TABLE OF CONTENTS January 2008

H.G. Wells Would Be Proud

If you think the paparazzifest over celebrities in the U.S. is off the hook, check out France these days, where so-called “Kervielmania” has exploded, with a bidding war breaking out for the rights to his life story. Bands of sweaty journalists are on the case, but there is one big problem: the public is hungry for fresh photographs of the much-beloved “rogue” trader, who, as it so happens, is always hiding in the boot of his lawyer’s car. In a sign of how dire the situation is, the hunt for new photos – ANY photos – of Kerviel is being led by big-cheese paparazzo Pascal Rostain, but so far, no dice. In the meantime, it looks like the unwashed masses will just have to content themselves with various Kerviel paraphernalia, such as these pink T-shirts (available at misskerviel.com) or the equally sought-after “Jerome Kerviel Is A Genius” ensemble. Despite the dearth of photos, we do have these just-released quotes from our famed invisible man. > read more

Why He Did It

Traders are not at all interested in the soul-searching and head-scratching over Societe Generale’s risk controls, or how it was duped into overlooking allegedly fictitious trades for possibly two or three years. This is no mystery to them; they know only too well how it all works. What they want to know is what motivated Jérôme Kerviel to do what he did. So far in the internal debate, two camps are emerging: one that believes that the modestly paid Kerviel just wanted a chance to make winnings big enough for the bank to embrace him as a star (this assumes that he would not have been automatically kicked out of the bank for misleading it for so long, gains or no) and one that believes he actually hoped to take the bank down – permanently. Finally, it looks like we have our answer. > read more

World Hunger Eating At You? Blame The Specs

We just found out, right this second, that speculators are apparently responsible for all the world’s evils. So sayeth the Organization of Petroleum Exporting Countries – and with a name as long as that, that’s gotta’ be some kind of wise counsel. We did not know. Thank you, OPEC, for showing us the way. In addition to poverty, cancer and government-created killer nanorobot infection, speculators are ruining everything when it comes to keeping oil prices on a low-vol trajectory. Now, a word from aegis-bearing Zeus, the Cloudgatherer. > read more

Faceoff: Boy Vs Bank

So, did a 31-year-old fell a monster bank? Or did the monster bank use him as a fall guy for other troubles it was having? As the plot thickens, the legal team of “rogue trader” Jérôme Kerviel accuses Societe General of using its junior employee as a smokescreen for massive subprime losses – something that the bank’s chairman has denounced as laughable. Meanwhile, one ex-SocGen trader privately tells TraderDaily he cannot imagine how any trader could lose anywhere close to $7 billion in the European equity-index futures market. “It’s not like what Amaranth did with natural gas, where losses like that are entirely possible,” he says. “In stock-index futures it would be hard to hemorrhage that kind of money that fast, even if you tried. Everyone believes there’s a lot more to this story than we are hearing.” Very well then; let the finger-pointing begin. > read more

Wild-On At Witching Hour

What we are learning about the sneakiness of credit-ratings agencies and bond-insurers these days could fill Shea’s Stadium. Rule No. 1: always report bad news in the middle of the night (as if no one’s looking). Clearly taking this to heart, MBIA waited until just past 12 a.m. EST to drop the bombshell that it had weathered a second consecutive quarterly loss, with write-downs in its credit-derivatives portfolio swelling to $3.5 billion. In what we are sure was a coincidence, S&P also held off until the dead of night to say it downgraded or put on negative watch around $534 billion of mortgage-backed debt, which means banks will have to double their predicted losses to $265 billion from $130 billion. (Since, so far, they’ve only reported a fraction of that, it looks like just about everyone is being naughty-naughty.) > read more

Rogue Trader: The Kerviel Story

OK, now that we’re past that nasty business of what’s up with the Jérôme Kerviel of real life, we can give our full attention to the more important stuff, like who’s gonna’ play Jérôme in the TV miniseries and/or B movie? As we are not much for assessing the male heartthrob circuit – even for trader roles – we’re pleased to say that The Guardian has already done all the dirty work for us. While prefacing that we still think it’s a sick, sick world that a portfolio of would-be Kerviels has been put together so quickly for this purpose, we also think it would be disingenuous for us to pretend that we were somehow above sharing it with you. > read more

Black Tuesday Averted – But For How Long?

The Fed’s quick trigger finger is getting judged from all sides today – and depending on who’s ululating the loudest, you may hear any one of the following: that Ben Bernanke is a) behind the curve b) whipped by the market c) terrified or d) doing a masterful job. We at TraderDaily are thoroughly confused. But as Asian markets bounce back this morning, we suspect that, either way, we’ll have a long slog ahead of us before the final chapter is written. Setting aside the impossibly tiresome jawboning about Bernanke, we’re wondering whether disaster averted can honestly be conflated with long-term relief. (We doubt it.) Some tales from the pits about what traders are going through – and whether slashing the cost of borrowed money is truly a tourniquet, or just another temporary band aid. > read more

A Boy, A Bank…And Everything Else

With the Federal Reserve tipped to cut interest rates today for the second time in nine days and a government report expected to show a slowdown in U.S. economic growth in the fourth quarter, questions are raging over whether the losses generated in Paris by a lone trader triggered a chain reaction that led to the Fed cuts thus far. One man’s humble opinion. > read more

Cost Of Absolute Power? Oh, About $11 Billion

After nearly two decades years of lighthearted dalliances, the world’s most formidable trading powerhouse – the Chicago Mercantile Exchange – and the planet’s top energy market – the New York Mercantile Exchange – may finally make it official. That said, we reckon this will be no cakewalk for either: a marriage of the CME and Nymex will no doubt leave many up in arms over the likelihood of this merger putting too much power over the global financial markets into the hands of too few. And let’s not forget about IntercontinentalExchange, Nymex’s biggest rival, which isn’t strictly without tricks up its sleeves when it comes to swooping in at the last minute with a counterbid – especially when it comes to the CME. Since Nymex never does anything the easy way, the more you know about what to expect in advance, the better off you will be. > read more

How He (Supposedly) Did It

SocGen is revealing a great deal more about how it believes Monsieur Kerviel allegedly balanced fraudulent trades in a series of bets that it says exposed it to more than $70 billion of losses – completely unauthorized by and unbeknownst to it. More on how the bank claims this was done, even as some traders question how it could be possible. > read more

