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
There seems to be glee in the air as capitalists who once managed thousands of people and added wealth to a country are slaughtered for being greedy and smug. It is true there are many with a disdain for the greedy goings on in banks and when Goldman and UBS announce the end of bonuses, they cheer with delight.
But a cash bonus payment is a distribution and income taxes are paid. So if there are no distributions, then tax revenues decline. So as much as the media delights in these executives having to live on bread and water, the upshot can be quite horrific. In this "savings are for suckers" culture, anything that creates demand must be good for the economy too. Denying successful people the right to high rewards is not the way forward. Obama of course assumes these bonuses are tucked away in Panama or Switzerland - what they forget is most of these large bonuses go to men with expensive wives who like to spend. Take Dick Fuld's other half - doesn't she own most of the world's top art?
Of course, it is much worse out there. There are no bonuses for anyone. It it tiresome reading about it all but we are all being tarnished with the same gloom and doom brush. And yet certain parts of the economy are booming away. Fast food, lap dancing clubs and pawnbrokers cannot keep up with demand. Reality TV, sales of knitting wool and cookery books are also booming away.
In times like this we need to embrace opportunities. As a hedge fund, this is relatively easy to achieve and if you a CTA or managed futures fund you don't know what all the fuss is about.
Today's news is troubling. There is no central theme - just a mish mash of gloom and doom. Where are the smiles? Being made redundant is a must in anyone's career but of course losing a job is easy, Citi especially, but finding another is very difficult indeed.
The greatest spam I now receive is from recruitment companies and head hunters. The resumes that pass my desk are amazingly good. If only I could tap into this wealth of education, knowledge and experience and turn it into a profitable fund then we would all be very happy indeed.
RECESSION: WE NEED PRIVATE EQUITY TO WEATHER THE STORM
Sub-prime mortgages, rather than private equity, turned out to be the trigger for this financial crisis. It took time for problems in the economy to feed through to private equity funds, which are only now feeling the pain. They don't tend to blow up spectacularly, like banks and hedge funds, but many may just fade away.
The survivors, though, are likely to thrive: the best-performing private equity investments are typically those made in the worst of times. And traditional private equity investors, skilled at picking up and restructuring troubled businesses, make a positive contribution to the economy. Let's hope they learn to stick to that.
Fintag says I have to disagree, but Pirate Equity was one of the main catalysts for the credit crunch. The pirates hoovered up leverage like a coke addict out of prison and marked to model like no one else had done before. However, the industry cannot operate without leverage and as soon as it can borrow again, it will play its part in the next big downturn.
A flood of unsellable homes has forced down rental prices as homeowners instead turn to renting their properties, according to the Royal Institute of Chartered Surveyors (Rics).
The number of housing transactions is at the lowest level since records began as banks limit the availability of finance to buyers. Some 50 per cent more surveyors reported an increase rather than a decrease in the number of flats to let in the third quarter of 2008, rising to 68 per cent for houses.
Fintag says I sincerely hope the UK abandons the home ownership model once and for all. Renting works in most civilised countries and it should be part of the UK landscape. So while the iron is hot, the UK chancellor should slap on CGT on property gains, and provide tax relief to those who rent.
UBS and Goldman Sachs will not pay bonuses to their top executives for 2008, the banking giants have revealed.
UBS's chairman and board of directors, and Goldman Sachs' top seven executives, including its chief executive, will not receive bonuses.
Fintag says A friend received an email saying "all new Mercedes 10% off". So he went to the garage and negotiated a staggering 40% off the list price. Shame he works for UBS and isn't getting a bonus.
This is where we are in the cycle. Lots of cheap goods and nobody able to pay for them.
Investors with exposure to managed futures this year are being richly rewarded, while others looking to diversify away from their souring hedge fund portfolios may find some solace in the asset class. Managed futures posted a gain of 3.48% in October, according to the Barclay CTA Index, taking the index's year-to-date advance to 10.81%.
"Commodity trading advisors have performed remarkably well in 2008, especially when compared with the losses we're seeing in hedge funds and global equity markets," said BarclayHedge founder Sol Waksman. "The Barclay CTA Index is up 10.81% through October, in contrast to a 19.14% loss for the Barclay Hedge Fund Index and a 32.84% drop in the S&P 500."
