Rough August

Rumors are RenTech of all places had a rough first week of August. Sentiment is Stat and Merger arb funds are not doing so hot. Does not sound good out there.

if i see Rentech go bust, then i'll bet whatever i have on DJ hitting 10500.

Let's not forget BNP's 3 funds today. And at the end of July, Sowood took out $375mm of the Harvard endowment.

Talk about a great chance to learn, if you're young

learn what

Eh, you hear all the old-school traders talking about bad markets being the best for learning and proving yourself. It kinda makes sense, since the guys that can survive in a ridiculous market like this one are the true rainmakers.

don't get bogged down counting the blow ups yet, we've still got 2/3 of the month to go! forget 10500, if we really push for it djia could get into the 4-digit range

hm...i'd guess it couldn't go below that...the fundamentals are not that bad...domestic consumer spending doesn't seem to be much affected (i'd like though to know what % of household income on average is put on stocks), global decoupling (aka rest of the world is undoubtedly on a sustainable growth track) and cheap $ mean strong demand for US products, and the fed has enough flexibility to cut the rates if they foresee deflation/serious slowdown. And this latter move will be greatly welcomed by the markets. I would see the dj stabilized around 11500-12500 after the dust settles.

rest of the world on an undoubtedly sustainable growth track? i think thats debatable im just joking about djia going down that far though

there is a publication by a BB (which received much attention 2.5 months ago) that makes this call, but there is nothing online...though the evidence is strong: investment boom in Europe & Asia, due to integration of Emerging Mkts (see accession of Bulgaria, Romania etc in EU for example), strong growth and increasing productivity in China, fiscal balance improving in EU and exports show resilience despite of strong euro; the latter statement comes to support the view that Asia is not so much dependent on exporting to the US for its growth. And of course we should not forget the rise of Russia and China, creating a cohort of greedy oligarchs who invest like crazy and support the local economies.

some speculation global alpha is going to shut down acttually.

IIRC, Soros called this drop about 2 months ago and said the US markets would struggle to find liquidity after credit worries. Perhaps why he's investing so heavily in Brazil, whose currency is pummeling the US recently.

GS Global Alpha: 10yrs of growth followed by 9% loss in 2006. Down 16% so far this year.

billion Global Alpha hedge fund has fallen 26 percent so far this year, according to people familiar with the fund.

others have been closed down for less.

let's see what shakes out by mid next wk.

Jimbo, if I have a portfolio of approx. 50/50 treasuries and corporates, would it be rational to sell some corporate positions and move deeper into treasuries?

I know financials are getting hit right now but I'm not sure how other industries would be expected to do in such an environment.

^^You're in FI right?

GS Alpha's entire strategy is based on exposure to various "risk factors". Their goal is to collect "risk premiums" from the market. Think Fama-French three factor model except these guys are thought to have found 18 such factors. So its not surprising that a rush to liquidity (aka "risk averse-ness") will, theoretically, hurt GS Alpha. Then again all this is me hypothesizing because I dont know exactly which 18 factors they employ.