From the Independent in London, via the Drudge Report

http://www.drudgereport.com/

MARKETS FEAR HEDGE FUND COLLAPSE MAY BE LOOMING

CONCERN IS growing in the financial markets that a major hedge fund is in difficulty, prompting fears of a repeat of last year's crisis when the Federal Reserve in the US had to mount a $3.5bn bail-out of Long- Term Capital Management (LTCM) in order to stave off a global financial collapse.

The market for swaps, complex interest-rate derivatives which are widely used by hedge funds and the proprietary trading desks of the big investment banks to fund their high-risk trading strategies is, say traders, showing the same signs of distress that was seen after the Russian bond default last August.

This has taken the form of a widening of credit spreads - the interest rate differential - indicative of concerns within the market of a major default. Spreads on 10-year swaps have widened on both sides of the Atlantic from the early 80s (0.8 per cent) to 110 over the past few weeks. Over the past few days the widening has accelerated.

The UK gilts swaps market is one of the most liquid in the world and a favourite haunt of big hedge fund players.

Tiger, the $12bn hedge fund run by New York-based financier Julian Robertson, yesterday dismissed as "rubbish" reports that Goldman Sachs, and Chase had cut its credit lines. Sources close to LTCM have been similarly dismissive of reports that it too was again in difficulty, less than a year after being rescued by a consortium of 13 banks including Barclays, Deutsche and Merrill Lynch.

Other accounts have referred to a big US or Swiss bank having taken a big hit.

Worries about big trading losses have been exacerbated by a number of large trades in both the equity and swaps market yesterday and on Thursday, indicative of an unwinding of big market positions. Goldman Sachs was reported to have unwound a big swaption (combined swap and option) position, and was also rumoured to have lost pounds 200m on European options.

There was talk, too, that the Fed was holding back on raising short- term interest rates to keep one of the big securities houses afloat.

The problems in the swaps market appear to have initially been caused by concern about the pile-up of corporate issues ahead of the fourth-quarter when demand is expected to dry up because of Y2K fears. However, over the last few days talk that a major institution is in difficulty has come to the fore.

Some of the big investment banks yesterday admitted privately to sustaining small losses over the past few days but nothing that would result in a material profits hit let alone a default.

Adrian Davis, swaps analyst at ABN-Amro, said yesterday: "Over the past few months spreads have been widening out because of concern at oversupply in the bond market. However, in the last three or four days they have really blown because of concerns about the viability of a financial institution."

Said another trader: "The markets are very strained. They are very like they were last year. In these kind of markets people will have lost money."

Although hedge funds and Western banks lost up to $40bn when the Russians refused to honour their GKO bonds, the real problem that brought LTCM to the brink of collapse was the widening of credit spreads in the the swaps and high-yielding bond markets which blew its strategy of buying high-yielding bonds in anticipation of yields falling to bits.

-- Andy (2000EOD@prodigy.net), August 07, 1999

Answers

Got gold???

-- Andy (2000EOD@prodigy.net), August 07, 1999.

Markets Fear Hedge Fund Collapse May Be Looming

-- (M@rket.watching), August 07, 1999.

I hope I don't get into trouble for posting this but IT IS VERY IMPORTANT to you Goldbugs and investors out there...

Le Metropole members,

We have just received word from a reliable source that the renowned hedge fund, Tiger, is in deep, deep trouble and in even worse shape that we have been reporting to you.

The latest news is they are about to be hit with a $6 billion dollar redemption. At best, that will mean their capital base will have dropped from $22 billion to $6 billion - and perhaps it could be lower. In addition we have been told that 50% the staff has left.

If true, and our source is impeccable, it can explain why the swamp spreads are at such high levels - which indicates that there is tremendous stress in the credit system.

It explains why there is do much talk ( even in the Wall Street Journal ) about Goldman Sachs, Chase and other banks having some big problems.

Today, the bank index is tanking and is down 2% at the moment. The index broke 800 and is down 16 points on the day. It explains why financial stocks are reeling.

