v****e
发帖数: 19471 | 1 http://online.wsj.com/article/SB1000142405311190389590457654270
A top Goldman Sachs Group Inc. strategist has provided the firm's hedge-fund
clients with a particularly gloomy economic outlook and suggestions for how
these traders can take advantage of the financial crisis in Europe.
In a 54-page report sent to hundreds of Goldman's institutional clients
dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm's
trading desk—argued that as much as $1 trillion in capital may be needed to
shore up European banks; that small businesses in the U.S., a past driver
of job production, are still languishing; and that China's growth may not be
sustainable.
“Here we go again…solving a debt problem with more debt has not solved the
underlying problem. ...Can the US continue to depreciate the world's base
currency?”
—From a report by Goldman strategist Alan Brazil suggesting how to profit
from bad economic news
Among Mr. Brazil's ideas for trading on that downbeat analysis: a fancy
option play that offers a way to take a bearish position on the euro, and a
bearish bet through an index of insurance contracts on the credit of
European financial stocks. The report also includes detailed information
about European financial institutions and pointed language about the depth
of the problems in Europe, the U.S. and China.
A Goldman Sachs spokesman said: "As a matter of course, financial
institutions publish reports suggesting strategies to fit clients' needs.
Whether clients want to hedge existing exposures or take long or short
market positions, our goal is to help them meet the challenges the markets
present." Through the spokesman, Mr. Brazil, who is 57 years old, declined
to comment.
The report comes as Goldman and its major rivals vie for banking and
advisory business from the same European nations whose fortunes it is
counseling clients to bet against. On Wednesday, Goldman and two other major
banks hosted a presentation in London in which the Spanish economics
secretary, Jose Manuel Campa, planned to outline Spain's fiscal austerity
measures and pitch Spain's case to investors, according to an invitation
seen by The Wall Street Journal. Goldman has a leading position among banks
in facilitating sales of Spanish sovereign debt.
Wall Street firms have sought to sell hedge funds ideas for trades that
would pay off under dire circumstances in the past. Before the financial
crisis of 2008, Goldman and other top Wall Street firms pitched their hedge-
fund clients on bearish bets on the housing market involving credit default
swaps—insurance-like contracts that rise in price if the value of the
underlying asset falls—that the banks developed. Goldman sometimes took the
bearish end of such trades even as it was selling the bullish end to
clients.
The trading ideas in Mr. Brazil's report, however, are different from the
mortgage-related products sold by Goldman, because these suggestions involve
existing financial products, such as options and indexes. As a "market
maker" in the products listed in Mr. Brazil's report, Goldman is offering to
put together the trades it describes. When Goldman handles such trades, it
pockets bigger fees than when it executes stock trades, which yield just
pennies a share. Goldman's own trading positions potentially could benefit
if hedge funds and other clients make trades based on the report. Goldman
says in bold letters at the top of the report that other Goldman traders, or
"Goldman Sachs personnel," may already have acted on the material in the
report.
Of course, Mr. Brazil isn't alone in his dark view on Europe: Bearishness on
Europe abounds these days on Wall Street. Neither does Mr. Brazil have a
lock on the financial instruments in the report. For instance, the Global
Economics, Commodities and Strategy Research unit at Goldman put out a
foreign-exchange report in July that mentions the prospects of bearish bets
against the euro versus both the U.S. dollar and the Swiss franc. Other
investment banks have strategists who provide hedge funds with trading ideas
, as well.
The report, released by the Hedge Fund Strategies group in Goldman's
securities division, provides a glimpse into the trading ideas that are
generated for hedge funds through strategists, such as Mr. Brazil, who are
part of Goldman's trading operation rather than its research group.
Such strategists sit alongside the traders who are executing trades for
their clients. Unlike analysts in firms' research divisions—who are
supposed to be walled off from information about the activity of the firm's
clients—these desk strategists have a front-row seat for viewing the ebb
and flow of clients' investment plays.
They can see if there is a groundswell of interest among hedge funds in
taking bearish bets in a certain sector, and they watch trading volumes dry
up or explode. Their point of view is informed by more, and often
confidential, information about clients than analysts' opinions, making
their research and ideas highly prized by traders.
The report itself makes note that the information included isn't considered
research by Goldman. "This material is not independent advice and is not a
product of Global Investment Research," the report notes. Hedge-fund
managers are discouraged from circulating Mr. Brazil's reports, and each
page bears the name of the hedge-fund client on it. It isn't clear whether
any clients made trades based on the advice the report offered.
Mr. Brazil's report carries language and details about the markets' problems
that normally don't appear in research for public consumption. Hedge funds
should batten down the hatches, he suggests.
"Here we go again," he says in the report, amid a number of charts
displaying negative statistics similar to those that portended problems
before the 2008 financial panic. Mr. Brazil writes: "Solving a debt problem
with more debt has not solved the underlying problem. In the US, Treasury
debt growth financed the US consumer but has not had enough of an impact on
job growth. Can the US continue to depreciate the world's base currency?" he
asks.
Mr. Brazil spells out in detail the borrowing by 77 European financial
institutions, identifying some that are especially highly leveraged. Such
details are valuable for investors who are looking to make bearish bets
through credit default swaps on individual European banks, hedge-fund
managers say.
For investors who want to make a broader bet against European financial
institutions, Mr. Brazil suggests buying a five-year credit default swap on
an index, which reflects the credit of a number of European companies. About
20% of the members of the index, the "iTraxx Europe series 9," are banks
and insurance companies, Mr. Brazil writes.
He also suggests a six-month "put option" giving investors the right to bet
against the euro versus the Swiss franc. The euro, "may weaken if additional
financial support packages or stimulus measures are passed by European
governments," he writes.
—Sara Schaefer Muñoz contributed to this article.
Write to Susan Pulliam at s***********[email protected] and Liz Rappaport at liz.
r*******[email protected] | g********5
发帖数: 10335 | 2 他家的空仓快守不住鸟哈哈
fund
how
to
be
【在 v****e 的大作中提到】
: http://online.wsj.com/article/SB1000142405311190389590457654270
: A top Goldman Sachs Group Inc. strategist has provided the firm's hedge-fund
: clients with a particularly gloomy economic outlook and suggestions for how
: these traders can take advantage of the financial crisis in Europe.
: In a 54-page report sent to hundreds of Goldman's institutional clients
: dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm's
: trading desk—argued that as much as $1 trillion in capital may be needed to
: shore up European banks; that small businesses in the U.S., a past driver
: of job production, are still languishing; and that China's growth may not be
: sustainable.
| s*****r
发帖数: 1745 | 3 they will eat their own shit as always, in a blink of eye.
fund
how
to
be
【在 v****e 的大作中提到】
: http://online.wsj.com/article/SB1000142405311190389590457654270
: A top Goldman Sachs Group Inc. strategist has provided the firm's hedge-fund
: clients with a particularly gloomy economic outlook and suggestions for how
: these traders can take advantage of the financial crisis in Europe.
: In a 54-page report sent to hundreds of Goldman's institutional clients
: dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm's
: trading desk—argued that as much as $1 trillion in capital may be needed to
: shore up European banks; that small businesses in the U.S., a past driver
: of job production, are still languishing; and that China's growth may not be
: sustainable.
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