Franklin Bird

Populist Politics Shouldn't Be Driving Financial Reform

On this anniversary of 9/11, let's not forget all the heroes in the hedge fund community. In the aftermath of the attack, those brave men & women battled regulation, market closures and general illiquidity to sell stocks short and help compound the impact of the attack on the financial markets and the economy in general. The average American owes those financial patriots a big thank you!

There's No Shortage of Those Who Want to See the Dollar Go Lower

How long will European companies be able to tolerate a rising euro before they ship all of the manufacturing jobs offshore? And how much longer will the rest of the world tolerate the mercantilist/parasite nation of Germany, the world's largest exporter by absolute size (larger than China!) and by percentage of GDP?

What's Wrong with Market Speculation?

The institutional players, such as endowments & pension funds, are all on the long side. They allocate some percentage of their portfolio to commodities. For the most part, that's NOT to futures funds or other active specs. It's to long-only exposure. That's the point the consultants drill into them = "you have to have exposure to commodities." And that wave of money is much, much larger than the marginal spot markets in many commodities.

Those are the flows which were driving up prices. Not Joe "Yours/Mine" punting around in the futures.


On Sep 03 01:18 AM Mike Kane wrote:

> People forget that it is speculators who brought down commodities
> prices last year too...it goes both ways.

What's Wrong with Market Speculation?

We are talking about FOOD here. In many places, including a few in the USA, food is a large percentage of people's budgets. Your "benign" speculator is literally taking food out of babies mouths.

But who cares, right??

Stress Test Results Seem to Be Changing Daily

You already gave the free market a chance to work -- without regulation, in fact.


On May 06 12:07 PM ps55 wrote:

> Time to let a few banks fail? Let's try something unique and actually
> give a free-market economy a chance to work...
>
> Discuss thoughts and trade ideas at marketfriends.com

Tuesday Outlook: Commodities, Global Markets

Question - over the last three or four years, hedge funds & prop desks accounted for 40-70% of daily volume. Volumes remained high during the 4th quarter sell-off as those leveraged specs were forced to close out all positions.

Now their risk appetite and access to liquidity is severly reduced. So it's no surprise volume is down. But given this, what does it really tell us in technical terms? It's not likely the leveraged specs will be coming back any time soon. So maybe what is considered high volume will need to be reassessed.

The market is starting to return to normalcy.Imagine that! Real investors taking the market back from highly-leveraged specs.

Ten-Year Bond Surges 3.2%: Where Are the Green Shoots?

Short sellers reassuring themselves. It brings back childhood memories!

Fourth grade boys camping out in the yard hear a noise outside their tent.

"Are you scared Timmy?"
"No... are you?"
"No...how about you, Billy?"
"Not me...I'm not a scare-dy cat!"

Despite Relative Outperformance, Alternative Investments Have Room to Grow

"Some have suggested that the strong performance of hedge funds relative to equities over the past 12 months..."

Mmmm, down 18% AFTER the results of many losing funds are stripped out (survivor bias). I thought hedge funds were absolute return vehicles? I did better in a 60/40 balanced fund.

Friday Outlook: Commodities, Global Markets

"This rally has been 50% short covering, 40% hedge funds moving it up, 9% PPT, and 1% mom and pop, average americans."

Who ARE the shorts you refer to if not hedge funds? People don't pay hedge funds big fees to be long.

In fact, I'd suggest that you are seeing the end of the era when hedge funds ran the markets. That "happy" era started when the tech bubble burst and kicked into high gear in the weeks following the 9/11 attacks when the hedge funds piled in to drive the markets and economy lower. They preyed on and drove out mom & pop America who were simply trying to put aside some retirement savings. When the average save gave up on stocks, the funds had to fight among themselves - performance fell and withdrawals began.

Three Reasons Commercial Real Estate Could Hold Back a Recovery

Reading through the comments here, I'd have surmised that every last commercial property borrower was paying no interest!

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

You pay to pay to do size. In amy market. No conspiracy there. Sorry fellas.


On Mar 30 04:40 AM Sophomore_23 wrote:

> It's an interesting theory, but isn't it also possible that after
> the bailout, there was a lot of pressure from above for AIG FP to
> unwind its positions as quickly as possible no matter the price?
>
>
> I agree that the banks' recent trading profitability is a one-time
> event and AIG's loss is their gain. However, I wouldn't go as far
> as calling it a scam since it is more an unintentional side effect
> of intense pressure to quickly wind down FP rather than a concerted
> effort by AIG to "gift" its counterparties with profitable trades.
>
>
> In an ideal situation, AIG would have enough time to unwind trades
> in a manner that maximizes profitability to its shareholders, and
> by extension, U.S. taxpayers. However, in this risk averse environment,
> it seems that the company is willing to pay an enormous premium to
> immediately extricate itself from exposure to more catastrophic losses.
>

What Else Are the Banks Hiding?

Haven't bothered to read the Bloomberg story. But my understanding is that the only way securitized assets can be forced back onto a bank's balance sheet is if fraud can be proved, usually with 6 months. This is being tried on some mortgage backed pools. Not easy to prove.

The fact is, buyers never examined what was in the pools, relying on the ratings agencies to do their homework. Of course, we'd all like "a Mulligan."

How to Profit from Market Manipulation

Great! This is the first time I have seen someone point out how short sellers used the German exchanges, especially Bremen, to enable naked short-selling. After the tech bubble, companies woke up to find that unknown persons had petitioned that exchange to list their shares there, without the firm's knowlege. Mmmm... I wonder who did that?
Oh that's right, short sellers provide "valuable liquidity."

Wednesday Outlook: Commodities, Global Markets

All this talk among short-sellers about "manipulators" when there is buying. So, hedge funds & specs hammering the pre-market futures, gang trading, naked shorting and using CDOs to panic bond holders and reguators is what? "Healthy activity?"