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
4 weeks is a long time in the world of finance. Actually that is not true. We like to think that every second counts, but the reality is things happen much more slowly and in a convoluted and haphazard way; it's just those who work in finance like to think that they are always one second away from disaster or imminent retirement. The media want there to be a crash, a bottom and an upturn in the space of a few weeks. Unfortunately it doesn't work like that. This crash (and they always happen at the start of new centuries) began at the start of 2007 when HSBC had to announce that its US subsidiary Household was suffering from a new disease called SOE - Subprime Over Exposure.
18 months later, and that is a long time - almost the time it takes to close a hedge fund down, SOE has spread slowly and infected and mutated into the WAAF (We Are All Fcked) virus. That is what I love about finance. You can day trade like crazy but sometimes you can make just as much money on the slowness of the markets. It comes down to people not wanting to admit there are issues. Where are all those “But the fundamentals are so strong” analysts today?
I came across a new hedge fund strategy that will really confuse the regulators. It's called the cash biased strategy. What this means is the hedge fund manager trades like a day trader. As markets open, positions are taken and at the end of the day all positions are liquidated into cash.
Imagine the types of regulatory return that this hedge fund would have to deliver? All the boxes would be “N/A”. Cash only. No exposure. Just cash. And what about the monthly newsletter? Now that would be as dull as reading fintag.
Cash is of course the new black. Banks, oil companies, sovereign wealth funds and uninvested private equity funds are full of the stuff. But cash only generates a decent return if it out performs the markets. Which it is doing. So what I have been up to you? Well quite a lot but that is for another time. Having reviewed the news on my blackberry, it is nice to see the short financials / long commodities trade has withered but the incompetent banks haven't let us down. There is a long way to go. The lying continues and most people I know who used to work for them are unemployed, soon to be unemployed or unemployable. [Editor: What about the Kabbalah? Does this mean you will be adopting lots of kids from Africa? BTW WAAF are you talking about?]
Please excuse my rusty blog. It will get better, honestly. These things take time. Thank you for hanging around and you won't be disappointed. I hope you are all well.
Today's news is mixed. Isaac Hayes dies and I sat next to Paul McCartney at the weekend whilst on Santa Monica pier (pictures have been syndicated so alas no flickr freebie for you lot but please enjoy the photo of me looking across the pier - I did enjoy the beer btw).
The City watchdog, the Financial Services Authority, has told the UK's banks to make sure they are strong enough to withstand serious losses on mortgages and other lending for the next two or three years.
In an exclusive interview with me, the FSA's chief executive, Hector Sants, was asked whether the difficulties for banks could be as bad as they were in the early 1990's and whether losses on lending would continue to be a problem for up to three years.
Fintag says I thought the regulators were there to help out not kick their customers when they were down?
A Swiss semiconductor company sued Credit Suisse, alleging the financial firm's brokers fraudulently put $450m (€296.6m) of its funds into unauthorized auction-rate securities.
The auction-rate market froze up in February after Wall Street dealers stopped supporting periodic auctions at which the securities' interest rates were reset.
Fintag says So I have missed the auction rate debt debacle? Good to see AIG haven't let me down. Here is a crap cartoon (give me a break, my brain is still in Kabbalah mode) and my observation of AIG's arrogance from February this year.
Royal Bank of Scotland reported its first ever loss after booking credit market writedowns of £5.9bn in the half year.
Chief executive Fred Goodwin said the £691m loss on a proforma basis, against a £5.1bn profit last year, was due to "unprecedented market conditions on a number of our business lines."
Fintag says Glad to see the banks are as slow as the Titanic. Not all of course. UBS hit the iceberg a while back and looks like a bank with a future, albeit in wealth management. Is Stanford up for sale yet?
times says " Crest Nicholson may ask HBOS for capital injection "
The US Securities and Exchange Commission (SEC) has unveiled a new one-stop online reference site to assist mutual funds in their anti-money laundering (AML) compliance efforts.
The AML Source Tool for Mutual Funds originally developed for use by SEC examiners in the Office of Compliance Inspections and Examinations (OCIE), provides links to key AML laws, rules and related guidance to help mutual funds maintain their AML compliance programs as required under law.
Fintag says Glad to see the SEC is concentrating its resources on saving the Financial World from collapse. AML is over. The Russians have cleaned their money through Iceland and the drug dealers have enough Citi accounts to keep them going for years. Allegedly of course.
Is Finvest blowing up? Sources familiar with the multi-strategy hedge fund firm have told FINalternatives that that the firm is indeed going under. However, Gad Grieve, a principal at Finvest Asset Management, says those reports are simply bogus.
“I have absolutely no idea from where this originates, and clearly and categorically I must state that these suggestions are malicious and untrue,” declared Grieve.
Fintag says I can confirm that my twitter on Friday was not a reference to this Hedge Fund. [Editor: Have you filled in you FSA rumor log?]. Although it might have been. I cannot remember.
dealbook says " Société Générale Said to Shutter Arbitrage Team "
GORDON BROWN AND HIS COHORTS GO BACK TO THEIR KEYNESIAN DEFAULT SETTING
I hesitate to admit this, but one of my earliest memories is a political speech. I distinctly remember, as a pyjama-clad seven-year old, hearing the following words. "We used to think you could spend your way out of recession by boosting government spending. I tell you, in all candour, that option no longer exists. And in so far as it did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by higher unemployment as the next step..."
OK - I didn't remember the quotation verbatim. I had to look it up. But I do vividly recall a haggard, yet determined Jim Callaghan on News at Ten delivering these words to the 1976 Labour party conference. I turned around to ask my mum what the Prime Minister meant by "candour". But she was back in the kitchen making my tea.
This is more than sentimental tosh. Callaghan's "in all candour" speech marked a sea-change in the history of post-war economic policy-making.
