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
The markets tanked yesterday because there are no more markets. The regulators and politicians have intervened in almost all areas now and market makers have no idea now to price stocks. A large conglomerate with a large debt on its balance sheet is one moment bankrupt, the next we are told it will be propped up. Financial Institutions are one moment unable to hedge their positions via shorts and the next allowed to offload their bad debts. Consumers are told not to worry and the next moment one of the largest economies in the world says it will protect its banking deposits. Apple, GE, Morgan Stanley and USB all went up yesterday. Why? I have no idea. Nobody does.
And now we have Jim Cramer, stock pumper and dumper extraordinaire tell the world to forget equities and turn to cash and in one fell swoop end his career as a stock picking pundit. Us hedge funds have been in cash for a while now and he is obviously taking a hat tip from the experts.
But let us get real. The markets have a long way to go down before we start getting worried. The VIX is high and the volumes low because we all know that the S&P 500 has to fall below 2001 levels before we can start seeing stocks priced at a more sensible level. The dot com boom and bust was a certain sector borrowing like crazy and the business model collapsing. It was a tiny and in retrospect a small irritant. The collapse of the banking sector impacts all businesses and consumers.
So today I feel rather bullish. There is still a long way to go and we need to see some more "once in a lifetime" events.
Fuld blames hedgies and not himself Dick Fuld is a PR disaster. At his testimony he came across like the child catcher in Chitty Chitty Bang Bang. I hid behind the couch as he said that he had earned USD250 million and deserved it. Not much you can say to that.
FINANCIAL CRISIS: STOCK MARKET SUFFERS ITS WORST FALL IN HISTORY
The FTSE-100 index of Britain's biggest companies dropped by 391.06 points - its steepest ever fall - to end the day down 7.9 per cent.
The FTSE's tumble was mirrored across Europe, as markets in France, Germany, Italy and Spain all recorded heavy falls.
On Wall Street, the panic drove the Dow Jones Industrial Average down through the 10,000 level for the first time in four years.The mild euphoria that greeted the passage of the $700bn bail-out of Wall Street on Friday evaporated as traders digested the more bad news from Europe.
The Dow Jones Industrial Average fell as much as 800 points during the session, slipping below the key psychological level of 10,000 for the first time since 2004.
Fintag says As I watched Mr Darling talk, the FTSE 100 fell. He stopped talking and it went up. So my quants have built a correlation model and I hope to launch a new fund next week called the "Treasury Spokesperson Correlation Non Levered High Fees Fund".
Richard Fuld, former chairman and chief executive of bankrupt Lehman Brothers, ”mocked” suggestions that the bank's top management should accept responsibility for poor performance by giving up their bonuses this year, according to a Congressional hearing.
In a session on the collapse of Lehman Brothers before the Committee on Oversight and Government Reform, Chairman Henry Waxman said the committee received thousands of pages of internal documents from Lehman and these documents portray a company in which there was “no accountability for failure.”
Fintag says I will say it again. Investment Banks were there to serve the employees, not the shareholders. Here is the proof.
Pope Benedict XVI today said that the global credit crisis shows that the world's financial systems are "built on sand" and that only the works of God have "solid reality".
Opening a Synod of Bishops in the Vatican the Pope referred to a passage from St Matthew's Gospel on false prophets, saying ''He who builds only on visible and tangible things like success, career and money builds the house of his life on sand''.
Fintag says Well that is a helpful comment. The Vatican has made its fortune on the banking system over the last 2000 years. Perhaps it would like to hand it back to the people?
IMF SAYS GLOBAL ECONOMY TO SLOW DRAMATICALLY; MORGAN STANLEY FORECASTS OUTRIGHT CONTRACTION IN EUROZONE ECONOMIC ACTIVITY
The IMF said on Monday that the global economy is forecast to slow dramatically. The World Bank President warned that the ongoing financial turmoil could be a tipping point for many developing countries. US Investment bank Morgan Stanley said that the risk of a more serious downturn in Europe has increased over the last few weeks and it downgraded its forecast for Eurozone growth, inflation and interest rates. It now forecasts an outright contraction Eurozone economic activity. In the US, a survey of business economists forecast no economic growth in the fourth quarter following an estimated annualised rise of only 1.0 % in real GDP (gross domestic product) in the third quarter.
Fintag says That must have been a difficult report to write. Not.
Kenneth C. Griffin was one of those Wall Street whiz kids. As a teenager, he traded out of his dorm room at Harvard. In his 20s, he opened his own hedge fund. In his 30s, he boasted that his company might one day rival Goldman Sachs.
But it can be tough for a boy wonder to grow up — particularly in the midst of the gravest financial crisis since the Depression. A week before his 40th birthday, Mr. Griffin finds himself in an unaccustomed position: on the defensive.