This new revelation most likely means what we have been telling you about the emergency Fed meeting, the hush hush banking meeting in Philadelphia, and the borrowing hundreds of tonnes of gold by Tiger and its bankers is also most likely all true.

It also can explain the strange Bank of England sale. I will have more this later, but there was a front page story in the Guardian in London today that nows says the Bank of England Governor, has contradicted himself about the sale.

And the Bank of England did not deny it.

Friday August 6 - London- Reuters:

"A spokesman for the Bank of England had no immediate comment, other than to say the story CONTRADICTED PUBLIC STATEMENTS by George in evidence to the committee on May 25."

Any of most importance to us, it can further explain the mainipulation of the gold market and it makes a mockery out of the British and American governments. This is collusion and conspiracy at its finest.

It can explain why the price of gold will not rise when all the news is bullish for gold. Today, the the stats in the U.S employment report were very inflationary as 100,000 more new jobs were created than expected and average hourly earnings were much higher than expected as they rose $.06.

But gold never rises on bullish news. It can't rise because Peter Fisher of N.Y. Fed and his "Hannibal Lechter" bullion bankers are sitting all over the gold market in "cabal" fashion.

This is an outrage of the the highest order and is surely going to bring on one of the great financial scandals in American history.

Why do you think Bank of England Governor is running away from the BOE sale and not denying the kind of story that came out in the Guardian this morning?

Stay tuned. Much more to come

All the best,

Bill Murphy Le Patron

-- Andy (2000EOD@prodigy.net), August 07, 1999.

The Fed is at The Fair this year, to ease Y2K fears

http://www2.startribune.com/stOnLine/cgi- bin/article?thisStory=80817536

-- (M@rket.watching), August 07, 1999.

Andy

Do you have a URL for this statement?

"A spokesman for the Bank of England had no immediate comment, other than to say the story CONTRADICTED PUBLIC STATEMENTS by George in evidence to the committee on May 25."

-- Brian (imager@home.com), August 07, 1999.

Yes I do Brian,

I'll try and find it... somewhere dangnabbit...

-- Andy (2000EOD@prodigy.net), August 07, 1999.

Ooops,

This is the link you need for the BOE retraction...

http://www.newsunlimited.co.uk/politics/story/0,3604,71738,00.html

-- Andy (2000EOD@prodigy.net), August 07, 1999.

From the OT 11-13 August thread... synchronicity???

I know this is y2k OT, but seen a lot of references to these dates, plus many vibes picked up from the Premonition and Something in the Wind threads that have kind of caused some things to click in my head, so I'll throw them out for discussion... I've been amazed by the (majority) above-average intelligence expressed on this forum, lets not get into the trolls. So here's one for you...

August 11, Solar Eclipse, also happening as the Solar Cycle 23 approaches Max. See the next article, and no, I haven't had time to validate his comments or qualifications... that's your job :)

Quote from csy2k

"By Richard Bracklow

Mathematician

AUGUST 3, 1999 6:00 U.T. Yet another massive solar flare was recorded by GOES.

The orbiting solar observatory has recorded another massive solar flare at 6:00 U.T. on August 3. This is becoming a trend nowadays and these flares are always preceeded by the alignment of at least two of the moons of Jupiter. The larger flares are preceeded by an alignment with the moons of Jupiter with the Earth.

Ten hours before this comparatively large flare earth scientists observed another flare, a smaller one. It was recorded at the precise time that two more moons of Jupiter were in a minor alignment. A minor alignment is when Jupiter does not intersect the moons.

What this proves is that the sun is affected by tiny magnetic fields that eminate from planets. Apparently there is a complex reaction on the sun due to its' gravitational structure and electrical properties of ultra-dense matter. This reaction, which can produce flares such as the one that occured on Wednesday, is energetic and can produce as much as 3 trillion megawatts of power during short bursts.

