Archive for September 23rd, 2008

A quick update on International Eco and US Eco

September 23, 2008

Dallas Fed has issued two very timely releases. One is an update on International economy and other is an update on US economy.

One can do a quick read to get an overview of trends.

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Morgan Stanley praises, hedge funds disposes

September 23, 2008

I had posted that short-selling has been banned in select stocks in US and UK. FT Alphaville posts updates the list and the list includes quite a few countries- Australia, Taiwan, Germany, France, Belgium, Japan, Hong Kong etc.

Morgan Stanley praises the move in its press release. It is pretty amusing the way MS praises the move. As long as you are being shorted, praise the policy; if you short some stock abhor the policy. I am sure if they were on latter side they would have issued an opposite press release.

Meanwhile, Hedgies are not pleased and a group of Hedgies is planning to sue FSA:

A group of the world’s biggest hedge funds are planning to sue the Financial Services Authority for millions of pounds of losses incurred as a result of the regulator’s ban on short-selling last week.

Lawyers are being galvanised on behalf of a raft of hedge funds which claim the financial watchdog has illegitimately extended its powers and caused ‘wide-spread capital destruction.’

One said: ‘The FSA’s remit is to maintain orderly markets – the markets were working fine, only the banks were going bust. With one swoop, the regulators have wiped out perfectly legitimate businesses and have cost some funds millions. They have gone for the big political hit without a thought for the damage they are wreaking. There may be unintended consequences but it’s outrageous and illegal.

What is even more amusing is that some Hedgies even managed to find a way around the short-sale ban. FT Alphaville points:

 Managers said they would continue to place bets on their negative views on the banking sector, even as straightforward short sales were no longer possible. However, they face active regulators who are moving to close loopholes in the hurried rules, designed to calm markets by preventing investors from betting on a worsening of the financial crisis. The UK’s FSA watchdog body issued new guidelines to make clear that shorting an index and buying back all but one of the underlying stocks – in effect creating a short position on the one missing company – was forbidden.

🙂

Addendum:

FT Alphaville points that some companies want to get into SEC short-sale ban list and some are opting out. 🙂

Assorted Links

September 23, 2008

1. WSJ Blog points Trichet says no point looking for scapegoats. It points to G7 call to reform state of affairs

2. Krugman points to an alternative Paulson plan- Dodd plan

3. Rodrik on fin innovation 🙂 and says whether too much competition be the culprit

4. FCB points zero interest on T-bills

5. MR on OTC derivatives, banks bigger than economies

6. IDB pointsto a new blog on microfinance

7. Nudges on automatic enrollment

8. ASB pointsto papers at the third NIPFP-DEA conference


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