Boaz Weinstein

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Forbes Reveals Its "Top 30 Under 30" In Finance





With Trader Monthly magazine having, ironically, gone out business long ago, all those traders whose egos demanded that their insider trading connections put them at least in one of the iconic "Top X under X" league tables, pardon, rankings, had to bide their time in expectation of one day when their prowess to frontrun others or move markets with repeated calls to 555-7617 (with or without references to Anacott Steel) would be appreciated by such sterling Wall Street "experts" as Anthony Scaramucci. Well, for this year's crop of some 30 traders under 30, the day has arrived. And while Forbes may not be Trader Monthly, the amusement, the hubris and the behind the scenes dealing to appear in such a list, sure are still the same...

 
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Frontrunning: December 24





  • Edward Snowden, after months of NSA revelations, says his mission’s accomplished (WaPo)
  • Japan’s Nikkei 225 Extends Six-Year High on U.S. Data  (BBG)
  • Retailers blend stores, e-commerce to snag holiday stragglers (Reuters)
  • Storm wreaks havoc in Britain, France ahead of Christmas (Reuters)
  • Big Rally to Pump Up Wall Street Bonuses (WSJ)
  • Obamacare Sign-Up Extended as Record 1 Million Use Site (BBG)
  • Merkel Hits Wall With Europe Fix (WSJ)
  • Boaz Weinstein Loses for Second Year as European Bet Sours (BBG)
  • UniCredit has reached an agreement to sell almost €1 billion in nonperforming loans to Cerberus (WSJ)
  • U.S. mortgage applications fall as refinance hits five-year low (Reuters)
  • Cohen Said to Have Warned Friend About Possible Federal Investigation (NYT)
  • ‘Duck Dynasty’ Dad Risks $500 Million With Gay-Sin Remark (BBG)
 
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About That Boaz Weinstein London Whale Bulls-Eye





Two days ago we made a simple observation: back in September 2011, Weinstein's firm SABA Capital hired one of the key JPMorgan prop traders - Maitland Hudson - who "ran JPMorgan’s proprietary trading of derivatives tied to commercial-mortgage bonds" and whose future job at Saba would "focus on relative value trades" - such as, perhaps, IG9 10 Year versus a basket of tranched trades... Our suggestion was that instead of being a brilliant credit trader as he has been called by Bill Ackman, and his antics while in charge of the DB prop desk certainly put theory in jeopardy, perhaps Weinstein is merely a wonderful headhunter: one who knows just whom to hire and when (kinda like Steve Cohen hiring key Pharmaceutical company R&D personnel in a perfectly legal transaction now that expert networks are done, but that is a topic for another day).

 
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Euro VIX Jumps As ECB Pumps





Depending on whether you look at broad liquid risk markets or narrow manipulated 'repressed' illiquid markets, your take on today's European action will be different. Equity markets were crushed. Corporate and Financial credit spreads blew wider. Volatility (Europe's VIX) exploded over 36%. So far so good? But Italian and Spanish bonds rallied. It seems EUR96 was the line in the sand that the ECB (or their proxy banks) decided was enough for Spanish 10Y bonds and that was where they were defended to (though we are suspicious why ECB would step in now after 4 months absence). There was eventually some notable divergence between underperforming Spain and outperforming Italy by the close (+40bps on the week vs +27bps). We suspect that much of the sovereign outperformance was a combination of Sovereign CDS-Bond basis traders (buying bonds and buying protection in Spain to lock in that wide spread) and a replay of the short financial credit, long domestic sovereign credit trade (as in banks will underperform the sovereign if things hit the fan/wall). That is the flow that was evident when looked at across markets. All in all, a terrible end to an awful week and hopefully we have helped explain why sovereigns outperformed (technicals) as CDS remain at wides and stocks at lows.

 
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Did One Of Jamie Dimon's Closest Traders Betray Him And Cost The Firm Billions In Losses?





As we predicted some time ago, it would be only a matter of time before the story of how one failed prop desk trader, in this case Boaz Weinstein who blew up DB Prop only to be resurrected as the successful head of Saba Capital, took down the London whale Bruno Iksil. Sure enough over the weekend, the NYT penned a largely one-sided if entertaining read: "The Hunch, the Pounce and the Kill" which begins as follows 'It was last November, and Mr. Weinstein, a wunderkind of the New York hedge fund world, had spied something strange across the Atlantic. In an obscure corner of the financial markets, prices seemed out of whack. It didn’t make sense. Mr. Weinstein pounced." The trade of course was the IG 9 -10 year which we have dissected infinitely in the past two days. And while the NYT story makes for great copy, and has a great narrative it is missing one crucial feature, namely what happened in those two crucial months before Boaz was pitching the IG9 trade, and thus during which he was establishing the position (because only those "hedge fund managers" who appear on CNBC discuss their positions if they haven't already built up their max positions). What happened is the following: "Saba Capital Management LP... hired Toby Maitland Hudson from JPMorgan Chase & Co. as the firm’s assets reach $4.1 billion, according to people familiar with the hire. Maitland Hudson, who started at Saba in New York last month, ran JPMorgan’s proprietary trading of derivatives tied to commercial-mortgage bonds and will focus on relative value trades."

