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
My biggest bug bear is when I am trying to take a photo of some unsuspecting person on a bicycle and a back packer turns 180 degrees and nearly knocks me over. I am minding my own business and my personal space is invaded by an evian cancer drinking ipod tinnitus loving discourteous playstation tunnel visioned ballistic nylon bagged individual.
Don't worry. Apparently hedgies are having mood swings at the moment.
I put this down to feeling a glow of proudness as lottery sponsored semi-professional althetes from the UK give the middle finger to supposed sporting nations like Germany and Australia in the Olympics and then watching the markets jump around as if they have ants in their pants.
That and I am bored of the gloomy news and negativism that exudes everywhere.
Today we have a horse, a bet on a horse and a horse Finbar Taggit who had to shout to be understood at the 12 years kids running the Apple Store in Regent Street where his new MacBook was bought.
The global financial crisis is set to get worse, with a large US bank likely to collapse in the next few months, a former IMF chief economist has warned.
Kenneth Rogoff's comments came as shares in Fannie Mae and Freddie Mac sank on a report that the home lenders would, in effect, be nationalised.
Despite hopes that the US economy had turned the corner, Mr Rogoff claimed it was "not out of the woods".
Fintag says Having the power to spook the markets is something I wanted to do as a child. Having seen traders censured for "moving the markets" with big basket trades and their mates at Goldmorgan Stanley have an in the money option, those days are gone. Today you have to be a big shot. I am not. Having told you for months that more banks would go, nobody believed me.
It is like being abducted by Aliens. People think you are a fruitcake unless it happens to you.
Anyone who thinks UBS should hold on to its Global Asset Management division needs to take a look at the results published by asset managers this month.
Corporate finance directors used to say that asset management companies would be a good thing for investment banks to own.
They assumed asset managers' earnings were more stable than those of investment banking activities, so possessing an asset management subsidiary would stabilize profits.
Fintag says Years ago, Asset Management was deemed dull. A bit like the Custody business. But it was proper bread and butter income. The fees just kept on coming. These are extraordinary times and the management of banks are failing to think rationally. Sell, sell, sell ...anything to keep the capital base up. They will come to regret it because the banks need to be diversified. But then why do Hedgies care? We don't.
The Useless Bank of Switzerland was over diversified and tried to follow the big American banks. It failed. As my boss once said, "only losers work at European banks." He was right until he was head hunted to run a large chunk of UBS. He did it for the money of course and is now on gardening leave with a for sale sign outside his house.
The hedge fund group that took a huge bet on Northern Rock as it was imploding last autumn has reportedly lost 85 per cent of its investors' money, amid evidence of a terrible spell this summer for many hedge funds.
SRM, the Monaco-based group that raised $3billion from investors in September 2006, is down by 85 per cent, according to The Wall Street Journal, including a minus 77 per cent performance in the past year. Tight lock-up terms prevent investors from withdrawing their money.
SRM, which was founded by Jon Wood, the former UBS investment star, is also thought to have been burnt by disappointing investments in Countrywide Financial, the American mortgage group; Bear Stearns, the investment bank rescued by JP Morgan; and Cheniere Energy, a struggling Houston-based energy company.
Fintag says I have been feeling grumpy recently. I think its the wet August in London and the large pile of redemption requests that need approving. Maybe I should just close my business and become a full time blog professional [Editor: Please don't].
SRM love buying at the wrong time. We all knew the UK housing crash was on the cards and they were long Northern Rock (unlike Lansdowne who I note are in the top 5 European hedge fund list published the other day). Were they really long Bear Stearns too? These guys need to subscribe to FiNTAG immediately.
Here is some advice. Don't go anywhere near insurance companies that start with the letter A or banks that start with the letter L. This is not financial advice. This is just common sense.
Now I can see why Paul Eustace is grumpy: new york times says " Hedge Fund Founder Ordered to Pay $300 Million "
The one financial industry that seems to be dodging the subprime bullet is insurance. Only a handful of companies have had their safety ratings knocked down because of an excessive exposure to Wall Street's toxic waste. The vast majority has enough capital to withstand the known problems on their balance sheets, the rating companies all say.
Turns out: not so much.
At least, not so much for AIG. The world's largest insurer.
AIG is, in fact, a trainwreck, and the market is only just waking up to this.