Fintag says We love CTA. It is cheap to run, very liquid and does what it says on the tin. And distressed too ...
financial times says " Paulson hedge fund buys into mortgage securities "
Citigroup (NYSE:C) took radical action on Monday to cushion the blows of the financial turmoil and revive its flagging share price, announcing plans to axe 52,000 jobs, or one in seven employees, and slash costs by about $10bn (£6.6bn).
The moves, unveiled by chief executive Vikram Pandit in a meeting with staff, are a dramatic escalation of Citi's efforts to deal with a crisis that has forced it to record a loss in each of the past four quarters. The company's poor performance and continued slide in its shares have raised the pressure on Mr Pandit amid simmering internal disagreements and a boardroom revolt over Citi's failure to buy Wachovia, a US regional lender.
Fintag says Bye bye that large ugly tower in Canary Wharf.
LONDON HEDGE FUND ALLEY RENTS DROP FOR FIRST TIME SINCE 2005
Office rents in Mayfair and St. James's, the London districts with Europe's biggest concentration of hedge funds, are falling for the first time since 2005 as the alternative investment industry has its worst year in two decades.
The cost of renting new or refurbished offices in those neighborhoods, the most expensive in the world, fell 6.5 percent to 107.50 pounds ($168) a square foot in the six months ended Sept. 30, data compiled by Jones Lang LaSalle Inc. show. Incentives such as rent-free periods lowered the net figure to 95.96 pounds, the commercial property broker estimates.
Fintag says Good news indeed. Given my lease ends next year, I am well positioned.
Incoming US President may strengthen rules on investing in Europe's offshore financial centers
Europe's offshore centers might be feeling the first cold winds of a renewed crackdown on their activities with the incoming Obama administration, but are confident they can withstand regulatory onslaught from governments talking tough on tax. They can also take some comfort from American commentators who say any crackdown may be bluster.
Thomas Sutter, a spokesman for the Swiss Bankers Association, which represents the interests of Swiss banks, said: “We have always managed to deal with different American administrations, no matter what their political agenda is, and reach a balanced agreement on issues on banking secrecy and our status as an offshore center.
Fintag says Good luck. So what about that huge tax haven Delaware? I bet he doesn't touch that one.
THE SIX UNKNOWNS THAT ARE ROILING THE STOCK MARKET
The stock market's behavior is downright strange lately. Professionals with decades of market experience scratch their heads as the market falls to its lowest point of the year, then surges almost 7% in an afternoon—all for no apparent reason.
What's hanging over the stock market these days is uncertainty. In an environment where few know what's next, investors are skittish, corporate executives are cautious, and government officials are trying anything and everything to stabilize the situation.
Fintag says The markets are truly all over the place. Great for day traders; shockingly bad for short term investors; an irritant for long term holders.
hussman funds says " The Stock Market is Not in "Uncharted Territory" "
Finding it difficult to figure out where all your tax dollars (and new government debt) are being shoveled? The Big Money presents Bailout Watch, a handy updated scorecard to help you track the bailout, in all its manifestations, in one place: What's up, what's ongoing, what's delayed, and what's out.
Just a quick snap - as yet unspotted elsewhere by FT Alphaville - from Wealth Bulletin (emphasis ours):
Man Group, the hedge fund manager whose share price has fallen by 60% this year, is planning to double the size of its flagship AHL fund despite analyst concerns it is too reliant on the computer-driven product.
The group's chief executive Peter Clarke said Man was seeking to double assets in its AHL fund to $48bn (€37.6bn) over the next three years. This would increase Man's total assets in model-driven funds by more than 10%.
Of course, seeking is rather a different proposition from actually doing. This said barely two weeks after Man reported troubled H1 results and funds under management falling 9 per cent.
Fintag says The old Goldman trick, eh? Look where it got them. I sincerely believe in 10 years time having Goldman Sachs on your CV / resume will be a serious blot on ones career. Just like Enron, Arthur Andersen and WorldCom, these companies were all once world beaters. I never worked for Goldman Sachs. I worked for HSBC, Uganda.
