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
Another day passes when the long tails got fat again and volatility made it impossible for most of us to ride. US confidence is at its lowest ever and the DOW shoots up into double digits. The Porsche trade (was it legal? Does it contravene EU law? How did they build up a stake so large?) was the talk of the day and some of us hedgies, desperate to end October with a positive return will have lost a lot of money. Automobile making is not a recession proof industry and the current second hand values of cars are falling and new car sales dead. But that isn't the point. The markets are mad and this trade was supreme madness.
I hope Porsche and VW have good lawyers.
Meanwhile, the largest urban shopping mall opens tomorrow in West London and predictions are the roads near to where I live (Holland Road) will turn into the new M25. The timing is awful and will be seen as this crunches Van Goch flowers. I look forward to pretending I am in Las Vegas at the weekend, camera in hand.
Polititians want to spend more and still haven't asked where does the money come from? It is easy to say we will borrow it but from who? If the governments hoover up the world's capital there will none left for companies. The stock market will plummet further and the banks will need more capital as their stock prices fall further. Oh dear.
My Hall of Shame has a new member, Northern Trust and much debate was had yesterday about my Country Hall of Shame.
Yesterday I went wild with pictures. Today I don't.
Europe's biggest urban shopping centre will be opening its doors in west London on 30 October.
The £1.6bn Westfield centre aims to bring 60,000 visitors per day to Shepherds Bush.
Fintag says Lots of window shoppers will be descending and of course it will a great place for unemployed ex investment bankers to join their hedge fund enemies for a fight or too.
FINANCIAL CRISIS: EAT, SPEND AND BE MERRY - THIS IS NOT THE END OF THE WORLD
I don't want to seem indifferent to suffering, and I don't want anyone to accuse me of minimising the likely effect of the recession, because the coming months will very probably be a lot tougher - for millions of people - than the boom times we have all recently enjoyed.
But after reading the BBC's special market crisis website, complete with its jagged red arrow pointing at the floor, and after hearing the pornographic glee with which we are told that another small country has gone up the spout, and after Mr Bean, the Deputy Governor of the Bank of England, has informed us that this could be the worst financial crisis in history, I am afraid I want to thrash my FT on the table and shout, Whoa! Come off it, folks! This isn't the Black Death. Pinch yourself. Are you still there? Got a pulse? Thought so. Look out of the window. Those aren't zombies. They are men and women engaged in the normal business of getting and spending.
Fintag says Tis true. But out of depression comes some of the greatest culture. The Shadows, Vivienne Westwood and The Bauhaus for starters. We need to feel glum to appreciate having a gold studded diamond Rolex doesn't bring us happiness. We need to embrace a new order, a new religion, a new thinking:
US CONFERENCE BOARD CONSUMER CONFIDENCE INDEX PLUNGES TO LOWEST IN AT LEAST 41 YEARS IN OCTOBER
The US Conference Board Consumer Confidence Index, which had improved moderately in September, fell to an all-time low in October. The Index now stands at 38.0 (1985=100), down from 61.4 in September. The Present Situation Index decreased to 41.9 from 61.1 last month. The Expectations Index declined to 35.5 from 61.5 in September. The Index is the lowest in 41 years when the series began.
The amount of money being invested in financial companies by sovereign wealth funds has hit an all-time high this year, according to new research, as state-owned investment vehicles continue to see value in struggling western banks despite some heavy paper-losses on deals to date.
The value of finance-targeted investment from SWFs so far this year has reached $31.3bn (€25bn), according to data provider Dealogic.
The figure is almost three times the value of $12.7bn at the same time last year and is the highest year-to-date value on record.
Fintag says What would we have done if the SWF's hadn't been around eh?
icfa says " Northern set to receive Treasury funding "
pbs says " Top Theorists Examine Rippling Economic Turbulence "
Some of the country's most famous investors, including Warren Buffett and John Bogle, have started to make the case that it's time to dive back into the stock market.
They are usually careful to add that they don't know what stocks will do in the short term. Yet their basic message is clear enough: stocks are now cheap, irrational fears have been driving the market down lately, and people who buy today will be glad that they did.