The Citadel Group of Chicago, the giant hedge fund that Mr. Griffin has run so successfully for nearly 20 years, is leaking money. As of Sept. 30, its two main investment funds were down 20 percent this year, according to Citadel investors. Most of the losses came in the last few weeks, when the markets swooned. Two other smaller Citadel funds are still well in the black.
Fintag says As you know I have no time for Griffin. He blanked me once in the US and like an Elephant I cannot forgive him. Nobody blanks Finbar Taggit. [Editor: Did you see the UK's premier of Eli Stone? He reminds me of you.]
Dean Art Investments, a new hedge fund that will invest in the fine arts market, has become the first fund to join the Harbour Capital Partners hedge fund platform. Dean Art is expected to launch with $50 million.
The fund will invest in a broad range of artworks, with an emphasis on Old Masters, Impressionism, Post-Impressionism and Modern Art, avoiding those areas the fund believes will underperform the market. Investments in individual works of art are expected to be in the £500,000 (US$885,860) to £3 (US$5.3 million) million range.
Fintag says ...just as the art market implodes, like it did in the early 1990's.
HEDGE FUND INDUSTRY IS ON STANDBY TO HELP AUTHORITIES SAVE CITY OF LONDON'S STATUS
...With the current collapse in confidence in financial institutions, it is easy for commentators to point the finger of blame, and hedge funds make for a high-profile and convenient target. However, Britain must be careful not to jeopardise the status of London as one of the world's leading financial centres. The fact that the European hedge fund industry, which has grown up over the past 15 years, has 80 per cent of its $500bn of assets managed in London is a testament to sensible UK regulation and to the pool of global talent that has chosen to base itself here in London. Our hope, as the US moves to lift the ban on short selling this week, is that the UK authorities will consult the industry to review the existing restrictions and take a measured position going forward that reinforces rather than diminishes the City's global status. We stand ready to engage in that process.
Antonio Borges,
Chairman, Hedge Fund Standards Board,
London WC2, UK
Fintag says Man the pumps, man the pumps ...
AUSTRALIA CUTS KEY RATE BY 1 POINT, MOST SINCE 1992
Australia's central bank cut its benchmark interest rate by one percentage point, the biggest reduction since a recession in 1992, to cushion the nation's economy against fallout from a global credit freeze.
Stocks rose after Governor Glenn Stevens and his board lowered the overnight cash rate target to 6 percent from 7 percent in Sydney today. ``An unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers,'' Stevens said.
Fintag says Sudden drops in rates are a panic signal. Why do they do it? Look at what happened when Bernanke did it? Sometime being orderley and discrete is the best form of action.
Stay Calm. Don't panic. Man the pumps, man the pumps ... [Editor: Are you the designated fire warden?]
TOP BOSS SAYS BONUSES WILL BE 'SOLID', BUT 'SMALLER'
Reuters reports that UBS Chairman Peter Kurer told Swiss newspaper Sonntag on Sunday that his firm would pay 'solid' bonuses this year, but that 'our employees know that the total bonuses at the bank, from top to bottom, will inevitably be smaller'.
According to the news agency, Kurer said that UBS would not be introducing a compensation cap, but confirmed that all executive bonuses would be significantly down on previous years. He said that he didn't know his own compensation yet, but expected it to be less than 10 million francs ($8.8m) this year (predecessor Marcel Ospel made $23m last year). Kurer is quoted saying: Certainly all management salaries will be lower after the crisis than before, in some cases noticeably so. I find that the right thing. But in some special situations, salaries over 10 million francs are still possible'.
Fintag says The world crumbles, shareholders lose billions and some greedy bankers discuss their bonuses. If I could short these people I would. It is an absolute disgrace. UBS should not pay a single bonus. They could have used the bonus pool to save the jobs of the thousands of people they have fired.
Now that they have comprehensively destroyed unsecured lending, the Fed is said to be scheming to revive it. Sorry, won't work, banks need to raise capital and they have no incentive to raise it as long as they can feast on subsidized lunches, courtesy of the Fed.
Fintag says Why don't they go the whole hog and just nationalise everything.
When the Berlin Wall fell down, who would have guessed 10 years later that the west would turn to communism to save itself?
In the midst of a financial crisis, a towering figure of American business steps forward with his reputation and financial resources for public good and personal gain.
Their times and personalities are vastly different, of course. But J. Pierpont Morgan's role in the Panic of 1907 has its echo in Warren E. Buffett's actions during the current financial troubles, says The New York Times's Steve Lohr.
Citigroup's lawsuit against Wachovia Corp., Wells Fargo & Co. and their directors is seeking at least $60bn.
Citi had reached an agreement in principle last Monday to buy Wachovia's banking operations for $2.16bn, but Wells Fargo swooped in and announced early Friday a $15.1bn deal to buy all of Wachovia.
