Finance Trends Letter

Came across some worthwhile links from the blogosphere and Twitter today, and thought I'd point you to 'em. We've got some videos and posts on The Ben Bernank, a macro view of the economy and markets, interviews with Bruce Berkowitz and David Einhorn, and more for you in today's links. 1. Bear Mountain Bull wraps up some recent interviews and links on The Ben Bernank . 2. Abnormal Returns brings us 3 non-Bernanke videos , including interviews with investors Bruce Berkowitz and David Einhorn. 3. Catching up on the Macro view with Gregor Macdonald and the health of the stock market with Joe Fahmy . Peruse what you like, leave the rest. Remember, our ability to process and retain information is finite, so focus on what's most important to you in your pursuit of market education and limit your exposure to extraneous "noise". Thanks, as always, for stopping by.

Jay at Marketfolly is currently at work providing notes from the Value Investing Congress in New York ( Update : see also, notes from VIC - day 2 ). Some of the well known speakers at this event include Kyle Bass, John Burbank, David Einhorn, Mohnish Pabrai, and Lee Ainslie, among others in the hedge fund and investment management world. These investing all-stars will be presenting their views on the markets and the global economy to the VIC audience, while sharing some of their current investing ideas. You can check out Marketfolly's continually updated notes at the link above. In addition, Jay has posted some recent notes from the Ira Sohn West Conference , including some big picture thoughts from John Burbank of Passport Capital regarding the US and its current investment climate. If you'd like to hear more from John Burbank on the theme of "US as an emerging market economy", please check out this excellent (and rare) interview with Burbank on Benzinga's rad...

The rise of global macro investing and the increased importance of weighing macro themes in everyday investing were the subject of this recent Wall Street Journal piece entitled, "Macro Forces in Market Confound Stock Pickers" (Hat tip: Abnormal Returns ). An excerpt from that piece: " The market turmoil has battered many investors over the past few years. But for stock pickers like Neuberger Berman LLC's David Pedowitz, it has made their entire investing approach feel like an exercise in futility. Mr. Pedowitz buys and sells stocks based on research and analysis of individual companies. His investment strategy, he says, has been upended by a tidal wave of "macro" forces—big-picture market movers like the economy, politics and regulation. More and more investors aren't bothering to pore through corporate reports searching for gems and duds, but are trading big buckets of stocks, bonds and commodities based mainly on macro concerns. As a resu...

Marketfolly has put together a nice, detailed post on the recent Ira Sohn Conference and the investing ideas offered up by some leading hedge fund managers and investors at this event. If you haven't heard the chatter about this event, we can tell you that there were some very notable speakers present, including investors David Einhorn (Greenlight Capital), Bill Ackman (Pershing Square Capital), David Tepper (Appaloosa Management), Seth Klarman (Baupost Group), Jeremy Grantham (GMO), and historian Niall Ferguson. Jay has summarized some of the main points and highlights from the speaker presentations, with the help of some Marketfolly readers who were good enough to share their notes from the conference. You'll also find links to additional coverage on Twitter and at Barron's. Update : new Marketfolly posts highlighting David Einhorn's presentation and Steve Eisman's presentation, "Subprime Goes to College" , have been added. Also, if you'd like to...

There was a good amount of buzz last week surrounding hedge fund manager John Paulson's move into the gold sector , one that coincided with the opening of a new Paulson & Co. fund (the "Paulson Real Estate Recovery Fund") that will invest in real estate . Market Folly has more on Paulson & Co.'s investments in gold and the gold mining shares in, "Paulson & Co. buys tons of gold" : "The first major move that everyone will be talking about is Paulson's big entrance into gold. His position in the Gold Trust (GLD) is brand new and is brought up to a whopping 30% of his portfolio. Now, there are indeed a few caveats with this move: Paulson & Co have said themselves that they have done so as a hedge, as they now own well over 8% of this exchange traded fund (ETF). Their hedge funds have a share class that is denominated in gold (instead of in US dollars or Euros). Still though, that's quite a large hedge to have. Not to mention, Paulso...

Noted short-seller and hedge fund manager Jim Chanos was the subject of a recent profile in New York Magazine . Given the current spotlight of publicity shining on hedge funds and hedge fund managers, along with the fact that Chanos is one of the few fund managers actually making money this year, this piece should make for interesting reading. Here's an excerpt from NY Mag's, "The Catastrophe Capitalist" : "It might be fun to share in a little Goldman-bashing with Chanos, until you realize that you and he are in very different circumstances. Your 401(k) has been plunging at the rate his fund is rising. Chanos is arguably the most successful hedge-fund manager on Wall Street right now. As hedge-fund all-stars bleed red—SAC Capital’s Steve Cohen is said to be off 18 percent this year, Citadel’s Ken Griffin as much as 44 percent, and even David Einhorn, who presciently called Lehman’s implosion, has seen his fund, Greenlight Capital, slide a reported 26 percent—Ch...

Barron's editorial page editor Thomas G. Donlan has a few things to say about the SEC's latest move to protect financial firms from supposed rumor-mongering and naked short-selling in this week's Barron's editorial commentary. In, "Swatting an Imaginary Fly" , Donlan reminds SEC officials (and Barron's readers) that short-sellers are not to blame for the very real problems facing certain banks and financial companies. "The SEC also denounced false rumors and undertook to fish through traders' e-mails and phone records in search of rumor-mongers. Its reasoning was simple: "False rumors can lead to a loss of confidence in our markets. Such loss of confidence can lead to panic selling, which may be further exacerbated by "naked" short-selling. As a result, the prices of securities may artificially and unnecessarily decline well below the price level that would have resulted from the normal price-discovery process. If significant financ...