Get Your Fed On

Whether stock valuations correctly reflect the level of recession risk remains utterly in question. What is not in question is how the Fed’s moves today could determine the course of your year. > read more

Shalom, Bernanke

(Did you happen to know that “Shalom” is our Fed chief’s middle name? No kidding. Kind of curious, as the word can be used both as a greeting and a farewell.) Anyhoo, it seems that today that Big Ben Bernanke’s sometime critics will be using his name in the positive sense, as relief washes over the financial system. But many still wonder whether this victory – however short-lived – came a little too easily. And worse, others fret that if the Fed acted less out of reason and more out fear, what else that might mean. > read more

Inside Wily Trader’s Socking Of SocGen

On the heels of the joyous discovery that his bank’s subprime write-downs would be less than expected, Societe Generale’s chairman finds out one lowly trader who earns less than 100,000 euros a year has soundly wiped out the bank’s annual profit by keeping two sets of books and using his intimate knowledge of the institution’s back-office controls. (Apparently, this 31-year-old worked his way up from the administrative side of the bank.) What follows is an absurd story of how a single employee felled a Wall Street monolith, propelled by motives that remain unknown – except, we presume, to him. > read more

The Judgment Of Paris

As Société Générale stands firmly, if perhaps futilely, behind its chairman in hopes that Daniel Bouton will somehow reprise his successful efforts to repel a possible takeover attempt by rival BNP – as he did in 1999 – and lead a recovery from massive trading losses the bank is blaming on one lone trader, another kingpin of French finance is now facing the guillotine. > read more

‘Rogue’ Postcards From The Edge

Whatever. We can’t believe the brilliant Michael Lewis of “Liar’s Poker” fame is openly airing his weird fantasies of Jerome Kerviel. And Bloomberg is eagerly printing them. (Actually, scratch that…we do believe B’berg is printing them.) Shouldn’t musings like these be kept somewhere more private, Mikey – like in the confines of one’s manly, leather-bound diary? > read more

Achtung, Baby

The Federal Reserve may push interest rates below the pace of inflation this year to head off the first simultaneous decline in U.S. household wealth AND income since 1974. But, see, that sort of sends it straight out of the frying pan and into the fire. > read more

UBS Or Bust

The fourth-quarter loss posted by UBS today is a record-breaker on several fronts: it is the biggest loss since the bank’s inception (following its merger a decade ago). It is almost double what analysts were expecting. And it handily tops the breathtaking losses of Citigroup and Merrill Lynch – no small feat, even for such a large bank. While the worst could be over, few market observers are willing to go out on a limb and say that they don’t expect more setbacks where these came from. As one money manager puts it, “Risk management must have been non-existent, as [UBS] seemed to find massive exposure in all sorts of pockets…'' Read on for the grand total of damages – and more on what went so terribly wrong. > read more

A Leg-Up?

A $1 trillion Baltimore money-management firm has searched for a successor for years – and now it has found one. But has he arrived in time to turn the firm around? > read more

So Stupid, It Must Be True

Who knew the only way to keep up “clean” ethanol production would be to build more “dirty” coal plants? And you thought our rabid addiction to good, old-fashioned coal-fired power would soon be a thing of the past. Silly rabbit. > read more

Death Of VaR Greatly Exaggerated?

Not if you listen to the big banks, which are suddenly waking up to the fact that their stable of algos, triple-A ratings and automated checks and balances are a poor substitute for good, old-fashioned due diligence. That said, how many institutions really plan to overhaul, rather than tweak, their risk-management systems – and how much will that interfere with your trading? > read more

‘I Always Knew It Was A Bad Idea To Let Kids Run Global Finance’

Too late. Here, a summation of the reactions and overreactions coming out of Davos as news of the $7 billion-ish trading loss generated by The Rogue Trader of SocGen continues to rock the financial cognoscenti. > read more

Surviving Your Gazillions

Congratulations: You just made a king’s ransom on that awesome bet everyone said you’d never win. From now on, it’s easy street for you, right? Wrong. In truth, you might as well have just painted a giant red bull’s eye on your chest. If you ever felt persecuted before, it’s nothing compared to what you are about to go through now: People will want to know every aspect of how you came into your riches and, of course, whether there’s any chance they might take them away from you. The public will not rest until it has its answers and the press won’t rest until the public rests. The good news is, there’s a way to play this game. You just need to know the rules. > read more

SocGen’s Trading Loss Tops Amaranth

Societe Generale, France's second-largest bank by market capitalization, is reporting a trading loss so huge today that one analyst actually said that, at first, he thought it was some kind of “joke.” With $7.1 billion soundly wiped out (more than the $6.6 billion lost by Amaranth in 2006) the bank says its woes are stemming less from the subprime mess and more from the activities of one unidentified trader it’s now accusing of fraud. (Never mind how any trader could have kept a losing position that size so well hidden). More on how SocGen suddenly find out nearly two years of pretax profit had gone up in smoke. > read more

Things That Make The FT Go Hmmmm….

It’s not exactly crying foul yet, but The Financial Times does seem to be finding a few of SocGen’s answers to questions about its “rogue trader” as either a) too pat b) inconsistent or c) wholly unsatisfying. Keeping in mind that newspapers generally believe anything where everyone is not totally to blame utterly disappointing and nonscandalous, we are bowing out of this one, but the following points – however shrill and hysterical – are worth a read, as they may shape the conversation in the coming days. > read more

Inflation-Hedge Spectacular

It’s all solid gold from here (also our favorite weekend TV show from the 1980s, btw). And speaking of the 80s, copper has made its biggest gains since 1987, while gold and platinum have smashed records today and corn has streaked to an 11-year peak. So just who are the big players nailing all these bets in raw materials? And where are prices headed next? Glad you asked. > read more

The Death (And Rebirth) Of Liquidity

Liquidity is like the weather: everybody talks about it, but most think you can’t do much to change it. Given the current credit drought, why not explore ways you can sidestep the negative impact of liquidity drying up? No need to shut the barn door after the animals get out; instead, take a page from forward-looking market participants and tap into the new technologies available to improve market transparency and valuation accuracy. Find out more about what’s out there – and how to use it – at the 2nd annual Liquidity 2008 conference. Use our priority key code, TRADER. > read more

Perfect Storm For Precious Metals?

Gold and platinum are soaring to fresh record highs today, as a shortage of electricity in South Africa forced mining companies to stop production. So where does that leave copper and oil? Three guesses and the first two don’t count. > read more

Econ-Stim Hammered Out – But Will It Work?

