Archive: 03/07/2008

Main News

Economic Risk Assessment of the 2008 Presidential Race (Part 1)
by Ed Kim

The 10 Largest Trading Losses In History
by Babak

Munis come roaring back. Yields on municipal bonds are down about 15 BP since last Friday, while Treasurys are about 15 BP higher, as historic yields entice large funds and retail investors. Wilbur Ross bought $1B in bonds, calling it "an extremely attractive segment of the market, even after the recent rally." Bill Gross's Pimco bought $1.5B of munis Friday.

Geopolitical Diary: Geography and Conflict in South America
March 6, 2008 0301 GMT
Geographic barriers have decreased conflict between South American nations. But as countries in the continent jockey for political and economic clout, the continent's geopolitical balance will change.

http://www.stratfor.com/geopolitical_diary/geopolitical_diary_geography_and_conflict_south_america

Bank of China sells all CDOs
Bank of China Chairman Xiao Gang said the Chinese lender, which reported nearly $8 billion of subprime-related investments at the end of September, has sold all its collateralized debt obligations. Xiao did not disclose what the bank's subprime-related debt is currently. "It will be in everybody's interest to find out what exactly they are holding," said Dominic Chan, an analyst at CLSA Asia-Pacific Markets. People's Daily (China) (06 Mar.)

Economic Risk – Research Shows Fear is Driving Recessionary Trend
Increasing pessimism about the U.S. economy is causing many CEOs to preemptively lower growth goals expectations and plan conservatively for 2008 – but is this a smart strategy? With phrases such as “darkening outlook”, “market freeze”, and “economic meltdown” dominating the financial headlines, companies are electing to implement a cautious approach.

Full Story...

US home foreclosures hit record high
Reuters - USA
For subprime mortgage loans, the delinquency rate rose a full percentage point to 17.31 percent from the previous quarter. The easy terms of subprime loans ...

Mortgage Crisis Bailout: Relief for Some, Risk for Others
Does the mortgage crisis demand a government bailout? A year ago, most experts thought not. Sad as the situation was for some homeowners, many felt the problem would be confined to those who had gambled on risky loans with eyes open. But things have changed. The mortgage crisis is behind a nationwide drop in home values that is impeding all types of lending. More and more experts now say some sort of government response is necessary to avert a prolonged recession. But what kind of bailout is affordable, and fair?

http://knowledge.wharton.upenn.edu/article/1912.cfm

No break in credit squeeze. Global short-term lending markets continue to struggle, despite massive injections from governments in the U.S. and Europe. Euro-zone banks are lending each other at 4.4%, 40 BP higher than the ECB's 4% target, while three-month Libor stands at 3%, well above where investors believe the Fed's target rate will sit three months hence. Another sign of strain: the cost of insuring corporate debt (a.k.a. credit default swaps) continues to surge to record levels, suggesting "perceived systemic risk to the financial system," BofA analyst Hans Mikkelsen says.

Credit Swaps Thwart Fed's Ease as Debt Costs Surge (Update1)
Bloomberg - USA
The $1.5 trillion CDO market is undermining Bernanke's attempts to lower borrowing costs. The Fed cut its target rate for overnight lending between banks by ...

Credit Risk Management Failures: Is the Sky Falling?
Seeking Alpha - New York,NY,USA
After three modifications to their respective RMBS and CDO loss assumptions each agency has staked their positions as to worst case losses and probable ...

Hedge Funds Frozen Shut
BusinessWeek - USA
Are they just postponing the inevitable? by Matthew Goldstein There's a chill spreading across the hedge fund industry. With more portfolios falling victim ...

A hunter among hedge funds becomes the hunted
Financial Times - London,England,UK
Some, it is said, came from beasts bagged on safari in Africa by Jim Dondero, who founded the hedge fund with Mark Okada in 1993 - while others were shot ...

HF Adviser Sued Over Risk Issue

Are Investors Smarter than We Think?
An academic report, looking at restatements, challenges the conventional wisdom that shareholders are slow to detect overstated earnings by their companies.

Missing the Margin Call
 Carlyle Capital's phone is ringing with margin calls, but the company isn't picking up. Read More

Managed Accounts or Hedge Funds?
by Andy Abraham

Energy Risk – Florida Sparks Dark Visions
When power outages spread 300 miles across Florida, dark visions occurred. It all seemed reminiscent of the 2003 blackout that left 50 million people in the United States and Canada without electricity -- a scenario that undoubtedly could occur again.

Full Story...
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Yield Curve Corner

Bernanke's 'Principal'
Wall Street Journal - USA
But there it was on Tuesday, the equivalent of a CEO shorting his own stock, as Ben Bernanke encouraged the nation's bankers to write down the principal on ...

Treasuries Gain on Speculation Economic Slowdown Is Deepening
Bloomberg - USA
Notes also gained after Federal Reserve Chairman Ben S. Bernanke said yesterday a housing slump may deepen. Australian bonds advanced as central bank ...

