Main News

 

A panel of chief risk officers from four major financial institutions argued that the distress in the financial markets has been partly caused by the concentration of money chasing too few trading ideas. “People don’t realise that one of the main factors that contributed to this period’s recent stress was the crowded trade, and the lack of liquidity for a particular trade once everyone gets out of the same trade,” said Madelyn Antoncic, chief risk officer at Lehman Brothers in New York. Another important cause of the market distress was the timing mismatch between analysing complex instruments and the time to bid on them, said Kenneth Winston, global chief risk officer at Morgan Stanley Investment Management.  “I think what happened over the summer is that the markets froze up because of that complexity and because there wasn’t time to analyse the trades. People just stepped back,” he said. “What’s happening now is that a lot of the complex structures are being unwound and are being placed into new vehicles that are more transparent.”
Risk USA: Crowded trade increases turmoil again, say CROs

 

 

 

Wall Street Journal - USAThis piece of legislation is intended to overhaul mortgage lending and legislate our way out of the subprime mortgage crisis. ...

HEDGE FUND TAX PASSED
New York Post Sat, 10 Nov 2007 2:06 AM PST
The U.S. House of Representatives passed a measure raising taxes on executives at hedge funds and private-equity firms by $49.5 billion over the next decade to prevent a separate, $50.6 billion tax increase on middle-income families. The House...

What Lessons Does The Market Turmoil Have For Risk Management?
Periods of market disruptions such as the one that began this June present a good opportunity to think about how risk management functioned and whether there are some lessons for market participants. The overarching issue and lesson has to do with the concept of risk governance. In particular, our enterprise risk management methodology emphasizes the role that a well-defined risk appetite plays in risk governance. A well-thought-through statement of risk appetite can go a long way toward guiding strategic aspects of risk taking.
To learn more, click or copy and paste the URL below:
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http://standardandpoors.rsys1.net/servlet/cc5?kHiQYWBCQTVsLgHxhilpuHQJhuV2VU

 

The Federal Reserve's recent policy decisions have been “designed to help Main Street and not to bail out Wall Street”. Speaking at the annual Risk USA conference in New York, Fed governor Frederic Mishkin insisted recent actions taken by the US central bank, including interest rate cuts of 75 basis points over the past two months, were designed to buoy the national economy, not to provide an unwarranted respite for investment banks that suffered record writedowns over the third quarter. “Pursuing such policies does help financial markets recover from episodes of financial instability, and so it can help lift asset prices. But this does not mean market participants who have been overly optimistic about their assessment of risk don't pay a high price for their mistakes. They have,” Mishkin said.
Risk USA: Rate cuts do not “bail out Wall St”

 

A panel of chief risk officers from four major financial institutions argued that the distress in the financial markets has been partly caused by the concentration of money chasing too few trading ideas. “People don’t realise that one of the main factors that contributed to this period’s recent stress was the crowded trade, and the lack of liquidity for a particular trade once everyone gets out of the same trade,” said Madelyn Antoncic, chief risk officer at Lehman Brothers in New York. Another important cause of the market distress was the timing mismatch between analysing complex instruments and the time to bid on them, said Kenneth Winston, global chief risk officer at Morgan Stanley Investment Management.  “I think what happened over the summer is that the markets froze up because of that complexity and because there wasn’t time to analyse the trades. People just stepped back,” he said. “What’s happening now is that a lot of the complex structures are being unwound and are being placed into new vehicles that are more transparent.”
Risk USA: Crowded trade increases turmoil again, say CROs

 

Falling BarometerWeak copper prices point to a China freeze.
http://online.barrons.com/article/SB119465198448588576.html?mod=djemWR

 

Banks Warn Subprime Will Impact 4Q
The Associated Press -
Wachovia has an additional $2.1 billion of exposure to more traditional subprime mortgage-backed bonds. The value of those holdings remained steady in ...
See all stories on this topic

 

Gloom envelops world markets
MSNBC - USA
Ratings downgrades for mortgage securities have pushed a clutch of such deals into default, threatening escalation of the turmoil caused by the subprime ...
See all stories on this topic

 

FUNDWATCH: AMG Buys ValueAct Capital Stake, Boosting Hedge-fund ...
CNNMoney.com - USA
SAN FRANCISCO (Dow Jones) -- Already holding a significant stake in hedge fund AQR Capital Management, boutique asset manager Affiliated Managers Group Inc. ...
See all stories on this topic

 

Man Group entangled in DoJ hedge fund fraud inquiry
Times Online - UK
The man at the centre of an inquiry into an alleged $200 million (£96 million) hedge fund fraud that has embroiled a former Man Group subsidiary has been ...
See all stories on this topic

 

Turkey: Making Nuclear Plans
http://www.stratfor.com/products/premium/read_article.php?id=298037

 

Defaults & Returns on High Yield Bonds: Analysis Through 2001
by Edward I. Altman and Pablo Arman
The year 2001 was remarkable on many fronts. For the high yield market, it was a year of crushing record numbers of defaults and distressed exchanges, combined with predictable low recovery rates. Despite these fundamental problems and the "flight to quality" following the terrorist attacks in September, the high yield market displayed impressive resiliency... More... <http://www.hedgefund-index.com/s_eventdriven.asp>

 

FINLAND – Allocations to hedge funds by pension and pension-related funds have doubled since the start of the year, the latest statistics from the Finish Pension Alliance (TELA) have shown.