Fintag says I liked this article; Economics being discussed in a grown up way.
COLLECTABLES: MADONNA AND PENNY BLACKS BEAT INFLATION
Stanley Gibbons, the stamps and historical signatures dealer, has seen profits rise thanks to investors switching to "recession-proof" collectables as a hedge against soaring inflation.
Martin Bralsford, chairman, said: "The benefits of investing in collectables as an alternative asset class have never been clearer. Not only do rare stamps and historical signatures provide a means of diversification and a safe haven in difficult economic conditions but also provide a hedge against inflation."
He said because collecting was an "all-consuming passion", prices of rare stamps and signatures showed no correlation with stocks, property or other traditional investments. Collectables had risen the most during high inflation, he argued.
Fintag says Of course. And nice and liquid too. Talking of Madonna (via my Kabbalah experiment which lasted 8 days), I never realised how small she was. However, I can attest she is excellent at one arm wrestling.
REINING in the runaway freight train otherwise known as the credit default swap market is a rising priority for regulators who oversee banks and insurers. It's a good thing, too, given the secretive nature of the swaps, the losses they are generating at some companies and the size of the market: $62 trillion in default insurance is outstanding, with a fair value of $2 trillion at the end of 2007.
As the sheriffs begin to confront the C.D.S. cowboys, more losses are bound to show up in this Wild West...
Fintag says Thankfully the cowboy tag has been passed on from us hedgies to CDS operators (who are mostly unemployed).
SEXISM AND THE CITY: YOU DON'T NEED MEN WHEN YOU RUN $60BN IN ASSETS
Susan Solovay is every inch the modern female executive in the revved-up engine room of New York finance. She breezes into a noisy, trendy restaurant in midtown Manhattan, and a number of things are pretty much immediately apparent: she is super-smart, pencil-slim with dark hair, deceptively youthful (she's in her late 40s), fast-talking, full of energy, successful - and late.
Over the din, Solovay apologises profusely. The markets may be going through a dodgy period, and the US economy teetering on the edge of recession, but the founder of Pomegranate Capital, a fund of hedge funds that invests exclusively with women hedge fund managers, is still moving at top speed and cramming ever more into a working day. By the time we meet, all the little overruns have put her behind schedule, and she's very sorry.
Despite Susan Solovay's belief that women are an under-exploited talent pool, Amanda Pullinger is one of many successful women working in the hedge fund industry. Pullinger, a British national, is just about to celebrate her 20th year of residence in the US. She has been executive director of 100 Women in Hedge Funds (WHF) since 2006.
Fintag says A smart lady who I recently lined up for a shake at the shake shack [Editor: That is a complete lie]
The freezing of the auction-rate securities market — and the resulting regulatory response — is fast becoming the crisis of the day for large global financial-services companies.
In just the past few days, a number of banking giants blinked first in their showdowns with regulators and agreed to plunk down fines and huge sums to buy back the securities from investors who wrongly thought they were buying liquid, very short-term investments
Fintag says That headline must surely be illegal ...
$1BN BANKER'S CAREER IN TATTERS OVER 'INDECENT PROPOSAL'
There's a really amazing story doing the rounds on Wall Street about the recent resignation of Steven Rattner, the head of Credit Suisse's private equity arm, DLJ Merchant Banking.
Rattner stepped down last week to 'spend more time with his family', but it appears that it was an orchestrated smear campaign over an episode in his personal life which may actually have led to his departure from the firm.
Fintag says Good to see the soap opera that is Wall Street can conjure up some spice. It can get pretty dull out there although we are all at it of course.
HEDGE FUND OUTLOOK IS `MUCH WORSE' THAN 1998, LTCM VETERAN SAYS
The $1.9 trillion hedge fund industry, mired in its worst performance in two decades, faces ``much worse'' conditions than in 1998, when Long-Term Capital Management LP collapsed, a veteran of that fund said.
``It's definitely a trickier environment,'' said Hans Hufschmid, chief executive officer of GlobeOp Financial Services LP, and a former partner at LTCM and co-head of its London office. ``The market is much worse that it was in 1998. Then it was just LTCM, but this impacts everybody.''
Hedge funds are concerned for the first time about risks related to prime brokers after Bear Stearns Cos.' forced merger with JPMorgan Chase & Co., said Hufschmid, 52, whose London-based company is administrator to funds managing about $104 billion.
Fintag says Thankfully Kabbalah are always looking for new recruits and teachers. My next step perhaps?
13 comments
stock8 said ...
A clean sheet of comments. Nice.
11 Aug 08 - 07:09 gmt
anonymous said ...
Welcome back sir. You have been missed.
11 Aug 08 - 07:31 gmt
benw said ...
good to have you back. my mornings have been dull Kaballah-related chat...
11 Aug 08 - 09:24 gmt
anonymous said ...
Welcome back fintag- missed you loads!
11 Aug 08 - 09:55 gmt
Seven said ...
Welcome come back.
11 Aug 08 - 10:00 gmt
anonymous said ...
Welcome back Fin. We've missed you!
11 Aug 08 - 10:43 gmt
TC said ...
I thought we'd do something constructive in your absence, like figure out who you are.
CityBoy and Banksy are old hat now.
You're the last anonymous piece of the puzzle.
BTW: Don't buy that CityBoy book... It's a cliche of Liar's Poker proportions minus an interesting story.
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The City watchdog, the Financial Services Authority, has told the UK's banks to make sure they are strong enough to withstand serious losses on mortgages and other lending for the next two or three years.
In an exclusive interview with me, the FSA's chief executive, Hector Sants, was asked whether the difficulties for banks could be as bad as they were in the early 1990's and whether losses on lending would continue to be a problem for up to three years.