Main News

 

Economists believe the next big shock to the financial system might not come from the property market but from consumer credit debt. The risk was highlighted by HSBC's third-quarter results earlier this month, in which the bank reported a $3.4 billion writedown on its US consumer finance business, and said it was easing conditions on its credit cards to reduce delinquencies. Karen Weaver, Deutsche Bank's head of securitisation research, pointed out in a recent conference call: "All consumer credit portfolios have enjoyed artificially low losses. You always had the option of extracting home equity. Now we're going to see all consumer credits posting higher losses." Rating agency Fitch said earlier this month that the credit card ABS market was "stable", but warned that both credit cards and auto loans could see higher losses in the new year.
Credit cards could be source of next debt shock

 

Credit 'heart attack' engulfs China and Korea

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 12:47am GMT 23/11/2007

 

Hedge Funds:
Wall Street Journal - USA
By ALISTAIR MACDONALD and MARGOT PATRICK Hedge funds have become famous for using borrowed money to boost their returns. But the upheaval in credit markets ...
See all stories on this topic

 

 Europe Quant Funds May Have Tumbled in November, JPMorgan Says

 http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=au9QfcmQMma8

 

Huge return for hedge fund betting against subprime
Financial Times Sun, 25 Nov 2007 2:28 PM PST
A Californian hedge fund has made more than 1,000 per cent return this year by betting against US subprime home loans, making it one of the world’s best-performing funds of all time.

 

Woman
Times Online Sat, 24 Nov 2007 5:45 PM PST
What is it that girls, really, really want? We want you to pay attention There is a certain type of woman who knows exactly what she wants, which is – in very particular order – a hedge-fund manager, a big house with a show-off postcode, a tiny lollipop figure, another handbag . . .

 

MONDO CONDOS
 By CARA TABACHNICK
If you build it they will come - at least that's how it used to be in the residential New York real estate market.  Now, with a housing slump sweeping the nation and the devalued dollar making the U.S. a bargain for Europeans and Asians, savvy...
full story: http://www.nypost.com/seven/11252007/business/mondo_condos_810486.htm

 

Thomas C. Wilson (46) will become Chief Risk Officer (CRO) of Allianz SE as of January 1, 2008. He will take over this function from Raj Singh (45), who will take up a new position at Swiss Re per turn of the year. 26 Oct 2007 , Munich : Wilson is currently acting as Chief Insurance Risk Officer of ING Group. Link read entire story on source's website

 

WASHINGTON — The Office of the Comptroller of the Currency announced today it has approved a final rule implementing the advanced approaches of the Basel II Capital Accord. This rule establishes regulatory and supervisory expectations for credit risk, through the Internal Ratings Based Approach (IRB), and operational risk, through the Advanced Measurement Approach (AMA), and articulates enhanced standards for the supervisory review of capital adequacy and public disclosures for the largest U.S. banks. Link read entire story on source's website

 

Hedge funds and credit
Problems refuse to go away ... more

 

The Steel Effect Still Going Strong in Japan
Financial Times - Friday November 23, 07:12 GMT

 

BOSTON (Reuters)—Goldman Sachs Group Inc. has told investors it expects its Global Alpha hedge fund will end the year with roughly $4 billion in assets, about 60% less than in January, several people familiar with the matter said. ......

 

Private equity underperforms market -- [at FT.com]
By Martin Arnold, Private Equity Correspondent FT.com
11/22/2007 11:55:18 AM

 

Blog: UBS Has a "SMALL" VaR Risk Modeling Problem

Toomre Capital Markets LLC ("TCM") would like to highlight a couple of items from UBS's 3rd quarter 2007 earnings report that was released on Tuesday, October 30th, 2007. Buried in the earnings report (a copy of the pdf file is attached to the bottom of this posting) is a discussion about the investment bank's market risk. The report states that "Investment Bank Value at Risk ["VaR"] (VaR-10-day, 99% confidence based on 5 years of historical data) ended the quarter at CHF 676 million, up from CHF 454 million at the end of the prior period end." Apparently the approximately 49% increase in VaR during the 3rd quarter was driven primarily by increased market volatility. As the report states, "The largest contributor to Investment Bank VaR at quarter end was credit spread on mortgage-related positions." Link read entire story on source's website

 

Blog: Did the Risk Models Work?

