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Mystery Buyer Of US Treasurys Revealed

Tyler Durden's picture




 

Back in March 2014, we first revealed something quite stunning: a new, seemingly ravenous, and completely unexpected buyer of US Treasurys had emerged in the face of "Belgium" which was buying tens of billions in US paper at a weekly clip, without any explanation.

One year later, this website first confirmed that the identity of the "Belgian" buyer was none other than China, which had been using Belgian-based clearer Euroclear as an offshore venue for its bond purchases, and which starting in March 2015 had commenced dumping the US paper it accumulated so dramatically in 2013 and 2014, in advance of what has become the biggest story of the summer: China's liquidation of its FX reserves, read US Treasury holdings, in defense of its devaluing currency.

And while we knew that China was selling - and following the record selling of FX reserves in August, so does everyone else - an even more interesting question emerged: who is buying?

Thanks to the WSJ we now have the answer: "A little-known New York hedge fund run by a former Yale University math whiz has been buying tens of billions of dollars of U.S. Treasury debt at recent auctions, drawing attention from the Treasury Department and Wall Street."

The hedge fund in question, Jeffrey Talpins' Element Capital Management, which according to the WSJ has become "the largest purchaser in dozens of government-bond auctions over the past 10 months, people familiar with the matter said. The buying is part of an apparent effort by the fund to use borrowed money to exploit small inefficiencies in the world’s most liquid securities market, a strategy that is delivering sizable profits, said people close to the matter."

For those unfamiliar, and Talpins certainly is not a household hedge fund name, "Mr. Talpins is an intense and reserved trader formerly at Citigroup Inc. and Goldman Sachs Group Inc. He is known for a tenacious style that can grate on rivals and once tested the patience of former Federal Reserve Chairman Ben Bernanke."

According to the NYT, in 2005, Trader Monthly named Mr. Talpins one of the top 30 traders under 30, when he was still an employee of Vega Asset management. "Youth is not wasted on this crop, any of whom could be a billionaire by 40,” the magazine said. “Or, then again, they could be belly up and bust."

Back in 2010 the FT profiled Element Capital, then at just $1.5 billion, saying that fixed-income relative value trading, "the hedge fund strategy pioneered – and made notorious – by Long Term Capital Management is returning to prominence amid one of its most successful years yet." It added that "fixed-income relative value trading – shunned by investors after the collapse of LTCM in 1998 – has been one of the industry’s few outperformers this year, thanks to massive pricing anomalies caused by fiscal stimulus packages and unconventional central bank monetary policies around the world."

As of the end of June, Element Capital, a $1.5bn relative value fund run by Jeffrey Talpins, was up 10.75 per cent. High returns have been driven by government bond markets flush with arbitrage opportunities, managers said.

By 2014, Element had grown substantially, and according to a Bloomberg note, last July it attracted the head of North America sales at RBS, Richard Tang: "Tang, who has spent almost two decades at the bank, is one of 16 members of the Treasury Borrowing Advisory Committee that the U.S. government consults with on its debt sales. His departure was confirmed by Sarah Lukashok, a Stamford, Connecticut-based spokeswoman for Britain’s largest state-owned lender. He will be joining New York-based Element Capital, which manages about $4.3 billion in its macro fund, said the people, who asked not to be named because the move wasn’t public."

In other words, Element is not only growing its AUM exponentially, it now also employs a member of the TBAC, which we profiled in November 2011 as "The Supercommittee That Really Runs America."

Not only that, but according to a November 2014 presentation to the Wharton Investment and Trading Group, the fund, then already at a $5 billion AUM, boasting it "has delivered exceptional returns to investors over its 9+ year track record, with annualized performance greater than 20% and a Sharpe ratio greater than 2."

Quite an impressive performance for a smallish relative-value hedge fund, one that begs the question: just how much leverage is involved (an important question for later).

So why is this relatively obscrue hedge fund in the news? Well, it appears that the mystery buyer of all China's bond sales is none other than Element:

Element has been the largest bidder in many of the 62 Treasury note and bond auctions between last November and July, these people said. At many recent auctions, some of which involved sales of more than $30 billion of debt, Element purchased about 10% of the issue, these people said. That is an unusually large figure, analysts said.

And while Element may have grown substantially, some wonder how its most recent AUM of $6 billion can sustain this ravenous buying spreed.

Element’s activity has raised questions because the cumulative purchases far exceed the hedge fund’s $6 billion in assets under management. Treasury officials, who frequently meet with large auction participants, have asked Element about its activity, said someone close to the matter.

 

“Their buying is eyebrow-raising,” said a trader who once worked for a firm that deals in government securities and witnessed Element’s bidding. These primary dealers often know the identity of other auction bidders. Element “never shared its strategy, but we often asked,” the trader said.

And this is where it gets tricky, because as the WSJ admits, the US Treasury "likes to know who is buying its bonds and why, partly because it prefers long-term holders such as pension funds, insurance companies and central banks. Treasury officials fear purchases by trading-oriented funds could result in sales that increase market swings and potentially drive up borrowing costs.

“If you’re issuing debt, your preference is those ‘sticky investors,’” said Scott Skyrm, a managing director at Wedbush Securities.

