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
Seeing bastions of capitalism turn into civil servant operations is truly shocking. No more arrogant Goldmanites earning hundreds of millions for a year's work, 18 hour days without a bathroom break, rude jokes on the trading floor, the hiring of floor dollys to keep the traders' spirits up, no more swagger, bravo or big swinging dicks. The destinations of the smartest MBA's and psychotic traders will no longer be the old investment banks but hedge funds. This is great news and I can tell you now that the resumes / CVs that have passed my desk in the last 3 months are very impressive indeed. Question is how to get rid of my existing staff who are paid a lot for ex investment bankers who will work for a pittance to avoid facing up to their spouses that they are now working for starbucks?
Much debate is being had about what happens next? Consensus is rates and inflation are going to fall rapidly and governments are going to be left with very expensive debt. And it will be the tax payer who has to fund this. Someone commented that 90% of my credit crunch predictions have come to fruition and I need to show the world that I wasn't lucky. So here is a stab at what the world will be like in 12 months time.
UP Unemployment Taxes Hedge Fund performance Banking related suicides House repossessions and fire sales Sales of Das Kapital Bonds
DOWN Rates Inflation (maybe deflation) More Banks Commodity prices Sales of Jimmy Choos Equities Real Estate
[Editor: Very lame]
So Ireland raises taxes (and the rest of the world will follow) and the UK government will be issuing GBP30bn to fund the banking nationalisations. And I failed to win the MAN Booker Prize.
EFFORT TO HALT FINANCIAL CRISIS COSTS GOVERNMENTS TWO TRILLION POUNDS
The US authorities followed the UK and Europe by announcing an extraordinary plan to buy stakes in its biggest banks using taxpayers' money.
Although stock market volatility may continue over the next few weeks, City experts are hopeful that the co-ordinated bail-out will finally put a stop to the catastrophic stock market slump which threatened to bring down the financial system.
Stock-markets around the world rose sharply on Tuesday.
The FTSE-100 index has risen by almost twelve per cent in just two days following Gordon Brown's emergency bank nationalisation scheme. It rallied again on Tuesday closing up 3.2 per cent at 4,394. The Japanese stock market posted its biggest ever one-day rise and the American Dow Jones index also saw gains after opening.
However, the huge cost to taxpayers of bailing out the financial system is likely to be felt for many years -and possibly decades - into the future.
Fintag says Spending other people's money is easy. Do you feel comfortable about paying off Dick Fuld's debt to society? I didn't think so. Time for the rich to pretend to be poor once more.
Savills has become the second property group in a month to push into the real estate recovery business, after launching a team to help real estate companies and their lenders with their liquidity needs.
The team will be jointly led by John Lyons, the chief executive of Savills Americas, who joined the group when it acquired a real estate investment bank last year that he co-founded, executive managing director Jeffrey Baker, and senior vice presidents Fredric Leffel and John Wilcox.
Fintag says Leaches. They ride the bull market and leach out commissions and in the bear market buy up distressed assets. Sounds like Savills is turning into a hedge fund.
BNP PARIBAS AND CRÉDIT AGRICOLE DENY THEY NEED EMERGENCY STATE FUNDING
Two of France's leading banks were forced to deny that they needed emergency funding yesterday as the Government expanded the terms of its €360 billion (£282billion) rescue plan.
After sharp falls in their share prices, BNP Paribas and Crédit Agricole issued formal rebuttals after speculation arose that they were preparing to tap the facility.
As part of an internationally co-ordinated set of state interventions designed to stabilise the banking system, France said this week that it would guarantee bank loans up to €320billion.
A further €40billion will be available to take stakes in banks as necessary. Georges Pauget, chairman of the French Banking Federation, said yesterday that banks could also use the facility to refinance specific maturing loans.
Fintag says So that means they DO need funding.
BNP Paribas was forced to take on the toxins from Fortis and is renowned for its structuring. CA is also a big structured product house. The French government have been bailing these two banks out since last August but have kept it very quiet. Looks like the EU are putting pressure on Sarkozy to come clean.
My question is where is SocGen in all of this? Remember this guy?
RISH BUDGET 2009: LOTS OF TAXES BUT NO SERIOUS REFORM; THE RAINY DAY HAS ARRIVED AND THE CUPBOARD IS BARE
Irish Budget 2009: The Minister for Finance Brain Lenihan, began his Budget Speech at 3:45 pm and as forecast, there is little cheer to dispense against a backdrop of an Irish economy in recession, a global financial crisis and a deeper contraction expected in 2009. In simple terms; after years of feasting on the "fatted calf" the rainy day has arrived for the politicians in power and the Irish people but the cupboard is bare.