 

Speaking at the annual Risk USA conference in New York, Joseph Mason, an associate professor of finance at Philadelphia's Drexel University, pushed banks to originate simpler products to increase transparency and information flow between buyers and sellers. Mason pointed to the auto and credit card sectors as examples. “The auto and credit card sectors decided a long time ago, because of similar distressed situations, that they are in the business of making auto loans and issuing credit cards, and they want to be funded no matter what the market does," said Mason. "They haven’t been having trouble getting funded lately – it’s pretty much only the mortgage sector with these overly complex structures.” 
Risk USA: Simpler structured products needed

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Yield Curve Corner

 

The following is a speech by Federal Reserve Chairman Ben Bernanke on the economic outlook before the Joint Economic Committee in Washington, DC.

Full Story...

 

by Beris Blog

 

Silencing the opposition
Benazir Bhutto, leader of the Pakistan People's Party, is put under house arrest
Full article

 

Fed Chairman Forecasts Slowdown in U.S. Economy
The economy is likely to slow through the first half of 2008, Federal Reserve Chairman Ben S. Bernanke said yesterday, as members of Congress called on him to take aggressive action to prevent a worsening mortgage crisis.
(By Neil Irwin, The Washington Post)

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Natural Disaster Corner

 

Climate Prediction  http://www.nws.noaa.gov/predictions.php

World Meterological Organization http://severe.worldweather.org/

Tornadoes: http://www.disastercenter.com/tornado.htm

Great Sat Pictures of events:

 

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Iranian Situation

 

Iran Guards ex-commander says US threats serious
AFP via Yahoo! News Sun, 11 Nov 2007 7:06 AM PST
A former commander of Iran's elite Revolutionary Guards said mounting US rhetoric against the Islamic republic over its nuclear programme should be taken seriously in comments published on Sunday.

 

Iran president compares critics to 'goats': report
AFP via Yahoo! News Sun, 11 Nov 2007 5:27 AM PST
Iran's hardline president Mahmoud Ahmadinejad hit back at his critics, saying they were less intelligent than goats in comments carried by a reformist newspaper on Sunday.

 

Bush, Merkel seek to overcome Iran differences
AFP via Yahoo! News Sat, 10 Nov 2007 12:34 PM PST
US President George W. Bush and German Chancellor Angela Merkel agreed Saturday to pursue a diplomatic end to the Iran nuclear standoff as they worked on a common strategy towards a defiant Tehran.

 

Elections in US, Iran could escalate nuclear row: former German FM
AFP via Yahoo! News Sat, 10 Nov 2007 7:35 AM PST
Upcoming elections in Iran and the United States could heighten tensions between the two countries over Tehran's nuclear programme, Germany's former foreign minister Joschka Fischer said Saturday.

 

Iran court upholds death sentence on dissident
Reuters via Yahoo! News Fri, 09 Nov 2007 12:16 PM PST
Iran's Supreme Court has upheld the death sentence on a Kurdish dissident journalist convicted of charges including spying, his lawyer said on Friday.

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Opalesque’s Corner

 