Which brings us back to the "how much leverage is involved" question, because one bad day for Element and suddenly the fund could be forced to unwind its giant Treasury book into what is already a very illiquid market.

Which leads to the question of just what is Element's strategy: "Element had been shorting, or betting against, bonds in anticipation of higher interest rates but has been exiting from that wager, according to someone close to the matter. That is one reason the fund has been a big buyer of Treasurys lately."

It appears that is not only macro considerations that drive Element's trading strategy, but also market mispricings between the primary and secondary market: "people who have worked with the firm or are close to Mr. Talpins said there is another reason: Element is among the last to embrace “bond-auction strategies,” trading maneuvers that have become less popular since the financial crisis."

These trades aim to take advantage of the effects of supply and demand in the $12.8 trillion Treasury market. Demand for these bonds often fluctuates based on factors including investor perceptions of economic growth and market risk, while supply can be affected by regular auctions of different-maturity Treasury securities. A burst of new supply tends to slightly depress prices for short periods, sometimes for less than an hour.

Element's auction arbing strategy is relatively simple: "In the past, Wall Street dealers and hedge funds scored profits shorting “when-issued” bonds. These are contracts conferring the right to purchase Treasury securities when they are sold days later at auction. Then, these traders would buy bonds during Treasury auctions at the slightly lower prices and use these newly purchased bonds to close out their short sales."

The difference between the higher price at which they sold the Treasurys and the lower price they paid at auction was their profit.

Which incidentally explains our "discovery" earlier this summer why Treasury auctions that took place at a time when the OTR was trading "special" led to dramatic outperformance during the actual auction: it was hedge funds like Element that did all in their power to squeeze the market and send the high yield deep inside the When Issued.

The reason why Element has become the dominant player in this market is because most of its competitors disappeared after 2008:

After the 2008 financial crisis, bank traders pulled back as regulators discouraged trading risks. Some hedge funds also began shying away from bond-auction strategies. Wall Street banks have significantly cut back their lending to hedge funds.

 

The pullback by rivals has left Element with a large presence in bond auctions to complement strategies such as in foreign-currency derivatives, people close to the matter said. In 2008, the firm gained 35%, these people say, even as financial markets crumbled. The next year, Element was up 79%. Last year it rose just 2.9%.

And with nobody left to compete, and the Treasury market as illiquid as it is, it meant huge potential profits for Element: sure enough, the hedge fund "was up 18.5% through July of this year, an investor said, beating most hedge funds and overall markets. Some recent gains came from bullish wagers on the U.S. dollar, according to the person."

So can anything go wrong with this strategy? Yes, plenty. 

Once in a while, the prices of bonds being auctioned jump, rather than fall, for reasons such as bad economic news that prompts an investor flight to safety. Hedges sometimes don’t work out. And the strategy relies on inexpensive borrowing because each trade usually yields minimal profits.

 

In the 1990s, hedge fund Long Term Capital Management used leverage to profit from small discrepancies in the Treasury market before a market reversal swamped the firm. LTCM used much more leverage than Element does.

Only problem is nobody knows just how much more leverage, and whether Element's leverage isn't slowly but surely creeping up to Merton and Merrywether levels.

Still, luminaries such as Yale professor Robert Schiller vouch for Talpins:

Mr. Talpins graduated in 1997 from Yale, where he was a research assistant for Robert Shiller, the Yale economist who later won a Nobel prize in economics. In a 1996 letter, Mr. Shiller wrote that in terms of overall performance, he “put Jeffrey first out of the 52 Yale undergraduates” who attended his course Economics 252, Finance, Theory and Application.

 

“I thought he was particularly bright,” recalls Prof. Shiller.

Others, however, were less than enthused about Talpins. Such as former Fed chairman Ben Bernanke:

A year or so ago, Mr. Talpins was among 20 investors invited by a Wall Street firm to a private meeting with Mr. Bernanke, after his departure from the Fed. Mr. Talpins peppered Mr. Bernanke with about 10 successive questions, according to several people in the room.

 

Mr. Talpins elicited some detailed answers, such as who is in the room during interest-rate discussions. But he also asked questions that exasperated some investors because they seemed irrelevant. Mr. Bernanke looked increasingly weary under Mr. Talpins’s barrage, one participant said. “Jeff was persistent and it got a little uncomfortable,” said another participant. “It was like, ‘Dude, let it go.’”

But the biggest risk by far is that now that the "mystery buyers" has been exposed, it won't take long for the other, much bigger players - i.e., all the central banks who have been desperate to push yields lower to "confirm" the self-fulfilling narrative that the economy, and inflation, are growing - to inflict the proverbial "max pain" upon Element. In fact, if Talpins is indeed very long TSYs, and has lot of leverage embedded in the trade, one may expect a concerted shorting effort to find out just how much leverage is incorporate in the trades, and push it to the point of breaking. After all, hedge funds exposed with massive positions rarely survive an onslaught by their peers who seek to do just that - inflict "max pain" (see Ackman and Herbalife).

If so, China's selling of TSYs may very soon inflict precisely the kind of damage on US paper not because it is selling, but because the biggest "mystery" buyer of US paper has just been revealed and whose continued ability to keep buying unimpeded is now suddenly very much in question.