Little is known about the cycle of the sun which is approaching its' maximum this year. But the earth will pass through the fields generated by Saturn and Jupiter and their moons this October. Just as it did in 1929. Just before the great dust bowl of the 1930's.

It hasn't been proven but there may be a connection between droughts and the cycle of the sun and the motion of the planets."

Now, August 11th, with the Solar Eclipse, the Moon & Earth are in perfect alignment with the Sun, maybe causing a magnetic influence on the Sun during it's most volitale time, Solar Maximum. The result, a high order X-Class flare, with an associated Coronal Mass Injection drawn directly towards the earth, as opposed to the recent CME's that have been pulled outward away from the Earth.

A CME from an X class flare would take approximately 48 hours to reach the Earth... 48 hours from August 11 is August 13, see Aztec Calendar, etc.,

Comments?

-- Carl (clilly@goentre.com), August 07, 1999

-- Andy (2000EOD@prodigy.net), August 07, 1999.

Andy

Thanks for the link, the solar stuff is actually very interesting. There is alot to be said about gravity.

Of course it will have little effect on the bond market :o) On the other hand what goes up must come down.

-- Brian (imager@home.com), August 07, 1999.

oops! you have to register and tell your life story, I do that enough around here.

-- Brian (imager@home.com), August 07, 1999.

Andy;

Somehow you did it! The trolls appear to be silent.

Either they don't understand what this means or don't understand the words "fear", "crash", and the like. Its not possible they'ld ever see the truth, is it?

-- Jon Johnson (narnia4@usa.net), August 07, 1999.

Thanks Andy, here is what caught my eye:

"There was talk, too, that the Fed was holding back on raising short- term interest rates to keep one of the big securities houses afloat. "

Ray

-- Ray (ray@totacc.com), August 07, 1999.

So what the hell's gonna happen next week???

Any takers???

Will Greenspan and his PPT cohorts try to keep things afloat until at least after labour day???

-- Andy (2000EOD@prodigy.net), August 07, 1999.

To keep the appearance of prosperity, they will stay silent. Then as usual, the October Suprise will wipe out the markets. It won't be blamed on the Fed of course, by then Y2K will be the culprit....

-- John Galt (jgatlfla@hotmail.com), August 07, 1999.

Andy,

CONFIDENCE is the key here. If the American public begins to lose confidence in the system "Katy Bar the Door", no government entity will be able to control the exodus. It was obvious on thursday of this week that the PPT was in action, Dow up 119 and the NYSE had 1800 losers with only 1200 winners.

The PPT can't keep the entire market afloat, the potential for a blowoff of the bluest of blue chips still exists. This would be similar to Thursdays action. The market is in an EXTREMELY oversold position at this point. IMHO it's a tossup, but rest assured we have entered into a "Bear Market".

Ray

-- Ray (ray@totacc.com), August 07, 1999.

I watch the markets for a living. All of them. Currency, commodity and financial. I must say based on Fridays rather manic performance that something is clearly changing. Sentiment is now at an all time low and fear is palpable. Shit, even the talking heads on CNBC were chattering nervously and Marc Haines was asking people about "whistling past the graveyard".

Then old Maria Bartiromo, who is without a doubt the most attractive Italian American woman I have ever seen, interviews some floor trader from the CBOT. He's in the bond pits and he says breathlessly, and I quote "Y2K, Y2K, never mind 6 months from now, Y2K is here NOW. Liquidity is dry accross the boards, to much corporate supply, followed by bad economic news, pressure on the dollar and now the rumor of a large financial house with big problems".

I felt a little chill in my spine when he spoke those words, as I have not yet dialed my positions back to cash yet as I hope to. Fortunately for me there are forces at work who can NOT afford a collapse of this magnitude. They will do ANYTHING to avoid having this collapse NOW. So we may have a few more weeks. I'm not going to wait that long, because I don't think they can hold it together. One LTCM is bad enough, but with the bizzare behavior and interventions which are currently taking place on debt, currency and gold fronts one can't possibly model the impact on complex deriviatives. Some big houses are gonna get hurt hard with some big big numbers. And John Q. Public has never seen anything like this.

