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
Unlike plane hopper Nouriel Roubini, that miserable Dr Gloomy, who continually tells us the world is doomed like a depressed Jehovah Witness, I am not a gloater. The fact I was the only person in the whole wide world to predict with precision the actual top of the market and the subsequent crash doesn't push me into endless CNBC and Blooomberg TV interviews and accepting an honorary PhD from Harvard. I am too reserved and proud for that.
We all know this is bad. Very bad. It is obvious. The last time we had banks going bust or nationalised, countries going bankrupt and real estate going into free fall was after 1929. Things were slower to unwind we are told. Not so. We have started falling and a year later we are still falling with a long way to go. Asia is in terrible trouble and all those countries (European mostly) with high exposures to emerging markets are facing a meltdown of historical proportions. We have currency volatility and central bankers wanting to drop rates to 0% - that is a real headache for currency traders and economists.
To sort this out we need World War 3, apparently. But before we go down that path, check out my chart and the rest of my picture packed newsletter.
If you want to pay me a few million, give me a green card and allow me to tour the USA gloating about the awfulness I predicted, how to fish and grow vegetables, then please email me. I am six foot, good looking and have the demeanour of an old Etonian and the roughness of Guy Ritchie. Given my funds are closed and investors suing me for style drift - yes, I told you lot the markets were a gonna but didn't adjust my models in time [Editor: Idiot] - I am available for Christmas.
Quotes "This is a once-in-a-lifetime crisis and possibly the largest financial crisis of its kind in human history" Deputy Governor of the Bank of England, Charlie Bean
“This is the biggest currency crisis the world has ever seen,” Neil Mellor, Bank of New York Mellon.
Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is to become “the second epicentre of the global financial crisis”.
Housekeeping Someone asked me how to download my charts I periodically display. Nearly all my pictures link thru to Flickr where you can often get large ones.
For new readers, I write this when I wake up. It is a stream of consciousness and full of typos and other errors. This is on purpose. My ex boss, now a retired Hedge Fund grandee always used to say to me "Spelling and Grammar is for wimps." It takes me 45 minutes to an hour depending on my hangover to write this. All errors are mine and most of the content written by smart people. My job is to tell you what is really happening, not what journalists think is happening.
When this man predicted a global financial crisis more than a year ago, people laughed. Not any more...
As stock markets headed off a cliff again last week, closely followed by currencies, and as meltdown threatened entire countries such as Hungary and Iceland, one voice was in demand above all others to steer us through the gloom: that of Dr Doom.
For years Dr Doom toiled in relative obscurity as a New York University economics professor under his alias, Nouriel Roubini. But after making a series of uncannily accurate predictions about the global meltdown, Roubini has become the prophet of his age, jetting around the world dispensing his advice and latest prognostications to politicians and businessmen desperate to know what happens next - and for any answer to the crisis.
While the economic sun was shining, most other economists scoffed at Roubini and his predictions of imminent disaster. They dismissed his warnings that the sub-prime mortgage disaster would trigger a financial meltdown. They could not quite believe his view that the US mortgage giants Fannie Mae and Freddie Mac would collapse, and that the investment banks would be crushed as the world headed for a long recession.
The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.
Currency pegs are being tested to destruction on the fringes of Europe's monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.
Fintag says This is the scariest analysis I have read about the next phase. Truly, it is very frightening. I created a Country Hall of Shame viral and within 12 hours it is out of date. It is moving just too fast. No wonder the USD is the reserve currency once more.
financial times says " Turkish politicians argue over need for IMF help as crunch bites "
Highbridge Capital, a hedge fund manager owned by JP Morgan Asset Management, has cut 10% of its staff as hedge funds struggle with the fallout from the third quarter—one of the worst on record for performance and outflows.
A JP Morgan Asset Management spokeswoman confirmed the hedge fund manager cut 35 staff last week, primarily in its back office.
She said: “These cuts do not impact the strategies it offers clients...There are absolutely no plans to close any funds. This business has grown to its position through constant adaption and innovation and it will continue to develop to serve its clients.”