Fintag says Lots of fat middle classers are going to be losing weight very quickly. The hangover is coming ...
Most of us know that when it comes to the economy, Fed Chairman Ben Bernanke is an important player, and that when we ponder the next big thing on the Web, we need to watch the folks at Google. But few of us are keeping an eye on Sheila Bair and Herbert Allison Jr. Never heard of them? Bair, chairman of the Federal Deposit Insurance Corp., has been in the thick of the battle to shore up America's banks. Allison, the new CEO of Fannie Mae, has the unenviable job of fixing the mortgage giant.
As the U.S. sweats out one of its toughest financial periods in decades, Americans may wonder not only how we'll get through it all, but also who will lead us. Wall Street's crisis has already claimed some of the nation's best-known financial companies, spooking investors around the globe. On Main Street consumers face a double whammy: declining portfolios and the steepest drop in home prices since the Great Depression. Each year we pick an elite group, names big and small, that will have an important impact on the economy, investments and other areas vital to your pocketbook. As always, people like Warren Buffett and Carl Icahn will play a big role. But so will Sheila Bair and Herbert Allison Jr.
Fintag says Awards season is coming up. I wonder who will win Investment Bank of the year ... of course there aren't any left. Someone mentioned to me that the rise of the Merchant Bank is taking its place. Remember them? Barings, Flemings, Warburgs? Looks like out of the nationalisation the new banks will come from wealth and family offices and of course hedge funds.
Imagine starting a hedge fund and in 10 years time being hailed as the new Goldman Sachs? It is possible. There was a time in the 1980's when Goldman was not the first choice of smart people.
25 years later and it is still the case ...
HEDGE FUNDS TARGET CORPORATE LENDING AS BANKS DRY UP
An unprecedented cash crunch is choking the ability of banks to lend and creating an opportunity for hedge funds to launch, or ramp up corporate lending facilities.
Companies that have relied on bank borrowing to grow, or even maintain their business, are turning to hedge funds in a move that some say may signal a broad shift of lending from banks to asset managers.
"I have a very strong belief that the new investment banks will be the absolute return hedge funds and the managers of private equity," said Thomas Priore, Chief Executive at ICP Capital, an investment firm that manages $13 billion in fixed income assets, in New York.
Fintag says It is true. We have set up an offshore vehicle to provide loans to companies. This is the way forward. Once we get our banking license and can accept deposits, FiNTAG may become the next Goldman Sachs.
Russell Investments is launching a single manager funds platform to give investors access to boutique fund managers who are unknown or unavailable to a wide investor base.
The funds available on the Russell OpenWorld platform will encompass a wide range of strategies, including climate change, frontier emerging markets, commodities, infrastructure and micro cap.
According to Johan Cras, CEO of Russell Investments in Europe Middle East and Africa, investors are finding it difficult to access these types of products. “The real specialists in these areas tend to be small, highly focused firms with limited capacity or little international presence,” he explained.
Fintag says Great timing? Could be.
HEDGE FUNDS FACE MARGIN CALLS ON FROZEN LEHMAN ASSETS
Adding insult to injury, hedge funds with frozen assets at Lehman Brothers' London prime brokerage may have to meet new margin calls on those assets.
PricewaterhouseCoopers, which is administering the Wall Street bank's bankruptcy and liquidation, said it may demand additional collateral on some US$65 billion in frozen assets. Even though they can't touch those assets, PwC will make margin calls if the value of the securities falls.
“If your bank fails, you still have to pay your mortgage,” Steven Pearson, who is leading PwC's liquidation of the London prime brokerage, told Bloomberg News. “Who is the holder of the risk of the securities? The hedge funds. If the value of the securities fell, they have to meet margin calls.”
“The biggest losers will be those who had the most assets rehypothecated because they're gone,” Pearson said, referring to collateral Lehman loaned to other clients.
Fintag says It will take years to sort out Lehman,. Look at BCCI ...it is still being wind down even today ... [Editor: Really?]
Sir, Your editorial "More haste, and much more speed" (October 11) correctly underlines the urgent need for a co-ordinated Group of Seven approach to resolving the global banking crisis. However, now that the global financial market crisis has spread to the hedge funds, one has to wonder whether co-ordinated G7 policy action should not go well beyond recapitalising the banks if a severe and prolonged global recession is to be avoided.
