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
I do find the news rather funny these days. If markets go up or down during a day, there has to be a reason. In fact any movement has a causal effect and it is the constant obsession and fretting about what causes these changes that perplex quants and stock pickers alike.
So when rules and regulations are implemented for no reason, it is bloody annoying. Surely there has to be a good reason to change the rules after so many years. It has taken trillions of man years to get where we are an a few glory boys and girls think they are God and want to change everything.
The only consolation we have is the goldfish. Our memories are like sieves and short and sweet. All these posturing headlines will pass and soon we can get on with our business.
Take tax havens. The USA likes to have "onshore" business and "offshore" business. So is Boring O trying to abandon the "offshore" business model? Wow, if he does that then America is surely the next Cuba.
Anyway, today we look at half eaten Pizza....
Sanity I have thought I was mad but today I have realised for the first time, you lot are mad and I and a select few others are sane. I am not sure if I like it. You know, being an outlier. But enough of my madness, let us look at madness and mayhem in the markets.
AIG came back for their fourth bailout and got a pledge of another $30 billion which brings the total up to $173.3 billion. Bernanke told Congress, “If there's a single episode in this entire 18 months that has made me more angry, I can't think of one.” Wow, is this guy angry.
Mr. Bernanke said the Fed “really had no choice” but to stabilize the company in September because the failure of a major financial firm in a crisis “can be disastrous for the economy.” With millions of policyholders and thousands of derivatives and credit-insurance counterparties, Mr. Bernanke said AIG's downfall would have been “devastating to the stability of the world financial system.”
Fintag says I guess now AIG is splitting into two - AIG bad, AIU good - AIG will now, eventually, be allowed to fail.
AIG is like an old car. You want to save it as you love it dearly. So you spend USD150bn trying to keep it going but it still breaks down. Its a sunk cost so do you take it to the scrap yard or throw a few more billion and hope it comes out working at the other end?
I am all for recycling so yes AIG should go into the Landfill of Chapter 11. [Editor: Uh?]
European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements. The BIS said European and British banks have relied on an “unstable” source of funding, borrowing in their local currencies to finance “long positions in US dollars”. Much of this has to be rolled over in short-term debt markets. The currency mismatch has become a potential risk for banks as the dollar continues to climb against the euro and Swiss franc, and especially sterling and Sweden's krona.
Fintag says And where does this shortfall come from? And where did the shortfall come from?
I will tell you a story. As a nipper at Goldmorgan Stanley where my sleeping bag would be stored under my desk, my mentor at the time had two ongoing mantras.
1. Spelling is for wimps. 2. If you dont understand it, then neither will the clients.
And yet the clients kept buying the CDO squareds, the power options, the ABS (Absolute Bucket of Shit) and I doubted my own intelligence. This has bugged me for years.
I consider myself super smart. A Rennaissance man of the 21st Century. Whatever I turn my hand to, it works, it excels, it is worthy of a Nobel prize of some sort. But having read the legal documents to some of the most complex structures every created by mad scientists at the banks (UBS mostly) I now realise that I didn't understand them because they never made sense in the first place.
And here we are today. Phew. That saves me a few pounds in extra therapy. Better have an extra large lunch and an extra 20 minutes on the rowing machine.
Life. Don't you just love it.
financial news says "Some hedge funds halt reporting as performance slumps "
FSA FACES MULTIMILLION CLAIM FOR FAILING TO STOP TERRY FREEMAN TRADING
The Financial Services Authority is facing a multimillion-pound compensation claim from a group of investors who say that the City watchdog failed to stop the activities of a suspected rogue trader.
Former clients of GFX Capital Markets, which has collapsed with estimated losses of £44 million, say that the FSA knew of serious concerns about its boss, Terry Freeman, but allowed him to continue trading.
The accusation comes as the regulator is struggling to cope with the most serious loss of public confidence in its decade-long history. It was accused of being negligent in its monitoring of Northern Rock, the mortgage lender that was nationalised last year, and the regulator's chairman, Lord Turner of Ecchinswell, has been forced to draw up radical plans to improve its ability to police the City.
Fintag says Useless. And who has to pay for their incompetence? Me, your friendly UK taxpayer.
The soaring price of fresh meat drove overall UK shop price inflation to a six-month high in February but economists do not expect the rise to influence the Bank of England's decision on interest rates today.
The British Retail Consortium (BRC) revealed that food price inflation jumped to 9 per cent last month from 7.5 per cent in January, which pushed up overall shop price inflation to 1.9 per cent a year. While February's overall figure is still only half of last year's peak of 3.8 per cent, recorded in August, it is substantially higher than last year's low of 0.5 per cent in December.
Fintag says Wow, that was quick. Inflation is coming back already ...so much for all those deflation lovers out there. Saves me from running naked down Regent Street shouting [Editor: Stop it].
Mervyn King must be printing money so fast even I missed it. However, have you noticed that when you go to an ATM all the notes are brand new? Something suspicious there meez thinks.
I took out 100 quid (worth about 3 peanuts) and the ATM gave me an extra 10 pound note for free.
Citadel Investment Group's flagship hedge funds continued their rebound last month, bringing their returns for the first two months of the year to almost 8%.