What's worse, if the result of a coordinated attack on Talpins leads to an LTCM-type blow up, hang on to your hats because the recent volatility in the equity market will be nothing compared to what is coming to the MOVE, TYVIX and US Treasurys...

 

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Tue, 09/08/2015 - 08:59 | 6521979 VinceFostersGhost
VinceFostersGhost's picture

 

 

a former Yale University math whiz

 

Do we know if he has any affiliation with Skull and Bones?

Tue, 09/08/2015 - 09:09 | 6522037 Argenta
Argenta's picture

A glaring example of what counts as math these days, and who's a whiz at it, lol.  If a math genius loves US Debt, so should you!

-Argenta

Tue, 09/08/2015 - 10:28 | 6522361 Irishcyclist
Irishcyclist's picture

Amen.

 

maths whizz my arse.

Tue, 09/08/2015 - 11:26 | 6522562 VinceFostersGhost
VinceFostersGhost's picture

 

 

Compared to all our youth learning Common Core math.....everyone is a math whiz.

Tue, 09/08/2015 - 12:13 | 6522719 atomicwasted
atomicwasted's picture

Non sequitur.  Math is just math.  It doesn't "love" or "hate" anything, it's just algorithms.  One can question the service to which this math is being placed, and the assumptions behind it, particularly in light of the LTCM blowup.  But math works regardless if you are a gold bug, or a Keynesian, or a Soviet, or ISIS.  It's just math.

Tue, 09/08/2015 - 13:48 | 6523048 Argenta
Argenta's picture

Sure.  Until math is no longer "math", but "opinions" and "feelings".

-Argenta

Tue, 09/08/2015 - 16:17 | 6523773 Booked
Booked's picture

We're going to find out how feeble is the MATH when we don't pay any attention to the PATH.  The road to Hell, truly, is paved with good intentions!!  Why is it so fucking hard to recognize the road to Hell?

Tue, 09/08/2015 - 09:09 | 6522041 post turtle saver
post turtle saver's picture

"... in defense of its devaluing currency."

c'mon, get with the program... the Chinese want, no *need* the yuan to go down in value... the only thing they're defending are bad assets by propping them up with the sale of stuff they know people will buy (UST)... I'm starting to wonder if the submitters were even *alive* in 2009, a popped bubble is a popped bubble and they and the people affected by them are going to behave the same way...

Tue, 09/08/2015 - 09:25 | 6522124 Uchtdorf
Uchtdorf's picture

Do you think it will get to the point that China will need to sell their PMs to prop up their economy?

Tue, 09/08/2015 - 09:40 | 6522181 Paveway IV
Paveway IV's picture

Judging by the last seven thousand years of Chinese history... I would have to say unequivocally NO

Tue, 09/08/2015 - 09:46 | 6522203 Uchtdorf
Uchtdorf's picture

That's what I think, and just think of the implications.

Strong hearts and hands, my ZH brothers and sisters!

Tue, 09/08/2015 - 09:14 | 6522062 tarsubil
tarsubil's picture

I'd hate to be him when the big day comes. The look on his face will be priceless.

https://youtu.be/_XXls7ax9lA

Tue, 09/08/2015 - 09:53 | 6522238 Urban Redneck
Urban Redneck's picture

I would be more concerned about any affiliation with Myron Scholes than Skull and Bones.  Isn't causing two financial crises already enough?

Tue, 09/08/2015 - 13:01 | 6522890 ZH Snob
ZH Snob's picture

jeffrey figures:

if they were forced to save LTCM then I can grab these short-term profits and let the rest of the world worry about the risk.

Tue, 09/08/2015 - 14:35 | 6523239 Macon Richardson
Macon Richardson's picture

In order to join Skull & Bones it is a requirement that you must take your shoes off to count to twenty.

Tue, 09/08/2015 - 15:24 | 6523522 SILVERGEDDON
SILVERGEDDON's picture

VFG - I dunno about the littl boy's club, but he is definitely a member of the weasel rat faced pharma doped wife owners club. 

Tue, 09/08/2015 - 19:52 | 6524549 PlayMoney
PlayMoney's picture

LTCM.......part deaux

Tue, 09/08/2015 - 08:59 | 6521984 thegazzman
thegazzman's picture

>Element's activity has raised questions because the cumulative purchases far exceed the hedge fund's $6 billion in assets under management. Treasury officials, who frequently meet with large auction participants, have asked Element about its activity, said someone close to the matter.

yellen asked them to continue buying, no doubt

Tue, 09/08/2015 - 08:59 | 6521985 johnnymustardseed
johnnymustardseed's picture

Smoke and Mirrors

Tue, 09/08/2015 - 09:00 | 6521989 LawsofPhysics
LawsofPhysics's picture

Bah ha ha ha ha!!!

You cannot make this shit up, oh that's rich...

How do these finance fuckers take themselves so seriously?  execute all these fuckers already.

LOL!!!

Tue, 09/08/2015 - 10:07 | 6522281 Jethro
Jethro's picture

Because when they look down on us, they're standing on their wallets.

Tue, 09/08/2015 - 09:00 | 6521990 lordbyroniv
lordbyroniv's picture

Front running genius.

Tue, 09/08/2015 - 09:00 | 6521993 Impoverished Ps...
Impoverished Psychologist's picture

So its another scam to cream of 0.1% off the top on trades worth billions - still rich pickings if you're in the club.

