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
Funny how we make up a word, define what it means and then get all gloomy when an event occurs that makes that word true. The US is in "Recession", apparently, and the markets turned to the color of blood last night.
As we said yesterday, the next two weeks are HR's favorite time for firing and HSBC and Credit Suisse have let some of its people have extended Christmas vacations. More gloomy news is expected and quite frankly putting one's head under a towel and snorting steaming menthol is more fun.
A new star dies and we question Bloomberg's understanding of fixed income. I have no meaningful comment today because the large essay I wrote on the trade off between unemployment and inflation was lost on my blackberry, the same blackberry that decided to follow the sewers under Oxford Street.
Nice lights eh?
I get a lot of complaints if fintag is a bit lite and today it is. So here are some comments from an emailler about a recent awards ceremony.
"That FoF awards was cr*p... a speaker nobody had ever heard of, no free bar, lame meal, poor location, very muted, nobody stayed for drinks afterwards.
As for the awards themselves, it was just a very rushed process, no speech from the winners or even Busson, they gave them all out in about 15 mins. Same shops seemed to be in every category, and some categories pitted commodity FOFs against l/s equity FOFs. Stenham had 2 tables and won lots of awards. Liongate had a table and won awards. RMF had no table, won no awards.
Best part was when the host consistently referred to one of the main sponsors (PiRho) as Liability Solutions for some reason. Think because the founder used to work at Liability Solutions. Oops."
Housekeeping Thanks re the comments about shirts yesterday. And don't forget, if you want a cheap 'n' cheerful Christmas present that has a nice cover and can be read whilst on the loo, FINTAG'S CRAP CARTOONS can be bought online. Alternatively wait until the 15th when the FINTAG meets BANKSY treasure trail starts and those who have time on their hands [Editor: You mean Citi people] can claim a signed book for free from their local book store (UK only; actually Mayfair only although Hampstead may also feature)
Also thanks to City AM, the Telegraph and the Guardian for keeping my hit rate up and quoting sentences that were written in a few seconds without much thought.
For newbies, I write this at 6:00 am GMT, often with a hang over and have a spell checker with a life of its own. My editor is useless but is amusing company. I do read all the emails and many have me in stitches. Sorry if I don't reply but my mind is often all over the place.
Confirmation that the US is in recession shook Wall Street yesterday, ending the Dow Jones industrial average's five-day winning streak, as it suffered its second-worst daily percentage drop this year.
The Dow fell 679.95 points, a drop of 7.7%, to end at 8,149.09 as signs of a deepening economic slump around the world erased much of last week's sharp gains, with banks and retailers among Wall Street's biggest casualties.
Shareholders balked at an announcement by the National Bureau of Economic Research (NBER) that the US economy entered recession in December last year.
Fintag says Well blow my socks. The US has been in a recession and nobody knew about it? The equity markets are suffering from paranoia; a tickle, a prod and they spasm out of control. No wonder trading is a nightmare and cash and t-bills is the strategy of the moment.
All those bottom fishing merchants should have kept quiet. If the Dow doesn't break 7550 by the end of the year I will be eating my socks.
A brutally damning article about the warnings the Bush administration received and ignored was published this morning by the Associated Press. The AP summed up the philosophy of the Bush White House, writing: “The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.”
Fintag says Well its a bit too late now. As any historian could have told you, the US subprime debacle was the mirror image of the late 1980's UK property boom and bust after the 1986 Building Societies Act was enacted. Bush thought it was "different this time" or maybe he didn't particularly care.
The European Union will this week take the first step toward new rules governing high-risk hedge funds, the EU's financial services chief said Monday.
EU Commissioner Charlie McCreevy, long opposed to regulating the funds, is bowing to calls from the G-20 group of the world's leading industrialized and emerging economies and many European politicians for more oversight for hedge funds that invest large sums and often operate in near secrecy.
Fintag says Wonderful. The best news I have heard in a while. The world burns and the bureaucrats bark up the wrong tree again.
Not that hedge funds exist any more. We are all wealth managers, family offices, fund managers. What are these hedge funds anyway? Sounds like an oxymoron.
We are private pools of capital. How and why should we be regulated? It is like putting speed limits on a go kart track in my back yard. It will not work and we will make sure it doesn't work.