Looking to kick-start the limping U.S. economy, President Bush and House lawmakers put the final touches (not to be confused with the final FINAL touches) on a fiscal-stimulus package. But the age-old question remains: which hits the financial system faster – food stamps or tax rebates? A question of great probity, it appears, to Senate Democrats. > read more

The Great Gotterdammerung?

We have noticed that the stock-pummeling has gotten somewhat more conspicuous as of late. But we’re not buying all this weak palaver about how the doughty permabears of the world have somehow forced a global sell-off with their “empty” rhetoric. Face it; it’s not so empty anymore. In fact, it is all too real and the steep drop in U.S. stock-index futures today ahead of the open that’s now targeting lows that haven’t been seen since the attacks of Sept. 11 proves it. The culprit? A sneaky suspicion on a global scale that we are on the verge of a massive wave of corporate defaults. Here, a detailed look at which markets have already had it socked to them today – and why. > read more

Weirdly, SocGen Also Named ‘Equity Derivatives House Of Year’

…By Risk Magazine, no less (whose timing, perhaps, could have been better). While crediting the bank with sidestepping enormous losses in the equities markets, despite harboring one of the largest exotics books on Wall Street, it now looks like the bank may have been so riveted by its equity-derivatives bets that it did not notice the pesky trader allegedly amassing a smattering of fraudulent directional positions. Ah, the irony of irony. > read more

Get Super Bowl Tickets On The Cheap

Despite this week’s volatile markets, we can definitively say that feel-good trading stories aren’t necessarily cyclical things: Giants fan Terence Gelke scored himself six Super Bowl tickets worth roughly $50K after betting $1,000 on sports ticket exchange yoonew.com. Here’s how he did it. > read more

Trader Monthly Exclusive: SageCrest/ACG Skirmish Heats Up

The legal battle between SageCrest II LLC, a $950 million hedge fund co-run by Alan Milton, and Art Capital Group has just escalated with the recent filing of a claim against SageCrest by ACG. With accusations of fraud, bid-rigging and embezzlement flying around against the glamorous backdrop of art investing, this is one brouhaha that looks like it might end up being to the death. > read more

ICAP’s Bonanza

Trading can be either a winning or losing proposition, but for those profiting off the price swings in bonds, currencies and commodities that you battle every day, the money is always rolling in. Find out what your brokers are really making. > read more

Rate Cuts Don’t Stop Trader Moans

We love our traders! Give them what they want – and they still want more. Go, unquenchable traders. As long as you exist, there’s hope for this toilet-bound economy. > read more

China’s Tipping Point

With the U.S. first leading the demand for oil, then the war in Iraq, and now a global economic slowdown, China is realizing it may not want to tie its fortunes so heavily to overseas trade anymore and focus instead on its own domestic development. As the nation reports a second year of growth above 11% today, it looks as though it may soon shift its priorities from curbing economic expansion to sustaining momentum. Really, can you blame them? > read more

Fed: How Low Will They Go?

We hear President Bush/Congress are almost done hashing out the economic-stimulus package that will supposedly save the world with tax rebates. We aren’t holding our breaths on that – either in terms of its efficacy or its time to market. Instead, we’re reserving all our chin-stroking for the Fed and how much chemo it can afford to administer to the financial cancer that is ailing Wall Street. > read more

Sleep When You’re Dead

Whether your portfolio catches fire today, or has been undergoing a slow burn for many weeks, there is no need to be mundane about your failure. Don’t forget, a failure by you should be unlike any other. You might not be able to stop yourself from going down, but you can at least do it in Icarus-like style. No need be all proletariat about it – even if that does happen to be the social class toward which you’re heading. There will be plenty of time to act like a plebian down the road. Right now, it’s all about the brass-knuckle fight and going out with a bang. A few key pointers on how to do this with panache. > read more

White Knight, 11th Hour?

The world is abuzz with titterings over how Bank of America is going to come charging down from the manor on its pale steed to take over the ever-limping mortgage mastodon Countrywide Financial...but not really out of the kindness of its heart. Nope, the bank has $2 billion to lose – the value of the stake it bought in the lender last summer. And if Countrywide goes under, three guesses and the first two don’t count what happens to that stake. How, B of A, which got into this situation by breaking one of the cardinal rules of Trading 101 (when bargain-hunting, don’t buy the first thing to go on sale) might end up breaking yet another (when in a losing bet, don’t chase after your losses). That said, we’re not sure what we would do about a falling knife either, if we were resolved to catch it. Maybe keep that tourniquet handy? > read more

Trader + Billionaire Daughter = Fighting Fathers

Imagine this: It’s your wedding day and you are ecstatic. You’re marrying the woman of your dreams…who just happens to be the daughter of a billionaire. And she isn’t doing too badly herself: you happen to be a bright and successful trader. The world is at your feet. Now enter your fathers and their cockamamie ideas about the pre-nup agreement. A sad lesson on why tough financial negotiations are best left at work. > read more

More Losses/Gains In Offing?

If anyone has $1.7 billion lying around, ACA sure could use it. If it doesn’t pay the piper today, per a stay of execution that’s about to expire, it will descend into insolvency hell, making it the first monoline to do so. Which means any Wall Street firms or hedge funds active in the vast, largely unregulated wilderness that is the $45 trillion credit-default swaps market may end up saddled with more losses – or gains – than it can stand. > read more

Recession ‘One Shock’ Away?

That’s what Lehman Brothers intoned at a briefing earlier today in Singapore. Highlighting stocks’ deep plunge over the past few weeks, the bank has actually changed its recession outlook from a 1-in-3 chance to odds that one might call rather more concerning. More from the bank that dares get discrete about what’s happening and what it expects for the rest of 2008. > read more

‘Deep’ US Recession In Hustings?

