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
Like the assassination of JFK, Jimi Hendrix at Monterey or 9/11, yesterday is a defining moment in post second world war history. The bail out and nationalization (it is temporary, apparently, but wasn't Northern Rock too?) of those two large debt companies that propped up the US residential mortgage market is without doubt something so big, so terrible and so frightening that it will take months to work out what the implications are on the global economy.
Is this the beginning of the end of capitalism?
Or is this just another chapter in our financial lives that is accepted and forgotten about? If someone had told you 5 years ago that the US government would nationalize Freddie and Fannie, Bear Stearns would collapse and Sarah Palin had the chance of being the second most powerful person in the world, you would have thought this a complete fantasy.
The markets have so far rejoiced this great distortion. F&F were implicitly being guaranteed by the US government just as all banks have a lender of last resort in the central banks. Of course, when the central banks start to own the banking system (like they do in France, China and Libya) we move into a new world order.
While we all digest this moment, let us look at other moments that will be forgotten very quickly.
Over the years, Fannie Mae and Freddie Mac showered riches on many winners: their executives, Wall Street bankers and Washington lobbyists. Now the foundering mortgage giants are leaving some losers in their wake, notably their shareholders, rank-and-file employees and, in the worst case, American taxpayers.
But even after the government seized the mortgage finance companies on Sunday and dismissed their chief executives, the companies' outgoing leaders could see big paydays — a prospect that angers many investors, particularly because ordinary stockholders could be virtually wiped out.
Fintag says So Bush walks away with saving the world and the next president has to come in, raise taxes and fight law suits. Nice.
bloomberg says " U.S. Takeover of Fannie, Freddie Offers `Stopgap' for Mortgages "
money central says " Federal National Mortgage Association (Fannie Mae): Ownership "
Mark McGoldrick, a former Goldman Sachs trader whose track record earned him the nickname 'Goldfinger' during his career with the Wall Street bank, is making a comeback with a new $5bn (£2.8bn) fund.
McGoldrick, who famously earned $70m a year ($200,000 a day), but resigned because it was not enough, has asked his old firm to raise money for a super hedge fund that will concentrate on special situations.
While at Goldman Sachs, McGoldrick was head of distressed and special situations investing in Asia. He co-founded and built the firm's secretive 'special-situations group', Goldman's elite and opaque money-making machine, which buys and sells eclectic assets including British power plants, Japanese golf courses and Thai auto loans.
Fintag says I guess USD70m is pretty small fry. Good luck though.
financial news says " Goldman's fund of hedge funds declines in July "
ASK any woman which colour dominates all sections of her wardrobe, from casual-wear to cocktail dresses, and the answer will most likely be black. Because it's such a classic, black tends to get ignored.
But there's a revolution underway, particularly as summer's over and it's time to get serious at work. The launch this month of a website devoted entirely to black womenswear, www.basicallyblack.com, is one sign that due attention is being lavished on our dearest colour at last.
The website's founder, Janey Marshall, says: “Like most busy working mums, I needed a wardrobe that made it quick and easy to look smart, professional and fashionable, and more and more, I found myself turning to black.”
Fintag says Last season black and grey were in. This season black and grey are back in with a hint of white. So yesterday I went out to buy some white shirts. What struck me was how expensive and badly made they were. During times of boom, one can tolerate a button coming off a USD300 shirt but now our belts are tightened, this is not right. Take this Emma Willis shirt. It is beautiful cotton, the label is discrete and the buttons have threads of cotton hanging out that if pulled cause the plastic (no mother of pearl?) button to fall off.
Shocking stuff. So I didn't buy it and spent the money on a decent lunch at the Connaught Hotel.
FANNIE MAE, FREDDIE AND YOU: WHAT IT MEANS TO THE PUBLIC
So what does the federal takeover of two mortgage finance giants mean to consumers?
