[manu]

Or the domino effect? The slide has begun and it will be very, very, hard to stop. The Neo Conmen will probably attack Iran, but that will just start a bigger fire. Anyway, Have a Nice Dieoff!

[Roccland]

Hedge Funds: First, You Get The Good News

$this->bbcode_second_pass_quote('', '&')quot;A crucial date could be Aug. 15. That is 45 days before the end of the third quarter, the date when investors in many hedge funds can give notice that they are pulling out their money. If many give notice, it could spark a rash of selling by funds looking to raise cash to cover withdrawals.

Meanwhile, as a torrent of corporate debt hits the market in the weeks ahead, losses could grow for both investment banks and hedge funds, some say.

"The availability of credit has disappeared, and there are $220 billion of [leveraged-buyout] loans" that need to be financed, says J. Kyle Bass, a managing partner at Hayman. "It is going to smoke investment banks. And many more funds will be carried out, feet first."

[LateGreatPlanetEarth]

interesting that oil stocks such as exxonmobil have sold off despite barrel oil hitting a new high. the reason given is production by the big international oils company is declining.

most previously thought that the oil stocks would do fine since the increase barrel price would offset the production drop.

[Roccland]

Went live yesterday - already 11 have been dragged out feet first. May want to think about getting out while you can...if you can. link

[OilIsMastery]

Buy despair.

[PenultimateManStanding]

interesting link, roc. I see that the Goldman Sach's Alpha hedge fund is down another 16%. The interesting thing about Alpha I read is that it is entirely computerized using mathematical models and no human input. Is that bizarre or what? A few years ago it was doing great, now it's foundering. So much for probability modeling. Reminds me of those lines from the movie Titanic:

Captain: surely this ship can't sink?!

Designer: she's made of iron, sir, I assure you she can.

[Eli]

I don't get it why the picture of Gene Hackman?

[PenultimateManStanding]

$this->bbcode_second_pass_quote('Eli', 'I') don't get it why the picture of Gene Hackman?

[eastbay]

After a few more bodies have been dragged out of the cluttered room, they'll thoroughly spray the place to get rid of the stink of death and it'll be happy business as usual.

There is really nothing here to be concerned about.

[PenultimateManStanding]

$this->bbcode_second_pass_quote('eastbay', ' ')
There is really nothing here to be concerned about.

[eastbay]

How was your vacation?

Very nice. Thank you for asking. No particular highlights. Went jogging 4 miles every day in the tropical humidity. Bought a few gifts for friends. Swam a few times... avoided coach seating on every flight through dumb blind luck. 2 weeks out and I avoided all the typical tourist sites. It's a relief to go a few weeks without any responsibilities whatsoever. Mainly rested.

[PenultimateManStanding]

$this->bbcode_second_pass_quote('eastbay', '[')i]How was your vacation?

No particular highlights. Went jogging 4 miles every day in the tropical humidity.

[eastbay]

No, not really. I just sat around alot... visited with a PO.com guy from Singapore over a coke and tea, which was one highlight. Went to the gym a few times... the store a few more... yeah, we burned quite a bit of fuel too.

Oh, we went to the library twice. I checked out a Clive Cussler book. I also bought a few pair of counterfeit Crocs for $2.00 each.

[eastbay]

{quoted response to previous inappropriate post deleted, as per CoC - emersonbiggins}

It feels a bit like old times again ... reminds me of when periodically some dirt-bag or another would say that. It puts me in a nostalgic mood.

Just a tip: Be cautious who you make that suggestion to because some could people get upset. I'm not one of them because it takes something really harsh to upset me and I'm rather used to suggestions I should be killed.

[Ferretlover]

Sept. 4 (Bloomberg) -- Synapse Investment Management LLC, the London-based hedge-fund manager which oversaw money for Landesbank Sachsen Girozentrale, shut one of three fixed-income funds because of ``severe illiquidity'' in the market.
The Synapse High Grade ABS Fund was closed and some assets have already been sold off, said Mark Holman, who helped found the company last year with Graeme Anderson. The fund, whose main investor was Leipzig, Germany-based SachsenLB, didn't have any assets in U.S. subprime investments, he said. ...

OOppss

[DantesPeak]

This is the first time I have seen very specific hedge funds being blamed for high oil prices. Nothing illegal is alleged; in fact the hedge funds have an outstanding success record. I have not heard about this before and don't know if these funds really have as much influence as implied here.
I would also like to point out (for the 20th time) that Murti in 2005 did not predict $105 oil sometime from 2007 to 2009, but that it could happen under certain political circumstances [I read the complete original report and it projected that oil prices would probably not be higher than $80 by 2007].
$this->bbcode_second_pass_quote('', 'F')rom The Sunday Times, 11 Nov 2007:
Petrol £1 a litre: blame City’s oil kings

THREE science graduates with a combined fortune of more than £500m have emerged as the commodity traders who led the “oil rush” that has pushed petrol prices to more than £1 a litre. David Harding, Michael Adam and Martin Lueck are renowned in the City for their skills in targeting the most lucrative trades in commodities, including oil.

Their system - known as the “black box” and based on mathematical algorithms - is now deployed by three of the biggest hedge funds in London and has helped push oil prices towards $100 a barrel. The three funds, AHL, Aspect Capital UK and Winton Capital Management, control more than £15 billion of funds used to buy future oil contracts and other commodities, usually on the gamble that prices will rise.

[sjn]

$this->bbcode_second_pass_quote('DantesPeak', '')$this->bbcode_second_pass_quote('timesonline', '
')Their system - known as the “black box” and based on mathematical algorithms - is now deployed by three of the biggest hedge funds in London and has helped push oil prices towards $100 a barrel.

The three funds, AHL, Aspect Capital UK and Winton Capital Management, control more than £15 billion of funds used to buy future oil contracts and other commodities, usually on the gamble that prices will rise.

[andy2001]

The Nymex Crude Futures contracts are settled at expiry by delivery of oil. So a hedge fund will have to close any long positions before expiry unless they want to take delivery of the oil. The hedge funds will not want the expense of having big storage facility’s full of oil, and will just close the position and move it to the next dated contract. This means hedge funds can have little if any effect on the price of oil at the expiry date of the contract.

Even before the expiry day there effect is limited because if the commercial traders AKA big oil company hedgers think the price has been pushed to high they will sell it to lock in profits for there company.

[DantesPeak]

I agree with sjn and andy2001. In the very short term futures trading has some influence on price. But with 85 million barrels consumed and delivered every day, futures trading doesn't seem to have much - if any - long term effect.

Granted it may be possible to take enough physical delivery and/or buy/rent oil storage tanks to physically disrupt the market. But even then the effects would probably be limited to the area where that occurs, and that's not what's claimed here.

Quite frequently oil companies want to lock in the price they will receive by selling futures, so their loss in this case is the traders gain.

[wisconsin_cur]

$this->bbcode_second_pass_quote('', ' ')A RAFT of European hedge funds have been forced to introduce emergency measures to protect their businesses from collapsing in the wake of the turmoil in financial markets. Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

A London prime broker told The Sunday Times that even before last week’s extreme gyrations, nearly two-thirds of London-based hedge funds had lost between 4% and 10% of their value. A “significant number” had lost much more, he said. The manager of one of Britain’s biggest hedge funds said: “It’s been an extraordinary week. Even in the crash of 1987 I don’t remember so much carnage.”