Fintag says A bit of wastage. The usual 10% dead wood that JP Morgan et al do. Nothing to worry about. Gulp ... [Editor: So you do work at Highbridge as suspected and in the back office too ...]
A new front is opening up in the battle between London and New York to be the world's dominant financial centre.
Hedge funds, and the thorny question of where they decide to do business over the coming months, could mark a turning point in the delicate balance of power between the two market capitals.
Despite widespread fears that hundreds of funds are poised to collapse, any shake-out in the industry will still leave hundreds of healthy firms with billions to invest.
Experts say that some of the industry's biggest funds are considering whether to move billions of dollars worth of assets across the Atlantic to the United States in the wake of the collapse of Lehman Brothers, the Wall Street investment bank.
Fintag says I am pleading. Please let me in. I have been pleading for the last 2 years; Curzon Street is turning into a war zone and I need to get out. And this is the last week of the red telephone box - they are no longer used and are being ripped out and turned into body armor for our troops in Afghanistan (cost cutting).
POUND IN FREE FALL AND TRADERS SAY THERE'S NO WAY TO STOP THE PLUNGE
The pound plummeted close to a six-year low yesterday. The currency's losses in recent months now mirror its demise after Black Monday in 1992, when John Major pulled Britain out of the exchange-rate mechanism and destroyed the Conservatives' reputation for economic management.
In London the pound hit a low of $1.5280, down from $2.01 three months ago, while shares in British companies tumbled again, leaving the FTSE down 30.77 at 3852.59, its lowest close since the invasion of Iraq in the spring of 2003.
Fintag says And the Bank of England wants to cut rates? This should only be done if every other country does it too. All the hot money is going into the Euro and I spent the summer with Frenchies enjoying a cheap dollar in the USA and it looks like Christmas they will be hoovering up the cheap goods in our stores.
UK exporters must be screaming with joy - except we dont really have many exporters. We, like most other countries just enjoy the fruits of the exploited labor in asia and will be sucking in inflation very soon. So deflation is off the cards? I think so. Or maybe not. I am good but not good at working this puzzle out.
fin facts says " Trichet signals ECB interest rate cut next week; Benchmark rate may fall to 3.25% "
Share prices in Asia have lost ground again as markets opened, following volatile trading throughout the world.
Japan's Nikkei index opened down 2%, falling below the 7,000 mark for the first time in 26 years, but recovered by lunchtime, down 0.95%.
Tokyo has said it will bring forward a ban on naked short-selling of stocks in an effort to stabilise markets.
Fintag says 26 years. Imagine that. And during those years of high average inflation, all those index tracking pension funds have lost an entire generations growth. They might as well have stuck the assets on T Bills. Still, the dividends were good.
Central banks around the world are moving to further slash interest rates as they seek to contain the damage from the bursting of the biggest credit bubble in history.
The Federal Reserve is poised to cut its benchmark rate for the second time in two weeks at a pivotal meeting in Washington on Wednesday, and the European Central Bank yesterday suggested that it would do the same next week. South Korea announced a dramatic rate cut yesterday, by three-fourths of a percentage point.
Fintag says And then when the rates are 0% what next? Print more money?
The white swans are not coming home. Is this a Black Swan event?
A collapse in tax revenues will send government borrowing soaring above £60 billion this year, it emerged last night.
Gordon Brown is preparing to tear up his “golden rule” on debt in order to fund a massive spending spree to counter the looming recession. Some economists predict that the level of government borrowing could reach £110 billion by 2011.
The triple shocks of the financial markets crash, housing slump and rising inflation will cause a drastic reduction in the billions of pounds that the Treasury normally receives in stamp duty, corporation tax and income tax, combined with the need to spend more on benefits.
But Alistair Darling will confirm tomorrow that new, “flexible” financial rules will be introduced to allow the Government to borrow as much as £3,225 for every person in the country in an effort to stave off an even deeper recession.