Fintag says Not one to criticize the experts but stock bargains exists when:
1. P/Es are low 2. Stock value < Book Value / NAV 3. Cash on Balance Sheet > Stock Value 4. That sort of thing
The question is timing:
1. What will the stock price be this time next year? 2. Will Sales be falling? 3. Will debtors be unable to pay? 4. Will bad debts be on the increase? 5. Will there be cash flow issues because they cannot service their debts or refinance? 6. Do they enjoy high or low currency rates? 7. That sort of thing.
How any one can make these judgements in this market is an a complete idiot.
The Sports car giant Porsche has pulled off one of the greatest share killings of all time in a coup that has left some of the world's largest hedge funds nursing combined losses that could total $20bn (£12.6bn).
The vast sum was won and lost in bets on the share price of Volkswagen. While Porsche has been building a secret 74 per cent stake in its rival, the hedge funds have been betting that the shares will fall. The shares soared by 400 per cent in two days, leaving Porsche with a huge profit and the hedge funds - some of which are based in London - with losses that could drive them into bankruptcy.
City traders were stunned by the audacity of Porsche's move, although there is no suggestion that it broke German law or trading regulations.
Fintag says So you thought Porsche was an exclusive brand? Now it is cheap as chips.
The financial rescue operation will force the federal government to borrow an unprecedented amount of money as the budget deficit climbs to record heights, a top Treasury Department official said Tuesday.
Anthony Ryan, Treasury's acting undersecretary for domestic finance, said the administration back in July was forecasting that the deficit for the current budget year, which began on Oct. 1, would hit a record $482 billion. He said that forecast did not include all the government's efforts since then to deal with the worst financial crisis since the 1930s.
"This year's financing needs will be unprecedented," with all the rescue programs now in place, Ryan said.
Ryan said those borrowing efforts will need the address numerous government initiatives: The $700 billion rescue program passed by Congress on Oct. 3; efforts by the Federal Reserve to bolster banks' balance sheets which have required it to utilize Treasury's borrowing resources; and the need of the Federal Deposit Insurance Corp. for resources deal with a rising number of bank failures.
Fintag says ...from who? China? India? The American citizens who have a zero savings ratio?
EXPERTS SAY HEDGE FUNDS TO ADOPT POPULAR UCITS STRUCTURES
Overseas hedge funds are increasingly launching UCITS III structures, which are highly regulated products suitable for institutional and retail investors.
According to some estimates, UCITS III funds currently hold US$6.4 trillion, and sales in Europe, South America and Asia are booming.
In Asia, 70-80% of all funds sold publicly are through UCITS funds.
Philippe Lespinard, a partner at Brevan Howard Asset Management, attributes the proliferation of UCITS structures to the increasing popularity of long extension strategies such as 130/30 funds, the increasing popularity of absolute return strategies such as hedge funds, and the demand for greater transparency in fund management from investors.
John Donohoe, CEO of Carne Global Financial Services, an investment consultancy, says UCITS III funds are a “fantastic long-term opportunity for fund managers to gain access to a broader investor base.”
“We believe that sooner or later, most hedge funds with significant assets under management will adopt UCITS III structures,” he said.
Fintag says ....uh how do they do this? We have checked this out and as far as we can tell only Hedge Fund Indices are UCITS compliant. I will have another look ... meeting booked with Neil Simmons later this week.
Not all the signs on my personal recession-watch are pointing down, however. People are gossiping that half the hedge funds in London are in danger of closure. But on Friday I had lunch at Automat in Mayfair in the heart of hedge-fund land. The restaurant was full. We couldn't get a table until 1.30pm. Lots of the clientele were in hedge-fund uniform: well-cut suit, open-necked shirt, deep tan. I tried to eavesdrop on neighbouring tables. And I did hear one guy confide to his lunch companion: "Sometimes I think I'm going insane." But we all feel like that sometimes - even when the economy is still growing.
Fintag says Good grief. You cannot have a private conversation without someone eaves dropping ... [Editor: You are insane, that is true]
THE MARKETS ARE CLEAR: BRITAIN IS MUTTON DRESSED UP AS LAMB
...And after the deluge, what then? It would be nice to report that lessons have been learned and that the future promises tougher controls on credit creation, the renaissance of the industrial base to meet the environmental challenge, the permanent cageing of the City. But do you honestly believe that is going to happen, whoever is in charge? No, me neither.
Fintag says This is where a control and command economy comes into its own. Having re-read Animal Farm I have decided it is better what we already have. Socialism sounds great in theory but in practice fails every time.
