Apr 30, 2008

Grain-processing giant Archer-Daniels-Midland yesterday reported a 42% year-to-year increase in quarterly profit,

John McCain rejected calls by his Democratic opponents for universal health coverage, instead offering a market-based solution with an approach similar to a proposal put forth by President Bush last year.

Credit Suisse said Tuesday that it has hired Norman Y. Mineta, the former Transportation secretary, as a senior adviser for infrastructure and transportation projects and deals.

The drop in private equity fees is much steeper. Fees from advising and providing the loans for buyout deals have fallen a whopping 74 percent from last year. While all the top banks have seen private equity fees drop by at least 70 percent, some have gotten hit especially hard.

So far this year, the amount of investment-banking fees generated from all deals worldwide — both strategic and private equity transactions — has fallen 40 percent, according to Dealogic’s calculations. The number of deals has declined only 19 percent, though, suggesting that the deals are getting smaller and so don’t throw off the same volume of fees as the larger ones.

Apr 18, 2007

Hedge funds were down an average of 1.5 per cent in the 2008 first quarter, their worst quarterly performance in almost four years, as a rebound in February failed to cover losses in January and March, according to new data from Morningstar (MORN.O). The data provider, which tabulates average performance from some 8,700 hedge funds and funds of hedge funds, said equity-focused hedge funds fared the worst in the quarter, particularly emerging markets funds and US small cap funds, which lost 8.58 per cent and 8.7 per cent respectively on average.

Citibank booked upward of $13.9 billion in write-downs stemming from its risk-taking ahead of the credit crisis and $3.1 billion in extra consumer-credit costs. And investors cheered what they hope if finally an end to the misery.

Apr 17, 2008

Growth becomes attractive when growth is scarce. Feel it like GOOG today. Up 70 pts.

As many other companies have done this year, CIT sacrificed its dividend to its balance sheet, cutting it 60%.

Morgan Stanley has established a team in its Dubai office to cover sovereign wealth funds and financial sponsors in the Middle East and North Africa (MENA).

Again Infrastructure is a bog play and attracting huge amt of assets. 3i India Infrastructure Fund raises US$1.2B. 3i Group has raised US$1.2 billion for its 3i India Infrastructure Fund, exceeding the US$1 billion target by 20%.

If the US dollar had remained strong in the global economy, oil might, in theory, be around $65 per barrel. However, oil is priced in dollars, and oil prices continue to rise.

China Inflation- As expected CPI inflation came in at 8.3% year on year. This implies that prices declined by about 0.7% during the month of March. It also implies that inflation for the first quarter of 2008 is running at 12.9%. High level of food inflation – 21% – combined with the rising level of non-food inflation. This rising inflation in the non-food sector, even though it is still under the PBoC target of 3%, is completely inconsistent with the argument that China is only experiencing a temporary food-supply problem.

Economy and Construction Weaken, Prices Rise The economy weakened in March as consumers curbed spending and businesses faced higher costs, according to the Fed's latest "beige book" report, out this afternoon. Consumer loan demand slowed and lending standards tightened. In earlier reports today, home construction plummeted 12% during March, dropping to its lowest level in 17 years. U.S. consumer prices rebounded in March on the back of rising oil prices, a sign of growing concern for Fed policy makers in the midst of an easing cycle aimed at calming troubled financial markets. The same inflationary pressures are building in the euro zone, with prices rising at an unprecedented rate.

Apr 14, 2008

A good spot to study hard assets, etc. http://hardassetsinvestor.com/

Now we are really talking food inflation. It is creating severe global disruption. Refer to earlier comments speaking to the most recent move in rice prices.

Apr 10, 2008

DWS Climate Change Fund - a very interesting theme/topic.

Not so good / Goldman Sachs' Level 3 assets increased 39% to $96.4 billion at the end of February, from $69.2 billion in November.

Lehman Brothers has liquidated three struggling investment funds with a total of $1 billion in assets.

Apr 8, 2008

Tiger 21 - The ultrawealthy's love for alternative investments continue to grow, but at a slower pace. TIGER 21 reports that its very deep-pocketed members now allocate 11% of their portfolios to the class. That figure is up from 9.5% in 2006, which had more than doubled the 4.5% of 2005. It appears, then, that changing market conditions appears to have tamed TIGER 21 members, who generally have on hand some USD10 billion in investable assets. According to TIGER 21, its members have yanked some their allocations to PE from 9% to 7%. "It doesn't take a PhD in economics to know that the buyout market is really pinched at the moment, given the pull-back in bank lending and the sluggishness of so many business sector," says TIGER21 founder and chairman Michael Sonnenfeldt.

