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 largest US bank failure in history - and it doesn't even make it onto the front pages.
Thankfully JP Morgan is there, once again, to hoover up the best bits as Washington Mutual (or WaMu to those who struggle with 5 syllables or more) goes bust. In the meantime, the mix of 2 wannabe presidents and a real president causes the USD700bn bail out fund to be put on hold. Nobody is telling us where this figure comes from and now WaMu is no more surely it should come down?
Morgan Stanley, once a member of the Prime Brokerage cartel with Goldman Sachs, suffers a massive haemorrhage (thanks spell checker) as hedge funds (if they can still be called that) leave in droves to safer havens. Where?
You guessed it. JP Morgan.
So who will JP Morgan be hoovering up next? Well it's got a Prime Brokerage business (Bear Stearns and most of Lehman and Morgan Stanley's clients). Now it needs a big Administration business. How about Fortis then?
reuters says " Fortis would consider sale of "crown jewels "
CALIFORNIA HOME PRICES DROP RECORD 41% AMID DEFAULTS
California home prices tumbled a record 41 percent in August from a year earlier as foreclosure sales pushed down values in the most populous U.S. state.
The median price of an existing, single-family detached home fell to $350,140, the lowest since March 2003, and will likely fall further, the Los Angeles-based California Association of Realtors said today in a report. Sales increased 56.7 percent from August 2007 and 1.8 percent from July.
Fintag says Now that is what I call a negative equity event.
For those new to this newsletter, these are the people who started this credit crunch. Where are they now you might cry?
A rescue for the U.S. financial system unraveled on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and Washington Mutual was closed by U.S. authorities and its assets sold in America's biggest ever bank failure.
As negotiations over an unprecedented $700 billion bailout to restore credit markets degenerated into chaos, the largest U.S. savings and loan bank was taken over by authorities and its deposits auctioned off. U.S. stock futures fell by more than 1 percent.
The third-largest U.S. bank JPMorgan Chase & Co said it bought the deposits of Washington Mutual Inc which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu's depositors and customers. JPMorgan said it would be business as usual on Friday morning.
Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages.
Fintag says Politicians eh? The bottom scrapers, JP Morgan, have saved the day.
Friday is the new volatility day. Expect some intraday fun and games today.
SHORT-SELLING' CHURCH LEADERS ACCUSED OF FAILING TO PRACTISE WHAT THEY PREACH
The Church of England was accused last night of having used short-selling to maximise profit on a £5 billion investment hours after its archbishops criticised banking practices.
After the call from the archbishops of Canterbury and York for tighter regulation of the markets, the liberal think-tank Ekklesia said that the Church was implicated in stock market speculation. It said that in 2006 the Church Commissioners, which manages the Church of England's investments, set up a currency hedging programme against a fall in the value of sterling, effectively short-selling the pound to guard against rises in other currencies. It also criticised the Church for its shareholdings in oil and mining companies.
On Wednesday the Archbishop of York, Dr John Sentamu, branded the traders who cashed in on falling share prices in the troubled bank HBOS as “bank robbers” and “asset strippers”.
Fintag says As if I don't have enough problems trying to survive without shattering my chances of reaching nirvana.
I start my Quaker group tomorrow. Time to reflect on where my life has gone. My parents are horrified. They believed I was a respectable financier - turns out I am worse than a paedophile.
IRISH ECONOMY IS IN RECESSION FOLLOWING CONTRACTIONS OF GDP IN BOTH THE FIRST AND SECOND QUARTERS OF 2008; FIRST FULL YEAR CONTRACTION SINCE 1983 EXPECTED
The Irish economy is in recession following contractions of GDP (Gross Domestic Product) in both the first and second quarters of 2008. The last full year recession in Ireland was in 1983 and the remaining two quarters of the year are also expected to show contractions.
Irish GDP increased by 6% in 2007.
In the second quarter of 2008 GDP decreased by 0.8 per cent at constant prices compared with the same period in 2007 while GNP decreased by 2.1 per cent in volume over the same period. This is the second successive quarter in which GDP showed a decrease compared with the same quarter of the previous year. The profits of foreign owned enterprises are excluded from GNP. These profits were relatively high in the second quarter of 2008 resulting in a significant decrease in GNP. GNP is also affected by other income flows between residents and non-residents and the timing of these flows can be variable.
