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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (6792)	9/29/1998 2:16:00 PM
From: Michael Sphar	Read Replies (1) \| Respond to of 9980

More LTCM related activity speculation: Tuesday September 29, 1:29 pm Eastern Time Some link Goldman's huge Eurodollar sale to LTCM By Apu Sikri NEW YORK, Sept 29 (Reuters) - Massive sales of Eurodollar futures by Goldman Sachs & Co. in three consecutive trading sessions have triggered market speculation that the investment bank is unwinding trading positions for Long-Term Capital Management L.P., the ailing hedge fund. Traders said Goldman sold about 6,500 of the each of the front four quarterly Eurodollar futures contracts on Tuesday morning, on top of about 6,000 contracts on Monday and 4,000 contracts on Friday. Officials at Goldman declined to comment on trades and referred calls to the firm's press office, which declined immediate comment. The four quarterly Eurodollar contracts mature in December 1998 and March, June and September 1999. Eurodollar futures now have monthly contracts extending six months out, but many financial institutions continue to deal in quarterly contracts. Goldman has not executed any offsetting trades either in the interest rate swaps market or in cash bonds, traders said. It has been a seller of Treasury bond futures and a buyer of deep in-the-money calls and puts, but those dealings may not be related to the Eurodollar futures deals, they said. Goldman has told market participants the selling in Eurodollars is for a customer and not for its own account, according to traders. Several traders, who declined to be identified, said they believed the dealing to be for Long-Term Capital, which has sold at least $5 billion in securities in the last four days in an attempt to reduce the leverage in its investments, according to bank officials. The hedge fund was rescued in a bail-out organized by 14 banks with supervision by the Federal Reserve Bank of New York last week. The banks provided the hedge fund, run by former Salomon Brothers vice-chairman John Meriwether, with $3.5 billion in equity capital. Goldman and Merrill Lynch & Co. took the lead in organizing the bailout, according to bankers. Traders suggested that Eurodollar futures could sink if the markets are disappointed with a widely expected 25 basis points cut in the Federal funds target. So any sale now may be aimed at stemming potential losses. The two-year Treasury note has priced in a full percentage point drop in the Fed funds rate, currently at 5.5 percent. The Federal Reserve is expected to make announcement on its monetary policy at about 1415 EDT (1815 GMT). Eurodollar futures are contracts based on short-term interest rates paid on dollar deposits held outside the United States. Effectively, they provide the benchmark short-term interest rate for financial institutions.

To: Henry Volquardsen who wrote (6792)	9/29/1998 9:53:00 PM
From: Lee	Read Replies (2) \| Respond to of 9980

Henry, "The world's financial system is over-exposed, over-extended, under-supervised, under-performing and in need of far-reaching reform," This quote is long cries from AG's comment about the sophistication of today's money flow which (to paraphrase Mr. Greenspan) "quickly moves to find the highest rate of return." I must ask, if it is so quick and efficient, why must it be bailed out? why is it losing money? why does it so often invest in industries that are already at world capacity? Cheers, Lee