Mortgage rates may fall a bit initially but probably not enough to halt the decline in home prices anytime soon. Some delinquent borrowers may have a better shot at modifying their loans and ending up with lower fixed payments. And the rules on new mortgages could slightly change.
Oh, and the federal government will help pay for it all, using your tax money.
Alex Bugeja, an entrepreneur formerly involved in the semiconductor, online advertising and e-commerce sectors, has founded a hedge fund and is currently prepping a long/short vehicle to invest e-commerce, alternative and renewable energy companies.
According to Bugeja's marketing document, Borton Capital's investment philosophy will be a conservative one: It will focus on value, and on obtaining a high margin of safety in all investments it undertakes.
Fintag says Does this mean I can set up a company to compete against Intel?
If only it were that easy to launch and a run a hedge fund.
HEDGE FUND KROM SWAPS CITY FOR LOW TAX AND EASIER SWISS LIFESTYLE
A London hedge fund has taken the rare step of quitting the City for Switzerland, in part to lower its tax bill.
As Europe's leading centre for the hedge fund industry, London is more used to seeing funds set up than leave.
But Krom River, an $810m commodities fund started two years ago, has shifted its office to the low-tax Swiss town of Zug, south of Zurich, in a move that some advisers predict will soon be followed by larger funds.
Fintag says Let us not be too hard on the swiss (except when Andy Murray beats one to gain the US Open title) but it is a very dull place. The best places to live as a Hedgie are Santa Monica, Singapore, Greenwich, Mayfair, Tokyo, New York and Melbourne. The worst places would be Switzerland, Dubai and Paris. That is what I think, anyway.
THESE 3 TOP FIRMS COULD HAVE GONE BELLY UP THIS YEAR
CNBC reports that, according to an analysis by JPMorgan Chase, the Bear Stearns debacle earlier this year could have brought down Lehman Brothers, Merrill Lynch and Morgan Stanley.
According to the news agency, an analysis undertaken by JPMorgan revealed that the counterparty exposure that each of these firms had to Bear Stearns last March was such that any one (or all three) could have failed if Bear hadn't been rescued by JPMorgan, and was forced into bankruptcy instead. CNBC also says that 'some people at JPMorgan weighed letting Bear and the rest fail because they would have eliminated at least two and possibly four competitors in about a week'. In the end, says CNBC, JPMorgan decided to proceed with its Bear rescue, partly due to pressure from the US Federal Reserve, and partly because Bear could be picked-up for a steal.
Fintag says So this means that they are all safe now?
Proprietary traders sitting on a profitable trading book would not normally look for a new job in September, with bonus day only months away. But fears that investment banks will this year renege on their implicit bonus promises are prompting even successful traders to seek new employers before the year-end.
Prop traders play the markets using a bank's capital and are paid formulaically, with bonuses traditionally set at between 12 per cent and 15 per cent of their trading profits. However, bonuses are almost always discretionary and expectations for this year's payout ratios have plummeted.
While many prop traders have lost money this year, some of those who are sitting on profits are said to be worried their gains will be diluted by losses made elsewhere in their companies, or that they will be paid in stock rather than cash. They are looking to extract whatever guaranteed bonus they can for defecting to rivals.
Fintag says Corporate life where the shareholders are shafted or the Entrepreneurial route where you lose all your hair?
The Chinese central bank, one of the most secretive in the world, is amassing shares in many of Britain's blue-chip companies. Malcolm Moore in Shanghai and Mark Kleinman in London report
It was a bitterly cold January day in Beijing, and events at home meant Gordon Brown was entitled to believe the chill would endure. The crisis engulfing Northern Rock, the mortgage lender which months earlier had been forced to seek emergency funding from the Bank of England, would soon need to be resolved; and as far as the media was concerned, Brown was being poorly served by the fact that Sir Richard Branson, one of a clutch of private-sector bidders for the bank, was spending the trip to the Chinese capital in close proximity to him.
Fintag says Nice.
22 comments
anonymous said ...
