Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (2023)	8/7/1999 11:04:00 AM
From: C.K. Houston	Read Replies (1) \| Respond to of 3536

Henry, Could this be the trigger? 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 in the market of a major default ... 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 ...[More] independent.co.uk Cheryl

To: Henry Volquardsen who wrote (2023)	8/7/1999 5:05:00 PM
From: Robert	Read Replies (1) \| Respond to of 3536

Henry et al. -- A bond trader friend of mine happened to mention to me that Ford Motor Company is issuing a bond ($100 mil) on which they are going to pay 15 basis points extra to the holders if they accept Merrill Lynch as the named originator; Ford is to guarantee the bond. My pal said that he has never seen this before and can't figure out what the heck Ford is doing. I guess trying to move something off of their balance sheet, so could this be derivatives related? Perhaps something blew up or is about to? As you are THE authority on the fixed income markets, I just know that you will be able to clear this up for me and educate me about the offering! <g> Anyhow, I look forward to getting any input from you and the other posters on the thread. TIA to all for your input on this matter. Regards, Robert