 

Tue, 09/08/2015 - 09:22 | 6522101 HungryPorkChop
HungryPorkChop's picture

Now they have found yet another 'mystery' buyer should we start speculating on who is the 'mystery' financer behind all of these large bond purchases?  

Rob Kirby recently stated they already started stealth QE.  Hmmmm...

Tue, 09/08/2015 - 09:03 | 6522002 1stepcloser
1stepcloser's picture

that's a murder-suicide waiting to happen

Tue, 09/08/2015 - 09:03 | 6522004 Mae Kadoodie
Mae Kadoodie's picture

May have to change his name to Talespins.

Tue, 09/08/2015 - 09:04 | 6522006 youngman
youngman's picture

Oh goodie...a new game in the casino

Tue, 09/08/2015 - 09:05 | 6522013 ToSoft4Truth
ToSoft4Truth's picture

I don't like the Horse-Face look.

Tue, 09/08/2015 - 09:20 | 6522095 Infinite QE
Infinite QE's picture

It's the inbred zio look.

Tue, 09/08/2015 - 12:58 | 6522879 Head_Shots_Work
Head_Shots_Work's picture

Gee - the boy needs to take some lessons from Sage Kelly. 

Tue, 09/08/2015 - 09:05 | 6522015 Pliskin
Pliskin's picture

Jeffrey Talpins of Element Capital and his horse

 

/ fixed

Tue, 09/08/2015 - 09:12 | 6522031 withglee
withglee's picture

Can we ever expect to adopt a properly managed MOE process when purposefully mismanaged classical processes provide such lavish opportunities for theft with no risk of punishment?

Tue, 09/08/2015 - 09:08 | 6522032 Sir SpeaksALot
Sir SpeaksALot's picture

he s just a face, how the hell can anyone think such a young lad got up there by himself.

Tue, 09/08/2015 - 09:21 | 6522090 SillySalesmanQu...
SillySalesmanQuestion's picture

The telltale fact, "he was an ex- Goldman Sachs trader."
The Squid strikes again...

Tue, 09/08/2015 - 09:09 | 6522040 gcjohns1971
gcjohns1971's picture

What can't you buy when given CB money at a lower rate than the purchased T-Bill's coupon?

Tue, 09/08/2015 - 09:10 | 6522042 Crocodile
Crocodile's picture

Animals Gone Wild; eat each other for the good of the nation & world.

Tue, 09/08/2015 - 09:11 | 6522046 Seasmoke
Seasmoke's picture

He should buy physical Gold before he gets blown up.

Tue, 09/08/2015 - 12:18 | 6522739 azusgm
azusgm's picture

When the markets got into the liquidity trap in 2008, gold was the pretty much the most liquid asset so it was sold, sold, sold to settle accounts. Spot gold lost about 20% in spot value because of distressed selling.

Tue, 09/08/2015 - 09:15 | 6522056 Volkodav
Volkodav's picture

maybe the real money is hers?

 

Tue, 09/08/2015 - 09:15 | 6522066 turtle
turtle's picture

Sounds like a cross between Dick Fuld and LTCM... what could go wrong?

 

Tue, 09/08/2015 - 09:15 | 6522067 Duc888
Duc888's picture

 

 

Belgium is pissed.

Tue, 09/08/2015 - 09:17 | 6522076 MWizard
MWizard's picture

How to be happy despite takind an investment loss https://www.youtube.com/watch?v=0T-BH8-yBmU

Tue, 09/08/2015 - 09:19 | 6522085 gcjohns1971
gcjohns1971's picture

This article makes no sense.

It says that Talperin is buying the Chinese and Russian Forex Reserves...presumably using borrowed money.

 

Just about any fiat, borrowed money he used would result in USD FX landing back in China's or Russia's hands.  Meaning that the Russian and Chinese CB's would have, at the end of the day, done NOTHING...likely at a loss.

 

What ARE THEY OFFERING TO THE RUSSIANS/CHINESE IN PAYMENT????????

(Because whatever it is...it should be rising in price so long as this is going on!!!)

Tue, 09/08/2015 - 09:22 | 6522104 redd_green
redd_green's picture

Cheese.  Lots of cheese.   Word around the campfire is that Talperin cornered the  American cheese market and is using that as collateral.

Tue, 09/08/2015 - 10:35 | 6522378 pods
pods's picture

So could one call him the Pope of Cheese?

Tue, 09/08/2015 - 11:06 | 6522488 Almost Solvent
Almost Solvent's picture

I swear I've heard of a "Cheese" Pope somewhere along the way . . . 

Tue, 09/08/2015 - 09:19 | 6522091 redd_green
redd_green's picture

A hedge fund run by a Yale math wiz.  What (LTCM) could (LTCM) go (LTCM) wrong? (LTCM)

Tue, 09/08/2015 - 09:40 | 6522180 Grinder74
Grinder74's picture

What is this LTCM?  Is it one of those codes the kids use like POMS, LOL, ICYMI, LMFAO?  /s

Tue, 09/08/2015 - 09:51 | 6522227 optimator
optimator's picture

Long Term Capitol Management, look them up.  Smartest people, best computer algos.  Had to get bailed out of course, and long gone.