David Einhorn , founder of Greenlight Capital and author of "Fooling Some of the People All of the Time", speaks with "View from the markets" , FT.com's weekly video interview series. In this three part interview , David offers his view of the recent move by the SEC to curb alleged naked-shorting in a list of 19 financial shares (a move he calls "a rather peculiar action"), the scapegoating of short-sellers for the problems affecting financial companies, the role of ratings agencies and risk management in the financial industry, and investing in distressed debt and shares. Interestingly, Einhorn refused to provide an update on the status of his past short position in Lehman Brothers. When asked, he did say that his views on the company were well known and that he had nothing new to add at this time. Is this a sign that Greenlight has decided to cover some or all of its previous short position, or is Einhorn just keeping mum in light of the recent publ...

What's driving events in this crazy world of ours this week? Join us as we follow the money trail in this Friday's, "Features of the week" . 1. Let's expand domestic spying , and grant telecoms immunity. 2. Midwest floods ruin crops ; higher food prices to come. 3. John Paulson is bearish on UK property, and sees $1.3 trillion in losses for financial companies in the credit crisis. 4. Lieberman makes risky bet in speculation ban bid. See also: Tighter trading laws may be boon to foreign exchanges . 5. Wilbur Ross speaks to Bloomberg about MBIA and Ambac, and says they are unlikely to regain their AAA ratings . 6. Your tax bill : how McCain, Obama differ. 7. Troubled Waters: Barron's 2008 Midyear Roundtable . 8. What recession? Shoplifting to make ends meet . 9. The Confidence Man . NY Mag profiles hedge fund manager David Einhorn, he of short Lehman Brothers fame (Hat tip to The Kirk Report ). 10. Death of America's suburbs is greatly exaggerated . 11....

The financials seem to be the prevailing theme in this Friday's, "Features of the week" . But Lehman , BKX , and Ambac aren't the only items we have in store for you; there's lots more to see and hear. Read on! 1. Lehman Brothers may raise $5 billion in capital in an effort to de-lever the balance sheet. The bank had been seen as a sale target earlier in the week. For more, see: "Making sense of David Einhorn vs. Lehman Brothers" , and, Jim Cramer's Blogging Stocks piece, "Einhorn gutted Lehman, and that's OK" . 2. US unemployment rises at fastest rate since 1986. 3. Morgan Stanley, Merrill, Lehman ratings cut by S&P . 4. Some were taking this week's breakdown in the bank index ( BKX ) as an ominous sign; will there be an upcoming bounce for the banking sector? 5. MBIA and Ambac lose their S&P AAA ratings , affecting over $1 trillion in debt securities guaranteed by the companies. 6. IEA says world needs $45,000bn ener...

Credit default swaps (CDS) have become an increasingly well-known financial instrument in recent years. Originally developed for insuring against debt default and hedging against, or speculating on, changes in credit spreads between debt instruments, CDS have grown into a $62 trillion market and are now the most widely traded credit derivatives. Barron's has put their focus on the CDS market in a recent piece entitled, "Credit-Default Swaps: Weapons of Mass Speculation" . Here are some excerpts from that article. "DON'T KNOW MUCH ABOUT derivatives called credit-default swaps, or CDS? There's no reason one should. Even today, CDS, which represent bets on the default risk of various debt issues, remain an obscure corner of the global-finance market, inhabited mostly by big banks and brokerages, hedge funds and other institutions. Denizens of the CDS market strike customized insurance deals covering all manner of debt, from corporate, sovereign and municipal b...

Caught this one over the weekend and thought you might enjoy this. CNBC had long/short investors William Ackman, of Pershing Square Capital Management, and David Einhorn, of Greenlight Capital, on Squawk Box last Friday; The Big Picture shares the video highlights with us. Topics of discussion include the panel's defense of short-selling, the advantages of long/short portfolios, Bill Ackman on valuing long-term investments, the importance of mark-to-market accounting, and more. You may remember Ackman for his famously thorough research in advancing his short positions in Ambac and MBIA. David Einhorn is often associated with his long-running battle with Allied Capital, detailed in his new book, Fooling Some of the People All of the Time . Enjoy the CNBC clips and the discussion . For more on Ackman and Einhorn's investment ideas, see our December 2007 post, "Time to buy financials?" .

Looking over the news this morning, it seems the big story in the US market is an $11.5 billion "capital injection" for subprime-beleaguered bank UBS. The European bank will raise the money from Singapore and Middle Eastern investors by selling stakes in the company. Financial shares, including those of UBS, reacted positively this morning to the news. Which of course, leads all to wonder: is it time to buy financials yet? Of course the big concern looming over financial companies and their shares is exposure to subprime mortgages and the illiquidity of assets in SIVs . And in case you still thought the subprime problem was well "contained", you obviously haven't been with us here on Earth these past few months. As FT Alphaville and Bloomberg point out, even the bond insurers are suspect . Monoline insurer MBIA is now facing scrutiny over its AAA rating as the company faces problems over the subprime CDOs it backs. This in turn spells trouble for all the AAA r...