Submitted by: Christopher Finger, Head of Risk Management Research There are a lot of market questions circulating right now whether the risk models worked properly given the current credit crisis. However, in assessing the models, we need to first decide which market we’re trying to analyze. The most visible losses came in subprime-backed ABS and later in quantitative equity funds. It seems the story in equity funds is somewhat mode-related, but it pertains to the specifics of the models the funds were using to trade. Given this, let’s focus on the current subprime story. Link read entire story on source's website

 

Blog: A Few Thoughts on "The Plight of the Fortune Tellers"

A Few Thoughts on "The Plight of the Fortune Tellers" (A) I suppose that the first lesson from talking to people about Riccardo Rebonato's The Plight of the Fortune Tellers is how foolish we academics are in thinking that there are things that go without saying: a great deal of the very large value of the book comes in saying things that, when I would say them in academic seminars, would be followed by somebody saying "But of course that goes without saying." The biggest example is Rebonato's hammered-home point that the 99.9% value-at -risk for a weekly return distribution cannot be determined. You would need 200 years of data from an unchanging return distribution before you could expect to have ten observations above the 99.9th percentile. Link read entire story on source's website

 

Clever Risk Models Fail to Reflect Reality

Computerized models of risk played a bigger role in the recent crunch than ever before. Common flaws in risk models link the failure of rating agencies to predict the level of defaults on subprime mortgages, the freezing up of the market for complex debt securities, and problems at several dozens hedge funds and a handful of banks. We handed over the job of assessing financial risk to computers programmed by mathematicians and physicists—and they failed. Link read entire story on source's website

 

Funds under pressure to use derivatives more
Source: FinancialNews-US.com
Getting positional data from a hedge fund can be like squeezing blood from a stone. But, despite the secrecy surrounding them, it is generally accepted that hedge funds are among the biggest users of derivatives. More... <http://www.hedgefund-index.com/newstoday.asp>

 

Why real estate may spring a surprise -- [at FT.com]
By Elaine Moore FT.com
11/23/2007 7:55:21 AM

 

Kass: Hedge Funds Losing Their Shirts
TheStreet.com - USA
Not only are hedge funds closing with regularity but a number of activist corporate raiders are in deep doo-doo. That also applies to a number of ...
See all stories on this topic

 

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Yield Curve Corner

 

Fed faces a fine balancing act on rates
Times Online - UK
Still, Ben Bernanke & Co believe that the economy is likely to grow at somewhere between 1.8% and 2.5% next year. Private forecasts are coalescing around ...
See all stories on this topic

 

GREENSPAN: SLUMP NOT MY FAULT
 Bloomberg
Former Federal Reserve Chairman Alan Greenspan said he has "no particular regrets" and that the slump in the US housing market isn&#39;t a result of his policies.  "Markets are becoming aware of the fact that the decline in house prices is not...
full story: http://www.nypost.com/seven/11242007/business/greenspan__slump_not_my_fault_767183.htm

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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 and Other Man Made Disasters

 

 

Victims of Iran war with Iraq found in mass grave
AFP via Yahoo! News Sun, 25 Nov 2007 3:17 AM PST
A mass grave containing 30 corpses of people killed during the Iran-Iraq war, including Iranian soldiers, was found on Sunday near the southern Iraqi port city of Basra, officials said.