In the US, banks now account for less than 30 per cent of overall financial intermediation, while hedge funds, structured investment vehicles and private equity funds in aggregate have balance sheets of a similar size to those of the banks. As Gillian Tett so well reports, the run now under way on these non-bank financial institutions is forcing them to deleverage their balance sheets aggressively in much the same way as the banks have been doing.
Even if a quick solution were to be found for the banks' capital inadequacy problem, it is unlikely that the hedge funds' deleveraging process would be arrested, since these funds will continue to experience large redemptions due to poor performance in a declining market. It would also appear that stabilising the non-bank financial institutions goes beyond the remit of the G7 central banks.
The sharp contraction of overall global credit creation that is now occurring as a result of bank and non-bank deleveraging would support the argument for a co-ordinated G7 fiscal stimulus package together with further aggressive monetary policy easing to support global aggregate demand. This would appear to be especially the case when one considers the large hit to US consumer demand from falling home, equity and bond prices, which have wiped out more than 80 percentage points of gross domestic product in US household wealth over the past year.
Desmond Lachman,
American Enterprise Institute,
Washington, DC, US
Fintag says Yes, where is my bail out fund? I am struggling to afford my trips to Scotts.
It is Black Friday in the financial world. As each hour passes, billions are being wiped off the value of shares. But Nassim Nicholas Taleb, the financial thinker of the moment, is enjoying a light-hearted lunch in a North London restaurant called Flaneur. It is one of his in-jokes - he is the epitome of Baudelaire's flâneur, a man who strolls the city, absorbing the spirit of the place: part of the crowd while also set apart from it.
Taleb is in a state of considerable excitement. He is greatly in demand because his recent book, The Black Swan, includes a scathing attack on the financial system. For years he has railed against the banks - bad risks taken for the wrong reasons by incompetent people using bogus financial models. Any fool can say that now. Taleb saw it coming.
“The financial ecology is swelling into gigantic, incestuous, bureaucratic banks,” he wrote in The Black Swan. “When one falls, they all fall.” Taleb's ideas, widely ridiculed by economists at the time, are being vindicated.
Fintag says More PR for his book. The Black Swan is an interesting premise but he is a whiner and the book very tedious. I think we would make great company.
BARCLAYS CHIEF WARNS RIVALS WILL BE 'HOBBLED' BY STATE INTERVENTION
Barclays chief executive John Varley has warned that government ownership of rival banks will leave them "hobbled" and at risk of losing key employees as the bank unveiled plans to raise £6.5bn in new capital from the private sector.
Mr Varley said he was "quietly confident" that Barclays would be able to push through its own fundraising without government support, claiming the bank already had an agreement "in principle" with an existing shareholder to contribute £1bn.
Barclays will issue £3bn of preference shares by the end of the year and £3.5bn in ordinary stock by April 2009. A further £3.5bn of capital will come through the cancellation of its final dividend, balance sheet management and operational cost savings.
"We want to protect the right of self-determination," Mr Varley said, warning that rival banks taking advantage of government capital injections would be "constrained in their strategic and operational flexibility.
Fintag says I think they will be more than hobbled. Mind you, I would take a final salary pension for a 9 to 5 job.
The New York Times reports that a Renaissance Capital equities trader, identified as one Anton Stenin, 28, is said to have circumvented the Russian investment bank's rules to build up a $130m unauthorised position using funds 'borrowed' from a client account.
Renaissance spokesperson J. Quinn Martin told Bloomberg: 'The bank's risk controls quickly uncovered the incident, and we took immediate action to mitigate the risk to the firm'. Although there were media reports that the loss was as high as $50m, Martin put the loss at around $10m. The whereabouts of the trader is thought to be unknown.
Estate agents are selling less than one property a week as prices continue to tumble, figures showed today.
The latest report from the Royal Institution of Chartered Surveyors said its members had sold on average just 11.5 homes each during the three months to the end of September.
This is the lowest level since the survey first began in 1978 and Rics has said that it expects prices to fall another 10 to 15% before bottoming out in the middle of next year.
Speaking to Sky News, Rics chief economist Simon Rubinsohn said mortgage supply was vital to the property market reviving and with moves such as Nationwide's decision to raise its minimum deposit to 15% tough lending conditions were continuing.
He said: 'Against that background prices must have further to fall.'
