Main News

 

 

Wall Street's latest woe: Hedging. I-banks that hedged risky holdings by shorting indexes that track real-estate assets and leveraged debt are taking a beating as the indexes post hefty gains, while the assets they were hedging have failed to post like gains. Lehman (LEH) appears to be the worst hit, with expected bad hedge losses of $1.5-2B. Morgan Stanley (MS) is thought to have lost less than half of that, and Goldman Sachs (GS) and Merrill Lynch (MER) even less.

 

Did computer bug trip up Moody's? Moody's (MCO) said it will conduct a thorough investigation after a Financial Times investigation alleged the company erroneously awarded AAA ratings to billions of dollars in debt derivatives due to a computer glitch. FT says internal Moody's documents reveal senior staff knew in early 2007 that AAA-rated CPDOs (constant proportion debt obligations -- which use borrowed money to speculate on an improvement in credit quality) should have been ranked as many as four levels lower.

 

Credit Crunch Could Hurt Cat Funding
Worsening conditions in the credit markets could leave policyholders in Florida without payment if a big hurricane strikes the U.S. this year.Read more

 

Fair value accounting offers users of financial statements the most relevant measure of a company's fiscal health, but improvements must be made to address its shortcomings, according to a panel of speakers at a Standard & Poor's Ratings Services conference held on May 15 in New York.

Full Story...

 

 

Indonesia to quit OPEC, not happy with costly oil
May 28, 2008 07:07 AM ET
JAKARTA (Reuters) - Indonesia will quit the Organization of the
Petroleum Exporting Countries because as a net oil importer
it is not happy with high global crude prices, the energy minister
said on Wednesday.
http://links.reuters.com/r/DFGA9/IU0TZ/0R1OQ/BKO62/WE8HE/YT/t

 

The Geopolitics of $130 Oil
May 27, 2008 1913 GMT
As oil prices passed $120 a barrel, they clearly began to have global impact. Recently, we have seen startling rises in the price of food, particularly grains. The world is refocusing on high commodity prices.
http://www.stratfor.com/weekly/geopolitics_130_oil

 

SIV asset/liability profiles reviewed
Structured Credit Investor (subscription) - London,UK
"The impact of the new rating criteria is expected to vary widely, depending on the reference portfolio and CDO structure. CDO structures with portfolio ...

 

Foreign Exchange Trading Volumes Surge
By: Michael S. Fischer, Senior Financial Correspondent
Posted: 05/28/2008 3:24:40 PM ET
http://www.hedgeworld.com/news/read_news.cgi?section=mfad&story=mfad1274.html

 

Economy: Watching the East Asian Canaries
May 28, 2008 1215 GMT
A handful of small and medium-sized East Asian states have been moving to prop up their currencies against the dollar. The move signals their worries about untenable inflation rates and could point toward trouble down the line for larger manufacturing economies, such as China. Analyst Donna Kwok discusses.
http://www.stratfor.com/podcast/economy_watching_east_asian_canaries

 

Geopolitical Diary: Asian Banks and Rising Commodity Prices
May 28, 2008 0223 GMT
The central banks of several East Asian countries employed currency manipulation strategies to help offset the economic effects of rising commodity prices. Their move may or may not influence how the region’s most important player, China, will or will not react.
http://www.stratfor.com/geopolitical_diary/geopolitical_diary_asian_banks_react_rising_commodity_prices

 

A Commodity Hedge Fund in Every Pot by Paul Kedrosky

 

Barron's: The Subprime Crisis May Be Over [Housing Tracker]
Seeking Alpha - New York,NY,USA
Minnesota: “Duluth's reserve fund… has been left precariously low after a bad investment tied to a subprime mortgage lender. If the city were financially ...

 

The Great Bear Conspiracy
S.E.C. will examine trading records. Read More

 

 

Recession: The Forgotten Indicia by Felix Salmon

 

The Economist Overstates Hedge Fund Complexity by Christopher Holt

 

S&P/Case-Shiller US Home-Price Index Falls 14.4% (Update2)

Bloomberg - 42 minutes ago

By Bob Willis May 27 (Bloomberg) -- Home prices in 20 US metropolitan areas fell in March by the most in at least seven years, pointing to weakness in the housing market that will constrain economic growth.