There are recessions and there are recessions. And then there are those recessions that defy a quarter century’s worth of recessions. Perhaps you can figure out which of the three is the kind that economists are now forecasting for our 300 million-strong nation. An in-depth look at the situation from a publication that at least tries not to be too prematurely alarmist. > read more

Newsflash: Gray Shirt Does NOT Match Gray Suit

For those neutral-color-fashion-victims out there, you’re not fooling anybody. There is no dearth of magazines and style swag available to help you. So why are you still wearing those weird zoot suits and unsightly tube socks? (What are you, 31…or 85?) Snap out of it. Some tips from the experts as well as the formerly colorblind on how to easily project the image you’re after while pulling yourself from that hell and damnation that is sartorial purgatory. > read more

Davos: Then And Now

Lest you think the global economic belt-tightening extends to annual conferences at Swiss ski resorts, think again. However, the mood this year is decidedly less jubilant than what we saw in 2007. Here, CEOs and investors speak frankly about their greatest fears for 2008. > read more

NYSE To Snap Up Amex For A Song

But then, the Amex is only worth a song, so nothing to shock and awe here. In fact, we heard the Amex has been quietly on the auction block for, like, ever, so it is good to see someone finally took it out of its misery. Now someone please go buy the Nymex. > read more

In The Buff

Preeminent value investor Warren Buffett is sick of whipsawing U.S. markets and the crap dollar. He’s now going overseas in search of better pickings. How one Swiss company (supposedly with “opaque” fundamentals) got a shot in the arm from a man who says he only wants ``good returns on equity'' with little or no debt and consistent earnings from ``simple'' businesses he can understand. Zounds, when he puts it like that, he almost makes it sound easy. > read more

Appraising Cayne

James Cayne, our favorite competitive bridge-playing, golfing, cigar-puffing, Nashville-going, bon vivant-ing CEO whose killer reputation took a drubbing amid the subprime crisis, appears to be stepping down. The lead-up to his departure unfolded gradually: things started to go downhill last summer when he couldn’t shake those nettlesome rumors about him strolling the fairways and out playing card games while Rome burned – a story reinforced by a belated and hyperbolic expose in a leading newspaper in which a young, upstart reporter looking to make a name for herself painted his extracurricular activities as somehow sinister. We’re pretty sure Cayne’s not directly responsible for the steep decline in Bear’s stock price, but we think him a right honorable man for taking the bullet anyway. Here, a requiem for a great man. > read more

Government Debt: It’s Hot

Indeed, what was drab is now cool again, as Treasuries target post-Sept. 11 action and two-year yields graze lows not seen since the spring of 2004. More on how bonds are taking up the slack from global stocks, which have given up trillions of value since the beginning of the year. (That’s right, trillions. Don’t believe us? See for yourself.) > read more

Falling Star?

The subprime crisis is taking the stuffing out of London fund manager New Star Asset Management. And prospects for the rest of this year aren’t looking much better. A sordid tale of how sudden market turbulence can either make or break you. > read more

Stock-Pummeling Gets Serious

Across the pond, there’s a building panic over the U.S. economy (which is roundly blamed for the ongoing credit upheaval) and where it’s dragging the rest of the world. As stocks plunge in Germany, Hong Kong and India, worries are beginning to boil over that the rate of corporate defaults will no doubt soon pick up – but to what extent? > read more

Coincidence – Or Psychic Phenomena?

Sick of getting spanked by big banks because they always seem to know which mergers and megadeals are about to happen and you don’t? Or maybe you trade for a monster bank and feel wrongly accused. Whether the issue gets your blood boiling or not, you may want to have a look-see at the latest data on this subject. Apparently, when banks do happen to scoop up stocks ahead of a deal – to their distinct pecuniary benefit – they tend to be, more often than not, the same ones that are advising on the transaction. Pipe in Twilight Zone music here and prepared to be amazed, if not gratified. > read more

Exploitation Reinvigoration

With the property market going all pear-shaped, now is the time to pull together some serious lumber and have a go at it. At least that’s what this closely held investor backed by both Yale and Harvard (not bad, as advocates go) seems to think. Here’s what the fund is up to while you overwork your laurels. > read more

More Dirty Gossip

Because you like it, and you like liking it. Ready? Two well-capitalized traders made a bet last year on which market sector would be the hottest for 2007. One of them wagered financial services. The other favored oil and gold. We clearly know which side won, but it turns out the bet (which was for $50,000) was made on the air, as the two men also happen to be big-time TV personalities. So who was the victor – and who went down in televised flames? > read more

What About…Uranium?

With even Buffett looking outside the U.S. for the next big thing, perhaps it’s time to consider something that’s both piping-hot and just across the border. Lucky you, uranium is not only on fire – it still has plenty of room to grow. > read more

Now We’ve Seen It All

John Paulson’s jaw-dropping bonanza last year amid the subprime meltdown is paying more than just cash dividends. Now it has delivered him none other than Alan Greenspan, who just signed his third consulting gig with Paulson & Co. How the lure of hedge funds proved even too great for the ex-Fed chief – and what all three of his new assignments have in common. > read more

RAB’s Net Drab

Let’s be clear about this, though. Against its own past performance, hedge fund manager RAB did not do so great in 2007. But against the performance of its own hedgie brethren, it did just fine, thank you. A look at how $7.2 billion of AUM toughed out a rough year and what the fund expects will lie ahead. > read more

Ready For Your Citi-Merrill News Detox Yet?

We are. But apparently nobody else is, as the media rabidly highlights CEO quotes from the Citigroup conference call yesterday as if such things were imminently going out of style (they’re not, btw) and trumpets $19.1 billion of capital infusions into both Citi and Merrill, courtesy of the ever-helpful sovereign wealth funds. So, does anyone have anything new to say about any of this today? Of course not. But they’re going to hash through the greatest hits, anyway. We would, however, like to point out one underappreciated fact: anyone else notice that banks aren’t having the slightest bit of trouble raising their gobs of cash? In fact, according to this story, the deep-pocketed sponsors are scrambling to bang down THEIR door. > read more

Bad Brains

Hey, smart people do dumb things. But most of them manage not to rope in a former Merrill Lynch analyst, a New Jersey postal worker, two staffers from a BusinessWeek printing press and an exotic dancer. Unless they’re this guy formerly of Goldman Sachs with what appears to be an affinity for insider trading and a self-destructive streak. > read more

The Plot Thickens

It’s the stuff of pulp fiction, but, in this case, all too true: Bill Ash, the man who’s come forward to assert that hedge fund millionaire and CNBC commentator Seth Tobias did not die resulting from an accident, but a deliberate attempt on his life, has passed his polygraph test, ripping the lid off what is likely to be a painful and dramatic battle among potential heirs of the Tobias fortune – including his wife, now being accused of murder. > read more

E-mail Scandal: Ex-Goldman Exec In Crosshairs

Ever try to send out an e-mail pretending to be someone else? Yeah, us neither. But some people – people, we’re sure, who lead much more exciting lives than we do – shoot these missives off without a second thought. So, here’s a scenario for you: what if you send out an e-mail besmirching a certain company while pretending to be its CEO? (But, really, you run a rival firm, sending out e-mails from a hedge fund where you rent office space.) Then someone responds to it by e-mailing that CEO back, inadvertently exposing you? Yep, this is when life gets exciting. > read more

Calling All Commodities Traders...