WORLD ACCORDING TO TARP NO LAUGHING MATTER FOR U.S. TAXPAYERS
The financial crisis exacerbated by credit derivatives is costing so much to fix that speculators are now using those same instruments to bet on governments as the price tag for bailing out banks approaches $3 trillion.
The cost to hedge against losses on $10 million of Treasuries is about $39,000 annually for 10 years, up from $1,000 in the first half of 2008, based on CMA Datavision prices. The equivalent for German bunds has risen to $37,000 from $2,000, while it has jumped to $66,000 from $3,000 for U.K. gilts.
Fintag says Hat Tip to Gore Vidal eh? Of course nobody is laughing. Who wants to live life under socialism?
“High conviction” Masters of the Universe sale Goldman Sachs Dynamic Opportunities Limited (“GSDO”) is a Guernsey registered closed-ended, fund of hedge funds which is listed and traded on the main market of the London Stock Exchange (“LSE”). GSDO launched in July 2006 and was the first closed-ended, exchange listed investment company managed by Goldman Sachs. GSDO represented the largest initial public offering of a fund of hedge funds listed on the LSE up to that point. GSDO is managed by Goldman Sachs Hedge Fund Strategies LLC (“HFS” [or Commodities Corp. to its really old friends]) which has 38 years of experience in allocating to alternative investment strategies. GSDO invests in a concentrated portfolio of high conviction managers. GSDO allocates to both core strategies such as relative value, event driven, tactical trading and equity long/short strategies as well as other niche strategies.
A 12-month chart for GSDO, the GBP-denominated (and largest, with its £182 million market cap accounting for about 75 per cent of the pool at Oct. 27) share class ...
Fintag says ...not a pretty site. The chart that is ... ;)
The large number of emerging market bonds that are due to mature over the next five quarters raises the prospect of high-profile defaults.
The threat of defaults and company closures in emerging markets in the final quarter of 2008 and in 2009 may become a reality, according to a research report by ING Wholesale Banking.
The report warns that over the next five quarters there is $111 billion worth of bonds that need to be refinanced in the emerging market economies and cautioned that some high-profile companies may default as they face shrinking markets and difficulties in rolling over maturing debt.
Fintag says And who is exposed to all these bonds? Mostly the EU ...
Samuel Israel III, the hedge fund manager who faked his own suicide after being convicted of swindling his investors out of $450 million, will spend 90 days in a medical prison, Reuters reports.
At a hearing in Federal District Court in White Plains, N.Y., Mr. Israel's lawyer requested that the former head of the collapsed Bayou Group hedge fund be physically and psychologically evaluated at the prison in Butner, N.C.
The market is worth more than $516 trillion, (£303 trillion), roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".
It's a market in which the lead protagonists - typically aggressive, highly educated, and now wealthy young men - have flourished in the derivatives boom. But it's a market that is set to come to a crashing halt - the Great Unwind has begun.
Last week the beginning of the end started for many hedge funds with the combination of diving market values and worried investors pulling out their cash for safer climes.
Fintag says That seems quite a lot. Let us hope that they all net off to zero.
First came the mortgage crisis. Now comes the credit card crisis.
After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both, just as an eroding economy squeezes consumers.
Fintag says So why have I had 3 invitations to open up a Credit Card last week? I supposed I had better apply - just incase I need to lever up one my funds [Editor: Your assets must low. Finbar: I am not that old ...]
Five Lancelot Investment Management hedge funds have filed for bankruptcy, blaming Minnesota businessman and hedge fund manager Tom Petters , who is accused of orchestrating one of the largest Ponzi schemes in history.
The five Lancelot funds and their subsidiaries filed for Chapter 7 liquidation in U.S. Bankruptcy Court in Chicago last week. According to court documents, the funds invested about $1.5 billion of their $1.8 billion in assets in Petters' business entities, which, in addition to his hedge funds, include Polaroid and Sun Country Airlines.
Fintag says ...and not a word from Gottex after their denials. Maybe they were telling the truth.
Speaking at the Massachusetts Institute of Technology, the Soros Fund Management chief said that the hedge fund industry could shrink by as much as two-thirds, one of the more pessimistic appraisals of an industry in crisis.
"The hedge fund industry is going to move through a shakeout," Soros said. "In my estimation, it will be reduced in size by anywhere between half and two-thirds."