Citi immediately cried foul, prompting Saturday's suit.
Fintag says So this is the new way for a bank to raise capital after everything else failed? Sue the competition.
Prime Minister Geir Haarde warned of “chaos” if Iceland's banks stopped operating, and rushed through emergency legislative measures designed to stop the collapse of the Icelandic banking system.
Mr Haarde added: “A lot of the banks' business is in Britain, so it is likely that Britain might well be affected.”
Earlier yesterday the government halted trading in the shares of six of the country's banks. The threat is the biggest yet faced by any country over its financial sovereignty in the 14-month-old credit crisis.
Fintag says As we predicted in March 2008:
44 comments
anonymous said ...
"The world crumbles, shareholders lose billions and some greedy bankers discuss their bonuses. If I could short these people I would. It is an absolute disgrace. UBS should not pay a single bonus. They could have used the bonus pool to save the jobs of the thousands of people they have fired".
Sure you're not a socialist in disguise Finbar?
07 Oct 08 - 07:52 gmt
anonymous said ...
The market has much more to fall before the bottom, I agree 2001 revisted and then one last panic leg to rock bottom.
Remember the top to bottom of the Dow during the Great Deprssion was about 90%.
07 Oct 08 - 07:52 gmt
MsR said ...
@ Anon: I don't think it's socialism to think that in exceptional times maybe it's worth thinking about the greater good. And perhaps not paying bonuses if jobs could be saved is a good idea. That's not diminishing capitalism: it's just making it moral and accountable- something that the crony capitalism practiced by the US isn't and hasn't been for a long time.
07 Oct 08 - 07:59 gmt
GalwayBoy said ...
Surely Peston should be done for market manipulation after causing the latest run on UK bank shares this morning.
Oh, I forgot he is nothing but the mouthpiece of the Brown/Darling axis of incompetence
07 Oct 08 - 09:05 gmt
anonymous said ...
Was that whole Lehman / JP Morgan account freeze a case of cowboy 'quick draw' and JP Morgan won?
07 Oct 08 - 09:08 gmt
HectorTheDog said ...
Starbucks waste water, milk and oxygen by simply remaining in business. When will consumers reject this insipid piss and seek out some decent coffee instead.
07 Oct 08 - 09:11 gmt
MacroHedgeBoy said ...
Preston is shocking. I rant and rave at the TV when he's. Brown/Captain Darling leaks, glib generalisations and incomplete statements. What a t*sser. My children look forward to his appearance so they can see Daddy turning purple. Funnily enough, the BBC has now been banned in our house....
07 Oct 08 - 09:23 gmt
anonymous said ...
This whole Peston thing is unbelievable. I'm shocked someone at the FSA hasn't even attempted to do something about this. He moves markets - and always down! Ban Pesto, not shorting!
07 Oct 08 - 09:26 gmt
MacroHedgeBoy said ...
Speaking of TV. Did anybody see those 'investors in Kaupthing high interest accounts' (otherwise know as 'clever dickies trying to chase high interest but knowing squat about the risk/return relationship) moaning on channel 4 news? Shocking interview - the guy wasnt even asked if he had thought about the risk, whether he knew who Kaupthing were? His justification for doing it was 'well I read the FT'......classic
07 Oct 08 - 09:29 gmt
wingrunner said ...
"There is no such thing as "was" - only "is". If "was" existed, there would be no grief or sorrow"." Faulkner.
We are all alone.
07 Oct 08 - 09:30 gmt
MsR said ...
@MacroHedgeBoy: I was yelling at the TV when he interviewed the greedy Icelandic bank chaser. What was the f**king point?
Re our marketing discussion yesterday I think your man Borges comes across as far, far too apologetic in the FT today. I reckon that letter was edited fifteen times and now sounds a bit like chastened schoolboy. It has the guts ripped out of it. Not good.
07 Oct 08 - 09:34 gmt
Loser said ...
I read the FT and just lost 2000 quid. Thanks icesave
07 Oct 08 - 09:57 gmt
Loser said ...
The bbc told me they were safe (read the last paragraph)
The FSA need to close the BBC down for misselling.
07 Oct 08 - 10:04 gmt
cockyspiv said ...
Oxymoron of the day!
"That's not diminishing capitalism: it's just making it moral"
07 Oct 08 - 10:06 gmt
Moron said ...
ms R ...u talk a lot of rubbish:)) but i still think u totally rock!
07 Oct 08 - 10:16 gmt
anonymous said ...
Moron - that's patronising, and wrong
07 Oct 08 - 10:20 gmt
Moron said ...
i know..:)
07 Oct 08 - 10:21 gmt
Alpha60 said ...
Fin, any views on y/days gold rally?