Fintag says Short GBP. Where is this money coming from? It took the UK 50 years to pay off its debts from the Second World War. What next Brown Bonds?
guardian says " Cries of companies going bust will be heard all too soon "
The last, and perhaps the biggest, bubble of them all: the yield on the long bond since 1980, annotated by, and stolen without permission from, Alchemy of Trading.
Fintag says It is truly a Black Swan event.
COMPSYCH POLL: VAST MAJORITY OF EMPLOYEES LOSING SLEEP OVER FINANCIAL WORRIES
Employees were asked: Do financial worries keep you up at night? If so, what is your biggest concern?
* 30 percent said the cost of living. * 29 percent said credit card debt. * 14 percent said mortgage payment. * 13 percent said retirement account. * 3 percent said kids' tuition. * 3 percent said health care costs.
* 8 percent said they are not worried.
Some 92 percent of employees say financial worries are keeping them up at night, according to a poll released by ComPsych Corporation.
Only 8 percent of employees described themselves as “not worried.”
Based on the size of holdings as per a June 30th 13F filing with the Securities and Exchange Commission, The New York Post reports that Eddie Lampert's hedge fund ESL Investments has seen its holdings in eight of its largest investments (including AutoZone, AutoNation, Citi, Home Depot and Sears Holding) fall an average of $193m in each trading day in the last 26, which translates into a paper loss of $30m an hour (allowing for a 6.5 hour trading day) over the period.
In the meantime, Bloomberg reports that, according to Morgan Stanley analyst Huw van Steenis, US hedge fund managers may lose up to 15% of assets to withdrawals by the year-end, while their European counterparts could see withdrawals up at 25%.
Fintag says Ooops. That is what you get when the prime brokers turn onto commercial banks and find they cannot lend as much to the hedge funds. Coupled with hedgies being asleep during the day because they have been awake during the night, it is hell fire damnation.
cnbc says " Morgan Stanley Funds Hit By $46 Billion Withdrawal "
finalternatives says " RAB Halts Withdrawals From Second Fund, Seeks Restructuring "
Stephen Schiff isn't a trader or a banker, but he knows first-hand about the convulsions on Wall Street. He is the screenwriter who wrote was was supposed to be Gordon Gekko's long-awaited comeback vehicle — only to have the landscape of Wall Street ripped up and rearranged in the months after his final draft was turned in.
“I'm certain my former masters at Fox will find a way to make a Wall Street sequel for a planet on which Wall Street has ceased to exist, and I wish them every success,” Mr. Schiff wrote on a post in The Daily Beast.
In the meantime, he said, he has been left wondering about all the predictions he heard from Wall Streeters during his research for the movie — predictions that, by and large, were completely off the mark.
As he traveled from New York to London to Dubai, speaking with people who were plugged into high finance, it seemed that one topic dominated the conversation, Mr. Schiff wrote: “Bankers wanted to talk about hedge funds. Oligarchs wanted to talk about hedge funds. Journalists wanted to talk about hedge funds.”
Fintag says Oh dear. So my poster is a fake then? Reality is happening faster than fantasists can keep up with.
Finally, I have given up with my Hall of Shame. Here is the latest version without KBC and Swedbank. There are so many banks being bailed out, as one commentator said it maybe easier to start again with those banks who have not been bailed out.
28 comments
pete said ...
Barton Biggs on Bloomberg replied to a 'hedge liquidation question' saying..'some hedge funds are raising huge amounts of cash' ? Is there any further anectdotal evidence out there?
28 Oct 08 - 08:03 gmt
anonymous said ...
I am looking for a butler? Are you good with waspy yanks?
28 Oct 08 - 08:04 gmt
ratfink said ...
Fin we need someone to entertain the family during Christmas lunch. How do you look in a striped cap and bells?
28 Oct 08 - 08:33 gmt
MacroHedgeBoy said ...
Did anybody see Hugh Hendry on TV last night? Lots of hindsight. I always knew he was more of an entertainer but I never thought I'd see him on telly.....
28 Oct 08 - 10:28 gmt
Tradebot said ...
