For some actually relevant news, instead of market kneejerk reaction comments, we turn to the WSJ, whose Nick Timiraos points out an important inflection point, namely that Kyle Bass, one of the best hedge fund managers of his generations, may have turned moderately bullish on housing. To wit "A closely followed hedge fund manager known for correctly betting on the housing market’s collapse four years ago purchased a small stake in the nation’s largest mortgage insurance company in a bet that the housing market has neared bottom. J. Kyle Bass, portfolio manager at Dallas-based Hayman Capital Management LP, bought the 4.9% stake in MGIC Investment Corp, according to federal filings. He said on Monday the bet reflected his view that the housing market’s losses had largely been absorbed. “You can see that the pig has moved through the python in terms of U.S. housing losses,” he said. Shares of MGIC are about 10.2% higher in Monday afternoon trading, to $2.82." The Heyman Capital filing can be found here.
$1 Billion of Gold Bars Taken Delivery Of By Pension Fund Due to Risk of COMEX Default and ShortagesSubmitted by Tyler Durden on 04/18/2011 05:59 -0500
Concerns that the sovereign debt crisis may be entering a new phase and the risk of contagion has seen peripheral eurozone bonds fall sharply and the euro fall against major currencies and gold today. Sovereign debt risk, global inflation concerns, geopolitical risk, disappointing European earnings and concerns about Japan's coming reporting season have seen equities weaken and new record nominal highs for gold and silver (all time and 31 year). Greek bond yields have continued their relentless march higher and have risen above 14.07% (10 year) and Portuguese debt (10 year) has risen to a euro era record over 9.27%.Spanish and Irish debt are also under pressure this morning. Gold is increasingly being seen as the superior currency in a world of trillion dollar and euro deficits and bailouts. Indeed, the printing and electronic creation of billion and trillions of the major paper currencies is increasingly making gold and silver the currencies of last resort. One of the largest pension funds in the world, the University of Texas Investment Management Co (which manages the endowment for the Texas teachers pension fund), has realized this and has put 5% of the pension fund into gold bullion (see news). The fund has previously expressed concerns about the counter party risk in ETFs. However, the reason given for opting for taking delivery of 100 oz gold bars in a warehouse was that if the holders of just 5 percent of COMEX futures contracts opted to take delivery of the metal, there wouldn’t be enough to cover the demand leading to a COMEX default. The risk of a COMEX default increases by the day and appears to be moving from the realms of the “conspiracy theory” to that of “of course we knew it would happen, it stands to reason and was inevitable.” A COMEX default would have serious ramifications for the dollar and all fiat currencies as it would further erode trust in central banks, fiat currencies and today’s monetary system.
When Takahiro Mitani, Chairman of Japan's $1.4 trillion Government Pension Investment Fund (GPIF) expresses concern over his country's mounting public debt, you'd better pay attention...
When I wrote last week about the emerging problems in foreclosures, I opined that the problem could get much bigger and more complicated. Boy, has it ever. It was noted how quickly this had morphed from a potentially isolated processing problem at a single institution (GMAC) to an industry-wide disaster that may threaten the very concept of securitization. That would be a major problem since at the top of the bubble, it was estimated that nearly 80% of all credit came from securitization.That’s a hole that no fleet of Fed helicopters can fill. - Art Cashin
A look into the ZeroHedge vs. Illinois Teacher's Retirement Fund Spat, We still have some unanswered questions..Submitted by Reggie Middleton on 09/20/2010 14:04 -0500
Any readers who read the back and forth between Tyler and TRS should ask themselves, "But why didn't the Fund answer these important questions?". Hey, they may not be in a death spiral, but when you make what looks like desperate moves and your returns are spiraling at the same time your liabilities are soaring, all the while your risk is flying through the roof... One should expect a blogger or two to take notice, particularly those bloggers who can count.
The WSJ is out with a short piece about new rumblings coming from Japan's $1.43T public pension fund, Japan's Public Pension Weighs New Investments. If I may be so bold as to impersonate the Japan deflation-blogger Mish for a moment, let's take a look at a few of the dynamics at play as reported by the WSJ. I'll provide some commentary along the way.
Is Illinois Worse Off Than Greece with a Little LTCM and Bear Stearns Thrown In? In Case You Didn’t Know…Submitted by Reggie Middleton on 08/23/2010 14:10 -0500
What does Illinois have in common with Bear Stearns, Ambac Financial, LTCM and Greece? Come on fellas, let's roll the dice. I've got some pension money in case I come up snake eyes...
Was Fabrice Tourre Cheating On His Girlfriend? Are CDOs Really Nothing More Than "Intellectual Masturbation"?Submitted by Tyler Durden on 04/24/2010 23:00 -0500
Zero Hedge is currently going through the 100 or so pages of just released Goldman emails that disclose in excruciating detail the events from late 2006 to late 2007 occurring in Goldman's mortgage trading business. We will have a lot more to say on this tomorrow, suffice to say that we were pleasantly surprised that C-BASS, which we uncovered recently may be implicated in the Goldman SEC fraud scandal, is again involved. We also feel bad for Harvard and MS Prop, and a little better for Hayman Capital. Stay tuned. In the meantime, we will take a brief detour into the financial yellow pages, as we focus on the curious case of Fabrice Tourre, who once again plays a prominent role in today's email discovery. The first thing that caught our attention is the original "Fab Fab" email, finally reproduced in its entirety. One tangent that may be relevant to gleaning some more insight into the character of the "fabulous" 27 year-old mortgage god, is that at the time he penned his email to girlfriend (#1), then Goldman co-worker, Marine Serres, he was likely also with girlfriend (#2) Fatiha Bouktouche, a Columbia University post Doc, to whom he may have been disclosing proprietary Goldman holdings and trades. Who knows to whom, when or how Fatiha may have leaked insider trades whispered to her by Fabrice, and who knows what CDO trades Marine was pitching to the retarded (and soon to be bankrupt) European banks gobbling up everything Goldman would sell them, structured and originated by her boyfriend.
An interesting opinion from Karl Denninger that I missed when it came out. Hat tip to reader Colin for pointing out. In a nutshell Zero Hedge disagrees with Karl's conclusion: his argument of reflexivity in pricing feeding collateral calls is an oversimplifcation.
Unlike the previous letter, this one actually is worth your time. Kyle Bass, the one man Spartan who took on the Xerxian hordes of sub-prime with his Hayman Capital (which has returned 6% in 2008, 9% in 2009 and is up 340% since inception), and won, shares some very valuable insight. Must Read.