Tue, 09/08/2015 - 10:27 | 6522354 venturen
venturen's picture

/Sarc look it up

Tue, 09/08/2015 - 11:08 | 6522493 azusgm
azusgm's picture

Plenty of MIT whizzes too. Here's the classic video of Eric Rosenfeld's explanation of LTCM's strategy and how it fell apart.

Tue, 09/08/2015 - 11:50 | 6522640 azusgm
azusgm's picture

Oops. Here's the link to the video of Eric Rosenfeld's talk at MIT.

 

http://video.mit.edu/watch/eric-rosenfeld-15437-presentation-21909-3771/

Tue, 09/08/2015 - 13:15 | 6522921 fallout11
fallout11's picture

I remember Rosenfeld. Proof that they can make mistakes, too.

Tue, 09/08/2015 - 09:20 | 6522097 phoolish
phoolish's picture

Yeah I'm sure.  A young hedge fund manager just happenes to be able to buy $100 Billion of bonds in a month.

 

 

Tue, 09/08/2015 - 09:25 | 6522122 VinceFostersGhost
VinceFostersGhost's picture

 

 

Anything is possible.....but not probable.

Tue, 09/08/2015 - 09:25 | 6522119 Evan Wilson
Evan Wilson's picture

Anyone want to guess how long it will be before they have a LTCM type of implosion and need to be bailed out?

Tue, 09/08/2015 - 09:47 | 6522209 Quinvarius
Quinvarius's picture

No.  But I will guess it is 9 points down on thr 30 year from here.

Tue, 09/08/2015 - 09:25 | 6522121 peterk
peterk's picture

its ludicous how they report the  funds "strategy" as being something that only the top  understand. its simple.. there SCALPING the  bond market with huge leverage.

Scalpers  NEVER make money.

An accident waiting to happen.

Tue, 09/08/2015 - 09:38 | 6522169 Arthur Schopenhauer
Arthur Schopenhauer's picture

This fund has been making an average of 20% every year since 2005. How you been doin'?

Tue, 09/08/2015 - 11:48 | 6522635 Blankenstein
Blankenstein's picture

VIrtu has only one losing day in 6 years.  I'm sure it's just because they are real smart.  How you been doin'?

 

http://www.zerohedge.com/news/2015-04-16/virtu-explains-why-it-lost-mone...

Tue, 09/08/2015 - 09:27 | 6522132 prefan4200
prefan4200's picture

He may be a hedge fund shit, but Talpins got under Bernanke's skin, so he's not all bad.  I really like that he peppered Bernanke with questions and made him uncomfortable.  Fuck Bernanke.

Tue, 09/08/2015 - 09:27 | 6522133 22winmag
22winmag's picture

Maybe this Ivy-league buttplug is on to something.

 

He will have cornered the market in toilet paper when the "The Day" comes.

Tue, 09/08/2015 - 09:28 | 6522138 BadDog
BadDog's picture

That hedge fund has just had a big bullseye painted on it.  Batter up.

Tue, 09/08/2015 - 09:28 | 6522139 RaceToTheBottom
RaceToTheBottom's picture

Easy to be agressive when your risk is backstopped by an uncle who screws your grandchildren....

Tue, 09/08/2015 - 09:35 | 6522157 Arthur Schopenhauer
Arthur Schopenhauer's picture

"Element is closed to new investments. When open it has required a $50 million minimum investment".

Well howdy do! The next time he opens up his fund to new investors, I'll just call him up and give him $500 million of my dollars to invest in my behalf.

Tue, 09/08/2015 - 09:49 | 6522168 NuYawkFrankie
NuYawkFrankie's picture

If you think she's bad - take at look at Mrs Nutt&Yahoo

http://www.dailyslave.com/wp-content/uploads/2014/03/saranetanyahu.jpg

Tue, 09/08/2015 - 09:40 | 6522184 Quinvarius
Quinvarius's picture

What a complete dipshit.  The reason he owns so much is because he is stuck and doubling down.  He just can't get out.  He is not taking advantage of any inefficencies.

Tue, 09/08/2015 - 09:54 | 6522214 Arthur Schopenhauer
Arthur Schopenhauer's picture

He doesn't own these treasuries any longer than a few seconds.

He's the epitome of a High Frequency Trader, except he's arbitraging on spreads in long term debt.

Tue, 09/08/2015 - 10:02 | 6522262 Quinvarius
Quinvarius's picture

For his sake, I hope that is true.  But I don't believe a thing these guys say.  They all claim to be super winners until the day they admit everything is gone.

Tue, 09/08/2015 - 13:47 | 6523044 Benjamin123
Benjamin123's picture

To start with, he does not have that kind of money. He is an employee managing money. A straw buyer.

Tue, 09/08/2015 - 09:47 | 6522205 Grinder74
Grinder74's picture

With a wife like that, who needs lights or windows in their bedroom?

Tue, 09/08/2015 - 09:47 | 6522208 khnum
khnum's picture

mathematics might meet ballistics after a few rate rises

Tue, 09/08/2015 - 09:50 | 6522221 Miss Expectations
Miss Expectations's picture

Talpins is on the Board of Trustees of the Harlem Children's Zone. 