Deutsche Bank wants you. Sure, the commodities boom may be giving banks a bit of vertigo these days, but they’re not about to close their eyes to the dizzying profits that are to be made if they play their cards right. That includes hiring more staff in this industry. People like you, who – let’s be honest – don’t come cheap. In fact, one could argue just hiring you at all is in and of itself a gamble. (And there are lots of reasons for that, but let’s digress, shall we?) Why Deutsche is ready to take a crack at those very steep odds. > read more

Oil Rules The World

And if you want to rule the world too, you’d better get your hands dirty with some natural resources-type trades. The way is long and the road is narrow, but with oil scoring $100 a barrel and economists still pontificating that this doesn’t necessarily pave the way for any kind of recession (righto) there’s no time like the present to get in on the action. More on the mechanics of the oil boom and how long it may last. (Hopefully, long enough to get in some more boffo megatrades.) > read more

Greenback Whacked…Again

As the Fed madly signaled its intent to be more aggressive about heading off the risk of a recession, the dollar dropped to a seven-week low that did some signaling of its own: could U.S. interest rates soon fall below that of the ECB for the first time in three years? > read more

Oil Options Spike

While that simple fact is hardly surprising, the strike price being bandied about in certain quarters when it comes to one of the most popular oil bets going is practically beyond belief. > read more

WSW: Back With A Vengeance

Wall Street Warriors, that HD reality TV series you love to hate, is queuing up another bumper crop of upwardly-mobile-hopefuls for its next illustrious season, starting in just 16 days (can’t wait!). We don’t have their pictures yet, but we do have their stats. > read more

Another Chink In Amour

That is to say, a really big chink. In fact, as chinks go, it is rather more like a yawning fissure in the weakening fabric that is our U.S. economy. But don’t take it from us. Take it from the world’s largest independent credit-card issuer, which has some choice words about the rising number of loan losses it is witnessing. > read more

Cool Aid

The investment inferno that is China is starting to show some signs of a slowdown, as central bank measures to circuit-break the overheating economy finally appear to be taking effect. While money supply growth is still bounding ahead of target, data released today points to a possible bend in the road for a country whose inflation has spiked by its fastest pace in 11 years. > read more

Nailing It

Amid the market upheaval of 2007, a lot of equity traders got pummeled. Not so, BlackRock’s $15 billion World Mining Fund, which posted the biggest gains of Europe’s 10 largest stock funds during the cruddiest year in equities since 2003. How, after three years of careful planning, the fund cannily scored its massive payday. > read more

Bear’s Deus Ex Machina?

Out of the subprime pall comes Alan Schwartz, the “effective” and “collegial” “people person” who now aims to guide Bear Stearns from the throes of the credit crunch – presumably, to better places. But what does his being hand-picked by his fallen predecessor (who, strangely enough, remains as non-executive chairman) say about how the bank will continue to make decisions? > read more

So, Who Did That $100 Trade?

That was our first thought when we heard oil finally printed at that level, too. We not only have your answer for you right here, but a great retelling of the mass excitement, hysteria and confusion that yesterday abounded on the New York oil trading floor. > read more

Black Swans Author Warns Traders

Never mind that Myron Scholes has essentially branded this ex-trader, bestselling writer and self-styled market philosopher a total hack. (As the accused might protest, “the absence of evidence is not evidence of absence.”) Why when Nassim Taleb talks, Wall Street listens. > read more

Deep, Bernanke-Like, Thoughts

Or rather, we should say deep thoughts on what is turning out to be, perhaps, a very deep man. This behind-the-scenes piece from The New York Times on Big Ben may be overly pious (as the Times tends to be – just look at the embarrassing picture they took of him; Ben, we know it wasn’t your idea to pose that way and we are sorry) but if you can get over that, it definitely affords us some worthy insights into what makes our Fed chief tick. An aperitif ahead of Ben’s congressional testimony today on whether to throw his support behind a much-touted U.S. economic-stimulus package. > read more

Risky Business

We have said it before and we will say it again: if you happen to be the boss wherever you happen to work, best not to participate in bribery, illicit sex and company-paid shopping sprees. Even if everyone else at your firm is doing it. Unfortunately, these guys clearly neglected to read our Web site and did not heed our warning. > read more

Out Of Frying Pan, Into Fire

Speaking of doing dumb things, what happens when one monster bank’s trading desk forces another monster bank’s trading desk to sell off a king’s ransom in CDOs to meet a margin call? Multibillion-dollar write-downs for everybody, that’s what. How not to cut your nose to spite your face, Lesson No. 1,047. > read more

Blackstone To Spring For Hedge Fund?

A peek at what could be behind the monster private-equity firm’s thinking when it comes to splashing out for a fund with a taste for the finer things: specifically, leveraged loans and distressed investments – not to mention $8 billion under management. > read more

As Pretty Sights Go, Not One Of Them

We don’t like to think of those holding the strings to our nation’s key interest rates as bumbling fumblers – or is it fumbling bumblers? In any case, we don’t like to think about that. That the economy continues to defy the sensibilities of even what we would like to think are the “smart” people is either a testament to the complexity of the former or the simplicity of the latter, but, either way, the Fed having no idea what wants to do – as was revealed in its latest minutes – won’t wash for very long. A close look at its lack of consensus. > read more

Solid Gold

Gold added to its record gains, riding the oil comet and flanked by sharp rallies in wheat, palm oil and soybeans. And what was the effect of this? Traders moved to increase the odds of a Fed interest rate cut this month to – yup – 100%. Events are unfolding fast, so take the time to read more about what else is happening on the ground. Before it all changes again. > read more

Moody’s, Need Some Egg-Remover For Your Face?