The Kensington and Wellington funds returned 2.6% in February, the New York Post reports. The funds rose 5% in January, getting Citadel off on the right foot as it tries to recoup the massive losses suffered by the funds last year. Kensington and Wellington dropped by more than half amidst the economic crisis.
Fintag says Funny how 8% is now considered a stellar return. It is 8 times more than libor. These people are gods.
Lehman Brothers' US liquidators have asked Barclays to explain what happened to an estimated $3.3bn earmarked for bonuses and other liabilities that the UK bank received when it acquired part of the bankrupt Wall Street company last year.
The move by Bryan Marsal, who heads the firm managing Lehman's US liquidation, underlines the tension between the company's creditors and Barclays, which acquired the North American arms of the investment bank for $1.5bn after it filed for bankruptcy in September
Fintag says It has always perplexed me as to why Nomura and Barclays got to cherry pick the best bits and the creditors were left with the crap. But I am sure this will come out into the open over the next year or so.
If I were a creditor, I would be looking at litigation (oops, I am a creditor ...)
The Bank of England is expected to cut interest rates to a fresh all-time low and start increasing the money supply in an attempt to revive the economy.
Most analysts believe the Bank will cut rates to 0.5% from 1%. An announcement is expected at 1200 GMT.
U.S. colleges and universities lost nearly one-quarter of their endowments' worth in the first half of their fiscal year, forcing them to cut staff and budgets just like corporations hurt by the financial crisis.
From July through December, U.S. schools' endowments dropped an average of 24.1 percent, according to a report released by the Commonfund Institute, a nonprofit group that polled 629 educational endowments on their results.
Fintag says Strip them of their pensions and force feed them stale pizza. Shocking news.
AUSTRALIA EXTENDS BAN ON SHORT SELLING OF FINANCIALS
The Australian Securities and Investments Commission extended a ban on selling short financial stocks until May 31, as global banks and insurers tumble amid the credit crisis.
“In making its judgment to again extend the ban, ASIC weighed up the continued volatility in global financial markets and potential damage from aggressive or predatory practices from short selling against the possible loss of some market efficiency or price discovery,” ASIC said in an e-mailed statement today.
Fintag says This just sends the signal that all Oz banks are truly fcked. And they are. Especially the Scottish sounding one.
The five hotshots who took Fortress Investment Group public were worth billions at first. Today they look like arrogant showboats, and their story helps explain why hedge funds are imploding by the thousands—and why there's still a truckload of money to be made. While fraud may not be exactly the norm, the underlying paranoia is this: Are hedge funds just a legal scam, in which investors pay through the nose for something that isn't what it's cracked up to be?
Fintag says Who writes this crap? I mean seriously, Vanity Fair is a proper journal but this article just shows how poor the state of journalism is.
Why do people write about things they know nothing about?
GE CAPITAL DEFAULT SWAPS CLIMB TO RECORD ON CAPITAL CONCERN
The cost to protect against a default by the finance division of General Electric Co. jumped to distressed levels as its shares plunged to a 16-year low and UBS AG said it may have to raise additional capital.
Traders of contracts protecting against a default by General Electric Capital Corp. for five years started demanding upfront payments yesterday after Moody's Investors Service said Feb. 27 it's still considering downgrading the company's AAA rating even after its first dividend cut in 71 years. Investors are also concerned that GE may spin off GE Capital, CreditSights Inc. analysts led by Richard Hofmann in London wrote in a report yesterday.
Fintag says So Jack Welch, the guru of business, was just another useless but lucky jock who said the right things at the right time.
What is the world coming too? First Citi is reduced to a pile of Bandits and now GE is shown to be nothing but a puff of static electricity?
Shocking. [Editor: What was it you said about poor writing ...?]
31 comments
Moron said ...
we r all a bunch of certified nutcases...that is why we enjoy this form of extreme sport called the stock market:)))
05 Mar 09 - 08:12 gmt
Hanky Paulson said ...
A lot of investment bankers would have traded all their AIG holding for that pizza crust.
05 Mar 09 - 08:20 gmt
Top Cat said ...
Fin - no comment on GLG losing their Vivendi insider trading case? Thought you would be revelling in that.
Citadel's 8% is for two months, not an annual figure. Surely that would even have been good in the boom years!
05 Mar 09 - 08:38 gmt
PPSec said ...
Fintag, where is you ATM that gives 10% extra? I am in need for cash...well, peanuts
05 Mar 09 - 08:59 gmt
Moron said ...
for all those who think i only do binary calls.....am using today's weakness to trim short exposure quite a bit...i smell a 5% or so rally....but i don't feel like playing it on the long side......will reload shorts after the rally.....bcos i am still a donkey:)))
05 Mar 09 - 09:37 gmt
Panta said ...
@PPsec are you trying to refinance your debt...?? you know you owe me some money?? btw, first day at home still waiting for those bloomberg morons to set up the free trial version....
05 Mar 09 - 09:53 gmt
anonymous said ...
"Obama Taps Clinton Ideas but Not Clinton Herself " - NYT
I should hope he had at least that much good taste
05 Mar 09 - 10:28 gmt
Alpha60 said ...