07 Oct 08 - 10:32 gmt
GalwayBoy said ...
Is there any truth in the rumour that Dick Fuld was punched out cold by a disgruntled Lehman banker in their gym the day they went bust..........................I hope so
07 Oct 08 - 10:40 gmt
MsR said ...
@ Moron: you talk excessively. Stop patronising me simply because you don't know how to react to someone who does something other than play with 0000000s all day. Otherwise I will be forced to assume that you are an Asperger's type who cannot relate to the real world
I don't think moral capitalism is an oxymoron; that is a highly simplistic view and very stupid.
07 Oct 08 - 10:50 gmt
MsR said ...
You did a boring MBA didn't you Moron? Must've read Drucker on capitalism...you too cockspiv.
07 Oct 08 - 10:52 gmt
Moron said ...
ms R ....u are a tigress:))
07 Oct 08 - 10:52 gmt
MsR said ...
Only in the right company Moron...
07 Oct 08 - 11:17 gmt
cockyspiv said ...
I read Marx on Capitalism.
(I do have an MBA in Economics but only from one of those northern universities)
07 Oct 08 - 11:18 gmt
Moron said ...
Ms R.....i was wondering if you could elaborate on that statement a bit:))
07 Oct 08 - 11:29 gmt
question said ...
MBA in Economics ..hmmm
07 Oct 08 - 11:30 gmt
anonymous said ...
God bless thee, Finbar Taggit.
07 Oct 08 - 11:50 gmt
Alpha60 said ...
MBA in economics...eh?!?! U mean an economics elective as part of your MBA surely
07 Oct 08 - 11:52 gmt
MsR said ...
@Cockspiv: I think that right now with markets and lives going down the sewer it's easy to see capitalism as evil..and certainly Ayn Rand's view of it as the only moral choice is questionable. However, I think about people like Andrew Carnegie who was a great capitalist but also made moral choices about how money should be used. And that is the nub really...there are choices.
07 Oct 08 - 11:53 gmt
Alpha60 said ...
I partially agree with you MsR, but Ayn Rand was around when the only other economic / political systems were communism or fascism. And anyway Ayn Rand was against the crony capitalism we have but instead of the more pure form where individual expression wansn't repressed by the ignorant masses...ala The Fountainhead
07 Oct 08 - 12:18 gmt
question said ...
"elective"=US=low quality...shudder
07 Oct 08 - 12:21 gmt
MsR said ...
Alpha60: Good points re alternative systems. That momentous speech in the Fountainhead is about freedom of ideas Vs bureaucracy and is a long way from what we see as capitalism today...
We need red wine for this discussion. I have only tea...
07 Oct 08 - 12:33 gmt
MacroHedgeBoy said ...
@ MsR - didnt see the Borges letter but will look at the Beano now. It sounds like it's another win for the HFSB (not).....
07 Oct 08 - 14:13 gmt
MacroHedgeBoy said ...
@MsR - Just had a look at the Borges letter. I think it's very poor on a number of levels. Firstly, it confuses things, they don't speak for the industry - that's what we pay our AIMA fees for. Well done HFSb, dividing us all again. Secondly, I agree with you; it was a wet, limp, apology of a letter. When really it should be on the front foot. Yesterdays Albourne letter really was much better
07 Oct 08 - 14:28 gmt
MsR said ...
@MacroHedgeBoy: it's very bad language..very passive and therefore doesn't ring true. It should have been more of a proposal than an apology.
You need to sort that out.
Meanwhile I am off to Australia for three weeks...need to put some money in a bank...
07 Oct 08 - 15:13 gmt
anonymous said ...
Once again proves how useless the HFSB is. Total white elephant
07 Oct 08 - 15:36 gmt
Finbar said ...
Peston. I would go to prison if I could move markets the way he does. Can I suggest you all officially complain to the FSA? Mine is in already.
07 Oct 08 - 16:57 gmt
anonymous said ...
Cramer should launch a hedge fund with Peston.
07 Oct 08 - 17:01 gmt
Tradebot said ...
....and the winner is HBOS, down 41%. RBS good runner up with -39%.
Thanks a lot Gordon Brown, today is a REALLY good day to play a bit of politics and invite the whole posse to number 10 for some serious photo shoots and postering.
07 Oct 08 - 17:26 gmt
Tradebot said ...
Emergency law... abolish elections in 2010... 5 more years of Brown Government by decree... you heard it here first.
07 Oct 08 - 17:28 gmt
rupert murdoch said ...
I would like to bemoan the lack of deference shown by poor people to those with more money, intelligence and hutzpah, than all of them put together. But i can't be arsed.
07 Oct 08 - 19:31 gmt
Moron said ...
Dear mr murdoch i really would like u to know that i think prudence is rather stunning
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