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.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (20291)	10/1/1998 4:33:00 PM
From: waldo	Read Replies (2) \| Respond to of 116753

CNBC just quoted Merril Lynch saying that they have an exposure of 2.083 billion in hedge funds and that 1.999 is collateralized (sp?). Exposure to LTCM is 1.4 billion and 700 million is broadly held. Now that wasn't too hard....how about the rest of the hot shots? W

To: Ahda who wrote (20291)	10/1/1998 6:47:00 PM
From: Alex	Read Replies (1) \| Respond to of 116753

Derivatives Collapse Rumour Unconfirmed rumours say that BT Merchant Bank will shortly file for Chapter 11 bankruptcy proceedings in the USA, relating to Asian derivative contracts that expire this month- remember that rumours can be true or false; if false, someone may be pursuing an ulterior motive. If true, the financial fallout could be significant! Bankers Trust Australia managing director Mr Rob Ferguson has denied claims the company's US parent might quit its local offshoot as a consequence of the fallout from its exposure to hedge funds [Oct 2] users.dircon.co.uk

To: Ahda who wrote (20291)	10/1/1998 7:32:00 PM
From: goldsnow	Respond to of 116753

Shaky outlook for the greenback The US$ seems likely to weaken as Asian interest rates recede sharply I F you are long, you are wrong. That's been the basic message that's been building up over the last week for many US dollar holders. In Asia, this was most clearly illustrated against the Singapore dollar, which rose past 1.70, and the Thai baht -- which sailed through 40. In Europe, one big beneficiary was the German mark, which last Friday rose to 1.6610, a level not seen since April 1997. Sterling, meanwhile, rose above 1.70 quite effortlessly to hit a 10-month high of 1.71 yesterday. <Picture: Currency fever> On the interest rate front too, things are looking up -- because interest rates continue to go down. Over the last four weeks, the cost of borrowing three-month baht offshore has fallen from almost 20 per cent to 13 per cent yesterday, while that for the Hongkong unit has almost halved -- from 15 per cent to 8 per cent. But before we get too carried away by all this rush of good news, the accompanying article is a reminder that it's early days yet, as far as economic recovery for the region goes. The bottomline is this: If the greenback's fortunes are doomed to sag, and Japan's locomotive powers are still very much in doubt, then Europe appears the obvious currency and investment destination of acceptable credit quality and size. Sterling may even have gotten a little too far, too fast. And, after a bit of post-election fuss and bother, the German mark, as proxy for the euro next year, appears to be a firm favourite as we enter the last quarter of 1998. * * * Two major financial market events last week signalled the very real possibility of a major change in financial market direction in the weeks and months ahead. If we are correct, one much-needed consequence of Asia's problem economies would be that the recent trend towards lower interest rates may just be sustainable. And, for forex markets, it may mean that the US dollar is no longer quite as muscle-bound. The outlook for Asian stock markets, however, is more complex -- given the severity of problems in the real economy. Both these events centred around the US Federal Reserve. In the first, Fed chairman Alan Greenspan last Wednesday gave the clearest hint in more than a year that the next direction for US interest rates would be down. By the time this column is read, it should have happened -- after the Fed's meeting yesterday - and maybe by as much as 50 basis points. By contrast the Europeans, led by the Germans, made it abundantly clear last week that they are in no mood to deflate in the run-up to the euro. Lower Fed fund rates may even be only the first salvo in a bigger game plan. One way to look at it is that the Fed bosses have read the economic tea leaves and decided it's time to prepare the ground for a gradual and orderly retreat on the American stock market front. Look at it another way: Some at the Fed fear that if they don't cut soon, or cut by only 0.25 per cent, then the Dow will dump -- which won't be good for the US dollar either. For example, one recent report revealed that analysts now expect that profits this quarter could decline 1.4 per cent for the companies that make up the blue-chip S&P 500 Index -- against the widely projected 10 per cent rise reported in early July. The second event also became public knowledge last Wednesday, when the Fed unprecedentedly organised the US$3.5 billion (S$5.9 billion) rescue of Long Term Capital Management -- a high-profile hedge fund run by Wall Street legend John Meriwether and two Nobel Prize winners. Coming as it does on the back of a string of other headline losses incurred by hedge funds from Russia to Latin America, the bombshell losses will at least mean they won't have the stomach to take any mega-bets against Asian markets for quite a while. In the worst case, some are already speculating that we've only seen the tip of the iceberg on the hedge-fund front. One big factor reinforcing US dollar weakness and lower interest rates over the last week was how hedge funds have been bailing out of long US dollar forex positions against, and overborrowed money market positions in, Asian currencies. * * * Here's what it all appears to come down to. Those who need to buy US dollars, or repay US dollar borrowings, can safely shade their orders lower. But those who have to sell, or sell out long positions in, US dollars against the Sing may well find it topping out at 1.7150 to 1.72. But those who want an alternative foreign currency to hold instead of the US dollar may want to work out levels at which to switch into the 11 constituent currencies of the euro. business-times.asia1.com.sg