Have you been having a hard time in the man department? Have you tried everything, including sending Instant Messages casually mentioning the fact that you’re filled with Cadbury Creme, volunteering to be tied up in licorice, and rubbing a dozen glazed doughnuts all over your body, to no avail? Shaan Hathiramani and Raj Hathiramani are here to help. The brothers recently left gigs at Citadel to found a perfume company, and it turns out you’re actually on the right track with the food-as-bait but your approach could use some refining. Continue reading »
Archive for July 2011
It’s not easy to generate alpha as an analyst at a quant fund these days. Most of the signals that are likely to make money have been discovered, so you find yourself sitting around running a lot of back-testing regressions on anything that could, however implausibly, predict financial results. It’s a stressful, lonely job, and if you’re low on good ideas your mind may wander to whatever is closest to hand.
That appears to be how Tatu Westling of the University of Helsinki came up with this:
The question is whether and how strongly the average sizes of male organ are associated with GDPs between 1960 and 1985? It is argued here that the average size – the erect length, to be precise – of male organ in population has a strong predictive power of economic development during the period. The exact causality can only be speculated at this point but the correlations are robust.
What could possibly go wrong? We took a look.
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Hedge Funds
Bridgwater Associates Truth Probings Are About To Get Turbo-Charged
By Bess Levin
In 1974, Bridgewater hedge fund manager Ray Dalio was working in the commodities futures department of Shearson Hayden Stone when he went out with his boss on New Year’s Eve, and after getting into a debate with the guy, punched him in the stomach. Soon after that night, Dalio was fired when management learned that “at the annual convention of the California Food & Grain Growers’ Association, he paid an exotic dancer to drop her cloak in front of the crowd.” Looking back, it’s clear that in both situations, Dalio was merely acting on his lifelong belief that one should relentlessly “pursue the truth at all costs,” the guiding tenet Principle found within Bridewater Associate’s employee handbook, written by Ray.
Unfortunately, in 1974, Principles was but a single-celled idea in Dalio’s mind, and the higher-ups at SHS didn’t understand that Ray didn’t pay off the dancer so he could see her tits but so conference goers could drill down to the truth underneath her robe, while punching the boss was RD’s way of trying to get the guy to open his eyes. Continue reading »
As you’ve likely heard, serious questions about the credibility of Dominique Strauss-Kahn’s alleged victim have suggested criminal charges against the former IMF chief may be dropped. Since he was accused of sexually assaulting a Sofitel maid, several French news outlets have and continue to stress the important distinction between being “a seducer” and “a rapist,” DSK falling into the former category. Want more proof? To further the point, one magazine reported over the weekend that Strauss-Kahn bagged himself a bunch of ladies during his New York trip, as part of his plan de-stress before running for president Continue reading »
Senate Debt Plan Promises Months of Budget Wrangling (WSJ)
With few signs of movement over the weekend on negotiations to raise the federal borrowing limit, Senate leaders are planning this week to unveil a back-up plan that would force more budget wrangling before the end of the year…Senate officials worked through the weekend to iron out details of the back up plan by Senate Majority Leader Harry Reid (D.,Nev.) and Senate Minority Leader Mitch McConnell (R.Ky.), who hope by mid-week to introduce the bill to give the president new powers to raise the debt limit.
Moody’s suggests U.S. eliminates debt ceiling (Reuters)
The United States is one of the few countries where Congress sets a ceiling on government debt, which creates “periodic uncertainty” over the government’s ability to meet its obligations, Moody’s said in a report. “We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty,” Moody’s analyst Steven Hess wrote in the report… Moody’s said it had always considered the risk of a U.S. debt default very low because Congress has regularly raised the debt ceiling during many decades, usually without controversy.
EU Stress Tests Fail to Convince Analysts (Bloomberg)
“I’m quite skeptical that this whole exercise will have any favorable consequences,” said Cesar Molinas, a former head of European fixed income at Merrill Lynch & Co. and now an independent consultant. “It seems to have been something of a waste of time and money.”
Pressure rises for Greek debt buy-back, swap (Reuters)
German Chancellor Angela Merkel called on Sunday for private investors to make a major contribution to bailing out Greece, as pressure rose for radical action to cut the country’s debt burden. Officials proposed a range of schemes for Europe’s bailout fund, the European Financial Stability Facility, to finance a buy-back or a swap in which private owners of Greek government bonds — banks, insurers and other investors — would accept cuts in the face value of their holdings.
Economists See Deepening Euro Crisis (WSJ)
All but one of 49 economists surveyed by The Wall Street Journal last week said Greece will be forced to restructure its debt. Fifty-three economists, who are mostly U.S.-based, take part in the survey, but not everyone answers every question.