-- Gordon (g_gecko_69@hotmail.com), August 07, 1999.

Then you've got this. Things are just way to dicey. If the buck slips any further, we've got some big problems. In fact it sounds from this like it has already started. These boys are big money and they're moving away from US dollar investments. The boys on Wall Street can't hold a candle to the boys in Zurich Zug and London. When they decide it's time to go, it's time to go. Buh, buh, buh, bye-bye.

Tuesday August 3, 1:42 am Eastern Time Hedge funds getting wary on yen carry trade-Hayami TOKYO, Aug 3 (Reuters) - Bank of Japan (BOJ) Governor Masaru Hayami said on Tuesday that overseas hedge funds were becoming cautious about yen carry trades, in which they borrow yen outright at low interest rates to invest in dollar-based assets.

Hayami said such a change in hedge funds' strategy, coupled with Japan's vast current account surplus and net assets overseas, as well as recent active buying of Japanese stocks by foreign investors, had been leading to the yen's recent strength.

``Capital flows (into Japan) have exceeded capital outflows,'' Hayami told parliament.

Hayami declined to comment on recent movements in the dollar/yen rate or currency intervention, saying foreign exchange is a subject for the Finance Ministry.

((Tokyo newsroom +81-3 3432-8022

PS I didn't mention that Maria, the woman with the prettiest eyes ever seen on TV, now seems to be a GI. She mentioned Y2K about a thousand times on Friday. She seems to have been holding this thought in her head for a while that Y2K would have a financial impact and now she was suddenly free to discuss it. Made my day. Go MARIA GO!

-- Gordon (g_gecko_69@hotmail.com), August 07, 1999.

Flood of Corporate Borrowing Causing Commotion in Markets

-- (in@other.news), August 07, 1999.

Gordon, My friend was working temp at Estee Lauder and saw Maria Bartelroma who came up to discuss being the personality for one of the lines. My friend said, in person, MAria is little and not that compelling. On the air, of course, she is gorgeous.

Anyway, interesting about the one broker's comment. I listen every day to see what the buzz is. I hadn't heard that. Mostly it was the inflationary scenario and we have seen flat and drooping periods like this before. As for dollar versus yen, the dollar has been much, much weaker, so I don't take that as definitive.

All I know, really, is that some of my stocks never recovered from last summer, never mind this bottom. Luckily, I was heavy into index fuinds and made a buncha money, then got out. Now, however, I am holding a couple of things and trying to get a rise out of them before I dump them. I think we'll get a brief upwind at the end of the month. If the markets EVER recover post Y2K, I wonder if I'll go in again. It all seems so freaking corrupt. No value added, just pulling dollars out of the system in a nasty, greedy way. On the other hand, it's better than working for $7 an hour.

Best to all.

-- Mara Wayne (MaraWayne@aol.com), August 07, 1999.

Gordon:

It looks like Larry Summers had a whole truckload of rotting fish dumped off to him by Bob Rubin of Goldman-Sachs fame. I'd bet Larry's on the phone right now hitting up his MD for a 3mos. Valium prescription.

-- Mike T. (anita_martini@hotmail.com), August 07, 1999.

The hedge fund problem is just another reason why compliance statements by the banks are a mute point. And the Fed is now between a rock and a hard place - they need to raise rates to slow the economy, but the higher they raise them, the worse the hedge fund problem becomes. Greenspan can now see the end of the rope and is bracing for the fall.

-- a (a@a.a), August 07, 1999.

From gold eagle

ARCH CRAWFORD UPDATE--THE END IS NIGH, BROTHER, THE END IS NIGH

Arch called the Oct. 79 "massacree" and the 87 top. Contemplating the imminent appearance of a not seen in two thousand years "Grand Double Cross", he says that the next 60 days will make previous crash calls "look like a walk in the park". Arch uses such terms as deadly combination and apocalyptic to describe the coming period in the financial mkts. I saw this in the Investors Intelligence newsletter I received today. Ricard Russells letter was featured and Richard was quoting Arch.

