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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: epicure who wrote (28932)	9/25/1998 2:00:00 PM
From: bobby beara	Read Replies (2) \| Respond to of 94695

X, I like steel, too. We are transitioning from a period of paper to hard assets. Gold is more volitile than steel and has more potential to be irrationally priced - YAHOO! -g- bb

To: epicure who wrote (28932)	9/26/1998 5:27:00 AM
From: flickerful	Read Replies (2) \| Respond to of 94695

london times... Markets fear LTCM bail-out may prove to be tip of iceberg Hedge fund rescue hits dollar September 26 1998 BY ALASDAIR MURRAY AND OLIVER AUGUST WESTERN markets suffered a renewed crisis of confidence yesterday as the £2.2 billion bail-out of the Long Term Credit Management hedge fund heightened fears about the health of the banking system. The dollar slumped on the foreign exchanges and European banking stocks wilted on concern that the LTCM losses may prove to be the tip of iceberg with other hedge funds destined to go under. Robert Rubin, US Treasury Secretary, was forced to publicly state that the US banking system is sound while Hans Tietmeyer, President of the Bundesbank, also sought to calm nerves saying there was no need for a "general panic". Market fears, however, were fanned by the absence of solid information on these funds and their widespread use of derivative instruments. The US dollar slipped to a 17-month low against the mark as traders gambled that the LTCM bail-out made an interest rate cut more likely next week. The dollar also fell to a ten-month low against the pound before recovering to close a cent lower at $1.7025. On the stock markets, banking shares bore the brunt of the losses as Dresdner Bank followed the lead of UBS to reveal it was making a $145 million (£85 million) provision to cover LTCM losses. Deutsche Bank also revealed that it had contributed $300 million to the rescue fund, although it has no direct exposure to the fund. In Frankfurt Dresdner shares closed down more than 5 per cent and contributed to a fall of 0.58 per cent in the DAX index. Paris banking shares fared worse with Paribas and Banque National de Paris suffering losses of moer than 7.5 per cent as the CAC-40 index slipped 2 per cent. London shares were also hard hit with Barclays falling 6.76 per cent despite its claims that it would suffer no direct losses from the LTCB bail-out. The FTSE 100 index closed down 106.6 at 5061.0. Michael Foot, head of financial supervision at the Financial Services Authority, confirmed that the FSA is talking to UK banks over the extent of their hedge fund exposure but dismissed calls for a "knee-jerk" tightening of regulation. However, the worst losses in Europe were stemmed by a bounce-back on Wall Street as analysts concluded that the bail-out had probably contained the worst damage. Stephen Bronte, of Stephen Bronte Partners, a hedge fund, said: "There were hundreds of firms doing the same trade LTCM was doing and could equally have lost just as much. But LTCM was the only one that was so big that if it went under it could take out some of their major counterparties on Wall Street by defaulting." However, Paul Volcker, the former Chairman of the Federal Reserve, joined in criticism of the Fed-led bail-out which some see as only profiting Wall Street insiders. "Why should the weight of the federal government be brought to bear to help out a private investor? It's not a bank," he said. The paucity of information of hedge fund activities has made investors especially nervous. Research suggests that there may be as many as 3,000 funds with about $350 billion of invested funds. Their actual exposure, however, is expected to be considerably higher due to the common practice of using leverage. Many of the funds are based in tax havens and have resisted attempts to force them to supply better information. In a recent report on the funds, the International Monetary Fund called for some "limited measures" to strengthen supervision. However, Alan Greenspan, chairman of the Federal Reserve, has maintained that the funds are adequately regulated by their own investors.