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Natural Disaster Corner

http://www.noaa.gov/
http://www.sec.noaa.gov/Data/index.html
http://tsunami.gov/
http://earthquake.usgs.gov/eqcenter/
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: http://www.osei.noaa.gov/Events/Current/TRCjokwe066_MT.jpg

China admits "high pressure" over weather
March 06, 2008 05:34 AM ET
BEIJING (Reuters) - Beijing is seeking weather forecasters from
home and abroad to provide hourly bulletins in three languages
for every event of the Olympics in August, China's top meteorological
official said on Thursday.
http://links.reuters.com/r/WZINC/9EVJT/SDS14/CKC69/ZIUJX/YT/t

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Iranian Situation and Other Man Made Disasters
http://www.globalincidentmap.com/home.php
http://icasualties.org/oif/

Election campaign quietly begins in Iran
AP via Yahoo! News Thu, 06 Mar 2008 12:16 PM PST
Iran's eight-day parliamentary campaign season got off to a muted start Thursday, with no events and a paltry number of challengers running against hardline President Mahmoud Ahmadinejad's backers.

US: Iran-US talks never scheduled
AP via Yahoo! News Thu, 06 Mar 2008 9:07 AM PST
The United States insisted Thursday that a meeting between Iran and Washington over Iraq's security was never scheduled, a day after Iran announced that the meeting would take place.

U.S. official: financial sanctions "painful" for Iran
Reuters via Yahoo! News Thu, 06 Mar 2008 10:02 AM PST
Targeted financial sanctions have been effective in isolating Iran, causing a "painful" situation for Tehran's leaders and raising questions about the Iranian administration, a U.S. Treasury official said on Thursday.

Iran, U.S.: Confusion About Iraq Talks (and the Lack Thereof)
March 6, 2008 1856 GMT
The United States appears to have snubbed Iran's latest attempt at holding talks on Iraq. If this is true, the reasoning behind it is unclear. [more]

Iran, Saudi Arabia: FM's Meet 'Unexpectedly' At Cairo Airport
March 6, 2008 1506 GMT
Iranian Foreign Minister Manouchehr Mottaki and Saudi Foreign Minister Prince Saud al-Faisal met...
http://www.stratfor.com/sitrep/iran_saudi_arabia_fms_meet_unexpectedly_cairo_airport

Iran: U.S. 'Not Ready' For Iraq Meeting
March 6, 2008 1448 GMT
The United States said it is not ready to participate in three-way talks with Iran and Iraq over...
http://www.stratfor.com/sitrep/iran_u_s_not_ready_iraq_meeting
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Opalesque’s Corner

- Opalesque Exclusive: Duff Capital Advisors on new paradigm train
- Peloton Update: Opalesque Exclusive: View -  7.5 times leveraged - no good job of de-leveraging at Peloton, Peloton to liquidate funds and close shop, Peloton ABS Fund investors may get nothing back

- Sovereign Wealth Funds Special: Opalesque Exclusive:  As assets swell in Mideast SWFs so does interest in alternative investments, On taxing sovereign wealth funds in the U.S., US officials say sovereign wealth funds not harmful, Dubai says Gulf SWF funds must open up to outside scrutiny, Norway and Singapore SWFs insist their investments are purely to generate financial returns, calm Congress, China`s sovereign wealth fund in interest troubles

- Fund launches: Update: Investcorp to introduce hedge fund replication product, Brevan Howard plans new LSE-listed multi-strategy hedge fund, UBP plans absolute return fund range, Mezzacappa Management launches emerging markets FoHF, Hong Kong firm readies environmental fund of funds

- Performance: Credit hedge fund in trouble: Hunter among hedge funds is now the hunted, Man Group flagship AHL Diversified Fund climbs 5.9% in one week, Terrible January returns has lead to tiny inflows for hedge funds

- M&A: PE fund bought majority stake in PCE Investors, plans for new offices and new FoHFs, McKinsey Quarterly: Running a winning M&A shop, JPMorgan rumored to buy BofA`s equity prime brokerage

- Risk Management: Investor Analytics paper on new method for finding meaningful drivers of hedge fund risk and return
- Trends: Hedge funds face bigger `haircuts` from banks and prime brokers, More hedge funds are blocking withdrawals - Are they just postponing the inevitable?, Hedge fund collapse fears push up Libor rates

- Credit Crunch Update: Ambac seeks $1.5bln in stock, equity unit sales, The Ambac effect (video), Merrill CEO says no need to raise more cash from markets, Two banks` funds sell U.S. municipal bonds, Muni market gets a lift as Wilbur Ross and Bill Gross hop in, Citi has adequate capital (video)

- Comments: Market conditions `worst` in living memory - F&C chief, Magnifying the credit fallout: How could a mortgage market meltdown create so much disturbance?, Deleveraging`s vicious spiral picks up speed, Jim Rogers: Singapore` state investors to lose money on US bank stocks, Tabb report: US financial markets due for radical changes