Short the GBP? Maybe againt the dollar, but I really *hate* the euro...Italy is bust, Spain are dead as the disco, Portugal, Greece, Belgium, Ireland... uh huh, half of Eastern Europe going to IMF with hat on their hand, begging for their lives, rich Russians hoarding EUR while getting marging calls while their bank lines are drawn and stock market remains shut....
28 Oct 08 - 10:39 gmt
anonymous said ...
Country Hall of Shame.
I can figure out why some are there.
However, why Switzerland? Why not Ireland?
Nick
28 Oct 08 - 10:40 gmt
gv said ...
all hail the mighty and omniscient Fin!!
28 Oct 08 - 10:49 gmt
stock8 said ...
Italy went bust when the Roman empire blew up..so nothing new...Question: Did Italian banks get any funds injection from the state....Fin can t see any on your Hall of shame
28 Oct 08 - 11:10 gmt
benw said ...
article - Swisss have 50% gdp exposure to eme markets.
Hendtys a bright guy but arrogant as fK. eclectic agriculture down 50% over 4 months aint so inspiring. perhaps we should all hire ex-footballers - i'll take graham le saux as he reads the guardian and therefore must be bright
28 Oct 08 - 11:15 gmt
MacroHedgeBoy said ...
If we are talking about which footballers to hire, I'll have Eric Cantana join the marketing team. He would be excellent for dealing with Funds of Funds 'You call me names, hiya, take a flying kick...!!). Now that would be excellent Hedge fund client service
28 Oct 08 - 11:33 gmt
benw said ...
I'll also have David Ginola but that night upset Fin as he wouldnt be the most handsome in the room
28 Oct 08 - 11:38 gmt
anonymous said ...
good to see that MsR is no longer posting here after the severe kicking she got last week
28 Oct 08 - 11:43 gmt
LikesMsR said ...
What kicking anon? You are pathetic
28 Oct 08 - 11:47 gmt
Posh said ...
I fink David should have a go
28 Oct 08 - 11:55 gmt
Ben M said ...
@Anon11.43: Sounds like you're missing her..otherwise why mention it.she's out of your league anyway.
28 Oct 08 - 11:55 gmt
anonymous said ...
short euro, long dm, ff, lira, austrian shilling
28 Oct 08 - 13:14 gmt
anonymous said ...
anyone know much about rbs orbita range of funds?
28 Oct 08 - 13:24 gmt
Moron said ...
im really really getting tempted to go long for a bear market rally!!
28 Oct 08 - 13:25 gmt
anonymous said ...
I think Orbita is an RBS Fund of Hedge Fund product range
28 Oct 08 - 14:17 gmt
yank said ...
Why don't you "marry" a yank to get your green card....you sound witty and attractive.....
28 Oct 08 - 14:28 gmt
anonymous said ...
Fintag in striped cap and bells? Much better to hire the Brit who can fart Christmas carols....long track record and very reliable.
28 Oct 08 - 14:51 gmt
Top Cat said ...
Ms R is on holiday, hence her lack of posting. Not thanks to some imaginary 'kicking'
28 Oct 08 - 15:05 gmt
fitzcaraldo said ...
Heidiland bust? The Helvetic Confederation was founded in 1291, almost every male has an assault rifle in his cupboard, Kloten airport is paved with bullion and the global UHNWI community will not be amused to see their favourite safe haven go belly up. N.B.: I am not Swiss, however, might apply, ist there a passport lottery like in the US?
28 Oct 08 - 16:14 gmt
Dan said ...
CH just raised 750MM for his new fund.
28 Oct 08 - 18:10 gmt
GalwayBoy said ...
Moron, have you got a big short on VW? I predict several hedge funds are currently getting bent over the table on this one.
28 Oct 08 - 18:19 gmt
Moron said ...
no position in VW either way...just think we r setting up for a rally here
28 Oct 08 - 18:39 gmt
Alpha60 said ...
Today's VW share px move is ridiculous. How Porsche have gotten away with this is unbelievable. Long live Bafin!!!
28 Oct 08 - 20:14 gmt
anonymous said ...
Finbar, stop wasting time making forecasts and get on match.com US....marrying is the only way you'll get that holy pass
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