We knew we knew you were full of it! Kudos to The Financial Times for airing the proof it found in the pudding. Actually, the FT didn’t even have to find it – the ratings agency which, let’s be honest, now is doubling as the court jester of Wall Street, accidentally sent the newspaper a copy of the press release it didn’t want anyone to see, complete with passages meant to be removed before any media/analyst/trader viewing. Here’s the unexpurgated version, with parentheses around the parts not meant for your poor, impressionable eyes. > read more

Wreckage Check

Some traders think financial stocks, housing bets and junk bonds have become so lowly rated as to be underrated. And they’re only too happy get the jump on other investors in sifting for diamonds in the rough. A quickie roundup on who’s nabbing what. > read more

The All-New Gilded Age

With gold shooting to a record high in both New York and London as rising oil prices and the cruddy dollar force traders to mobilize inflation hedges, we know one thing: maybe the last gilded era of the 1870s had a bit of a bad rep – you know, what with all those political scandals and rampant materialism – but we pledge to do it better this time. > read more

Sad, Weird, Strange

More details are slowly emerging in regard to the mysterious death of hedge fund manager Seth Tobias last September. Linked here is a heavily redacted digital recording of the final 911 call made by his wife after she found him floating in the pool at their Florida home. He was dead when paramedics arrived. The call is strange for several reasons, not in the least because the wife seems to indicate Tobias has not been removed from the pool and she hangs up before giving full directions to their house. > read more

Hedge Fund Awards

A list of hedge funds receiving awards for achieving the obvious mission of making money in 2007. (This is not a very nuanced list, to be sure, but not to worry: Trader Monthly is coming out with a sweeping list shortly detailing the very best trades of the year that blows this one away. Just think of the following as an aperitif of the feast to come.) > read more

Your Oversell Is Showing

Just because global equity markets are looking a bit wan doesn’t mean they won’t hold up better later this year. One trading strategist argues why that’s exactly what he’s expecting. > read more

Can Gisele Bündchen Save Victoria’s Secret SIV?

A $6 billion Victoria Finance SIV has defaulted on its senior liabilities, according to Standard & Poor’s. Will Gisele swoop in to save it at the 11th hour? We propose a special fundraiser – which, by the way, Ms. Bündchen, we’d be more than happy to organize. > read more

It’s Money, Baby

We don’t know who started this, or how long it’s been going on (though MIT students hold competitions in it, apparently, some of it a tad risqué) but we think it’s the bees knees. Moneygami: it’s like origami…only better. > read more

Dangerous Mix

The market’s ongoing turbulence combined with U.S. election skirmishes promises to make for one scary cocktail in 2008 – but that revelation won’t stop Congress from trying to heal the woes of the credit crunch with its own special brand of legislative stimuli fine-tuned, no doubt, to lay bare its abject ignorance of all things both moral and financial. > read more

Metals Trading: Not ‘Fun’ Anymore?

Celebrated wit and poet, Dorothy Parker, in one of her stereotypically grumpy moods, walked into a bar. The bartender asked, “What are you having?” Her response: “Not much fun.” Remember when Bank of America’s chairman said last year he'd had all the "fun" he could handle? Well, perhaps now he’s feeling a bit more like old Doro. Behold, his new plan to streamline trading activities, among other things. > read more

Greenspan Losing His Luster?

Looks like the honeymoon could be over already. Why the next bubble to deflate may be Alan Greenspan's reputation. > read more

Gold, Platinum Smash To Fresh Records

If you thought people couldn’t get enough of precious metals last week, you ain’t seen nothing yet. (Don’t forget about silver, either, which just shot to a 27-year high.) Read on for indications of how long this feeding frenzy may last – meaning, when can we expect the dollar to hit its absolute nadir? > read more

Good Trader Gone Bad

New investor gets scammed by a forex fund, becomes a forex teacher, starts a forex fund, buys the school he taught forex at and then allegedly becomes a forex scammer himself. Some of those he scammed still want him to trade for them. It wouldn’t be so shocking, if it weren’t all so true. > read more

Secret To Goldman’s ‘Luck’

Get it straight: there is no conspiracy theory, there is no master race of bankers and there is no magic Dumbo feather to be found anywhere on Wall Street. So stop watching X-files and let’s focus on the facts. The reason Goldman managed to head off the losses it very likely would have booked (had it stayed on course with the rest of the pack) was by vigorously second-guessing its own staff, notes “Liar’s Poker” author and Bloomberg columnist Michael Lewis. He elucidates further in this latest oeuvre. > read more

A Cut Deeper?

Recession risks appear to have worsened. And Ben Bernanke has an announcement to make after strolling the parks, ruminating and perambulating, chin-stroking in his study for weeks and even whetting his mouth with a little Keats before bed – all for the greater good of the economy, you understand. He now thinks, perhaps, the Fed may want to cut interest rates again. And he’s even hinting by how much. > read more

Another Day, Another Dragnet

In typical better-late-than-never fashion, securities regulators are suddenly off their duffs, grilling brokerage firms over the sale of mortgage-related products, asking for documents and marketing materials and taking names. They’re shaking the trees and they want to see what falls out. But no one is calling it anything other than a “sweep” – yet. > read more

It Rhymes With Secession

Based on 2007's rising unemployment rate, economists are now saying that the U.S. economy may be on the verge of – or already in – a arggghemm...you know, that thing that happens when we get two or more quarters of negative GDP growth. Yeah. That. > read more

Bring On The Fed

We are a bit sleepy today (still dragging from that New Year’s eve we hardly remember) so just get us our favorite chair and our black coffee and our fluffy bunny slippers and, of course, our Fed minutes. Read on for all you need to know about what Fed policy makers are saying and why they’re still agonizing over what to do next. (Confidential to Fed: you know you want to, so just cut the melodrama-cum-prologue and get it over with already.) > read more

The Dollar: What Goes Down, Must Come Up?

So, forex has yet to go the distance in discounting weaker economic growth, says the head of currency research at Lehman Brothers in London – but just how far off is it and what does that mean for the long-suffering greenback? > read more

Weird Ways Of The Street

Last year, brokers’ customers did reasonably well. But brokers did not. This runs counter to the usual way of things on Wall Street. Two-thirds of a century ago, a best-seller asked, “Where are the customers’ yachts?” It noted that somehow brokers always made money, even when their customers suffered. And so it has been for many years since…Until 2007, when customers finally flipped the script. > read more

Recession Spoiler

True, there are those rumors that Countrywide is now verging on bankruptcy (denied by the lender Tuesday). And that the great engine of economic growth and prosperity, the rabid American consumer, has been hobbled by the subprime crisis. But do not underestimate this animal’s need to feed – on luxury goods, watches, shoes, sporting equipment, handbags, electronics devices, vacation packages and just about anything that can be made or imagined – no matter how thin his pockets. How, in the end, this is what might save us. > read more

Blah, Blah, Another Senate Probe

How many are there going on now? We are seriously losing count. Why Senate investigators somehow found themselves examining whether Wall Street firms improperly structured transactions to help hedge funds dodge their dividend taxes, instead of probing something more important like, oh, maybe the war in Iraq. > read more

SAC On Auction Block?