-- Andy (2000EOD@prodigy.net), August 07, 1999.

From an Arch Crawford post on Silicon Investor: Major Instability by Arch Crawford Editor, Crawford Perspectives The world will get a strong dose of Millennial Madness during the coming eclipse series. Political, military and social unrest at maximum with economic and financial repercussions aplenty! There may be surprise attacks across national borders, possibly involving Israel, and assassination attempts on world leaders, possibly including the U.S. We do not say these things lightly. This sequence of T-squares and Grand Crosses among the "wandering stars' is unprecedented in our lifetimes, and maybe for Millennia! Do you think we are alarmist? Can we frighten you into taking some modicum of defensive measures, personally and financially? If you're waiting for greater proximity to Y2K before tightening up, don't! Whatever you might be coerced to do for your own safetydo it now! Remember that we have a long history of predicting dates of astronomic moments which have often coincided with monstrous world events! Not all of these predicted events affected our markets. Many did. Among the greatest planetary alignments we brought to readers' attention were: Top day before the "October Massacre" of 1979, biggest point decline in history (to that date) in 1986, exact date of the Challenger explosion, exact high day before 1987 crash, exact day of Kobe earthquake, Lunar Eclipse conjunct Pluto 2 days before Chernobyl explosion, Lunar Eclipse forming Grand Cross when Saddam Hussein attacked Kuwait, Saturn square Neptune date of "Hunt Debacle" Saturn square Pluto date of Chiapas Uprising, Saturn semi-square Neptune date of Peso devaluation, Saturn/Neptune conjunction opposed Jupiter 2-3 days before Berlin Wall came down, exact date of drowning of 900 in ferry accident, date of Diana's deathand many more! The next 60 days will make all these look like a walk in the park! Never, ever, have we observed combination after deadly combination culminating one after another in a truly apocalyptic sequence. To those among the spiritual or religious communities, some of whom are planning gatherings for the Solar Eclipse, I give this advice: "Start sooner and pray harder!" To those who believe in nothing, I give this advice: "If there's something you have really wanted to do and haven't done yetdo it now!" If there is someone you haven't told "I love you!" best to do that now, as well. Although the sequence has already begun building, it can be observed openly by July 18, and even the dull- witted will become aware by July 21 that something is amiss. The biggest events will most likely occur Monday, July 26 when the first T-square forms involving Sun/Mercury conjunction opposing Neptune, all square Jupiter! This is extremely inflationary and will disrupt currencies and financial markets. Possibility of chemical spills, deception, germ warfare and tragedies at sea. Then comes the Lunar eclipse on the 28th conjunct Neptune and square Jupiter = more of the same! The third T-square reaches maximum energy on Saturday, August 7th. This combination of Sun opposing Uranus, both squaring Mars symbolizes open, In Your Face Confrontation, Warfare, Explosive Tempers, Explosive Hardware! August 11, 1999! This is The Big One, the MOTHER of all Solar Eclipses about which the 16th century seer, Nostradamus wrote: "A King Of Terror will come from the skies" Ebertin's Combination of Stellar Influences says of Mars/Saturn = Uranus: "The ability to give as well as to take under provocation, the inclination to apply brute force, a test of nervous strength, the intervening by higher power, separation, death. Dell Horoscope magazine opines: "This eclipse might augur a paradigm shift of global proportions." Richard Giles, writing for Gordon Michael Scallion's Earth Changes Report writes: "What's at stake hereis the basic stability and strength of the free market system. Struggles for control of the world economy and issues of ownership of the world's resources are in balance. War over land and rights to resources are very likely. Neptune in Aquarius will foster a mystical and humanitarian revival of the world at a mass level, offering many people their first transcendental glimpse of the planetin late July expect people claiming to be a messiah to emerge. This energy also favors sudden reversals of fortune in the markets." The greatest after-shocks are triggered with the formation of a second Grand Cross on August 16-17, involving Jupiter, Neptune, Mercury and Moon. How many thousands of years since we have encountered a Double Grand Cross? The Pluto station on the 18th will aggravate underground movement and, likewise, the realignment of power structures, physical and social. Further powerful astronomic hits on August 24, 26 and 29 add to the general chaos of this intense period. Editor's Note: Arch Crawford is editor of Crawford Perspectives, 6890 E Sunrise Dr., Ste. #120-70, Tucson, AZ 85750, 1 year, 12 issues, $250. Published since 1977, Crawford provides quinessential market timing by planetary cycles and technical analysis. A 900 Hotline service is available at 10 a.m. and 2 p.m. EDT for $4.30 total per 2-3 minute call 1-900-776- 3449.