The Promise Neighborhoods program is overseen by the U.S. Department of Education and provides federal funding to distressed communities to help them build cradle-to-career pipelines with high-quality, data-driven educational, community, health, and social services to support children and families and significantly improve their outcomes.  Since its launch, more than 850 applications for funding have been submitted from 48 states, the District of Columbia, American Samoa, and Puerto Rico.  In total, over $200 million in planning and implementation grants has been awarded to 48 communities in 24 states and DC. [...] Promise Neighborhoods is just one of a cluster of anti-poverty initiatives that the Children's Zone® has helped inspire.  In 2010, the Obama administration also launched the Choice Neighborhoods program under the Department of Housing and Urban Development (HUD). Choice Neighborhoods focuses on revitalizing public and HUD-assisted housing to promote economically sustainable, mixed-income communities. And, in January 2014, President Obama announced a new Promise Zones Initiative to help create jobs and increase economic security in 20 communities through greater access to resources and strong federal partnerships with local business and community leaders.  Of the first five Zones selected, three are also Promise Neighborhood implementation grantees; another eight Zones were announced in April 2015.
Spreading the Model, Leading the Nation | Harlem Children’s Zone
Tue, 09/08/2015 - 09:50 | 6522224 large_wooden_badger
large_wooden_badger's picture

Somewhere under that black suit is a blood funnel...

Tue, 09/08/2015 - 09:50 | 6522225 Soul Glow
Soul Glow's picture

Talpins is probably a Scull and Bones cocksucker.

Tue, 09/08/2015 - 09:52 | 6522234 KuriousKat
KuriousKat's picture

said he bought  10 percent..so wtf who bought the other 90 percent?  He used methods abandoned buy all the smart big shots..he pissed off Bernanke ..God Bless him..His teacher liked him..fK this is the all american kid..and he gave the Chinese something back..Who the fk cares what the treasury dept thinks..they want pensions to hold on to worthless securities for the long haul? Give this guy a medal for doing his homework..He made  that money the old fashioned way..he earned it..a steady trickle of nickle and dimes..lol...we have a sam walton here..I say go for it..

Tue, 09/08/2015 - 09:54 | 6522242 Invinciblehandaxe
Invinciblehandaxe's picture

with a wife like he has I would not even want all the millions he earns

Tue, 09/08/2015 - 10:04 | 6522268 Panic Mode
Panic Mode's picture

Thank you zerohedge, you really make me appreciate my wife.

Tue, 09/08/2015 - 10:00 | 6522255 sandhillexit
sandhillexit's picture

Our government no longer borrows from a government with 1 bln people behind it...no, it borrows from a guy who is lending borrowed money....and he learned it all at CITI....whew, feel better already. Maybe he borrows from Uncle Sheldon, who is now up to $38 bln.   That covers one refunding, right? We are in friendly, steady hands, America.

Tue, 09/08/2015 - 10:02 | 6522256 Panic Mode
Panic Mode's picture

It's true. Billionaires really own ugly things. Thank you Zerohedge http://www.zerohedge.com/news/2015-07-25/presenting-most-ridiculous-things-ever-bought-billionaires

Tue, 09/08/2015 - 10:06 | 6522277 Dapper Dan
Dapper Dan's picture

arbitrage:

 

Arbitrage is a risk-free way of making money by exploiting the difference between the price of a given good on two different markets—it’s the proverbial free lunch you were told doesn’t exist. In this equation, the undervalued good in question is hog meat, and McDonald’s exploits the value differential between pork’s cash price on the commodities market and in the Quick-Service Restaurant market. If you ignore the fact that this is, by definition, not arbitrage because the McRib is a value-added product, and that there is risk all over the place, this can lead to some interesting conclusions. (If you don’t want to do something so reckless, then stop here.)

http://www.theawl.com/2011/11/a-conspiracy-of-hogs-the-mcrib-as-arbitrage

Tue, 09/08/2015 - 10:07 | 6522279 Panic Mode
Panic Mode's picture

I bet my dollar that he finds Yellen sexy.

Tue, 09/08/2015 - 10:39 | 6522396 optimator
optimator's picture

Bet his wife could buy and sell Yellen.

Tue, 09/08/2015 - 10:10 | 6522291 GFORCE
GFORCE's picture

This guy is picking up pennies in front of a steamroller.

Tue, 09/08/2015 - 10:13 | 6522308 Jethro
Tue, 09/08/2015 - 10:17 | 6522319 RawPawg
RawPawg's picture

a fool and his money are soon divided.

Tue, 09/08/2015 - 10:18 | 6522325 q99x2
q99x2's picture

The wives of financial perverts . . . well look like the wives of financial perverts.

Tue, 09/08/2015 - 10:20 | 6522330 SSRI Junkie
SSRI Junkie's picture

"talpin" is belgian for "fed"

Tue, 09/08/2015 - 10:20 | 6522334 russwinter
russwinter's picture

 What a farce. They expect people to believe this one?