There may be something to all the jawboning lately that’s putting $15 billion hedge fund SAC Capital on the slab. Not only did the hedge fund ask Moody’s to rate a handful of its funds – kind of unusual – but two high-level departures at the firm have set tongues a-wagging again. What gives? > read more

Hedgie Gets Unisys On Ropes

Another activist hedge fund is fiending for change, suggesting that Unisys split itself in two. But here’s the rub: we hear the company’s CEO, Joseph McGrath, may not be averse to listening. > read more

Beware The BRIC…And The Brac

Some investment ideas hit you right between the eyes. Your adrenaline ratchets up and your pulse races, because they seem so obvious, so impervious to failure. Then, the other shoe drops. > read more

It’s That Time Of Year Again: Trader Awards

Here’s your chance to give props to your favorite broker…or get even with him. Anonymously, of course. Let us know what you think of the best and the worst on Wall Street and beyond, whether it’s the people executing your commodities trades or the ones designing your killer algos. You only get to vent once a year, so don’t hold back. > read more

Having Your SIVs And Eating It, Too

Literally. Bondholders in structured-investment vehicles, caught in the slamming door of the subprime snafu, have now lost nearly 50% of the value of their assets. Guess how many have already gone out of business and how many still remain on the chopping block? Hint: more than any commercial-paper junkie can bear. > read more

Not Your Father’s Credit Crunch

Sheesh, you know it’s getting bad when even Alan Greenspan starts talking about how the work ahead for Ben Bernanke’s “tougher” than any monetary-policy environment he “ever experienced.” Why inflation fears may head off another rate cut next month (despite the fact that traders recently put chances of a cut at 100%) even as recession looms. > read more

Shocking: Oil Up, Dollar Down

As crude oil futures surge above $97, the dollar is falling against the euro, extending its first annual decline in three years. The pound is falling to a record low against the euro on speculation that the Bank of England will lower interest rates. And what is the euro doing? Does it ever fall against anything for any period of time anymore? > read more

Man, Oh Man

The world’s largest publicly traded hedge fund manager says its AUM rose 4.5% to $71.7 billion in the latest quarter – but net sales ran into hurdles amid a slew of investor redemptions. A snapshot of how the increasingly jittery market is slowing down even the most successful hedgies. > read more

Global Default Rate To Quintuple In ‘08

Zounds. Moody’s says past results are no measure of future performance (thanks a mil for that, Moody’s). Or, more specifically, just because the global default rate on high- yield, high-risk bonds closed 2007 at a 26-year low is no reason for hope in the new year. > read more

The Richest Man You Never Heard Of

The nation’s top three richest people from greatest to least: Bill Gates, Warren Buffett and…uh…Sheldon Adelson? (Is that a real name?) What you don’t know about Adelson could fill Shea’s Stadium. And we intend to start filling it. Right now. > read more

Forever Yen

With U.S. growth grinding to a halt, everyone is loving the yen. This year, it’s expected to gain 1 percent to 107 per dollar and 5.6 percent to 152 per euro, according to a recent survey by Bloomberg. How one hedge fund manager who manages billions proposes to exploit the situation. > read more

Friday Levity: Funny...Kind Of

Got zero connections and attend the University of Hickville? Not a problem. > read more

Another Jackpot For Jim

In the 1970s, when trader-adventurer Jim Rogers was working with George Soros on some little-known hedge funds, he took to riding his motorcycle around New York’s neighborhoods looking for the perfect place to live. Ever the contrarian investor, he chose a place many others would not – and now is the richer for it. Much, much richer. > read more

S&P CDO Downgrade Watch Hits $77 Bil

As is its wont, the ratings agency waited until late Friday to let investors know it might slash ratings on another $6.42 billion of U.S. cash flow and hybrid collateralized debt obligations of asset-backed securities. And there’s likely more where that came from. > read more

Undercover Economist Gets Prurient

We say “prurient,” because if we get any more specific about it, we could very well be scolded by our censors. That said, this is an amusing, if not wholly informative, anecdote, er, laying bare the rational economics of an irrational world. > read more

Friday Levity: Stewardess Theft, 1965

We’re not sure if this one is real or not, but if it is, it’s kind of scary. And funny. > read more

Take That, Dubai

Abu Dhabi doesn’t see why that other great city of the UAE should get all the attention. Now, with plans to translate 100 books by famous thinkers into Arabic (not excluding Greenspan, Friedman and Keynes) it hopes to reclaim its status as the cultural lodestone of the Middle East. A close-up look at this wholly surreal (not holy) battle. > read more

Cold As Ice

The same hedge fund that’s expected to be scooped up by Blackstone today is considering the revival of a $1.1 billion bid for a packaged ice maker – even after Morgan Stanley seemed to pull the plug on the deal last autumn. But, after failing once, is there enough momentum to push this one through? (And, incidentally, what’s a hedge fund doing getting into ice?) > read more

Pearls From The Moodster

Risk cannot truly be gauged. Competition is narcissism. Oh, and that bonus…you didn’t deserve it. Just a handful of the many cursory observations from Moody’s (by its own admission, now measurers of the immeasurable) sent out in a recent note to clients, says the FT (which clearly enjoys poking fun at Moody’s as much as we do). Only this time, the ratings agency may actually have a point. > read more

Wheels: Risk Management

We put a hopped-up equities trader at the helm of the new Mercedes S63. Then we frantically activated its every last safety feature. > read more

How The Nimble Won

The aged David and Goliath story found a new corollary this past year as the world’s top hedge fund managers – not excluding the much-ballyhooed Renaissance Technologies – found themselves beat out by puny stock-pickers with fewer assets...but also fewer ways of getting caught under the subprime truck. > read more