- AMG buys stake in ValueAct hedge fund, Record plc to proceed with IPO with intention to list on LSE, AQR forced to shelve planned IPO after poor performance caused by withdrawals, Augen - BluMont`s partnership completes IPO raising C$16 mln, will invest in resource companies, Julius Baer plans to spin off U.S. fund unit in IPO, GAM will not be sold
- Millennium CEO launches multi-strategy hedge fund through Decade Capital of New York, 360 Asset Management readies Japan L/S Fund, Marshall Wace to launch top open-ended Ucits III fund, Former SVP partner sets up Normandy Hill, ProShare unveils two ETFs
- GAM manager to move to Dubai to manage GAM Frontier Opportunities Equity Hedge, calls Gulf the next emerging market, Spinnerhawk closes energy hedge fund shop after 2 years in business, Another boring month at Resolute Capital Growth Fund (+2.99%), 58th positive month
- Hedge fund start-ups face squeeze from investors
- Man`s Research Analysis and Strategy Group issues report: `De-mystifying managed futures - why class research and innovation are key to stay ahead of the game`,  Barings launches 130-30 fixed income white paper, Preqin Hedge 2008 Institutional Investor survey: Most investors say transparency only marginally improves investor confidence, more:
- Indices: October 2007 performance review of the Dow Jones HF strategy benchmarks,  Hennessee Hedge Fund Index advanced +2.88% in October, 90% of hedge funds profitable in October, Barclay index up 2.90%, 12.02% YTD, Merrill launches emerging market FX index
- Fixed-income managers raising funds to take advantage of dislocation in asset-backed securities
- People: Asian HF looking to expand research team
- Pensions: Ford to cut equity share of pension investment, to increase alternative investments
- Legal News: Vega Opportunity Fund losses may be up to $100m, facing fraud claims, Eustace indicted for commodities, wire fraud, Basis` Cayman Islands hedge fund seeks to skip hearing, HF manager claims two PE firms drove down stock prices of Greek company listed on Nasdaq, Armstrong Capital, Bay Capital and Timothy Bliss to pay $1.8 million to settle short-sale case
- Merrill reveals $6.3 billion more in subprime-CDO exposure, SEC investigating Merrill subprime portfolio, Former Merrill Lynch star player warns of company collapse, New focus on succession at Morgan Stanley, Zoe Cruz is leading candidate
- Capital crunch spreads: Capital levels tumbling at major banks and brokerages, Investors may cash out of big brokerage firms,Demand for risky debts are weakening again after recent recovery, Get set for more debt downgrades from Moody`s, S&P, Fitch, US capital markets `at risk`, to `tip` if not adapted to new global methods of regulation
- Regulators: European and US` effort to achieve greater convergence in financial regulation, Commentary: 'Principles vs. rules', regulators may be rethinking approach to enforcement, SEC plans to open an overseas office in London or Brussels, IOSCO launches task force on recent market events to review the issues facing securities regulators, The MFA`s 2007 Sound Practices for Hedge Fund Managers - document, Commentary:  2007 edition of the MFA guidance is more robust, Saudi regulator bans 82 websites
- US Congress and OPEC concerned by `speculative` crude oil trades
- Tax Update: Cerberus` John Snow attacks tax rise proposal, Bush threatens to veto Rangel`s minimum-tax proposal,  White House objects to the tax increases
- Exchanges: Linked global carbon market could be worth EUR800 billion, EEX`s COO said,  Hong Kong stock exchange increases its capacity to ease bottleneck
- Events: Inaugural annual conference of the Cass-Capco Institute Paper Series on Risk, London 8th April 08, Frontiers in Hedge Funds and Proprietary Trading Forum, Nov 16
- Sotheby`s stock drops 28% following N.Y. evening sale, bull market in fine art may be over
- Austrian UCITS III compliant equity L/S fund, Salus Alpha Equity Hedged, now approved for distribution in Germany and Sweden
- Zurich University of Applied Sciences: Rally across a wide front in FoHFs industry, list of Swiss registered FoHFs
- Istithmar expands footprint with the opening of a new office in China
- Have Asian markets already decoupled from America?
- Activist News: Hedge fund manager Lampert raises AutoNation stake
- News Briefs: Bernanke`s outlook on the economy: speech, JP Morgan says bull market not over despite problems,  Delta Financial laying off half its workforce, Bank of England keeps key rate unchanged at 5.75%,  Indian port operator breaks record: The $52bln IPO (subscriptions), India`s solution for oil prices: Ban speculation by banning trading
- And Finally. Unusual looks? Hollywood wants you
- Logon: http://www.opalesque.com/main.php?act=archive

 

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Misc. Items of Interest

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Funnies, Facts, Quotes, etc….

 

mercurial mur-KYUR-ee-uhl, adjective:

1. [Often capitalized] Of or pertaining to the god Mercury.
2. [Often capitalized] Of or pertaining to the planet Mercury.
3. Having the qualities of shrewdness, eloquence, or thievishness attributed to the god Mercury.
4. Changeable in temperament or mood; temperamental; volatile.
5. Of, pertaining to, or containing mercury.
6. Caused by the use of mercury.

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Conference, Courses, Books, Papers

 

Great Research Sites:

 

Merrill Lynch research Link to full report including important disclosures see example

 

John Mauldin’s Weekly Analysis

 

James Altucher’s Website:

 

Other useful sites:

 

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Index Corner

 

The CSFB/Tremont Hedge Fund Index www.hedgeindex.com.

The Cogent Dynamic Averages http://www.cogenthedge.com/home/inv_strategy.asphttp://www.cogenthedge.com/home/inv_strategy.asp

The Dow Jones Indices: http://www.djhedgefundindexes.com/index.cfm?event=viewPremiumContent (free registration)

HFRX Indices https://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login&1170880431

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Regulatory Info

 

 

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Disclaimer

 

The information contained in this document does not constitute an offer or solicitation to sell any security or other type of vehicles to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this document be considered as financial advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Investor DNA, LLC from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Investor DNA, LLC is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice. All materials are the property of the respective publishers, as referenced by header and appropriate hypertext links.