Madrid: Great place to run a hedge fund. They keep blowing up though.
08 Sep 08 - 07:41 gmt
anonymous said ...
What is the skiing like in London?
08 Sep 08 - 09:01 gmt
anonymous said ...
icy.
08 Sep 08 - 09:15 gmt
anonymous said ...
Hong Kong is much better than Singapore, which is pretty lifeless in comparison
08 Sep 08 - 09:46 gmt
Moron said ...
this bailout and stock market rally smells of a political fix pre election.....not convinced this rally has much to run
08 Sep 08 - 10:05 gmt
GP said ...
"Moron said ... tis is all gonna get pretty nasty guys...be careful....SEPTEMBER 2008 will go down in history" Well at least you seem to have got something right Moron, as Fin said history in the making. All in all I’ve always been wary of socialist moves like this. I remain Sceptical, but long for the day!
08 Sep 08 - 10:18 gmt
Moron said ...
i remain sceptical as well.... just remember though that the politicians are now desperate to create some optimism into the elections .... highly unlikely they have the firepower to move the needle much on this broken market though......i still think we are set up for a september crash as managements finally give up the earnings spin game
08 Sep 08 - 10:23 gmt
Moron said ...
interested to hear any opinions/views
08 Sep 08 - 10:25 gmt
anonymous said ...
I agree a crash is coming, but know I'm not smart enough to guage the timing. Probably before year end, but moves such as this just prolong the wait. I expect when Q3 results start coming out in October, there could be some downside
08 Sep 08 - 10:34 gmt
Gp said ...
i can't believe LSE has crashed, what timing!
08 Sep 08 - 10:38 gmt
Moron said ...
banks reporting next week in the us.....plus we are in profit warning season.....if results are the catalyst....and i think they are ....then the crash starts now....once we get through this euphoria...which will probably last for a few more hours
08 Sep 08 - 10:38 gmt
GP - waiting for LSE... said ...
Traders using this as an excuse to sell up and close positions? Buy on behalf of the clients sell on behalf of the bank! Prop desk sell sell sell… Oi you lot over that Chinese wall, start buying you stupid wankers. Haha.
08 Sep 08 - 10:46 gmt
ReturnFreeRisk said ...
JPM should have added itself to the 'dead pool' list....100T notional exposure and bloated CDS book. The dollar has an aggressive cancer after F and F, if it didn't already. None of this is over in the US until the VIX bounces in the 30s for at least a week. Sept and Oct bloody, but suckers rally in Nov and Dec when 'better' yoy housing numbers report.
08 Sep 08 - 14:07 gmt
Moron said ...
sep very very painful ...be careful...the crash is coming
08 Sep 08 - 14:19 gmt
Moron said ...
i wouldnt be surprised to see the us indices open up and then close down by the end of the day....that will really whack it to the bulls
08 Sep 08 - 14:20 gmt
Moron said ...
us open already being faded....what are the chances? down close today:)))
08 Sep 08 - 14:56 gmt
Moron said ...
this is surreal....nasdaq probably in the red in another 30 mins at this rate
08 Sep 08 - 15:02 gmt
anonymous said ...
BTW - getting back to a favourite topic of ours : What did Fin have for breakfast today?
08 Sep 08 - 15:10 gmt
Moron said ...
ms q:))))
08 Sep 08 - 15:13 gmt
Moron said ...
OK.....so nasdaq almost negative now....just a little bit more:)))))
08 Sep 08 - 16:05 gmt
Moron said ...
it seems to me this joke of a rally is over and the nazz is actually flat for the day.....but i thought the fannie freddie bailout was about to change the world:)))))))))
08 Sep 08 - 16:30 gmt
Dan said ...
Agreed on Santa Monica / Venice. Far better than SF, though SF has proximity to Tahoe which is unbeatable. Either way life is brilliant here. Weather is always pleasant, women are gorgeous and banker / finance types are no where to be seen.
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