Tricks Of The Trade

Wanna’ buy a big stake in a company without its meddlesome execs even knowing it? Forget the ol’ Hart-Scott-Rodino Act. Hedge funds are now stealthily scooping up quite a bit more than the $60 million threshold by back-dooring their purchases through a tidy little loophole. And guess who’s helping them? > read more

Venture: Fantasy Island

A haven for a recent migration of celebrities and billionaires (and even a few celebrity-billionaires) the Bahamas’ Harbour Island is the exclusive retreat for the reclusive man of means. Why you may want to buy into this island before there are no tracts left. > read more

Oil Field Shuffle

Oil fields and chess: they have a lot in common. Production from the world’s oil fields is now falling by about 4.5% a year. But, the research group run by the same man who won the Pulitzer for “The Prize” says that new production is expected to offset that. If it ever comes. The real lowdown on depletion rates, peak production and where oil prices are really headed. > read more

Retreats: Into The Wild

We all know how the West was won. But why? So you could one day own a piece of it, piker. > read more

Tombstone: Liftoff

The end of the Cold War put a big chill on the early-’90s defense industry, which was forced to consolidate amid shrinking Defense Department procurements. How Boeing nabbed a deal to bob and weave its way around what could have been a catastrophe. > read more

Watch List: Vintage Year

Having trouble landing one of last issue’s luxe debuts? Behold, five more hot prospects from the year’s watch fairs. > read more

Home Equity: Green Rooms

How eco-friendly buildings are growing like kudzu through the world’s luxury real-estate market — and turning principle into profit. > read more

How To Be A Billionaire

Forget Occam’s Razor. May we present to you Long or Short Capital’s take on the august and hallowed Greenspan technique. > read more

Liquidation: Not For Office Consumption

But perfect for later. Uncork history with these re-creations of timeless high-end spirits. > read more

Road Show: Blowout Round

Behold the 2008 luxury sedans — or how to go 150 mph without leaving the estate. > read more

Forex: What’s At Risk

The world's top foreign-exchange traders say their primo performers of emerging markets in 2007 are on the cusp of falling against the U.S. dollar in 2008, as economic growth slows and price swings intensify. So which currencies hang in the balance? They literally circle the globe. > read more

Commodity Heads Just Kept on Walking, Rising… and Rolling
By George Stein
> read more

Blue Sky: Air Force Three

It is Friday. Going somewhere after work for the weekend? May we suggest taking the ultra-private Boeing 747-8 VIP? It’s money, baby. > read more

SageCrest/ACG Skirmish Heats Up
By Teri Buhl
> read more

Alan Greenspan’s Job Interview
By Fred Gehm
> read more

Demystifying EMs

Emerging Managers. You may have heard of them, but have no idea what they do or how they might benefit your portfolio. William C. Thompson, Jr., New York City Comptroller, gives an explanation on how these experts work, plus you get a chance to meet a wide spectrum of them at World Research Group’s 2nd Annual Performance Focused Emerging Managers 2008 Conference. Register today and don’t forget to use your priority code, “TRADER.” > read more

Friday Levity: The Worst Video Game. Ever

We wish this were a joke. But it’s all too real. > read more

Fly On Wall, Ear To Door

Two weeks ago in the blood-red offices of Sir John Regal, CEO and Chairman of the Board of Inquisition Partners, a private equity fund with special interests in vulture investing and leveraged buyouts, Alan Greenspan underwent yet another interview for yet another cushy job. And we have the transcript for you. > read more

Tales From The Great Burial Reef. Literally

After four years of trading subprime mortgages, Jason Rew jettisoned his job at the investment bank Goldman Sachs and founded an off-shore business. But not the kind you think. > read more

Rise Of ‘Creative’ Capitalism?

Far be it from us to rain on the love parade that Bill Gates is no doubt whipping up in Davos today on ways the world’s rich might better harness lucrative methods of helping the world’s poor. Clearly, assisting those in need is always a good thing. But we wonder how Gates the Bleeding-Heart Philanthropist would have received his own message years ago when he first set out to be Gates the Bone-Crushing Software Tycoon? Would he have been as receptive then? > read more

Feel-good Trading Story of the Week

> read more

French Trader Was Forced to Work 30 Hours a Week

This funny take on the rogue trader story has been making the email & IM rounds on the Street. It’s by “Anonymous”...but we'd love to know who wrote it. > read more

Friday Levity: Rage Against The Latrine

What happens in the men’s room stays in the men’s room…right? Different strokes for different folks, but can we at least all agree on this? (We would even go so far as to apply this rule to the nettlesome George Michael-cum-Larry Craig snafus.) At the end of the day, we just prefer not to know about it, okay? Too bad not everybody else feels this way. And that’s apparently where the Minnesota Supreme Court comes in. > read more

Panic, Hysteria, Mayhem – Not An Entirely Bad Thing?

Getting cash out of the once-burgeoning derivatives markets of collateralized debt obligations these days is a lot like trying to squeeze blood from a stone (not that we ever understood that allegory meant, anyway). But in places where trading requires no appointment, markets are booming. Why traders at exchanges in Chicago, London, New York and Frankfurt never had it so good. > read more

Leah Goodman on CNBC

Many unanswered questions in the case of the trader scandal at SocGen, with Leah Goodman, Trader Monthly contributing editor and CNBC's Sue Herera. > read more
Keywords: Television Appearances

Joke of the Week

> read more

Should He Stay Or Should He Go?

Société Générale’s chairman and chief executive, Daniel Bouton, offered to resign after the revelation of his bank’s appalling trading losses. He was soundly rebuffed by his board. It turns out French politicians, however, are not quite so merciful. They’re out for blood and Bouton is persona non grata No. 1. A look at how many heads might roll (yes, it appears Monsieur Bouton may have company) before this saga can come to a close. > read more

Classless Society? Fat Chance

Víctor Vargas is a polo-playing high-flyer with six homes and a fleet of luxury jets. So you might expect him to be struggling in today's Venezuela, where President Hugo Chávez has vowed to build a society that erases the lines between the poor and the rich. Funny how that never quite works out the way it’s planned. > read more

Membership Has Its Privileges

Especially when you’re talking about Bubba’s inner circle. (We, of course, could only be referring to our ex-president of the United States and perhaps soon-to-be first husband, the indomitable Bill Clinton.) Who, it seems, in addition to doggedly running his charity, also likes to lend a hand now and then on the occasional, er, uranium deal. > read more

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