28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 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
Yesterday I said something would happen. And by all accounts it looks like another trigger of downward pain in the equities markets did happen. With anarchy on the seas, a dancing pig forced out of a reality TV show and the membership list of a far-right political party dumped onto the internet, all is not well.
More importantly it looks like the end of the road for the current US car makers and Chapter 11 looms and consolidation beckons. The job losses will be horrendous but it serves them right for making 1970's cars in the 21st century. Capitalism is cruel to be kind.
Someone asked me what the new Western landscape will be like when people start saving and my mind turned towards Japan where with 0% interest rates, a positive savings ratio and deflation of sorts, saving was what the Doctor didn't order. You want consumers spending which is why Marks & Spencer are having a 20% off everything day today in the UK - another sign that retail is suffering.
Yesterday my lunch was given to the beggars of Curzon Street including a couple of bottles of 1997 Alsace, and today I shall be buying some fat 'n' salty sandwiches and a week's worth of cashmere jumpers at M&S. In the afternoon I will watch more Dow and S&P volatility before retiring to my "knitting for beginners" course in South Kensington. Last time I checked the class had a male:female ratio of 1:20. Nice.
Not nice are the extended vacations being given to structured product employees at banks like Deutsche and the Prime Brokerage department at Morgan Stanley. The latter alarms me because MS had the best people - Goldman had the best coverage and Deutsche the best systems and reporting - and it is sad to see these people wondering the streets trying to reconcile the fixings of an equity swap and the synthetic dividends on a basket of illiquid illiquids whilst quaffing a bottle of 1997 Alsace.
Deutsche Bank has moved to cut 900 jobs across its Global Markets division by the end of the year in response to losses in structured credit and proprietary trading in the third quarter, becoming the second major bank to disclose substantial staff reductions this week.
A source familiar with Deutsche Bank said it would eliminate jobs where activity will “not be” next year, including proprietary trading, exotic derivatives and credit origination. The job cuts will come mostly from the firm's New York and London offices
Fintag says More people with time on their hands struggling to find a job with thousands of others.
The extraordinary surge in investment demand for gold in recent months reflects, in part, the evaporating confidence in banks. Many investors don't even trust banks' safe deposit boxes. Demand has also been boosted by falling interest rates, which reduces the opportunity cost of holding gold, an asset that provides no income. Yet the gold price has tumbled by a fifth since early October. This stems partly from concerns about demand for gold jewellery and receding fears of inflation, for which gold is a hedge. But gold bulls say the price slump was caused largely by forced selling by hedge funds and a strong dollar. Some see a future of low interest rates and resurgent inflation, which is a glittering prospect for gold.
Fintag says Gold has been an enigma. We have all gone long and depending on our entry and exit timing have been baffled as to why in these very uncertain times it bounces around without much panic in its footsteps. Head says go long Gold, heart says stay in cash. Reality is just short the S&P 500 and come back in 6 months time and sell the position for a couple of islands off the coast of Indonesia.
Lloyds TSB's shareholders today voted through the bank's rescue takeover of HBOS, owner of Halifax and Bank of Scotland, with 96 per cent of investors backing the deal.
A merger between the two banks, brokered by Gordon Brown, the Prime Minister, in September, will create a lender with 145,000 staff and 3,000 branches across the UK.
At today's meeting, shareholders also supported Lloyds TSB's plan to raise £5.5 billion to shore up its balance sheet, including £1 billion from the Treasury, which will buy preference shares in the bank. Until Lloyds TSB pays back the Government's £1 billion investment, it will not be allowed to pay bonuses to its directors.
Fintag says I bank with Lloyds TSB. It is a good old fashioned bank. Now it is taking over that cess pool of toxic Scottish prudence, I will be moving elsewhere. Why oh why does Lloyds TSB want HBOS? It will end in tears when the accountants realise that HBOS is just a play on UK real estate.
NEWS : INTERNATIONAL LAST UPDATED: NOV 20, 2008 - 4:47:15 AM MERRILL LYNCH'S SURVEY OF FUND MANAGERS NOVEMBER 2008: INVESTORS REMAIN UNCONVINCED PUBLIC POLICY MEASURES CAN COMBAT GLOBAL RECESSION
Merrill Lynch's Survey of Fund Managers for November 2008 shows investors remain unconvinced that a spate of policy measures from governments and central banks can combat global recession, and are retaining defensive positions.