Trillions in stock market value — gone. Trillions in retirement savings — gone. A huge chunk of the money you paid for your house, the money you're saving for college, the money your boss needs to make payroll — gone, gone, gone.
Whether you're a stock broker or Joe Six-pack, if you have a 401(k), a mutual fund or a college savings plan, tumbling stock markets and sagging home prices mean you've lost a whole lot of the money that was right there on your account statements just a few months ago.
But if you no longer have that money, who does? The fat cats on Wall Street? Some oil baron in Saudi Arabia? The government of China?
Or is it just — gone?
If you're looking to track down your missing money — figure out who has it now, maybe ask to have it back — you might be disappointed to learn that is was never really money in the first place.
Fintag says Like magic it just went puff.
ART MARKET NEWS: KATE MOSS, VICTORIA BECKHAM AND AGYNESS DEYNE PORTRAITS TO LAUNCH GALLERY
More than 70 paintings of celebrity fashion icons including Agyness Deyne, Kate Moss and Victoria Beckham are to launch Ransom, a new gallery which opens in Pimlico, south-west London, on Thursday.
The portraits, which measure up to 8ft x 6ft, are by American artist Katherine Bernhardt, who is represented in Charles Saatchi's collection. Her work has been described by New York critic Jerry Saltz as "a fashion-shoot orgy of legs, eyeliner, red lips, big hair and more legs".
Fintag says Now this is the sign that the markets are over.
RBC: HEDGE FUNDS DOWN 7.7% IN SEPT., 13.2% IN 2008
In case you hadn't heard, September was not a good month for hedge funds.
The latest industry index to play the role of bearer of really bad news is the RBC Hedge 250 Index, which fell 7.67% last month. The index is down 13.17% year-to-date.
The sole bright spot, managed futures funds, added 1.03% last month. The strategy is also the only one tracked by RBC in the black on the year, with a year-to-date return of 8.28%.
Fintag says There is always next month to make up for lost ground ...
29 comments
anonymous said ...
All the merchant banks were plural. you will need to call yours fintags. sounds like a lapdance club
15 Oct 08 - 08:31 gmt
Watcher said ...
Finbar, Soc Gen's CEO also said yesterday that they don't need to make use of state funds. He then claimed to dislike cheese, garlic, wine and holidaying in August.
15 Oct 08 - 08:54 gmt
GalwayBoy said ...
In these turbulent times you have to look after yourself Fin. I had a most enjoyable anti-recession lunch at Scotts on Monday. The place was packed. They were all there, Earl Spencer and a mystery blonde, lots of private bankers nervously lunching their UHNW clients, and a french girl on the next table who bizarrely had the face of a 20 year old and yet had the neck of a 70 year old....weird. I tell you its the way forward. It was as if the worst financial storm in a century wasn't happening.
15 Oct 08 - 08:57 gmt
t2k said ...
The Bank of International Settlements has recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.
Finbar, Do these July '08 numbers seem credible to you?
15 Oct 08 - 09:37 gmt
anonymous said ...
What happened to the Curzon St soap? Time for another installment please Fin.
15 Oct 08 - 09:54 gmt
khyron4eva said ...
"Imagine starting a hedge fund and in 10 years time being hailed as the new Goldman Sachs?"
Answer: Citadel
Hey, Finbar, long time no see.
15 Oct 08 - 09:55 gmt
KONG said ...
"It was as if the worst financial storm in a century wasn't happening."
Sounds like the Ballroom of the Titanic.
15 Oct 08 - 10:09 gmt
Moron said ...
citadel...they have 1300 employees and 20 bill under management...can u smell the implosion:)))
15 Oct 08 - 10:30 gmt
Tradebot said ...
well, in 10 years time the new Goldman Sachs will be Goldman Sachs. All banks that will come out from this mess without the dead hand of Government weighing down on them will prosper...
However, what remains of investment banking landscape will be burnt and barren... land of low returns and low risk. Hedge Funds will have the edge, but days of high leverage are gone.
I am furiously working on figuring out what will be the next bubble, but I've come up with nothing so far.
15 Oct 08 - 11:49 gmt
Moron said ...
hedge funds will always prosper...as long as there is volatility....lower leverage just means lower returns for the same risk.....its a simple business model...we make money off volatility...up or down
15 Oct 08 - 12:08 gmt
KONG said ...
Next Bubble? I still like the Emerging Markets to lead the eventual recovery, get overbought and begin trading at crazy PE multiples once again. Plus ca change.