 
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Presenting JPM's Uber-Prop Trading Desk: Meet The SIO Inside The CIO





Remember when Jamie Dimon told the world the CIO stories were a "tempest in a teapot" during the firm's Q1 conference call the very same day we accused the CIO of being the world's biggest prop desk (aside from the Fed of course) and that the JP Morgan was merely "hedging" its positions? It appears that just like Vegas, it's the lie that keeps on giving. Because as it turns out in addition to being a massive undisclosed loss leader courtesy of 'unlimited downside' CDS pair trades (anyone remember DB employee Boaz Weinstein?) which have yet to be unwound, and which may have a total book loss of up to or over $31.5 billion as explained before, that was merely the tip of the prop-trading iceberg. The WSJ reports: "The JPM unit whose wrong-way bets on corporate credit cost the bank more than $2 billion includes a group that has invested in financially challenged companies, including LightSquared Inc., the wireless broadband provider that this month filed for Chapter 11 bankruptcy protection. The group within the CIO doing the distressed equity investing is known as the Special Investments Group. Whether it should be part of the CIO in the future is something that Matt Zames, who was put in charge of the CIO this month after the losses were disclosed, is evaluating, according to a person familiar with the bank. He is also examining whether the bank should keep some of these investments, the person said... The Special Investments Group last year took a $150 million stake in closely held LightSquared, in a deal that J.P. Morgan lost money on, according to a person familiar with the bank." But, but, surely they were hedging their offsetting position in er, uhm, non-satellite, telegraph stocks? In yet other words, an SIO within the CIO... once again Wall Street's only value added shines through - baffle them with acronym-based bullshit. And of course, everyone is busy hedging, hedging, the firm's other positions... Or not: as these are pure play directional prop bets. And all are funded by, you guessed it, your deposit dollars. Which one day will go boom, when JPM suffers a loss so large that not even the Fed bails them out any more (Jon Corzine anyone?).

 
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Bruno Iksil Leaving





Update: not so fast: Bloomberg reports that the whale is still beached: JPMorgan Chase Still Employs Trader Bruno Iksil, Spokesman Says. So... pile into the IG9 trade still?

Yesterday we speculated that the final confirmation that JPM has unwound its disastrous skew trade will only came once Bruno Iksil joins all the other members of the CIO team in being involuntarily retired: "As for the question of how much additional P&L loss JPM has sustained from Friday through today is a different matter entirely, and we are confident the next announcement from JPM will come momentarily, coupled with the announcement that Bruno Iksil, the last remnant of the CIO desk, and now having completed his duty of unwinding the trade that brought so much pain for Jamie Dimon, has been retired." Sure enough, the NYT reports that Iksil is now history.

 
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Santelli On CDS Regulation And Why Bank Analysts Failed





It would seem, just as during the crisis in 2008/9, that now might be an opportune time to push for 'improvement' in how banks are regulated (and more importantly how the instruments they trade in colossal size are priced and marked-to-market). Rick Santelli believes now has never been a better time but as his guest Tim Backshall of Capital Context notes, regulation of the CDS market can be summed up in one sentence "Get Them On Exchange". Something we have been saying for years (and has been tried before) but with dealers holding all the keys (to market-making) and exchanges cowering for fear of losing clients, we remain less optimistic. Santelli and Backshall critically address the complicity of banks, regulators, analysts, and The Fed in giving 'banks the benefit of the doubt' with regard their use of the bottomless pit of capital they implicitly have but what is more important is for the hordes of sell-side analysts and buy-side sheeple to understand just what this JPM debacle exposes about bank risk (VaR is useless), bank transparency (mark-to-model or worse is widespread), and bank valuation (traditional Price/Book metrics have no merit anymore).

 
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Deutsche Bank Takes A Jab At JPM's "Fail Whale"





We have presented our opinion on the JPM prop trading desk repeatedly, in fact starting about a month ago. Last night, Senator Carl "Shitty Deal" Levin also decided to join the fray, which is to be expected: the man needs air time. And now, in a surprising twist, competing banks, all of whom have more than enough skeletons in their own prop desk trading closet, are starting to speak up against the bank that should not be named. Enter Deutsche Bank's Jim Reid and his take on the Fail Whale.

 
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The Rapid Rise and Blistering Fall Of Boaz Weinstein





As we wrote two weeks ago in detail, the massive unwind of basis trades in the post-Lehman world was a crushing blow to numerous hedge funds, Merrill Lynch's prop desk, the reason why Citadel has to post a 100% return this year just to be able to pocket any incentive fees, and cost Boaz Weinstein his investing career (contrary to his aspirations to start a new f

 
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The Rapid Rise and Blistering Fall Of Boaz Weinstein





As we wrote two weeks ago in detail, the massive unwind of basis trades in the post-Lehman world was a crushing blow to numerous hedge funds, Merrill Lynch's prop desk, the reason why Citadel has to post a 100% return this year just to be able to pocket any incentive fees, and cost Boaz Weinstein his investing career (contrary to his aspirations to start a new

 
Tyler Durden's picture

The Rapid Rise and Blistering Fall Of Boaz Weinstein





As we wrote two weeks ago in detail, the massive unwind of basis trades in the post-Lehman world was a crushing blow to numerous hedge funds, Merrill Lynch's prop desk, the reason why Citadel has to post a 100% return this year just to be able to pocket any incentive fees, and cost Boaz Weinstein his investing career (contrary to his aspirations to start a new

 
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