Fintag says Ireland has been one big bubble. The decline and fall of RyanAir sums it up nicely.
M STANLEY LOSES NEARLY A THIRD OF PRIME BROKERAGE ASSETS LAST WEEK
Morgan Stanley lost close to a third of assets in its prime brokerage last week, amounting to hundreds of billions of dollars, as hedge funds panicked after the collapse of Lehman Brothers and moved to rival banks.
The losses, confirmed by several people familiar with the business, will deal a big blow to Morgan Stanley as its prime brokerage is one of its most profitable and successful businesses.
The flight of cash and stock out of the division occurred as spreads in the credit default swap market ballooned, but has since slowed to a trickle, these people said. Morgan Stanley declined to comment.
Several of Morgan Stanley's hedge fund clients said they were likely to return to the bank once markets stabilised. The prime brokerage, which provides hedge funds with custody and loans and assists short selling, is highly rated by many managers.
Fintag says I never thought I would see these headlines. But it is another excuse to put up the MS logo from Times Square that Bloomberg et al love so much. But I have resisted.
FUNDS CALL FOR REINSTATEMENT OF 'UPTICK' RULING TO STAVE OFF ATTACKS
Hedge funds and other investors are responding to the clampdown on short selling by calling for the reinstatement of the "uptick" rule, which they claim provided ample protection against speculative attacks on stocks.
The so-called uptick rule was scrapped by the Securities and Exchange Commission last year.
Fintag says The uptick rule had been in place since before the film Atonement was set. It is true this rule, which regulated shorting, did do the trick. Looks like it is going to be reintroduced.
Cause number 47 of the Credit Crunch.
GOLDMAN SHARE SURGE - 'SOMEONE IS GOING TO GET CAUGHT'
Reuters reports that an 'unusual' surge in Goldman Sachs' share price in the 10 minutes before the closing bell Tuesday has aroused suspicions that something dodgy was going on. Just two hours later came the news that Warren Buffett's Berkshire Hathaway was to make a large investment in the firm.
The news agency quotes Dave Rovelli, managing director, US equity trading at Canaccord Adams, who said: 'Obviously, someone knew the Buffett news that was coming out.........(and) someone is going to get caught, because that is easy to track'.
Bloomberg reports that the sale of Lehman Brothers' Investment Management Division is said to have been held up over spats about how the unit will be run, and how fund managers will be rewarded. Lehman remains hopeful, however, that the deal for the unit sale to Bain Capital and Hellman & Friedman will close in a few days.
Fintag says What can I say? Paulson has a big mouth I guess.
EU EXPLOITS MARKET TURMOIL TO GET ITS HANDS ON THE CITY OF LONDON
The EU, as I've mentioned before, is a solution in search of a problem. Whatever the question, the answer is always more Europe. Climate change? We need a European environmental policy! Terrorism? Let's have a unified system of criminal justice! A war in the Caucasus? Bring on the common foreign policy!
So it was perhaps inevitable that the recent market turmoil would lead, as I report in The First Post, to more Brussels rules on financial regulation. And, just as MEPs were wary of being painted as soft on terrorism if they rejected the integration of home affairs, so they are now reluctant to come across as speculators' friends. A motion to regulate hedge funds and private equity has just been passed by 562 votes to 86.
Fintag says Time for the UK to leave Europe meez thinks.
The words coming out of Washington this week about the American financial system have been frightening. But many have raised the possibility that the Bush administration is fear-mongering to gin up support for its $700 billion bailout proposal.
In many corporate offices, in company cafeterias and around dining room tables, however, the reality of tight credit already is limiting daily economic activity.
Fintag says Those poor Private Equity types with their 20% hurdles who cannot borrow. The number of PE funds to collapse will be horrendous unless the oil of credit is pumped back into the system.
Negotiators in Washington were scrambling late into last night to salvage a compromise deal aimed at bailing out American's financial industry even as last-minute objections were raised by some conservative Republicans.
For most of yesterday, both sides on Capitol Hill seemed on course to announce a deal to make $700bn (£350bn) available to buy soured mortgage-related assets from financial institutions, though with several conditions attached, notably provisions to cap the future pay packages of the bank executives.
Markets soared on hopes that the outline deal would be announced at the conclusion of a meeting called by George Bush and attended by party leaders and both men hoping to succeed him.