 

Eclectica Launching Ag Futures Fund

LONDON (HedgeWorld.com)—The $1 billion U.K. hedge fund firm Eclectica Asset Management is prepping an agriculture-focused futures vehicle called Eclectica Agricultural Futures Fund, set to launch June 15. ......

 

MFA Questions SEC Proposals
Source: Compliance Reporter
The Managed Funds Association is concerned that planned changes to the Securities and Exchange Commission's customer privacy rule don't go far enough to protect customers' non-public personal information.

 

Chinese regulator warns about root of financial crisis
Liao Min, a senior executive with the China Banking Regulatory Commission, said that in order to avoid another global financial crisis, Western governments need to improve cross-border cooperation and oversight of financial markets. "I feel the Western consensus on the relation between the market and the government should be reviewed," he said. "In practice, they tend to overestimate the power of the market and overlook the regulatory role of the government and this warped conception is at the root of the subprime crisis." Financial Times (27 May.)

 

Wed, 28 May 2008, 06:32

Bloomberg
A relic from Russia's debt default a decade ago is threatening the country's economic resurgence by forcing more than 200 companies to increase the interest they pay to as much as 16 per cent. With bond yields rising worldwide as the US subprime turmoil spreads, hedge funds and other investors in Russia are demanding the higher rates or their money back.

 

Blowing the Bubble Bigger by David Merkel

 

New Mandates Bridge Gap Between Alts and Skeptical Pensions by Christopher Holt

 

Citi’s Hedge Fund Litigation Problem by Jake Zamansky

 

CDS Counterparty Risk and the Bear Stearns Bailout by Felix Salmon

 

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Yield Curve Corner

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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: http://www.osei.noaa.gov/Events/Current/FSHSmexico149_G12.jpg

 

2008 could set records for tornado deaths
CNN - USA
Weather radar was in its infancy, the tornado warning system was far less sophisticated, and if a warning was issued, it was hard to get the word out. ...

 

Slideshow: Powerful quake rocks central China

Video: China fears flooding will add to quake deaths AP

Full Coverage: China

 

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Iranian Situation and Other Man Made Disasters

 

Larijani warns IAEA that Iran could revise cooperation
AFP via Yahoo! News Wed, 28 May 2008 12:26 PM PDT
Iran's new parliament speaker Ali Larijani on Wednesday warned that the country could review its cooperation with the UN nuclear watchdog, after the body expressed grave concern about Tehran's contested atomic drive.

 

Rival to Iran?s President Elected as Parliament Speaker
New York Times Wed, 28 May 2008 10:38 AM PDT
Iran?s former chief nuclear negotiator, Ali Larijani, is viewed by the West as a moderating influence who could challenge Mahmoud Ahmadinejad.

 

Chris de Burgh in Iran, plans gig
AFP via Yahoo! News Wed, 28 May 2008 7:49 AM PDT
Irish singer Chris de Burgh said on Wednesday he had realised a lifelong dream by visiting Iran, expressing hope he would be the first Western pop star to perform in the Islamic republic since the 1979 revolution.

 

 

CIA Predicts Al Qaeda 'Succession Crisis' After Bin Laden
BY PAMELA HESS - Associated Press
WASHINGTON — America is making "a big and continual push" to capture or kill the leader of Al Qaeda, Osama bin Laden, but his demise won't end the organization's menace, the director of the CIA, Michael Hayden, said yesterday in an Associated Press…

 

May 26, 1908: Mideast Oil Discovered — There Will Be Blood

 

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Opalesque’s Corner

 

