Opening Bell: 12.02.08

Posted by Dealbreaker, Dec 02, 2008, 7:55am

Picture 275.pngJP Morgan's Highbridge Suffering (WSJ)
Investors are calling for 36% of the assets from the flagship multistrategy fund, which when coupled with the fund's losses could see the fund dropping from its watermark $15B to around $6B. All in all, Highbridge has seen its assets tumble from $38B to $20B over the course of the last year, though no mention is made of whether those numbers include looming redemptions.

Related, JP Morgan Is Cutting Back At Wamu (BBC)

Looking to scale back their operations, WaMu will be cutting about one-fifth of its work force over the coming year, with roughly 4000 people being cut in January alone. This looks more like a winding down than a clearing of payroll though, as the remaining 5200 people are going to be released gradually over the remainder of 2009.

Goldman Could See $2B Quarterly Loss (CNNMoney)
Goldman is facing write downs across most business lines. Lowlights:

"One area that is thought to have given Goldman particular problems in the just-ended quarter is its "book" of so-called distressed investments. Over the years, Goldman has invested in everything from troubled auto loans in Thailand to the debt of a liquor maker in South Korea to struggling golf courses in Japan. This business was once a big profit center.

It isn't known whether these specific investments contributed to the write-downs in this portfolio, and Goldman doesn't disclose the size of its book of distressed investments, which is housed in its fixed-income department. But the business is substantial. In 2005, a blowout year for the group, Goldman bet $24 billion of its own money on this type of investing, according to people familiar with the matter."

One-Half Of College Kids Are Crazy (Guess Which Chromosome Pair I'm Voting For) (Bloomberg)
Apparently College kids are engaging in potentially risky behavior using alcohol, have lasting psychological issues from substance abuse (smoking is listed), or are just bat-shit nuts.

Credit Suisse and HSBC Lay Offs (Reuters)
"Credit Suisse said on Tuesday the bank was cutting 650 jobs, equivalent to roughly 3 percent of its investment banking workforce of about 21,300.

HSBC, Europe's biggest bank, said it was cutting 500 jobs at its UK banking business following a review of the business. The bank employs 58,000 people in Britain."

Paulson & Co. Up Big For 2008 (Bloomberg)
Paulson did a hell of a job capitalizing on the market downside over the trailing quarters, better than the majority of his peers. The breakout winner was out of Long Island, though:

"The highest return in the Bloomberg ranking was scored by the Medallion Fund, run by Jim Simons's Renaissance Technologies LLC. The fund, which has an estimated $8 billion in assets, according to Bloomberg, racked up a gain in excess of 58 percent. That translates into firm profits of $1.43 billion for the quantitative juggernaut."

BOJ Issues Credit For Credit (Reuters)
The BOJ is going to issue an additional $32B in credit lines to companies, which they're trading for Bonds (and apparently they're accepting bonds of a lower rating this round, because ratings still matter).

"The BOJ will launch a new scheme in January under which it will lend unlimited funds to financial institutions at the overnight call rate with corporate debt as collateral.

Until now the BOJ has only accepted corporate debt rated single A or higher as collateral. From December 9 it would start lending against triple B-rated bonds."


--William Richards

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