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 long commodities / short financials trade has gone on a bit too long and like the yen carry trade before, many hedge funds haven't got out in time. A key problem with many quant models is trying to correlate implied volatility against actual volatility. If the implied is 3% and suddenly the actual is 4%, many models try and wait for a period of time before deciding that the 4% is abnormal and the position should be closed out. Often it is too late. Like now.
And so us global macro types who look at movements and trends and think we are very clever can be caught out too. So another fund spins out of control and the excuses on volatility, poor timing and judgement, the models need to be updated, was caught sleeping at the wheel, was on vacation, the servers crashed, investors are too short term, markets are misbehaving, etc, all come out to play.
The next trade is long financials (except the lagards) and short the UK. In the early 1990's Soros shorted the GBP and our interest rates doubled in an afternoon. The great fear is that the hedge funds are shorting GBP out of fashion because of the indecision of the Bank of England. Does it appease the consumer and like Ben Bernanke drop rates but fuel inflation and collapse the currency further or does it put up rates to hold steady the currency and keep down inflation as its mandate says?
The looming threat of recession has left the Bank of England under intense scrutiny as it prepares to announce its latest interest rate decision.
The Bank's Monetary Policy Committee is expected to keep rates on hold at 5% on Thursday despite evidence the economic outlook is fast deteriorating.
Output ground to a halt in the second quarter while consumer confidence has been shaken by tumbling house prices.
Fintag says Of course staring at the headlights and not moving is the outcome we all expect. The MPC haven't a clue what to do. Economic prudence says up; their personal bank managers say down.
naked capitalism says " UBS: UK Banks May Have Used £200 Billion in Emergency Funds "
this is money says " Rate cut in doubt as food prices jump 10% "
CHARLEMAGNE CAPITAL PROFITS DROP 30PC ON INVESTOR FEARS
Charlemagne Capital saw its profits fall by 30pc in the first half of this year after it was hit by a "disappointing" investment performance.
The investment manager, which focuses on emerging markets and the BRIC countries, said revenues tumbled 25pc to $30.3m (£17.1m), while pre-tax profits slumped to $13.2m.
The company, which invests in developing markets across mutual funds, hedge funds, institutional and specialist fund products, said that while total management fees had grown markedly, its performance fees had fallen by around 80pc and would no longer "make a significant contribution to overall profitability for 2008".
Chief executive Jayne Sutcliffe said: "The first half of 2008 saw a significant correction across emerging markets following six years of strong performance. This was against a backdrop of turbulence in developed markets which reacted to concerns of a global credit crisis, fears of worldwide recession and the increased threat of inflation."
Fintag says The BRIC trade. When does anyone ever learn? 1970's, 1980's, 1990's there is always some analyst going on about BRIC. History shows that mature economies take hundreds of years to establish. The Emerging Market bubble is a Jim Cramer special.
Of course, jumping on is easy. Jumping off is always more difficult.
HEDGE FUNDS CAUGHT OUT AS HURRICANE GUSTAV FAILS TO LIFT OIL PRICE
Several hedge funds face big financial losses after wrongly predicting that oil and gas prices would rise as a result of Hurricane Gustav slamming into the Gulf coast of the US earlier this week.
As Gustav swept towards New Orleans on Monday, catastrophe experts were predicting insured losses of up to $7 billion (£3.9 billion) as offshore oil rigs faced destruction and the storm threatened energy supplies.
Commodities hedge funds saw the glum prediction as an opportunity, betting heavily, using the futures market, that prices would surge in the wake of the hurricane chaos.
In New York, crude oil leapt to $116 a barrel in the hours before Gustav hit the US coastline. On Nymex, natural gas futures rose 45.3 cents to $8.278 per 1,000 cubic feet. However, the experts, and the hedge funds, were caught out. By the time the storm was sending water lapping over New Orleans's flood barriers, Gustav had been downgraded by the National Hurricane Centre to a Category 1 event. Oil eased to $105.46, with dealers soon speculating that it would fall to $100.
Fintag says Yes. I can put my hand up. The commodities bubble has burst a little early but the puncture repair kit is in use and it will inflate again. Of course, if consumer demand scales back globally, then the bubble will burst. But then I am a hedgie who hasn't a clue. None of us do. We cross our fingers most of the time.
The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.
Hedge fund operator Ospraie Management LLC notified investors Tuesday that it's closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It's believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.
And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.
Fintag says There you go. More vitriolic reporting.
Buyout shops have been known to hold onto their investor's money for as much as seven to 10 years, but one New York firm is taking lockups to new lengths.
American Securities, a middle-market buyout firm, has closed its latest offering, American Securities Partners V, with committed capital of more than $2.3 billion. The lockup? Twenty-five years.
“Our investors understand our enthusiasm to help managers build their companies for the long-term,” said American Securities CEO Michael Fisch. “The unique 25-year investment horizon of this partnership will allow us to continue to create high long-term, risk-adjusted rates of return for our management partners and investors.”
Fintag says What an excellent idea. Now to find some long term investors ...
The most revolutionary notion in commerce today is one of the oldest. If you want to buy something, you may actually have to pay for it. We are reverting from a "borrow and buy" economy to the "cash and carry" model of our grandparents.
The Olesons may have extended store credit to Ma and Pa Ingalls in Little House on the Prairie, but widespread consumer credit is a very recent phenomenon. It began in the 1920s, when expensive consumer durables—cars, refrigerators—were first produced in mass quantities. It wasn't until Bank of America began carpet-bombing California with credit-card applications in the 1960s that the debt wave started in earnest.
Fintag says So why didn't anyone try and stop it? I blame the church. We have lost our way and turned into live one day at a time hedonists. I wonder if the suicide rate will increase as a result? Can I go long suicide? Let me ask my analysts... If I can find them... They have gone on a vacation seeing great bridges of the world... Mmmmm...
[Editor: Nice reference to the Ingalls]
7 comments
anonymous said ...
Beautiful painting...
04 Sep 08 - 07:47 gmt
Moron said ...
Finbar is turning into a grumpy old lady
04 Sep 08 - 10:19 gmt
TC said ...
Are we nearly there yet?
04 Sep 08 - 11:06 gmt
Worsthorp Mittenklimpt said ...
Finbar you truly are a dark horse - was that you playing that flamenco guitar?
04 Sep 08 - 13:29 gmt
anonymous said ...
Fin - I cannot believe someone has not outed you yet. What with your video on Yahoo, and a limited number of outfits you could actually work for given what you reveal (assuming it's true), I cannot believe someone hasn't yet fingered you. I thought you were writing a warts and all hedge fund book? When will you reveal to the world who you really are?
04 Sep 08 - 14:13 gmt
Finbar said ...
I am in prison.
04 Sep 08 - 17:44 gmt
Moron said ...
at the end of the day fin...we still love you....but ...that does not give u a right to underperform mate
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The looming threat of recession has left the Bank of England under intense scrutiny as it prepares to announce its latest interest rate decision.
The Bank's Monetary Policy Committee is expected to keep rates on hold at 5% on Thursday despite evidence the economic outlook is fast deteriorating.
Output ground to a halt in the second quarter while consumer confidence has been shaken by tumbling house prices.