 

Tough Iran sanctions to hit Germany hard: report
Reuters via Yahoo! News Sat, 24 Nov 2007 9:18 AM PST
The adoption of tougher sanctions against Iran over its nuclear program could cost the German budget 2 billion euros, according to Finance Ministry estimates cited in Der Spiegel magazine on Saturday.

 

Iran will not block oil passage: navy chief
AFP via Yahoo! News Sat, 24 Nov 2007 8:08 AM PST
Tehran has no plans to block the Straits of Hormuz amid fears it could use the strategic oil passage as a weapon in its nuclear standoff with the West, Iran's navy chief said on Saturday.

 

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Opalesque’s Corner

 

- Opalesque Exclusive: Water fund up +140% YTD
- Opalesque Exclusive: Number one Asia long-short equity hedge fund returns 289% YTD from traditional stock-picking
- New launches: Goldman aims to raise $6bn for hedge fund, 2yr lock-up, Halbis launches leveraged version of European Alpha Fund, A fund of hedge funds, investing in Korean HFs, has been launched for the first time in Korea, Former Volvo Treasury professionals launch Swedish fixed income hedge fund
- SVM Global Opportunities fund has received its first rating, AA, from S&P
- Profile: Thames River Capital looks to the future, Occam planning to offer long-only versions of hedge funds, Bramdean may invest more in distressed opportunities and emerging markets
- More managers in rush to float, more HF and FoHFs groups predicted to go public
- Hedge funds criticized for failing to make adequate use of derivatives to achieve optimal strategic advantage, Property derivatives market ready to explode,
- iShares tests inverse ETFs concept
- Comment: Serial crunching - Credit problems refuse to go away
- Low dollar `threatens the life` of Airbus, UK expert is not convinced that the world is ready for the euro yet as the major oil currency
- People: HF manager Sadeque steps down from RAB board
- Commodities: BluMont Capital: BRIC may cure any resource sector ills, growth should drive demand for metals, Interview with Dan Ascani, Gemini Futures: Focusing on opportunities in the gold markets, Zinc and copper prices start to collapse
- Exchanges: TSE says no cash for capital ties before IPO, Western exchanges seek to become involved in Eastern Europe
- Tech Update: The growth of dark pools has led to the development of a management system: OnePipe, Real-time NAV: a paradigm shift for the hedge fund industry
- European Socialists seek tougher regulation for equity and hedge funds
- Terra Asset Management may have marketed hedge funds illegally to Norwegian municipalities
- Value Partners may sell China products with Ping An Insurance Group
- Delivering alpha in Japan: Why invest in Japan when it is low growth?
- Events: CFA Institute and EDHEC Business School launch new joint seminar exploring state-of-the-art investment management, next event on 19-21 March in London
- Activist News: FNX Mining urged to put itself in play by U.S. hedge fund shareholder,  Steel Partners continues to apply pressure in Japan, United Airlines looking for a merger, York Capital demanded FNX Mining Co. be put up for sale
- New Briefs: Denver Schools pension beats benchmark for quarter, A.I. primary drivers, UK water utility Kelda Group has received GBP3 bln takeover approach from consortium, Intermediate Capital`s profit rose 34% as `bubble` burst, SG Private Banking to set up in Canada with the acquisition of Canadian Wealth Management,  Dubai regulator bans former Barclays private bankers
- And Finally. Shooter says he mistook cow for coyote, authorities are sceptical
- Logon: http://www.opalesque.com/main.php?act=archive

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Misc. Items of Interest

 

Islamists’ electoral disaster
A blow for political reform in Jordan
Full article

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Funnies, Facts, Quotes, etc….

 

"This is going to be scary. We think the Fed will have to step in and bail out at least the pension funds." - Thomas Martin, president of consumer advocacy group Homeowners Consumer Center, estimates that pension funds will take a $1 trillion hit from devalued subprime securities. (CNN Money, Nov. 21st)

 

recumbent ih-KUM-bunt, adjective:

1. Reclining; lying down.
2. Resting; inactive; idle.

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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.