Tue, 09/08/2015 - 10:23 | 6522348 SmedleyButlersGhost
SmedleyButlersGhost's picture

I was at that Wildlife Conservation Society dinner. During the cocktail part of the evening, resplendent in my dinner jacket and primed with a few Scotches (turns out there was no draft beer or any beer for that matter) - I was introduced to Mrs. Talpins or Bunny as I was told to call her. Somewhere during the 4th scotch I was trying to engage Bunny in what I thought was some witty reparte about the mating habits of a certain rare breed of baboon.  Jeff joined us about then and somehow my baboon mating comments went horribly off track when i tried to ask them about their children. I have no idea what was served at dinner as I didn't make it that far.  Sorry for the ramble but I just wanted to say that I don't believe Jeff said anything to me about his trading strategy - well not that I recall.

Tue, 09/08/2015 - 10:28 | 6522360 venturen
venturen's picture

in the future I am sure he will be highlighte in a a show named "The Men Who Built America". Why do we keep rescuing these crooked money changers? 

Tue, 09/08/2015 - 10:36 | 6522384 optimator
optimator's picture

I could have sworn I saw Talpins with a 3 card Monti table yesterday.

Tue, 09/08/2015 - 10:38 | 6522392 Mr.Danglemeat
Mr.Danglemeat's picture

Magen David?

Tue, 09/08/2015 - 10:48 | 6522412 Johnny_is_alrea...
Johnny_is_already_taken's picture

so he is buying them with borrowed money... fresh from the press I presume

Tue, 09/08/2015 - 10:52 | 6522427 sam site
sam site's picture

 

What's going to happen to Treasuries when the dollar devalues 49% according to economist Jim Willie.  Jim says that the BRIC exporters to America are going to eventually demand gold notes of credit in settlement of exports like Walmart goods.

The BRICS know the Fed money printing has devalued their current $1.2 T in Treasury holdings and that's why they are dumping.  As Peter Schiff says, "Anything dollar denomenated such as Treasuries is going to take a big hit in this upcoming devaluation.

QE is fraud and being associated with fraudsters like the Fed has it's own risk of a rude awakening some day sooner than most people think.

 

 

 

Tue, 09/08/2015 - 11:55 | 6522658 the grateful un...
the grateful unemployed's picture

depends on how the dollar devalues. should the monetary base shrink (through deleverging) holding these bonds would seem to be a good thing. if the fed is forced to print money and repatriot the bonds then the monetary base expands. once before they were prepared to exchange those bonds for cash. this guy looks like a smart ass, who wants to corner the market aka the hunt brothers and what better to buy than something no one wants. for right now the fed is probably thinking good this guy solves our problem for us, but this add risk to an already risky market

Tue, 09/08/2015 - 10:55 | 6522442 Guns N Metals
Guns N Metals's picture

Jeffery must have married his college sweetheart.

Tue, 09/08/2015 - 11:59 | 6522672 the grateful un...
the grateful unemployed's picture

if he pulls this deal off he can afford a trophy wife

Tue, 09/08/2015 - 11:08 | 6522495 All is chosen
All is chosen's picture

I don't suppose he wears a mask & carries silver bullets?

Tue, 09/08/2015 - 11:11 | 6522506 Chuck Knoblauch
Chuck Knoblauch's picture

skull and bones man is safe

Tue, 09/08/2015 - 11:19 | 6522534 Batman11
Batman11's picture

As long as he gets enough money out before it goes tits up its a viable strategy.

I am sure those that ran LTCM are still enjoying the profits they made in the good times.

Who cares about clients and long term consequences these days?

 

Tue, 09/08/2015 - 11:25 | 6522555 jjsilver
jjsilver's picture

The WSJ is an impeccable source of information. So, the alleged math wiz Talpin is buying all that paper to exploit small inefficiencies; move along, case closed.  LOL

Tue, 09/08/2015 - 11:36 | 6522588 bankonzhongguo
bankonzhongguo's picture

So your business model is to go into debt in order to buy debt being sold by one of the largest market makers who is trending out of the market in absolute terms.

I can appreciate the whole AIG (TBTF) strategy and like the return to LTCM amid all the other googleplex derivative plays.

Maybe a sidecar of child sacrifice for the trifecta.

 

We deserve EXACTLY what is coming.

Tue, 09/08/2015 - 11:37 | 6522591 the grateful un...
the grateful unemployed's picture

even the beard has a beard

Tue, 09/08/2015 - 12:03 | 6522685 Sixdeuce062
Sixdeuce062's picture

KING DOLLEAR BITCHEZ!!!!!!!

Tue, 09/08/2015 - 12:10 | 6522706 atomicwasted
atomicwasted's picture

It will be interesting to see what Rickards says about this, if anything.

Tue, 09/08/2015 - 14:34 | 6523234 CarpetShag
CarpetShag's picture

Such affairs are not in his script.

Tue, 09/08/2015 - 12:12 | 6522713 themarketflash
themarketflash's picture

This guy is picking up nickels in front of a steam roller, right?   He doesn't sound like buy and hold of Treasuries to me.

Tue, 09/08/2015 - 12:26 | 6522761 fowlerja
fowlerja's picture

Concerning Jeffrey's wife..don't belittle him..sometimes to get a head..well its hard..

Tue, 09/08/2015 - 12:36 | 6522792 Dadburnitpa
Dadburnitpa's picture

Wouldn't mind seeing this trade get broken off in his ass.

Tue, 09/08/2015 - 13:17 | 6522931 franzpick
franzpick's picture

Straw Buyer: An agent who completes a transaction for the real buyer who wishes to conceal his identity. Examples: Belgium, Element Capital Management.