HEDGE FUNDS NEED TO FIND BETTER WAY TO SAY SORRY: MATTHEW LYNN
Investors in hedge funds might have expected to beat the market in exchange for a management fee equaling 20 percent of the profits.
If that was too much to ask for, they should have been safe in the thought that the word “hedge” had something to do with preserving their capital when the economy turned rough.
Fintag says I thought we did this story last month? The old ones are the best ones they say.
Personally, I think someone should look at the banks. Some of the Press Releases over the last 24 months have been complete works of fiction. And not an apology in sight. Where is Dick Fuld when you need him ...so I see his team are being sued?
the lawyer says " Litigation explosion fails to materialise "
HEDGE FUNDS MAY FALL TO $1 TRILLION BY MID-2009, CITIGROUP SAYS
Hedge-fund assets may fall to about $1 trillion by the middle of next year, a decline of almost 50 percent from their peak in June, because of market losses and client withdrawals, Citigroup Inc. said in a report.
Managers are likely to see investors, led by funds of funds, pull 20 percent of their money, Tobias Levkovich, an analyst at the New York-based bank, wrote yesterday. Funds of funds are middlemen who select hedge funds for their clients.
Fintag says Yes, but at least we will still have an industry to play in. Where will Citi be in 12 months time? Perhaps they will merge with GM or turn into a chain of pawnbrokers.... [Editor: Apologies. His Citi cash card was eaten yesterday by his dog]
13 comments
anonymous said ...
If you don't give all the money to a few greedy ones it doesn't mean the money won't get spent at all.
Your logic really doesn't make any sense. Money spent on food, clothes or furniture isn't worth less than money spent on Mercedeses or brothels.
18 Nov 08 - 08:17 gmt
anonymous said ...
De Graaf, the highest-rated technical analyst in Institutional Investor, said other indicators suggest stocks will keep falling.``The final low will be much lower than this,''de Graaf said. No way! All the fund mgrs. on CNBC say stocks are Cheap! Buy Now!
18 Nov 08 - 08:22 gmt
First time buyer said ...
De Graaf is damn right. Equities are very expensive, especially compared with other securities. By the way, was the fact that Citi recently removed its logo on the tower in CW a sign of things to come?
18 Nov 08 - 09:15 gmt
anonymous said ...
@anon
Read up on the velocity of money my friend to find out what a few mercs can achieve for the greater good
18 Nov 08 - 10:03 gmt
Moron said ...
U aint seen nothing yet we are only just halfway thru this equities bear market
18 Nov 08 - 11:11 gmt
Alpha60 said ...
Fintag - Any views on the saudi oil tanker hijacking and it's links to Glencore? Their CDS spread is getting wider...
18 Nov 08 - 11:19 gmt
Tradebot said ...
...me thinks it is Xstrata equity v Glencore CDS pairs trade.
18 Nov 08 - 13:42 gmt
Tradebot said ...
Yours the GBPeso.
18 Nov 08 - 13:44 gmt
Mother Ben said ...
I bet mayor Bloomberg would really have liked the $100MM in tax revenue from those GS bonuses right about now. Now those dollars will be shielded by all those losses and NYC won't see a cent.
18 Nov 08 - 14:08 gmt
Moron said ...
this business will get tough going forward....we r gonna have a significant crash from here and then a sideways market at best for many years in western economies...will have to trade any volatility aggressively to perform....
18 Nov 08 - 18:27 gmt
Free Willy said ...
Citadel Investment Group LLC, had the counterparty rating for its two biggest hedge funds cut by Standard & Poor’s after posting their worst losses. The ratings were cut to BBB from BBB+ on the Kensington Global and Wellington funds, which tumbled about 40 percent this year.
18 Nov 08 - 23:37 gmt
anonymous said ...
Citigroup fell 53 cents, or 6 percent, to $8.36 even in a big DOW up day.
18 Nov 08 - 23:53 gmt
Moron said ...
citadel is trouble....how long can u get away with a 9% management fee???......despite the sheer genius of ken griffin....its just not sustainable.....and then to have 3-4 times as many employees as similar funds managing similar amounts of capital thanks to the high % management fee.....smells like a house of cards
facebook
free daily e-mail
feed