Both candidates had put the issue of compensation at the top of their list of conditions. John McCain said: "The senior executives of any firm bailed out by Treasury should not be making more than the highest-paid government official." That would cap pay at the level of the US president, namely $400,000, but it remains to be seen if Congress will heed McCain's call to the letter.
Fintag says Of course. Pay the politicians more and the capitalists less. So McCain is a socialist? Let us hope he gets dementia in the next month and Sarah Palin can take over ...
US SEC TELLS DOZENS OF HEDGE FUNDS TO PROVIDE DATA
U.S. securities regulators have ordered more than two dozen hedge funds to hand over information about their trading activity in securities of some financial institutions, a source briefed on the matter said on Thursday. Late last week, the Securities and Exchange Commission said it was expanding its ongoing probe into possible market manipulation in certain financial companies' securities. The SEC did not name the companies.
But the agency said hedge fund managers, broker-dealers and big investors with significant trading activity in financial firms or positions in credit default swaps would be required to disclose those positions to the SEC and provide certain other information.
Fintag says And boy was it stamping its feet up and down. Time to move to Switzerland boys and girls.
Britain's new Personal Accounts scheme, a plan for savers without a company pension, is 'highly unlikely' to invest in hedge funds and private equity, said the head of the authority in charge of setting up the scheme. The investment portfolio of the Personal Accounts scheme, which is set to grow to 150 billion pounds ($279 billion) in 50 years' time, has not been decided, although the scheme has said its default fund is likely to consist mainly of index-tracking funds.
Tim Jones, chief executive of the Personal Accounts Delivery Authority (PADA), told Reuters on the sidelines of an industry conference: 'My personal view is that it highly unlikely because that's not where our low to middle income earners are.'
Hedge funds, which have been blamed for adding to current market volatility due to their role in short-selling stocks, are viewed by pension funds as a diversifier, although returns have been disappointing for many investors this year.
Fintag says Just as I was perking up knowing that Investment Bankers would soon be earning less than a hedgie tea boy then I am struck by this bad news.
So yes, FiNTAG Capital Management is no longer a hedge fund manager. We are a long only alpha manager.
HSBC slashed 1,100 jobs in its investment banking division as the financial group tightened its belt due to the slump in the financial markets.
Thursday's cuts - equal to about 4 per cent of HSBC's total employees in its global banking and markets division - come as investment banks around the world cut staff and trim costs in expectation of a continued slowdown in the business.
Stan O'Neal, the first big-name casualty of the credit crunch, is considering joining Vision Capital Advisors, a small hedge fund and private equity group, which would mark a return to the financial industry for the former chief executive of Merrill Lynch.
People close to the situation said Mr O'Neal, who left Merrill a year ago with an estimated pay-out of $160m, was looking at a number of options in addition to Vision and had not yet made up his mind.
Fintag says Shocking.
31 comments
anonymous said ...
What is George Michael doing here? Selling crack perhaps?
26 Sep 08 - 07:03 gmt
Andrew Knight said ...
Hi Fintag,
I emailed you a while ago but never heard back, can you please email me so we can discuss my proposal.
Thanks, Andrew.
26 Sep 08 - 07:11 gmt
Andrew Knight said ...
My email is: andrew dot knight at boomerang dot com dot au
26 Sep 08 - 07:13 gmt
Alpha60 said ...
You OC picture had me in stitches...Its all those shiny teeth that are resposible for this mess!!
26 Sep 08 - 08:59 gmt
Finbar said ...
@AK - please contact me via facebook.
26 Sep 08 - 12:19 gmt
anonymous said ...
New (non-partisan) USA election slogan: Let's elect someone who was not shot down and taken prisoner.
26 Sep 08 - 12:29 gmt
anonymous said ...
You got Fortis spot on. Didnt they refuse the line of credit to Goldman at the weekend?! Serves them right
26 Sep 08 - 12:37 gmt
Moron said ...
more profit warnings by the day....looks like the short trade...to whatever extent possible....is the only sensible trade guys:))) not even sure i buy the short term rally on bailout news thesis....more like short term sell the bailout news and keep going down in a straight line....look at the bollinger bands of most stocks now:))))
26 Sep 08 - 13:40 gmt
anonymous said ...
i enjoy the fact that 'moron' only re-emerges to espouse his short selling on down days. I presume when the market has headed up he is spending a lot of time in the bathroom evacuating from both ends. Prepare to take it hard on Monday troll..