The survey shows that four out of five investors believe that the world will continue to experience recession over the coming year. Policy makers have offered fiscal stimulus packages, liquidity and interest rate cuts, but investors are not yet ready to give their policies the benefit of the doubt. Forty percent of the panel still believe that monetary policy is "too restrictive" and asset allocators remain overweight cash and bonds relative to equities.
Fintag says Absolutely correct. Distorting the markets for political gain never works. Take the newspaper industry - in times of boom, the hacks are impartial and professional. In times of bust, personal prejudices and government propaganda come to the fore. We need less government intervention, not more.
FED'S KOHN SAYS CRISIS `MORE SEVERE' THAN EPISODES SINCE 1990S
Federal Reserve Vice Chairman Donald Kohn said he was too confident the U.S. economy could rebound from a burst house-price bubble, which has proven more damaging than the commercial real estate collapse in the early 1990s.
``The economic disruption here and abroad are likely to be considerably more severe than in past episodes,'' Kohn said today in prepared remarks for the Cato Institute's Annual Monetary Conference in Washington. ``Mopping up after this asset-price bubble has turned out to be much harder because of its greater magnitude.''
Fintag says Academics. They love historical extrapolation and fortune telling. Shame they cannot do what their job descriptions tell them to do - check out wikipedia: the Fed's main role is keep the USD strong.
As the stock market tumbled to its lowest level in nearly six years on Wednesday, Wall Street traders and many ordinary Americans were asking the same question: Where, oh where is the bottom?
A downcast trader sat on the floor of the New York Stock Exchange shortly before the close. The Dow closed below 8,000.
After a yearlong slide in stocks and a giant bank rescue from Washington, even some pessimists had hoped that the worst might be over. But now, after the Dow Jones industrial average fell below 8,000 on Wednesday, the financial crisis and the bear market it spawned seem to be taking a new, painful turn.
Fintag says Are we there yet? I asked the office joker, our technical analyst, and she said that 7550 is the Dow bottom. If it breaks this we should all buy nuclear fall out shelters because the fall will be considerable. Hence my predictions six weeks ago:
With stock market volatility running close to all-time highs, trading equity volatility as a separate asset class is becoming more expensive and hedge funds are turning their attention instead to the commodities markets.
Derivatives based on commodity indices provide cheaper access to the “long volatility” trade that has been among the most successful equity market strategies of the past two years.
Implied equity market volatility, as measured by the CBOE's Vix index - known as Wall Street's fear gauge - is below the all-time high reached in late October. But it remains at historically elevated levels. This heightened volatility has become a regular feature in recent months with huge price swings becoming the norm as equity markets are driven by fear generated by the wider economic crisis.
Fintag says Now what was I saying about Gold ...?
COWDERY TO PRESS AHEAD WITH RESOLUTION LISTING IN DECEMBER
Clive Cowdery will brave one of the worst markets for initial public offerings in history when he goes ahead with the listing of his second Resolution vehicle next month. Mr Cowdery has decided the need to have cash and currency to do deals in coming months has become stronger than hitting the best value for the IPO.
The company, the Guernsey-based Resolution Limited, plans to seek acquisitions in the financial sector. It is most likely to start with UK asset managers or life insurance businesses. Over time, it also plans to target companies in the general insurance, banking and diversified general financial sectors across western Europe.
Fintag says A brave man indeed. Should I stag this?
New York's Attorney General Andrew Cuomo today demanded that beleaguered insurance giant AIG come clean and disclose its plans for bonuses to corporate executives and pay raises, reminding the firm that there are significant "legal ramifications" to AIG's decision.
New York's Attorney General Andrew Cuomo today demanded that beleaguered insurance giant AIG come clean and disclose its plans for bonuses to corporate executives and pay raises, reminding the firm that there are significant "legal ramifications" to AIG's decision. Collapse
It is the latest salvo by Cuomo in his crusade to get financial institutions to cease paying excessive compensation and bonuses to executives even as their banks are being bailed out by taxpayers.
Fintag says Bonuses? AIG to pay bonuses? Shock horror. History will show that AIG is an Enron still standing. Lehman should have been rescued and AIG let go but because Paulson's beloved Goldman had such huge exposures to AIG, it was best to save the insurer instead and we all paying the price.
Herkules Capital, the Norwegian private equity firm, has held a final close at US$884 million for its third fund, which will focus on Norway and the Nordic Region.
