I have been busy getting some work. Plus it all looked so gloomy here I figured I needed to find somewhere happier to play.
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Deutsche Bank has broken into the top five in the US mergers and acquisitions rankings at the end of a half-year for the first time while Goldman Sachs has maintained its number one position.