- Fund launches: California-based Adobe Capital Partners to launch first quant fund, GAM launches systematic UCITS III L/S equity fund, Charlemagne to launch long-only MENA fund in June, Update: Blackstone`s new Asian firm plans $1bln event-driven fund for October, people say,  Asian long/short shop Jadeite Capital readies long-only fund and Hong Kong office
- Opalesque Exclusive: Finch annualises 42.80% through investments in undervalued sub-Saharan African and Africa-related securities
- Performance: SVM Highlander Fund recovered in April (+1.9%) thanks to short in house-builders and longs in energy
- Opalesque Exclusive: Incubators, seeders invest in early stage manager `much quicker` - Hedge fund lifecycle report - Part Two
- Alpha Equity Management: Alpha Equity Management and The Praedium Group form joint venture to develop publicly traded real estate securities products, Alpha Equity`s market neutral and 130/30 real estate hedge funds receive top rankings in BarclayHedge AI database
- Stakes: Lehman Brothers and oil entrepreneur Moratti invest in Arpe`s Sator
- Trends: Start-ups: Road to hedge fund riches is rockier now, HFs biggest drivers of currencies markets growth - Greenwich Associates
- Trading: Lorenzo Di Mattia, Sibilla`s HF manager, says best trades are usually most painful
- DD: Working paper suggests due diligence is a source of alpha for FoHFs
- Hedge fund compensation policies spark debate
- Regulatory: SEC steps up investigation on DB Zwirn asset valuation, SEC will scour Bear trading data that show clients, trading partners and lenders fleeing weeks before collapse, SEC has jurisdiction over the Moody`s case, says chairman
- Credit Crunch Update: George Soros explains the credit crisis in new book, Investment banks split over Fed loan facility, Swiss bank UBS shares in sharp fall on second capital increase
- People: UBS`s commodities co-head Hunter Shively quits to join start-up energy hedge fund Sasco, CalPERS names Eric Baggesen senior investment officer, global equity
- Institutions: China`s $14.9bln pension fund seeks overseas managers
- Indices: S&P launches new commodities and natural resources indices - New equity indices provide investable and benchmark exposure to popular asset classes
- Commodities: Fidelity`s top manager Bolton says time to quit commodities, Candy companies blame higher prices on hedge funds` chocolate cravings, Key US senator urges CFTC to dig deeper into speculation, As food prices spiral, farmers, others profit, Comment: Don't go against the grains - `now wheat, corn and rice are just as sexy as the oil markets`
- Europe: Shareholders slam SocGen after scandal while chiefs defend bank`s actions, With bond yields rising worldwide, hedge funds and other investors in Russia demand higher rates or money back
- Middle East: Hermitage bets on Abu Dhabi real estate developer, Shariah investments top $260bln,  Deutsche Bank expects HFs to boost EM commitments and Middle-East to be best performing region
- Asia: Hedge fund manager interview: Franco Ngan, CEO of Value Partners, talks about his $400m China hedge fund
- LatAm: How long can the Latin American bull run carry on?
- SWFs: Middle East SWFs show interest in Nedgroup`s latest FoHF
- Barings A.M. recommends inflation-protected bonds, E.M. commodities, alternatives investments, currencies to hedge against inflation
- Events: Art, Wine and Hedge Funds for Habitat on June 11, Gary H. Stern, President, Federal Reserve Bank of Minneapolis, shares his perspective on the credit markets at 100-Women-In-Hedge-Funds event, June 12
- Activist News: Update: CSX Corp. challenges TCI share swap with 3G Capital Partners to secretly hide ownership in rail operator, CSX urges shareholders to reject activist slate, Atos Origin strikes deal with rebel funds
- News Briefs: Markit acquires trade confirmation network SwapsWire, Trader Monthly survey: Chicago best city for traders, BNY ConvergEx Group`s Eze Castle software to launch full-service office in Hong Kong, Northern Trust enters the ETF game, Europeans protest fuel taxes but accept high prices, UBS tells unit staff to avoid traveling to America following Birkenfeld`s indictment, Elena Ambrosiadou set up scholarship scheme
- And Finally. French parachutist`s bid to set world freefall record threatened by rogue balloon who left without him - after two failed attempts, maybe it was not meant to be
- Logon: http://www.opalesque.com/index.php?act=archive

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Misc. Items of Interest

 

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Funnies, Facts, Quotes, etc….

 

forgo or-GO, transitive verb;
Inflected forms: forwent, forgone, forgoing, forgoes:

To abstain from; to do without.

 

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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.