Back after one of it's Funds collapses. It really doesn't matter - The Carlyle Group has formed a $1.35 billion fund to troll for bruised companies and securities less than a month after the failure of one of its own investments. Carlyle Capital, collapsed into insolvency last month after it began defaulting on $21.7 billion in assets. The publicly traded company, which had been set up in 2006 on the island of Guernsey, off the coast of France, had borrowed money to buy AAA mortgage-backed securities issued by Fannie Mae and Freddie Mac. Those are traditionally considered secure and conservative investments. As the market value of the Fannie Mae and Freddie Mac securities dropped, Carlyle Capital's lenders asked it to increase its cash equity in those securities from what was 1 percent to as much as 5 percent.

The amazing fact to note is that the firm had only 1% cash equity invested in those securities. An increase of that amount on $20 billion in loans amounts to several hundred million dollars. Carlyle ended up losing about $900 million of its employees' and its investors' money on the deal.

More food inflation - rice has increased by 50% in the past 2 weeks, and 10% Friday alone.

This is the next wave that will impact the carnivores of imported products in US and other developed nations. Mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too. The assocaited problem is that these developing nations are energy intense due to manufacturing economies. Energy costs are rising therefore they have to raise prices, bc/ input costs are higher. In addition, wages have had to be raised signfiicantly to keep with with inflation in food prices. Quang Vinh/Vietnam, which was founded by a 15th-generation pottery maker, has raised wages by 30 percent over the past year to keep up with food prices, which have also risen. Food is the biggest expense for the company’s workers, who earn $75 a month working eight hours a day, six days a week. Additionally, the dollar’s weakness is itself a cause of inflation in developing countries, particularly those that have barely let their currencies rise against the dollar in an effort to hold on to export markets.

Apr 7, 2008

In times such as these, much money has moved to least economically sensitive stocks -drug sector, etc. Not much beta in portfolio to get good upside if data supports strong growth prospects. Do you have enough beta?

Current situation on auction rate market per Bloomberg - Auction Collapse Quadruples Fee for Bond Alternatives

Apr 4, 2008

HY market disappeared - Sales of high-yield bonds had all but dried up this year as recession worries and fallout from a global financial crisis curbed investor demand for riskier debt. Just $5.9 billion was issued in the first quarter, an 85 percent drop over the year-earlier period, according to Thomson Financial.

Around the end of March, the pipeline of LBO debt included about $127 billion of unsold loans and $74 billion of bonds, according to Bank of America estimates.

Apr 3, 2008

January of 2008 was the worst month for hedged strategies since Long Term Capital Mgt. (LTCM) “blew up” in August of 1998. According to HFRI, the first quarter of 2008 was the worst quarterly return for hedge fund in six years. Equity markets globally were down sharply and volatility increased substantially. The S&P 500 is off -9.45% for the quarter, and daily swings have become more dramatic.

Morgan Stanley has bought another stake in a hedge fund firm, taking a minority ownership position in London-based Hawker Capital. Hawker, a fundamental long/short commodities shop, is the seventh stake in a hedge fund management firm that Morgan Stanley has taken in the past two years. The firm owns stakes of various sizes in Brookville Capital Management, Lansdowne Partners, Avenue Capital Management, Front Point Partners, Oxhead Capital Management and Traxis Partners.

This is how it happens - Daniel Zwirn, the hedge-fund manager who froze withdrawals on USD4 billion in assets about a month ago after investors asked to pull more than half their money out, is already talking about starting a new fund.

A group of ex-Wachovia Securities investment managers has launched a traditional fund management business with the backing of private equity firm Robert W Baird & Co and an alternative investment management company. Riverfront Investment Group will provide separate account portfolios and analysis to financial advisors and their clients, which will include high net worth investors, families and institutions. Baird will offer Riverfront distribution and product development opportunities. Riverfront will work with Private Advisors, the independent global alternative investments firm that focuses on the management of hedge fund and private equity fund of funds products.