Gold Rallies to Record in Best Run Since 1980 (Bloomberg)
Immediate-delivery gold gained as much as $6.55, or 0.4 percent, to $1,600.10 an ounce and traded at $1,596.88 by 8:26 a.m. in London. Prices are up for an 11th day, the longest streak of gains since July 1980. Gold for August delivery was 0.5 percent higher at $1,597.50 an ounce on the Comex in New York after reaching a record $1,601.
Goldman says recession risk rising (Fortune)
Goldman Sachs, which just seven months ago was the loudest voice for a stronger than expected U.S. recovery, now expects U.S. output to creep ahead at a snaillike 1.5% clip in the second quarter and a less than vigorous 2% in the third. Friday’s call stands as quite a comedown for economist Jan Hatzius, who in May forecast a 2% expansion in the second quarter and a 3.25% gain in the third quarter – numbers that themselves represented a retreat from the firm’s bullish start-of-the-year forecast.
Bankruptcy on the table for Alabama County Says Governor (Reuters)
Bankruptcy is still a “very strong possibility” for Alabama’s Jefferson County, Governor Robert Bentley said on Saturday — a move that could make for the largest municipal bankruptcy in U.S. history. Continue reading »
$$$ Obama Prods Congress As House Sets Vote (WSJ)
$$$ Rosenberg: A Recession Is ‘One Small Shock Away’ (CNBC)
$$$ 8 EU Banks Fail Stress Tests (WSJ)
$$$ Greenhill’s Timothy George Said to Leave Company as Departures Accelerate (Bloomberg) Continue reading »
You’re a hedge fund manager working and living in CT, catching a 7:30 showing of Harry Potter this evening in Stamford. The tickets have been purchased, the seats selected, and the previews about to begin. You tell your wife you need to take a leak and will be back in 5. You clumsily make your way through the aisle, forcing people to turn their legs so you can fit through and get outside. But once there you don’t head toward the bathroom. Because that’s not what you actually excused yourself to do. Oh, you came outside to pull down your pants and relieve yourself alright, but in a totally different way: by shoving a box of Jujubees in them. Continue reading »
Many people are surprised that investment banks want their customers to buy things that they are selling. If a customer buys a bond, then the bank doesn’t own it any more – but isn’t that a conflict of interest? Wasn’t that bond designed to fail? Shouldn’t the banks only sell bonds to their customers that they’d rather keep themselves?
Given that mindset, we’ve seen many calls to turn market makers into fiduciaries for their customers. But Dodd-Frank started small, changing the rules mainly for derivatives dealers who interact with “special entities” (muni issuers, pension plans and endowments – who are presumed to be less sophisticated / more likely to blow all their money on sewer swaps), providing that those dealers will be treated as “advisers” and will have to act in the best interests of their special-entity counterparties if they recommend transactions to them.
The SEC recently released proposed business conduct rules under Dodd-Frank, and today law firm Cleary Gottlieb gave them a pretty positive review. In particular, they like that there’s a way for dealers to get out of the best-interests rules:
Continue reading »
Standard & Poor’s Friday put a broad range of financial firms on negative credit watch, warning they could all be downgraded if the United States has its credit rating cut. The S&P action takes in Fannie Mae, Freddie Mac, all “AAA”-rated insurers, clearinghouses, fixed-income and exchange-traded funds and hedge funds, some Federal Home Loan Banks and Farm Credit System Banks, among others. S&P characterized its targets as “entities with direct links to, or reliance on, the federal government.” [Reuters]
*Not actually necessary. Corpses are also on notice.
Morgan Stanley Farewell Address Includes Primer On Firm’s History That’d Make JP Proud
By Bess Levin
From: [redacted]
To: Morgan Stanley employeesIt is with a heavy heart with which I must notify you of my decision to leave Morgan Stanley today. I consider it to be a distinct honor to have worked with you all at this firm. In 1935, two years after the passage of Glass Steagall, a group of bankers took a substantial risk, leaving J.P. Morgan with $340 million in capitalization to start Morgan Stanley with a mere $7.5 million in order to build it into the stellar institution it is today.
Having an entire month on Wall Street under their belts, summer analysts are probably at this point fending off a lot of pitches from a lot powerful people on the opportunities in corr trading or FIG M&A. And considering for most of their lives they’ve dreamed of being a hitter, and a little hard work isn’t going to deter them from taking the most high-profile job they can get, it all sounds pretty enticing. Before anyone makes any serious decisions, however, they might want to hear out a few monkeys, who think they might be making a mistake.
