Minyanville's Market Recap: Markets End Down, Hedge Fund Pain, Warning Signs
Recap the trading day: Goldman hedge funds, watch out for redemptions!
The trading session began with news that central banks around the world continued to inject liquidity into the marketplace. The New York Fed injected $2 bln into the banking system which followed earlier moves by the European Central Bank (ECB) and the Bank of Japan (BOJ).
In other news, all eyes were on Goldman Sachs (GS) this morning as the company provided a highly anticipated update on two of its hedge funds that are both down approximately 30% YTD. The company did its best to assuage the concern of investors, but it was to no avail as the stock ended down $9 dollars from its highs of the day. The stock closed -$3.00 at $177.50.
The poor performance was not just isolated with Goldman as many companies that use computer-driven strategies have experienced negative results. Lehman (LEH) issued a statement later in the day saying its quant hedge funds suffered large losses last week as well as $37 bln hedge fund AQR saying it had similar "shockingly bad" results." Numerous warnings have appeared on the Buzz and Banter to mark August 15, the day most hedge funds could experience massive redemptions that would result in large liquidations. Jeff Saut also provides a bleak warning with an interesting comparison of the implications of today's market conditions and those of the early 1900's in Modern Echoes of the Bankers' Panic.
Meanwhile, following a June decline, retail sales came in higher than expected at a 0.3% increase. Although the figures were sluggish, the news was still pleasing to the bulls as it showed a steady increase in all major segments. Read Professor Depew's Five Things You Need To Know for a detailed look on the retail sales figures and Goldman's updates.
Below is just some of the idea flow on today's Buzz and Banter. Please note that stocks may appear on both bullish and bearish categories due to long and short term trades by our many Minyanville Professors.
Some Bullish trade or investment ideas: SPX, AAPL, GOOG, TSL, TASR, BRCM, NOK, GLW, CCU, FDC, HD, LTR, LUK, Y, ACP, DISH, CMCSA, BRCM, CG, LTR, LBTYA, CVL, RIO
Some Bearish trade or investment ideas: PPD, AAPL, BZH, CTX, RYL, TOL, LEN, KBH, FNM, FRE, GRMN, WFC, C, LEH, BKX, AKAM, GS, C, BAC, CFL
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