26 Sep 08 - 13:54 gmt
Moron said ...
actually was travelling last two days...thanks for the kind words anyway anon...my heart has a lot of sympathy for someone as bitter as yourself....life is not always kind to all of us is it.....its sad...sometimes we dig our own graves and the bitterness just makes our problems more acute....apologies for the philosophy
26 Sep 08 - 14:02 gmt
Blackcat said ...
Moron - great contribution.
26 Sep 08 - 14:13 gmt
anonymous said ...
agree that moron seems like the type of guy to have called 5 out of the last 1 market crashes... a broken clock that would never be able to hold down a funds management job in the real world.
26 Sep 08 - 14:39 gmt
anonymous said ...
travelling=double shifts in your minicab
26 Sep 08 - 14:40 gmt
Moron said ...
thank you anon ....at least u still have a sense of humour...thats nice to see:))
26 Sep 08 - 14:48 gmt
Alpha60 said ...
Anonymous - 13:54 u had me in chuckling for ages with your " prepare to take it hard on monday troll" comment.
But seriously, I have to agree with Moron there is a serious mkt correction on the way
26 Sep 08 - 15:18 gmt
Moron said ...
thank you alpha60 .... 2 further points anon (apologies but i love this banter:)) 1. i have made some of my biggest gains on the long side over the years....for whatever that is worth 2. cabin drivers should not be underestimated.....i have gained some of my biggest insights from conversations with cab drivers u know...they are often far ahead of the curve than you or i
this is fun:)
26 Sep 08 - 15:25 gmt
anonymous said ...
God you guys (not you Moron ) are starting to talk like those jerks on Bankers Ball. And here I thought this would make you all be a tiny bit humble; at least enough not to knock other occupations.
26 Sep 08 - 16:08 gmt
anonymous said ...
moron please see annecdote of Jo Kennedy the shoe-shine boy and the 1929 crash, if you are taking stock tips from cabin (sic) drivers, i am happy to take the other side
26 Sep 08 - 16:35 gmt
Moron said ...
anon....please feel free to take the other side...be my guest...and bet big while u are at it:)))
26 Sep 08 - 16:59 gmt
anonymous said ...
moron is a loser, always posting you got the morgan stanley logo wrong. tsk tsk thats the old one or maybe it was intentional?
26 Sep 08 - 19:21 gmt
Moron said ...
yup...and anon is a prissy little fairy:)))
27 Sep 08 - 15:58 gmt
Guy said ...
With all these Bearish comments, a strong Buy signal from both the put call ratio and the smoothed NASDAQ trin. Time to start picking up longs. Waiting for more confirmation to add on. Oh, SP 500 also ack to 05` low. Good Trading. Guy
28 Sep 08 - 01:25 gmt
anonymous said ...
Fin - your other long term dislike B&B gone....the BBC has 'learned'
28 Sep 08 - 08:26 gmt
donal macintyre said ...
I'd like to do a programme about hedgies, who's in?
28 Sep 08 - 18:20 gmt
MsR said ...
If you understand anything about hedge fund people Donal, you'll know that the real players are very private and like their anonymity. I think you'll have to be a bit smarter than that.
28 Sep 08 - 18:39 gmt
Moron said ...
Ms R rocks! Finbar should marry u asap!
28 Sep 08 - 19:27 gmt
Moron said ...
that is...if he has any sense anymore:))
28 Sep 08 - 19:34 gmt
donal said ...
cobblers, i'll have to get up earlier.
28 Sep 08 - 19:47 gmt
Moron said ...
so the bailout is here....in my humble opinion ...expect a strong up us open.....and a fade...and a negative close by the end of the day....love this market:)))
28 Sep 08 - 20:13 gmt
anonymous said ...
Moron - you should favour quality over quantity for comments
28 Sep 08 - 20:58 gmt
Moron said ...
thank you anon....u mean i should post more comments....always happy to oblige:))
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California home prices tumbled a record 41 percent in August from a year earlier as foreclosure sales pushed down values in the most populous U.S. state.
The median price of an existing, single-family detached home fell to $350,140, the lowest since March 2003, and will likely fall further, the Los Angeles-based California Association of Realtors said today in a report. Sales increased 56.7 percent from August 2007 and 1.8 percent from July.