MICHAEL LEWIS ON THE HEDGE FUND MANAGER WHO SAW IT COMING
I can't quote Steve Eisman because he uses four-letter words too often, but I think what he said basically was that the stock market is a zit compared to the bond market. He realized this business in investing; he was going to invest in these companies that were in the middle of this madness. It was insane. He wanted to take a position, he takes the position that this is all going to go bad because it seemed like it was all going to go bad to him. He called S&P, the ratings agency, and said, Look, I know you are rating these things AAA, and your model says they are AAA, but what happens if real estate prices go down? And the guys says, Actually there is no place in their model to put a negative number. I can't tell you what happens when real estate prices go down.
Fintag says As you probably know Michael Lewis was part of the original securitised loan crew who invented a lot of the stuff that has caused world melt down. A funny guy with no remorse.
Tudor Investment Corp., the firm run by Paul Tudor Jones, temporarily suspended client redemptions from the $10 billion BVI Global Fund Ltd. as it plans to split the hedge fund into two.
Tudor is proposing to put hard-to-sell investments, mostly corporate bonds and loans from emerging markets, into a new fund called Legacy, Jones said in a Nov. 28 letter to investors. BVI Global, the flagship fund Tudor started in 1986, would focus on easier-to-trade stocks, bonds, commodities and currencies.
Fintag says Suspensions happen to the best of them too. I love the name "Legacy" for its crap stuff. They should have called it "crap stuff".
DERIVATIVE USE BY HEDGE FUNDS FORECAST TO RISE IN 2009
Use of derivatives by fund managers will rise over the next 12 to 18 months despite market turbulence and record levels of redemptions from hedge funds, according to a report from Protiviti, an independent risk consulting company. The report warns changes need to be made to secure the operating environment for derivatives and ensure that UK companies maintain their competitive advantage.
According to the study, 79% of traditional fund managers, hedge fund managers and service providers expect their company's use of derivatives to increase. Most (84%) also plan to improve derivative capabilities over the coming year.
The survey also highlighted differences between traditional and hedge fund managers. Hedge funds tended to rate their current capabilities lower than traditional fund managers. Protiviti suggested some traditional fund managers may be under estimating the work required to manage the derivatives lifecycle competently.
Fintag says Now how do they know that? Most of us are sitting on cash with a bit of spread betting on the side.
Hugh Hendry, who oversees about $500 million as co-founder of Eclectica Asset Management in London, said he's buying World War I debt on the bet the U.K. is due for its worst round of deflation since the Great Depression.
The gilts, known as perpetuals because they have no maturity date, have a coupon of 3.5 percent compared with the U.K.'s 4.5 percent inflation rate. Investors hold about 1.9 billion pounds ($2.9 billion) of the securities that still pay interest 90 years after the end of the Great War, according to the U.K.'s Debt Management Office.
Fintag says TV star Hendry is loving the spotlight.
I think Bloomberg have got the definition of a gilt wrong. Most of them do have maturity dates - this bond is a perpetual.
Turbulent market conditions have taken a heavy toll on the hedge fund industry, but a select group of investors is still optimistic about the long-term success of the industry.
According to a new Prequin survey, 46.6% of institutional investors said that their long-term outlook on the hedge fund industry was positive and 67.8% of investors have an unfilled long-term target allocation to the asset class. Just 5% of institutional investors described their activity as “mainly redeeming investments.”
Shares in New Star Asset Management, one of the UK's best-known fund managers, plunged nearly 43 per cent on Monday as analysts warned it had just days to negotiate a deal with its banks to avoid potentially devastating outflows of its funds.
The FTSE-listed group announced before the market opened that it was in talks with HBOS, Lloyds TSB, HSBC and Royal Bank of Scotland, about a debt-for-equity swap that would leave the banks owning a majority stake in the ailing group.
Fintag says Very sad although Duffield has enough to start over. Following his love of astronomy, his new venture should be called "Black Hole". Or maybe "Red Dwarf"?
U.K. POUND PLUNGES, GILTS RISE AS DATA ADD TO SIGNS OF SLUMP
The U.K. pound posted its biggest one-day loss against the dollar in more than a month while gilts rose after a report showed the housing and manufacturing slump worsened, reinforcing speculation the central bank will cut interest rates this week to revive Britain's ailing economy.
The British currency declined against all of its 16 major counterparts tracked by Bloomberg after property Web site Hometrack Ltd. said house values in Europe's second-largest economy dropped in November to the weakest in almost three years. Lenders approved 32,000 loans for house purchase in October, matching the fewest since comparable data began in 1999, a report from the Bank of England showed.