Herkules III's key investors include Goldman Sachs and Indiana Public Employees' Retirement Fund.
Fintag says These Pirates are doing very well these days. Want to know why? It is because as an asset allocator you can dump hundreds of millions into a closed ended opaque fund and not bother with mark to market or transparency and risk management. Nice and clean.
This is the future. Opaqueness. Closed Ended funds. 15 year lock ups.
Iran is forging ahead with its nuclear programme, the United Nations' nuclear watchdog reported on Wednesday, deepening the dilemma facing US president-elect Barack Obama over his campaign promise to engage with Tehran.
The latest report by the International Atomic Energy Agency reveals that Iran is rapidly increasing its stockpile of enriched uranium, which could be rendered into weapons-grade material should Tehran decide to develop a nuclear device.
Fintag says What was I saying about nuclear fall out shelters? Let us hope World War 3 isn't the remedy to our depression the way World War 2 was for the 1930's slump.
RITCHIE FUNDS SUED BY BARCLAYS OVER HIDDEN PETTERS GROUP STAKE
Ritchie Capital Management and Thane Ritchie, the hedge fund manager's principal, were sued by Barclays Bank Plc over accusations they concealed more than $150 million in investments made in the collapsed Petters Group Worldwide LLC and affiliates.
Now bankrupt, Petters Group, based in Minnetonka, Minnesota, was raided in September by FBI agents acting on information that the company may have cheated at least 20 investors. Principal Tom Petters, accused of leading a $2 billion fraud, is being held without bail in a Minnesota jail.
Fintag says Didn't I tell you when these first burst into the news that Petters was the new Refco? I loved Polaroid cameras ...
U.S. options trading slowed this month from a record pace after hedge funds collapsed and the biggest market swings since 1929 made equity derivatives too expensive to be used as insurance against stock losses.
About 12.5 million contracts linked to shares changed hands each day in November on average, according to data compiled by Bloomberg. That's 23 percent less than in October, the worst month for the Standard & Poor's 500 Index since 1987, and 13 percent below the 2008 average, according to Options Clearing Corp., which processes all exchange-listed U.S. options.
Fintag says There you go. More proof that hedge funds are the wheels to the financial markets.
One of the critical planks of a nation built on borrowed money is confidence. Up until recently, that hasn't been an issue. Faith in America's future has remained steadfast. Now, though, people are starting to doubt the wisdom, capabilities and ethos of those in charge. They are increasingly nervous about reactive and open-ended moves to fix the system that aren't working. They wonder if things have moved past the point the point of no return. Some are even asking the question, as the Economist.com's Free Exchange blog does, "Could America Default?"
Fintag says Gulp. Now where should I build my shelter ...
Most hedge funds these days are spending their time crying over their losses — when they're not shutting down.
But John A. Paulson instead was celebrating his funds' performance with more than 100 investors at an opulent dinner Monday night at the exclusive Metropolitan Club in Midtown Manhattan, facing Central Park.
The soiree was held in the cozily candlelit dining room of the club, where Mr. Paulson and his firm, Paulson & Company, feted their funds' good fortune and outlined their next steps amid the market turmoil. And while the institutional investors listened to Mr. Paulson and Alan Greenspan, the former Federal Reserve chairman, a senior adviser to the firm, they also enjoyed choice wine pairings for their dinner. (Bottles of 1999 Chateau Lafite-Rothschild, anyone?)
Fintag says 1999 Chateau Lafite-Rothschild - any good? According the loverboy "Tasted blind, clearly pauillac nose with leather, tobacco leave, pencil lead, red berries, earth. No " lafite elegance" with this bottle. Big wine with huge finish."
Any way, this man is a god. Nothing bad should ever be said about him.
Other news:
stamford advocate says " Hedge fund exec seeks additions to vast estate "
the street says " Kass: S&P Yield Eclipses 10-Year Yield "
25 comments
Panta said ...
Mhhh Fin your taste concerning wines is really improving...Good choice today Alsace 1997 a wonderfull...Are you coming with me in new Bond street today? We can offer Vin brule' to the curzon st beggars...Let s keep the Alsace for us...
20 Nov 08 - 07:58 gmt
Panta said ...
News of the day: A DEPRESSED parrot is taking PROZAC after the man who raised him from a chick died.
20 Nov 08 - 08:37 gmt
anonymous said ...
some talk of MS axing 30% in London...sounds too high?
