Putting the shadow banking system back in vogue

Let’s talk a little about the data released on Friday. On the plus (contrarian) side, everybody is talking about the unemployment number and NOBODY happened to mention that consumer credit was UP on Friday, even before TALF. I think we are very close to the bottom. I think that New York Fed President Dudley is screaming to the investment funds, hedge funds, private equity to do these deals with

Goldman says fund managers expect deflation

Goldman Sachs London conducted a poll of fund managers today that had interesting results. The poll demonstrated that fund managers are expecting deflation more than inflation and that they expect the U.S. or Asia to escape the downturn first (and certainly not Europe or the UK). I imagine that funds are positioned accordingly.

Here are the poll results

Bailouts: catching a falling knife

This post from January 2009 explains why banks do not increase lending capacity when uncertainty about the level of existing loan losses already on their balance sheet makes them worry about future loan losses. Credit wariness will be the order of the day meaning new credit will be restricted amid doubt about the creditworthiness of potential borrowers. Given the still anemic growth in credit, this is something to keep in mind

Madoff as a signal to go for “regulation heavy”

On a recent Bloomberg Radio with Tom Keene broadcast, Harvey Pitt and Arthur Levitt, two former SEC Chairman were guests. Levitt made the suggestion that hedge funds had once been given the choice of “regulation-light” or “regulation-heavy.” Now, in the wake of the Madoff scandal, “regulation-heavy” is all but assured. But, isn’t this just

Law firm confirms the disaster at Lehman

Many will suffer at the hands of Lehman Brothers. That is the verdict by white-shoe law firm Wachtell, Lipton, Rosen & Katz – a firm I had the pleasure of working with during my previous life in finance. They are very good. Apparently, the bankruptcy laws will not be a protection for creditors as clent

Massive short covering at VW and massive losses for hedgies

I ran across a very disturbing news item today that is getting a lot of press in Germany. Apparently, the leveraged finance community is getting routed at the German Automaker VW. The crux of the situation is that Porsche, which controls VW, upped its stake in the company causing shares to rise. For whatever reason,

Forced liquidation

The recent movement in global markets has me scratching my head a bit. You have people dumping gold and the Swiss Franc in order to invest in the U.S. dollar and Treasury securities. Everyone says it is a flight to quality. I do not agree. Logic has it that the U.S., as a debtor nation

Hedge Fund Panic

If you recall, I have been warning for a while now that hedge funds were going to take a beating. There are many progosticators out there including Nouriel Roubini which feel that many hedgie bankruptcies are on the way. Below is a snippet of a well-written article from the UK site “Money Week” which I

Hedge funds collapsing

CNBC and other media sources are reporting that a number of hedge funds are collapsing under the weight of poor performance and massive fund redemption. Given the market volatility in credit, sick, bond and currency markets, it was only a matter of time before we started to see this occurrence.CNBC reported the following today: Citadel

Hedge Funds

For a few months now, I have been wondering where all the hedge fund fallout from global market turmoil was hiding. Now it seems that the turmoil in the hedge fund world is becoming more apparent — hedge funds are imploding left and right according to the FT. This turn of events will mean one

Jim Chanos: short sellers are heroes

I just watched a great clip of an interview Jim Chanos, the famous head of hedge fund Kynikos Associates, did with the FT’s Gillian Tett (Hat tip FT Alphaville). Chanos does a very good job of arguing hat short sellers are being unfairly victimized by government. Basically, he and other hedge fund managers like John

RAB looks to halt redemptions for three years

RAB Capital, the hedge fund that lost a good deal of capital in its quest to capitalize on the Northern Rock situation now finds itself losing investor money. In fact, it is looking to halt redemptions from its funds for three years. This is a real sign of distress at the fund. Below is a