- SocGen Update: CFTC launches probe into trading scandal, Agricole rules out SocGen bid, French trader Kerviel seeks release on bail

- Regulators: Update: SEC in some three dozen investigations related to subprime crisis,  SEC proposes to streamline ETF approval process

- Legal: UBS hit by another lawsuit from hedge fund
- Institutions: Hedge funds on the road to greater respectability, Pension funds must be brave on alternatives, creative on governance - Kitts

- People: Opalesque Exclusive: Citi Alternative Investment sales head joins Graham Capital, Mercer Sentinel Group expands global manager ops/implementation due-diligence business, Malbec Partners introduces investment management teams for alternative investment platform strategies, Lord Turnbull to chair new Brevan Howard fund of hedge funds, Alex Griffiths relinquishes Odey Japan, California-based alternatives shop expands as global market disruptions create opportunities for firm`s alternative strategies

- Hedge fund client `in love with fund`s investment style` comes out of retirement to become firm`s marketing head
- Exchanges: European Energy Exchange and Eurex launch options on EUA future
- Commodities: The PowerShares DB Agriculture ETF is full - that`s how big the commodity boom is,  FT Comment: Financial system faces commodity-led crisis

- Activist News: Washington expresses concern at CSX board fight, TCI tells congress it won`t undercut rail safety, Barington and Clinton Group target Dillard

- News Briefs: Merrill Lynch launches frontier markets index, Gore invests $35m for hedge funds with EBay billionaire`s Capricorn Investment Group, Mark Rogozinski named senior vice president corporate development at WealthTrust, SunGard acquires Advanced Portfolio Technologies, UBS says inflation will adjust currency imbalances,  Bear to renegotiate Citic cross-shareholding deal, Lombard sees Japan in recession

- . And Finally: French mayor tells locals not to die, `offenders will be severely punished`
- Logon: http://www.opalesque.com/main.php?act=archive
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Misc. Items of Interest

Forbes' richest New Yorkers
In 2008 not a single New Yorker made it into the top 10 or even top 25 on Forbes’ list of the world's wealthiest people.  (David Koch, ranked 37, comes closest. )

Moscow Now Has More Billionaires Than New York
by Mark J. Perry

SunGard Acquires Advanced Portfolio Technologies
Forward this email
By PR Newswire
3/5/2008 12:44:00 PM

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Funnies, Facts, Quotes, etc….

rara avis RAIR-uh-AY-vis, noun;
plural rara avises RAIR-uh-AY-vuh-suhz or rarae aves RAIR-ee-AY-veez:
A rare or unique person or thing.

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Conference, Courses, Books, Papers

Great Research Sites:
http://www.highbeam.com/
http://www.dealbreaker.com/
http://seekingalpha.com/
www.riskmterics.com
http://www.allaboutalpha.com/blog/

Merrill Lynch research Link to full report including important disclosures see example
http://rsch1.ml.com/9093/24013/ds/78763025.PDF

John Mauldin’s Weekly Analysis
www.frontlinethoughts.com

James Altucher’s Website:
www.stockpickr.com

Other useful sites:
www.flyonthewall.com
www.gloriamundi.com

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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
http://www.cogenthedge.com/home/inv_strategy.asp
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Regulatory Info

Commodity Futures Trading Commission (CFTC)
Division of Enforcement: +1 866-FON-CFTC
http://www.cftc.gov/enf/enfform.htm
http://www.cftc.gov/enf/enfform.htm
Securities and Exchange Commission (SEC)
e-mail: enforcement@sec.gov
http://www.sec.gov/complaint.shtml
http://www.sec.gov/complaint.shtml
Autorité des marchés financiers (AMF)
Ombudsman's office: +33 (0)1 5345-6464
French: http://www.cob.fr/affiche_page.asp?urldoc=mediateur.htm&lang=fr&Id_Tab=0
English: http://www.cob.fr/affiche_page.asp?urldoc=mediateur.htm&lang=en&Id_Tab=0
http://www.cob.fr/affiche_page.asp?urldoc=mediateur.htm&lang=en&Id_Tab=0
Financial Services Authority (FSA)
http://www.fsa.gov.uk/consumer/01_WARNINGS/scams/mn_scams.html
http://www.fsa.gov.uk/consumer/01_WARNINGS/scams/mn_scams.html
Financial Ombudsman Service: 0845 080 1800, outside the UK: +44 (0)20 7964 1000
complaint.info@financial-ombudsman.org.uk
http://www.fsa.gov.uk/consumer/01_WARNINGS/scams/mn_scams.html
Hong Kong Securities and Futures Commission (SFC)
http://www.sfc.hk/sfc/html/EN/inutilbar/contact/contact.html
Investor Hotline: 852-2840-9333
investor.info@sfc.hkhttp://www.sfc.hk/sfc/html/EN/inutilbar/contact/contact.htmlhttp://www.sfc.hk/sfc/html/EN/inutilbar/contact/contact.htmlhttp://www.sfc.hk/sfc/html/EN/inutilbar/contact/contact.html

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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

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