A note from Goldman analysts this morning might just be the wake up call investors need. For an idea of tone, let's flash through some of the headers:
Don't buy AIG.
A dangerous balance sheet posing as an inexpensive entry point.
There's nothing to be feared except fear itself...and mortgages.
Raising capital: Ultimate number too difficult to quantify.
The “base case” scenario for AIG under Goldman's analysis is a further $9bn in losses on their CDS contracts. That widens to $20bn under the more likely “stressed” scenario.
Fintag says Those were the days. I asked the same question in the spring.
Lets face it. Insurance is pretty dull so obviously a candidate for making up complex risk products. The parallel is with broking equities. Next step is to trade them. Next step is create derivatives. Next step is to create wrappers of derivatives on underlying derivatives and getting the credit agencies to rubber stamp them. Well this is what has happened to the insurance industry.
Simple revenue models are for the likes of low grade companies like Walmart. Complex "pat on the back" business models are for the likes of AIG and UBS. I know which one I prefer.
WATCH OUT WHEN PRIVATE EQUITY'S DEBT DEALS GO SOUR
Moulton the Mouth is at it again, warning about the legal and ethical risks of buy-out groups acquiring the debt of companies whose equity they own. Pick a metaphor: Jon Moulton is the black sheep of the private equity flock, a thorn in the side of his buy-out peers, a man throwing stones inside his own glass house (his £300m credit fund, Alchemy Special Opportunities) or all of the above. He is also right.
The trend towards private equity companies buying at a discount the debt of companies they took private is (probably) not illegal. It may even be beneficial for the portfolio company if the alternative is a fire-sale of debt to hostile hedge funds. But the buy-out firms that do it make a virtue of the fact that they use knowledge attained as bidders or shareholders to assess the true value of the debt. That is presumably knowledge to which other creditors, or potential creditors, are not privy.
Fintag says Pirate Equity. They have been been very quiet recently. But I love this. Tis true you can buy debt for equity and companies have no choice. The last thing Pirates want is an investment going bust - so they have to bend over and take it. Nice.
Thanks to the reader who sent me this link. If you want to know more about CDO's read on. equityprivate
LEHMAN CONSIDERS SELLING STAKE IN INVESTMENT MANAGEMENT ARM
Lehman Brothers is exploring the possibility of selling a stake in its investment management arm in an attempt to bolster its capital position in the wake of the continuing credit crisis.
The investment bank, led by chairman and chief executive Dick Fuld, is sounding out potential interest in the division, which includes the Neuberger Berman business which it bought for $3.1bn (£1.66bn) in 2003.
The assets included in the possible sale are also believed to be certain parts of the bank's private equity and hedge fund businesses.
wall street journal says " Rising Cost of Debt Stokes Fears On Freddie's Prospects "
Fintag says I know I covered this one yesterday. Just trying to pad out today's newsletter written on my newly acquired Macbook.
CDO DEFAULT EVENTS ACCELERATE WITH NEW `WAVE,' JPMORGAN SAYS
Collateralized debt obligations experienced so-called events of defaults at a faster pace in early August, with a commercial-mortgage CDO joining the list, according to JPMorgan Chase & Co.
Seven mortgage-linked CDOs experienced default events, indicating even the senior-most classes may not be repaid in full, up from 14 for June and July, JPMorgan said in a report yesterday. Monthly additions to the $229 billion of defaults since mid-2007 peaked with 47 in February, the report said.
Fintag says Here we go again. The documentation behind most asset backed derivatives is shocking. I know because my lawyers read them on the loo. Events, triggers, default points, they are loose as a loose man.
I don't know why but CDO's always remind me of Cowboys. So here is a picture of a horse.
4 comments
anonymous said ...
Have you gone down the 'virtual PC' route on your MacBook or have you ditched Microsoft completely and fully embraced Apple? And have you opened a short Microsoft position yet?
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The global financial crisis is set to get worse, with a large US bank likely to collapse in the next few months, a former IMF chief economist has warned.
Kenneth Rogoff's comments came as shares in Fannie Mae and Freddie Mac sank on a report that the home lenders would, in effect, be nationalised.
Despite hopes that the US economy had turned the corner, Mr Rogoff claimed it was "not out of the woods".