Tue, 09/08/2015 - 13:34 | 6522997 Kprime
Kprime's picture

examples: Jeffery

Tue, 09/08/2015 - 13:17 | 6522933 surfvin
surfvin's picture

Tomorrow's Michael Milken

Tue, 09/08/2015 - 13:23 | 6522947 NotApplicable
NotApplicable's picture

So... who exactly is buying these "when issued" contracts that Talpins is selling? K-Hen?

I'm no finance whiz, but I'm thinking that's kind of important, as don't they end up being the true Treasury holder once Talpins closes his short?

Tue, 09/08/2015 - 13:22 | 6522953 Barnaby
Barnaby's picture

If you invest in a time machine and use it successfully, is that really illegal?

Tue, 09/08/2015 - 13:27 | 6522968 SmedleyButlersGhost
SmedleyButlersGhost's picture

Only time will tell

Tue, 09/08/2015 - 13:31 | 6522974 Kprime
Kprime's picture

what a crock of shit.  it's just the banker/gov murdering thieves using free digital money to hide their theft.  None of this is real market or real trading; it's all fake and fiat.  He's just the latest front man.

Tue, 09/08/2015 - 13:36 | 6523001 The Magus
The Magus's picture

Anyone interested in what is about to happen to this society. Head over to ClubOrlov and the latest post argues succinctly what will transpire.

 

We are fooked.

 

PS As usual the English are responsible.

Tue, 09/08/2015 - 18:19 | 6524191 geekz_rule
geekz_rule's picture

are you referring to today's post? the financial-industrial revolution's origin and destiny?

Tue, 09/08/2015 - 13:48 | 6523045 surfvin
surfvin's picture

She looks wired for sound

Tue, 09/08/2015 - 13:53 | 6523059 stephysat28
stephysat28's picture

frontman

 

Tue, 09/08/2015 - 13:55 | 6523065 NoWayJose
NoWayJose's picture

You would expect that volume on the treasury market is down with the Fed having removed so much. That makes it ripe for plucking. There are any number of trade calculations possible but you can bet that NONE of them involve research or fundamentals or technical trading or long term holds. Instead, they involve arbitrage of selling and buying immediately ahead, during, and after treasury auctions such that a small profit is obtained on every trade - but every trade is repeated in high volumes. And in those rare times when he guesses wrong, he probably has reverse engineered the trading algorithms such that he can either run stops or trigger a reversal in his favor. Very similar to those skimming stocks.

Tue, 09/08/2015 - 14:57 | 6523371 CHX
CHX's picture

Either he knows something l don't, or he'll go down in history as the "smartest" bag holder. Time will tell.

Tue, 09/08/2015 - 15:39 | 6523595 maneco
maneco's picture

How do you spell QE4?

J-E-F-F-R-E-Y  T-A-L-P-I-N-S

Tue, 09/08/2015 - 17:01 | 6523931 smithmorra
smithmorra's picture

People like this are really scary, they've sold their souls to the devil and are as amoral as jellyfish.  I shudder to think of their fate when they have to meet their maker and get delivered over to the tormenters.  

Tue, 09/08/2015 - 18:12 | 6524165 geekz_rule
geekz_rule's picture

these are the BEST of ZH.. these forensic analysis and intrigues.. these and the Nanex sourced ones..  Thanks Tylers!

hope this witch is burned!

P < P + I

Tue, 09/08/2015 - 18:15 | 6524172 Multivariate Man
Multivariate Man's picture

Mr. Talpins may have been number one in Shiller's class but he is merely gaming the Treasury auctions. How does his fund make money?  From manipulating the price of Treasuries and capturing the short price vs. the auction price.  THIS HAS NOTHING TO DO WITH INVESTMENT AND EVERYTHING TO DO WITH RIGGING THE TREASURY MARKET AND CAPTURING A SMALL PROFIT OVER AND OVER.  What a fine brilliant mind!  What a great contributor to capitalism and the economy and the American way!

Tue, 09/08/2015 - 18:42 | 6524277 TSA Thug
TSA Thug's picture

Lol. How much does ZH charge for instant account approval?

Tue, 09/08/2015 - 21:07 | 6524789 Ned Zeppelin
Ned Zeppelin's picture

Hopefully we now know the Masters of the Universe, e.g., LTCM and their ilk, are short timers. Watch this space for the inevitable implosion, but this dickhead running the thing will have an adequate supply of cash hidden away by then.

Tue, 09/08/2015 - 21:39 | 6524946 frankly scarlet
frankly scarlet's picture

Talpins the name and secret QEs the game. Audit the Fed a see what the real scope of their balance sheet is. Petro dollar oil derivatives are unwinding apparently...wonder what that is costing the Fed on a monthly basis? Shit the Feds balance sheet may already be in the 15 to 20 Trillion mark and growing monthly.

Wed, 09/09/2015 - 22:22 | 6529681 Occams_Razor_Trader
Occams_Razor_Trader's picture

I'm surprised we have yet to see a mainstream picture of him handing out "Fair Play for Cuba" flyers. Funny how the Patsy's now make billions- Oswald was on the FBI's payroll for a couple hundred a month.

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