Bloody Terry freeman and GFX, and there's me thinking I was the greatest finance whizz kid to come out of Bromley.
05 Mar 09 - 10:36 gmt
PPsec said ...
@ Panta..please don t speak to me, my boss is watching...
05 Mar 09 - 10:38 gmt
fitzcaraldo said ...
ceterum censeo AIG delendam esse...
05 Mar 09 - 11:04 gmt
anonymous said ...
Mafia money is the new black: "As Italy's Banks Tighten Lending, Desperate Firms Call on the Mafia", washington post
I disagree with one point in the article tho: "The banking system doesn't work, and the private one that is operating is often managed by organized crime"
I think the private one is also managed by organized crime.
05 Mar 09 - 11:06 gmt
Anonymous Bull said ...
@Moron so you agree with me then....this mkt is currently oversold. Its ok I accept your deference to me..
05 Mar 09 - 11:58 gmt
Moron said ...
i defer to you anonymous bull.....we are going to have a bear market rally.....and after that u are gonna have ur bull horns shoved up ur pretty little butt again:)))
05 Mar 09 - 12:00 gmt
Alpha60 said ...
There any FX barrow boys here? Any views on cable breaking 1.40 and further downward moves?
05 Mar 09 - 12:43 gmt
anonymous said ...
Hang on a few days more, Moron, don't miss the unemployment #s tomorrow. And w/productivity down and labor costs up- both big & unexpected- firms are going to continue layoffs. I've been a fixed income guy too long, this equity stuff's just too easy to make money on....
05 Mar 09 - 13:36 gmt
Osiris said ...
stiglitz - one of the few nobelists that i actually like
05 Mar 09 - 14:11 gmt
damiendamien said ...
Has Citi broken the buck yet... Chart of the day... h_tp://tinyurl.com/dkcqyq
05 Mar 09 - 15:34 gmt
Anonymous Bull said ...
How the mighty have fallen...C has been run into the ground by some incompetent mgt
05 Mar 09 - 16:12 gmt
Moron said ...
blo**dy jim cramer and bl**dy doug kass and all the silly anon bulls....am kicking myself for closing shorts here:((( !!! where is this great rally we were to expect?????
05 Mar 09 - 16:27 gmt
Moron said ...
the problem with this business is that too many idi*ts have too many opinions!! ... bottom calling shud be a criminal offense!!!!!!!
05 Mar 09 - 16:31 gmt
Osiris said ...
his work i mean, never actually met a nobelist ...
05 Mar 09 - 16:41 gmt
Anonymous Bull said ...
@Moron have faith...my indicators are indicating a full house of variables...this mkt is way oversold. Expect a rally v soon, I have been adding to my longs today.
05 Mar 09 - 16:59 gmt
Moron said ...
i expect a rally as well.....just not happy with the sort of volatility we are seeing.....i don't like 4% moves!!....am up high single digits this year and am disappointed......!!!!!! this is not an easy market.....too many bl**dy sleepless nights!!
05 Mar 09 - 17:02 gmt
anonymous said ...
Stay short. This market is rotten. Over sold in what context, forget your experence no longer accounts for anything. hang on to your seets. this is a one way ticket! (hahah sound like a moron)
05 Mar 09 - 17:20 gmt
anonymous said ...
spell like a moron. prat
05 Mar 09 - 17:21 gmt
Moron said ...
great....then those idi*t anons who are getting their little vagin*s handed to them on a platter will finally shut the fu*k up and stop misguiding us!!!
05 Mar 09 - 17:28 gmt
AthenaDelphi said ...
So....not only does O-Head give the bust of Churchill back to the British because he didn't like it in the oval office (it gave him the willies and reminded O-Head that he doesn't have cojones), the PARTING GIFT to your PM was (drumroll) 25 b/w dvd's (not even blu-ray) that Brown could have bought on Amazon. Boy, O-Head really dissed your guy and I thought they were both lefties. Clue:We now only love Russia,Cuba,Venuzuela.
05 Mar 09 - 17:34 gmt
AthenaDelphi said ...
@Moron, I thought we were going into a rally for a few days. O-Head pronounced that it was a good time to buy stocks as profits/earning ratios were lower. HAHAHAHAHA (P/E is not profit/earning). Everyone bought on his order and looked what happened: Geithner comes out and blows the energy industry up. Tomorrow is unemployment figures in the US. Citi stock is lower than one ATM transaction. Buy it now, its still going down.
05 Mar 09 - 17:38 gmt
anonymous said ...
FDIC insurance on people's bank accounts is going broke (bloomberg news) Watch for runs on banks next in US when they finally stop watching Oprah.
05 Mar 09 - 18:08 gmt
Panta redudant said ...
@ Moron...well mate what can I say? Respect.
05 Mar 09 - 20:06 gmt
beartrap said ...
when the bears start bottom picking....my advice: stay short stocks until all indicies are at 0, then short all bonds until all govies are at 0 and then convert all profits into the biggest bank notes you can find (in size that is) and use them as toilet paper...or perhaps all that paper might come in usefull for starting fires...
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