• Pivotfarm
    04/18/2014 - 12:44
    Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and...

Risk Management

Reggie Middleton's picture

Goldman is Ratcheting Up VIE Risk!!! More So Than the Top of the Bubble! Many Thought the Enronesque Days of “Hide the Sausage” Accounting Games Were Over

“Goldman, unlike the rest of the street and practically the rest of the I banking world, is ratcheting up VIE risk!!! Is BoomBustBlog the only one inquiring as to WHY??? We have a few reasons in mind… And to think, many thought the Enronesque days of “hide the sausage” games have come to an end…”


Reggie Middleton's picture

Wall Street Responds to My Roadmap of the Derivative Meltdown

Wall Street responds to my missive on the potential of concentrated derivatives risk blowing up the banking system. Traders, salesman and financial engineers chimed in, and made some cogent points. Of course, I must rebut. It is the actual rebuttals that are probably more stinging than the original article - particularly the one concerning hedge funds. Please read on and feel free to chime in. Don't forget to bring the "Fiery Sword of Truth!"


Tyler Durden's picture

Guest Post: Here’s the Proof Day Trading is Dead

Lately I’ve heard a lot of heated conversation about the day trading industry. There’s an intriguing debate with opinions ranging from “it’s a great way to make a living” to “it never worked in the first place” to “we’re now in the midst of the great shakeout.” But the bottom line is: day trading is DEAD. Two-thirds of the rhetoric focuses on the idea that day trading is a firmly entrenched part of markets with a somewhat stable future ahead. I disagree. More realistically, a much larger change is taking place with market structure. Like the extinction of human beings roaming the floor of the NYSE, this evolution presents a bleak picture for the day trading community moving forward.


Tyler Durden's picture

Despite Raising VaR To Record, Morgan Stanley Revenues Are A Bloodbath

A few months ago, before it became a staple MSM topic, we speculated that the dereliction of capital markets by both equity and credit traders would mean a complete collapse in Wall Street sales and trading (aka hedge fund proxy) revenues, now that investment banks rarely if ever perform traditional IB activities like advisory and underwriting work. As the latest battery of Q3 bank earnings has confirmed, we were correct, however nowhere more so than as pertain to Morgan Stanley: the bank's Q3 revenues were an abysmal disaster, with total sales and trading revenue collapsing from $3.7 billion in Q2 (and $4.1 billion in Q1, $3.2 billion in Q3 2009) to just $1.8 billion. The drop was especially pronounced in Fixed Income S&T, which plunged from $2.3 billion to $846 million. Yet what is scary is that this plunge did not occur in an environment of moderating risk management: oh no. In fact, the firm's aggregate average trading and non-trading VaR in Q3 2010 was the highest on record, coming at $189 million! Meaning the bank had to stretch and put massive amount of risk on the books to eek out even these pathetic numbers. It also means that one day, as MS and others once again start raising their VaR in pursuit of that elusive last HFT dollar, another market crash will result in billions in trading desk losses in a span of minutes.


Tyler Durden's picture

Atlanta's Dennis Lockhart Joins Doves Begging For QE2

On the wires:

  • Fed's Lockhart says leaning in favour of more monetary stimulus, decision not clear cut

Somehow this will lead to even more QE "pricing in", even though by now it is "priced in" about 150%. Of course, this is no surprise as Lockhart has long been in the opposing camp of an ever increasing group of hawkish Fed presidents such as Hoenig, Bullard, Kocherlakota and to some extent, Fisher. That only one of them is a voting member is irrelevant. After all at the end of the day, only one madman has the launch codes.


Leo Kolivakis's picture

Mercer Quits US Public DB Investment Consulting

Looks like Mercer's little Alaska problem had a big impact on its US DB investment consulting business...


Reggie Middleton's picture

The Research In Motion Forensic Valuation and Analysis is Released to the Public

Now that Research in Motion has reached our valuation target and offered the opportunity for material gain for our subscribers, I have decided to released the full 45 page professional Forensic Valuation report to the public. It is quite extensive, and has been quite accurate to date…


Tyler Durden's picture

Guest Post: Consumer Deleveraging = Commercial Real Estate Collapse

There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts...


ilene's picture

Scientists, Secrets and Wall Street's Lost $4 Trillion

What Wall Street bears no relationship to any longer is its primary mission in the U.S. economy: to be a fair and efficient allocator of capital to worthy businesses and innovators to propel job growth while also providing a medium for allowing investors to buy or sell stocks and bonds of those businesses at a fair price.


Leo Kolivakis's picture

Caisse Getting Ready for the Next Big Move?

The Caisse de dépôt et placement du Québec, Canada’s biggest pension fund manager, is going overweight commodities and energy...


ilene's picture

Fed Speak Friday - Volcker, Lacker and Ben Batting 1, 2, 3

"the system remained at risk because it is subject to future 'judgments' of individual regulators, who [Volcker] said would be relentlessly lobbied by banks and politicians to soften the rules."


Tyler Durden's picture

Goldman Exposes The "Lend To Play" Conflict Scheme Involved In IPO Underwriter Allocation

In providing commentary to the FASB's attempt to solicit public response on its recent foray into bringing some transparency into "loans held to maturity" by Wall Street banks, Goldman Sachs does a terrific job of exposing the very prevalent, and very conflicted phenomenon better known as "lending to play" in Wall Street firms' attempt to get an allocation on the IPO underwriter syndicate of public company candidates, in exchange for providing debt to the same firm on very disadvantageous terms to both the underwriters' shareholders, and to secondary purchasers of such debt. In addition to providing broad mispricing incentive to an entire capital structure product, this practice also completely destroys the credibility of the ratings of the newly public company by the Underwriter syndicate due to tremendous conflicts of interest.


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