Fintag says ...and this is a good thing?
25 comments
rtah100 said ...
Gore Vidal? John Irving, if the reference is to Garp.
29 Oct 08 - 07:56 gmt
Finbar said ...
oops ...Irving it is
29 Oct 08 - 08:46 gmt
anonymous said ...
so which fund has been on the wrong side of VW?
29 Oct 08 - 09:35 gmt
anonymous said ...
Fintag nil points... its eurovision all over again...
29 Oct 08 - 09:59 gmt
KONG said ...
The dibbling public are loving the VW hit on hedgies over on the BBC message boards. Blissfully unaware that their pensions were probably destroyed in that fireball.
29 Oct 08 - 11:52 gmt
GalwayBoy said ...
anon @8.46 Let me guess................ another journo looking for a story?
29 Oct 08 - 13:36 gmt
anonymous said ...
GalwayBoy -- um no this is a standard question/line of inquiry on this board... or at least it used to be until it began to be populated by hagiographic references to the author and the introduction of the awful MsR and her laughable sub-SATC attempts at witty urban comment.
29 Oct 08 - 13:49 gmt
JP said ...
well if you believe the German press yesterday, Marshall Wace were on the wrong side of it with a €5bln loss. Yes Billion! utter tosh.
29 Oct 08 - 13:50 gmt
cockyspiv said ...
...and where is MsR to defend herself?
29 Oct 08 - 14:03 gmt
GalwayBoy said ...
Don't read the press. There is way too much wild rumour flying around at the moment. My guess would be that there is a political component to the Porsche/VW shenanigans. How much have the state of Lower Saxony made out of all this? Don't forget ze Germans hate "locust" hedgies. We should also look at the losses the banks and their prop desks will have sustained. The hedgies will be down but not out.
BaFin look about as useful as the FSA
29 Oct 08 - 14:10 gmt
MacroHedgeBoy said ...
I want to talk about the bottom. Where's MsR?
29 Oct 08 - 14:21 gmt
J. Ross said ...
i heard a rumour about MsR and Russel Brand
29 Oct 08 - 14:23 gmt
Russel Brand said ...
It's true. I did her several times. But I wore a condom
29 Oct 08 - 14:35 gmt
anonymous said ...
one suspects in real life MsR is a definite "two bagger"
29 Oct 08 - 15:23 gmt
anonymous said ...
who is the goons that advises porsche?
29 Oct 08 - 15:38 gmt
fitzcaraldo said ...
"need to embrace a new order, a new religion, a new thinking", sounds like familiar 20th century stuff where we all know where it lead to...
29 Oct 08 - 15:51 gmt
Alpha60 said ...
New goldmans partners list announced. 1 of the guys on there use to fuk up his option trades all the time, leaving me to fix them for him...joker!!
29 Oct 08 - 17:50 gmt
anonymous said ...
yes you just posted that comment on alphaville, alpha60. i bet that guy wishes he was you
29 Oct 08 - 18:20 gmt
anonymous said ...
Bauhaus: King Volcano. Great song! Peter Murphy rules.
29 Oct 08 - 18:32 gmt
Alpha60 said ...
LOL...im just "bitter" anon 18:20 as i could only make ED before having to emigrate to HF land...didn't kowtow to the right ppl u see!!
29 Oct 08 - 18:59 gmt
LittleMissMuffett said ...
the new religion is ISLAM, the new order is Sharia
29 Oct 08 - 19:25 gmt
Moron said ...
i am now all in long for a santa claus rally....still a bear market rally though but a significant one
29 Oct 08 - 23:37 gmt
MsR said ...
Hello Moron, I'm just reading what these real morons have been saying about me.
Seems someone is obsessed. How sad.
29 Oct 08 - 23:48 gmt
Moron said ...
if they put u down ms R...don't mind it...too many frustrated losers on this site......the joke is on them....don't let the ba*tards get u down!!
30 Oct 08 - 00:12 gmt
anonymous said ...
socialism rules! $230 million dollars for a 30 minute infomercial 4 days before the vote in the USA when the man's aunt lives in a slum. I have a headache!
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Europe's biggest urban shopping centre will be opening its doors in west London on 30 October.
The £1.6bn Westfield centre aims to bring 60,000 visitors per day to Shepherds Bush.