Fintag says Here it comes that elusive run on the pound. If only we had joined the Euro.
PREGNANT WOMAN TRIGGERED INTO GIVING BIRTH BY VIOLENT MUGGING OUTSIDE HER NORTH LONDON HOME
This at the start of a deep and long recession...... After the events of the last 3 month it is valid to wonder how much of this debt will get bailed out ( GM....) or will end up without much disclosure on the Fed´s balance sheet......I wonder how many companies are now on the brink of bankruptcy just because they decided to make big debt financed stock buybacks or megalomaniac takeovers & buyouts......
Fintag says I guess the rating agencies have swung violently the other way after years of stamping AAA on anything that gave them a fee.
17 comments
Uncle Ben said ...
With hedgies needing to sell to meet end of year redemptions, banks screaming for more money and GE needing a bailout look for the Dow to crank down to 500 in the next 6 weeks!!
02 Dec 08 - 07:03 gmt
anonymous said ...
Well done uncle ben for reading fin's fortune telling....
02 Dec 08 - 07:53 gmt
Hanky Paulson said ...
My secretary came to me in 2005 and told me she and her husband (shift manager at McDonalds) had purchase a $750K home in Virginia. Knowing what they made together (50K) I was pleased to see that the ownership society was working so well. Really this whole mortgage thing blindsided me. Who could have known this would happen?
02 Dec 08 - 07:54 gmt
Bushtucker said ...
Finbar I think you should comment on the absurdity that is the annual award "Britains Most Admired Company"> it happens to be Diageo this year. Last year it was M&S, ahem, -61% ytd. Anyone with half a brain knows award winners are always screaming shorts... and that includes hedge funds as well
02 Dec 08 - 09:08 gmt
Panta said ...
It will be a worn socks or a clean one..I bet worn hein??...
02 Dec 08 - 09:33 gmt
Tradebot said ...
ah...the GBPeso, my least favourite currency. Despite being physically impossible, it both blows AND sucks.
02 Dec 08 - 09:38 gmt
Tradebot said ...
although I like Hugh Hendry, I don't think going long ultra dated Gilts is the trade. Problem is that they are in denominated GBPeso. Even if you end up making a killing, it will be worth close to nothing as currency crashes. I'm thinkin bit more along funding+currency crisis combo ie. sudden bout of inflation as currency drops so the Gilts get hammered too. Nice.
02 Dec 08 - 09:42 gmt
anonymous said ...
have More laid off any of its existing EM staffers once Coffey pitched up with his own team or have they all been kept on?
02 Dec 08 - 10:09 gmt
anonymous said ...
Gentlemen I am perplexed: Now that I own RBS apparently shouldn't I be doing something, offering 0% credit cards, lowering interest rates or something? I feel a great responsibility and frankly I didn't ask for it. I have enough to do...baking and putting on makeup etc..it's all too much.
Ms R
02 Dec 08 - 11:01 gmt
Davros said ...
Hendry bought the war bonds on his personal account. Actual Eclectica Fund is loaded with long dated German gov stuff.
02 Dec 08 - 11:13 gmt
Davros said ...
also Hendry did a good interview for the goldbuggy Commodity Watch Radio podcast about a month ago. He explained the 'deflation then inflation so buy bonds then gold' thing hes been riffing on for the last while.
02 Dec 08 - 11:22 gmt
Alpha60 said ...
Yen/$ doing v nicely today
02 Dec 08 - 12:06 gmt
Boston said ...
If the tradeoff is inflation versus more unemployment, I think most (working class) people would rather have inflation. My few cents.
02 Dec 08 - 15:19 gmt
anonymous said ...
These mkts are great for day traders. Follow the trend.
02 Dec 08 - 17:40 gmt
fitzcaraldo said ...
CS Bonus Valuation...Great Fun, Fin...
02 Dec 08 - 18:46 gmt
anonymous said ...
>> Tudor Investment Corp., the firm run by Paul Tudor Jones, temporarily suspended client redemptions from the $10 billion BVI Global Fund Ltd. as it plans to split the hedge fund into two.
Blimey, now that chap is a clever one - he can charge clients twice now or at least: charge them for the better performing one of the two.
02 Dec 08 - 22:39 gmt
Ms P said ...
To Uncle Ben - did you actually mean GE needing a bailout and not GM?
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