"The problem with movies and books is they make evil look glamorous, exciting, when it's no such thing. It's boring and it's depressing and it's stupid. Criminals are all after cheap thrills and easy money, and when they get them, all they want is more of the same, over and over. They're shallow, empty, boring people who couldn't give you five minutes of interesting conversation. Maybe some can be monkey-clever, some of the time, but they aren't hardly ever smart."
Dean Koontz
We are not sure what to make of this drawdown in the short end of Treasuries.
The Fed says don't worry, that's just us buying up the market.
Perhaps they are rebuilding their bank panic breakwall.
But in the meanwhile, we'll head to higher ground for a better view.
Credit Suisse Sees First-Quarter Loss After Writedown
By Elena Logutenkova and Warren Giles
March 20 (Bloomberg) -- Credit Suisse Group, Switzerland's second-largest bank, probably will post its first quarterly loss since 2003 after writing down debt securities that were deliberately mispriced by traders.
Credit Suisse fell as much as 11 percent in Swiss trading after the bank said it will take $2.65 billion of writedowns spread over the fourth quarter and first three months of 2008. The markdowns and ``difficult'' market conditions in March may lead to a first-quarter loss, the Zurich-based company said.
An internal review found that the pricing errors, first announced last month, were made intentionally ``by a small number'' of traders, who have since been fired or suspended. The episode is the biggest setback for Chief Executive Officer Brady Dougan since he took over from Oswald Gruebel in May after heading the investment banking unit for three years.
``This incident is unacceptable,'' Dougan, 48, said in the statement. ``We are taking strong action to remediate and move forward.''
Credit Suisse fell 4.62 francs, or 8.9 percent, to 47.18 francs by 10:30 a.m., bringing the drop this year to 31 percent.
The markdowns led the bank to restate fourth-quarter net income lower by 789 million francs ($788 million) to 540 million francs. Profit for 2007 declined to 7.76 billion francs.
The announcement of writedowns as a result of pricing errors came as a surprise last month, just a week after the bank said its risk management systems helped it sidestep the worst of the U.S. subprime mortgage market crash in 2007....
The mispricing was limited to traders and didn't involve managers or controllers, Dougan said on a conference call today. About half of the 1.18 billion-franc writedown on these trading positions in the fourth quarter was attributed to incorrect pricing, he said.
Credit Suisse said it was profitable through the end of February, though will probably have a loss for the quarter because of worsening market conditions this month. The world's biggest financial firms have fired more than 30,000 workers in the last seven months and reported at least $195 billion in writedowns and losses.
``March has been a very difficult month,'' Dougan said. ``Trading results have been very difficult given the extreme volatility in the markets.''
Dougan, a native of the U.S., earned 22.3 million francs last year, the bank said in its annual report today, publishing the CEO's salary for the first time. Dougan told reporters on the conference call that his compensation declined 40 percent last year. Chairman Walter Kielholz took a pay cut of 8.7 percent to 14.6 million francs in 2007.
To contact the reporter on this story: Warren Giles in Geneva at giles@bloomberg.netElena Logutenkova in Zurich at elogutenkova@bloomberg.net
Last Updated: March 20, 2008 05:57 EDT
John Meriwether's Bond Fund Loses 24% on Credit-Market Plunge
By Katherine Burton and Saijel Kishan
March 19 (Bloomberg) -- JWM Partners LLC, the investment firm run by ex-Long-Term Capital Management LP chief John Meriwether lost 24 percent in its $1 billion fixed-income hedge fund this year through March 14, according to two people with knowledge of the matter.
Meriwether's Relative Value Opportunity fund was hurt as bond managers such as Peloton Partners LLP and Carlyle Capital Corp. were forced to sell securities to meet margin calls, said the investors, who asked not to be identified because JWM doesn't publicly disclose returns. The Greenwich, Connecticut-based firm, which is selling holdings to reduce borrowings and lower risk, didn't have any loans called, they said.
``There's been a lot of forced de-leveraging,'' said Benjamin Sarly, head of marketing at Sanno Point Capital Management in New York, a relative-value credit fund.
Meriwether declined to comment.
JWM Partners opened a year after Russia's 1998 default resulted in almost $4 billion of losses for Greenwich, Connecticut-based Long-Term Capital. The Federal Reserve orchestrated a bailout by its 14 lenders.
Relative-value funds try to profit from price changes between related bonds. They rarely make outright bets that a specific bond will rise or fall. Investors in these funds expect to make about 1 percent a month.
To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Saijel Kishan in London at skishan@bloomberg.net
Last Updated: March 19, 2008 13:42 EDT
CFO Survey: No Economic Recovery Expected Until Late 2009
Duke University CFO Survey
Top Concerns of American CFOs
Confidence in the US economy appears to be hitting new lows. (and a hat tip to The ContraryInvestor.com for the charts)
But the stock market just had a fabulous rally?
Doesn't that mean that stocks are discounting an improving economy looking out six months?
No. It shows that credit bubbles deflate in fits and starts. Also, that its still relatively easy for the Street to pump the markets to smooth the way for a big IPO like VISA when the Fed is picking up the tab and decent but naive people are willing to do what the Street wants 'for the good of the country.'
Its takes a little effort to see it in this chart, but NYSE margin debt is a leading indicator of the SP 500.
If you would like to be able to watch a more convenient indicator of the direction of the SP, keep an eye on the Yen/$ cross currency.
We show the Yen chart with an SP 500 overlay every day on our charts section.