15 Oct 08 - 12:19 gmt
KONG said ...
Next Bubble? I still like the Emerging Markets to lead the eventual recovery, get overbought and begin trading at crazy PE multiples once again. Plus ca change.
15 Oct 08 - 12:19 gmt
Alpha60 said ...
Interesting article from Peston. According to this Chairman Mao a.k.a Hank Paulson wants to kill all the "bad" h-funds (i.e the ones who shorted his beloved GS)
15 Oct 08 - 12:29 gmt
KONG said ...
Alpha60,
Interesting indeed, but how will Hammering Hank deal with funds that are way, way outside his jurisdiction?
15 Oct 08 - 12:39 gmt
Fred Goodbutcoulddobetterwin said ...
Gis-a-job!
15 Oct 08 - 13:29 gmt
Moron said ...
hammering hank needs to get his head out of his ar*hole and reconnect with his softer side....other than that....it seems to me the markets are on a rather downward sloping trajectory at the moment:)))))))
15 Oct 08 - 13:33 gmt
Jaa said ...
hehehe...big up the Moron.:))
15 Oct 08 - 13:42 gmt
Alpha60 said ...
Kong - He can't, big govt and over regulation is always doomed to failure ( I.E Basel II ). And any attempt to regulate the hf's will only result in them leaving greenwich / mayfair, and moving to switzerland, Singapore or dubai.
15 Oct 08 - 13:45 gmt
Moron said ...
it seems to me that....it pays to be a moron:)) so many stocks are so much higher than their lower bollinger bands......sitting duckies:))))
15 Oct 08 - 13:53 gmt
anonymous said ...
Traderbot - next bubble will be gold, soon you will see retail people lining up around the block to buy the metal. It will be the next public mania.
15 Oct 08 - 14:45 gmt
anonymous said ...
"Up - sales of Das Kapital"
Hardly -- try sales of Ayn Rand's books, which sell more copies every year. The unfree market has had its chance and failed. How absurd that 12 men in a room mandate what our interest rates should be. Get rid of the Federal Reserve politburo and go back to gold.
15 Oct 08 - 14:48 gmt
Raynor said ...
thanks for the update!
Question: Why do you call rates lower? Me thinks risk premiums are climbing, and with the gov taking on bad assets, wouldn't 10% be more likely on a 10 yr treasury than 3%?
thanks as always!
15 Oct 08 - 14:55 gmt
anonymous said ...
Ah yes, Flaneur. Fantastic restaurant / gourmet shop, but has it been so good since the original owners sold it? They used to thrive on custom from Merrills but suffered when they moved.
Ironically the author of that article doesn't know the other meaning for Flaneur, the hidden codeword meaning. Or if they do, then they are heaping a big insult on Taleb's orientation.
15 Oct 08 - 15:32 gmt
Moron said ...
making so much performance today....didnt expect the sarkozy rally to fade this fast....this market is badly broken!!
15 Oct 08 - 15:59 gmt
KONG said ...
Gordon Broon is having his Falklands moment- unfortunately he is General Galtieri.
15 Oct 08 - 16:55 gmt
Moron said ...
Markets collapsing woo hoo
15 Oct 08 - 20:59 gmt
Moron said ...
Dribble dribble dribble
15 Oct 08 - 21:15 gmt
anonymous said ...
Hedge Funds started forced selling today due to margin calls. The Hedge Fund industry in the US has $3 trillion under management. When they are forced to sell---look out below!!!
DOW 6000
16 Oct 08 - 01:33 gmt
Scary Movie said ...
Ah I have a secret, please tell know one CASH IS KING!!
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The US authorities followed the UK and Europe by announcing an extraordinary plan to buy stakes in its biggest banks using taxpayers' money.
Although stock market volatility may continue over the next few weeks, City experts are hopeful that the co-ordinated bail-out will finally put a stop to the catastrophic stock market slump which threatened to bring down the financial system.
Stock-markets around the world rose sharply on Tuesday.
The FTSE-100 index has risen by almost twelve per cent in just two days following Gordon Brown's emergency bank nationalisation scheme. It rallied again on Tuesday closing up 3.2 per cent at 4,394. The Japanese stock market posted its biggest ever one-day rise and the American Dow Jones index also saw gains after opening.
However, the huge cost to taxpayers of bailing out the financial system is likely to be felt for many years -and possibly decades - into the future.