Sunday, October 26, 2008

Is Citadel going Down?

Rumor has it that the reason the futures went lock limit down on Friday was because the massive hedge fund Citadel was going down.

Here is the article from Reuters. It appears that Citadel went to the the government looking for a handout:

"CHICAGO, Oct 25 (Reuters) - Examiners with the Federal Reserve have questioned Wall Street counterparties in recent days about their exposure to debt and other holdings of Citadel Investment Group, the Wall Street Journal reported on Saturday.

The report came a day after Citadel, one of the world's largest hedge funds, said it has more than $10 billion in available credit. The Chicago-based fund was seeking to stop rumors it was liquidating some portfolios after its two main funds had lost 35 percent since January.

Citing people familiar with the matter, the Journal said the Fed had questioned the counterparties in at least two instances.

Talk has swirled in the market that Citadel had asked the U.S. government for a cash injection and that financial regulators were coming to inspect its accounts."

Final Take:

This seems to be the next kaboom in the stock market. I doubt that the Feds will start bailing out hedge funds. The Citadel was leveraged at 10-1. A 35% loss on their equity pretty much tells me they are toast.

Expect a violent market reaction if this turns out to be true.

5 comments:

teddy bear said...

it looks like huge financial pyramid (called "modern finance" or financial engineering :D) which now collapses ;)

http://tinyurl.com/3mrg3z

Ron Paul is great :)
http://pl.youtube.com/watch?v=9_yjImzwuIU

thanks God for him :)

teddy bear said...

amazing 8-)

"Volvo said it received 115 order bookings for heavy trucks in Europe in the quarter, down from 41,970 trucks a year earlier. Customers in Europe are taking a ``wait and see'' attitude amid turmoil in global financial markets, Volvo said."

http://tinyurl.com/6gyysp

Jeff said...

Teddy

I saw the Volvo article. Thats flat out frightening.

I was speaking to an automotive consultant over the weekend. He thinks Ford is toast and chrysler and GM will merge and hope that Chrysler's $12 billion will give them enough cash to weather the downturn.

I love Ron Paul. Great stuff!

Jeff said...

Interesting night over in Japan.

The Nikkei once again got crushed. Down almost 500 points. The Nikkei is now back to 1982 levels. Unbelieveable!

This market peaked at almost 38,000. Its now down 70+% 19 years later.

I thought the markets always went up? DOW fututes are now red.

Could be another bloody day tomorrow. HOld on tight!

Jeff said...

wow

What a close.

Post coming