The markets in the US did not take at all well to Henry Paulson’s announcement that he wanted to get his hands on the rest of the TARP allotment (a remaining $350 billion) and spend it so as to help consumers go to the mall again. As one correspondend, Andrew, noted: 1) Is the dog-chasing-its-tail […]
Read more...A front page story in the Wall Street Journal discusses how continued forced selling by hedge funds was the proximate cause of the sharp selloff of the last two days (um, the simply lousy economic news. such as lousy payrolls, horrific retail sales, no sales of credit card bonds in the last month, and similarly […]
Read more...When it rains, it pours. Amazingly, the list of possible casualties from positions on forward freight agreements includes not only ship owners, traders, and charterers, but also hedge funds. From the Financial Times: Fears are growing in the shipping industry over the potentially big losses that could emerge this week on derivatives triggered by the […]
Read more...I somehow managed to fail to connect the dots on this one. When Morgan Stanley and Goldman, the far and away two biggest prime brokers (as in lenders to hedge funds) became banks, tougher regulatory requirements forced them to curtail hedge fund lending significantly. To give you an idea of the concentration in this business, […]
Read more...After the Fed, ECB,, Bank of England, and other central banks took unprecedented measures over the last month to restore liquidity and recapitalize banks, Nouriel Roubini sounded slightly less gloomy. He had deemed that the authorities has avoided a systemic financial meltdown, but a nasty, protracted recession was in the offing. It appears that Roubini […]
Read more...The financial media has, for the last month, regularly mentioned poor performance and high redemptions at individual hedge funds, and stories that a lot of players had taken significant losses. While those reports sound entirely plausible, they are nevertheless anecdotal. Bloomberg tells us that a hedge fund indexes, which track performance systematically, are confirming the […]
Read more...Hedge funds continue to create considerable dislocation as they dump positions to meet redemption requirements. For instnace, a major downdraft in gold this week occurred in a very short time frame and is almost certain to have resulted from an investor selling some large holdings. With even larger redemptions expected this quarter, all sorts of […]
Read more...Now that the horse has left the barn and is in the next county as far as the damage of overly lax financial industry regulations is concerned, a lot of people are in favor of having tougher rules. Even Tyler Cowen, who hews to the conservative side of the political spectrum, cites lax supervision as […]
Read more...Not only is the $43 billion number, um, impressive, but recall September was a dreadful month for many funds. Industry experts see more redemptions in the offing. Moreover, London is a bigger hedge fund center than the New York metro area, where the vast majority of hedge funds ply their trade, so the US figures […]
Read more...Hedge fund margin calls appear to be playing a role, perhaps a substantial one, in the precipitous fall in stock prices. One hedge fund manager told us yesterday that a West Coast hedge fund was supposed to have dumped a lot of risky fixed income positions late in the day yesterday. That affected the stock […]
Read more...From Bloomberg: U.S. stock exchanges may seek to impose a temporary ban on short sales for individual stocks that plunge as regulators seek to rein in short-selling. The New York Stock Exchange and Nasdaq Stock Market may file their proposal with the Securities and Exchange Commission as soon as today, said three people who have […]
Read more...Nouriel Roubini has been almost freakishly accurate in calling the progression of the credit crisis, with his only major failings being predicting its onset on the early side and his fondness for an apocalyptic writing style, which now seems fully justified. Even by the standards of his alarming missives, his latest is truly troubling. Roubini […]
Read more...John Cassidy, in the New York Review of Books, discusses George Soros’ latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means, emphasizing how the storied investor’s views differ from those of the efficient markets/rational expectations school of economics. It also weaves in a wide-ranging discussion of the […]
Read more...Traders play to win, and hedge funds are unconstrained by big-firm considerations, like turning your clients into your next meal is probably not a good strategy for long-term survival. But even then, brokers are widely believed to play dirty. Hedge funds avoid revealing their positions to their prime brokers (funds of any size have two […]
Read more...We have noted several times in the last few weeks that hedge fund redemptions were likely to produce another ratchet-up of intensity of the financial crisis. Nouriel Roubini has also called it as the next domino to fall. Hedge fund have had not-so-hot returns so far this year, on average delivering losses despite promises to […]
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