20 Nov 08 - 09:11 gmt
Shane Warne said ...
Depends on the producer Fin. Hugel, Trimbach, Zim Humbrecht Rieslings? Very good.
Some commie co-ops Pinot Gris? Not so good.
20 Nov 08 - 09:15 gmt
Free Fall said ...
A serious trauma for the UK mortgage market. Just across the wires: 20/11/2008 07:38:17 GraniteMaster IssPLC - Non-asset trigger event Granite is Northern Rock’s master-issuer trust and as the below graph, reprised from a Deutsche note, shows, the bedrock of the UK mortgage-securitisation market.
20 Nov 08 - 09:17 gmt
Shane Warne said ...
"Lloyds TSB. It is a good old fashioned bank"
What? It is a rubbish old fashioned bank!
HSBC is a good old fashioned bank.
20 Nov 08 - 09:20 gmt
Shane Warne said ...
and finally re: Lafite 99, a bit early to be drinking.
20 Nov 08 - 09:28 gmt
anonymous said ...
Shane are you really that Matt guy who does wine on the TV
20 Nov 08 - 10:25 gmt
anonymous said ...
@freefall
I checked this granite thing out and still struggling to work out the implications. I think its a storm in a tea cup.
20 Nov 08 - 10:31 gmt
Alpha60 said ...
Interesting to see GS have closed their crude oil recomendations (todays alphaville), wonder if Arjun Murthi will be getting a huge bonus for making such bold statements again.
20 Nov 08 - 12:38 gmt
Boaster said ...
Only 20% off at M&S?! Why buy now, hold out for a better deal. NO ONE is in NYC stores. Saks (SKS equity ) personal shopper called a friend on Tues and offered him 40% off on a suit which he declined. She started crying, said no one's buying anything. Wait for post-Christmas, minimum 50% off sales.
20 Nov 08 - 14:50 gmt
anonymous said ...
GE is in talks with four Asian sovereign wealth funds, including China Investment Corp., to win them as investors, according to a media report.
20 Nov 08 - 14:52 gmt
anonymous said ...
You don't run a mega dollar ad campaign around brand image and then discount like this. M&S are sh*tting it. They need to discount by more than 20% but if they do that they risk undermining the brand they've been rebuilding. They are in trouble.
Svetlana
20 Nov 08 - 15:00 gmt
Tradebot said ...
as wrong as a Goldman analyst. Time to go long crude then! re: Granite breaching non-asset trigger event, it will just accelerate the payment to senior tranches and extend subordinate/mezz payments.
20 Nov 08 - 15:02 gmt
anonymous said ...
Agreed - that and their £10 meal deal (ridiculous value) smacks of horribel desperation.
20 Nov 08 - 15:04 gmt
Tradebot said ...
anyway, there was also arrears trigger breached in Granite trust. Not the end of world, but it's all adding to the chaos in UK ABS market. End result will be the same : UK securitisation market will remaind frozen.
20 Nov 08 - 15:05 gmt
anonymous said ...
Capitulation. Moron must be creaming his trollies
20 Nov 08 - 15:36 gmt
Moron said ...
DRIBBLE DOO....DRIBBLE DRIBBLE DUM:)))))
20 Nov 08 - 16:08 gmt
Moron said ...
they don't call me moron for nothing....it pays to be a first class idiot:))))
20 Nov 08 - 16:15 gmt
the prophet said ...
M&S "enjoyed" -15% LFL last week, thats why they are shitting it
20 Nov 08 - 18:21 gmt
Moron said ...
anybody noticed glg's stock price and market cap....its becoming a penny stock....sad!!
20 Nov 08 - 20:20 gmt
Free Willy said ...
20 (Bloomberg) -- General Electric Co. is in talks with four Asian sovereign wealth funds, including China Investment Corp., to win them as investors. No Buffet/Berky, seems Warren now has his own problems.
20 Nov 08 - 20:30 gmt
Moron said ...
WHAT A BL**DY MESS!!
20 Nov 08 - 20:39 gmt
not a martian said ...
be careful what you wish for. if hu jintao and co open the floodgates on their reserves at the right time, they'll end up owning chunks of the corporate west and running it like ... chinese ... US default may actually be preferable
20 Nov 08 - 22:07 gmt
Billy Mays said ...
Rumors say US Treasury pushing Citi hard to announce a merger before Monday morning. Yikes!
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