-- Dave (dannco@hotmail.com), August 07, 1999.

-- Andy (2000EOD@prodigy.net), August 07, 1999.

Hello,

I have never posted anything on this forum, but found this thread very interesting!! Some of you may know that I analyze and monitor hedge funds for a living for an investment bank in New York. I don't feel comfortable saying too much about Tiger, because we have large investments with that firm, but some facts in the thread were inaccurate. Tiger's high in assets was about $18 billion, not $22 billion, and now they have $11 billion in assets. Most hedge funds have only year-end redemption provisions, but their offshore vehicles typically have more frequent redemption provisions, usually quarterly. Tiger has both domestic and offshore vehicles. Much of Tiger's assets are "locked up" for longer than just this year and next. Anyway, enough about Tiger.

One of the reasons I think the fall will be so difficult is that hedge fund investors typically have to give "notice" of their intent to redeem by September 30 or October 31, meaning that hedge funds will have to begin liquidating securities once they receive notice. In addition, they will probably want to "delever" to have more in cash than usual because of their own nervousness about Y2K.

I don't give much credence to CNBC. They are eternal bulls, and do after all, refer to themselves as "The Big Cahuna", "The Brain", "The Bond Babe", "Lola LOng Bond" and they use lava lamps to predict the market outcome for the day!

Why do you all think that Wall Street basically is still not paying attention to Y2K? Because they don't want the bull market to end, or because they really don't get it?

Jennifer Yourdon

-- Jennifer Yourdon (jennifer@yourdon.com), August 08, 1999.

Jennifer,

IMHO Wall Street knows this can lead to a crash and depression, but don't understand it viscerally - money guys not code heads. I KNOW one of the very biggest firms had Y2K as their number one priority a couple of years ago. They are trying to ride the bull and not be blamed for the millenium crash. They think they can get out ahead of the public (and they can).

I have 2 retirement accounts that I have to tell the account managers by the 25th if I want to move money and the move is the effective the first of the next month. Wall street can see people like me omve our money a week before we do and know it happens at the end of the month. The culture believes in October crashes, so lots of people will try to move to safety in September.

I read somewhere that 7/10 of 1% of the money in the stockmarket being withdrawn caused the Oct 87 crash.

-- ng (cantprovideemail@none.com), August 09, 1999.

Come on baby let her rip. Only a few windows left. August, October of 99 and January and May of 00. The biggest risk has been contra party default due to unexpected high volatility. Anyways, right now is one of the few times I am happy to be holed up Montana land of the Unabomber and Freemen, plus we have the Hollywood crowd, a number of religious cults ranging from the Scientologist to the Church Universal and Triumphant, don't forget the occasional tycoon like Ted Turner and friends. Anyways back to the discussion, after getting ripped on options market and holding more paper, electronic bits these days, it is quite unnerving to see the leverage the current system operates on from Credit Cards with rotating refinancing or Musical Balance Transfer, to home equitiy loans taken to play margin positions, to the more exotic forex and interest swaps. Nobody seems to be holding hard assets or currencies except for a few billion Indians, Moslems, and Chinese. Just a thought.

-- Luy Luong (lluong@montana.com), August 10, 1999.