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Home / Tag Archives: Risk and risk management

Tag Archives: Risk and risk management

Wall Street’s Useful Idiot: Financial Times Shills for CLOs….as Fed Hasn’t Bailed Them Out

It’s not a popular position to point out that a particular financial risk is overblown. But when everyone in Corporate American and investor-land is in “Where’s my bailout?” mode, the usual motivations are reversed. Normally, “Nothing to see here, move along” is the default position when the great unwashed public worries about too much leverage, opacity, and tricky practices. But when central banks are doling out trillions, sounding alarms, whether warranted or not, is the way to get someone...

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The Invisible Business Risk of the Covid-19 Pandemic

Lambert here: “More research needed.” Really? By Jordan Schoenfeld, Associate Professor of Accounting, Tuck School of Business, Dartmouth College. Originally published at VoxEU. Are pandemics systemically important to modern-day financial markets? It is not obvious how a financial market’s myriad interconnected parts would react to a pandemic-induced supply and demand shock. This column shows that the COVID-19 pandemic triggered unprecedented changes in employment levels and the values of...

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Universa Debunks CalPERS’ Defense of $1 Billion Tail Hedge Miss; Insider Accounts Expose Additional Misrepresentations

The controversy over CalPERS CIO Ben Meng’s decision to exit tail risk hedges just before a $1 billion payday is not going away as quickly as CalPERS would like. The Nassim Nicholas Taleb-affiliated fund manager, Universa, which managed the bigger and more lucrative hedge, has cleared its throat to debunk CalPERS’ excuses justifications for terminating the program despite it having the support of CalPERS’ consultant, Wilshire, and over the objections of staff. Now Universa itself has...

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Fed Drastically Slashed Helicopter Money for Wall Street. QE Down 86% From Peak Week in March

Yves here. The fact that the Fed isn’t giving financiers as much in the way of new juice doesn’t change the fact that it threw open the floodgates last month. By Wolf Richter, editor at Wolf Street. Originally published at Wolf Street Total assets on the Fed’s balance sheet rose by only $83 billion during the week ending April 29, to $6.656 trillion. That $83 billion was the smallest weekly increase since this show started on March 15, and down by 86% from peak-bailout in the week ended March...

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More Public Pension Fund Pain: LACERS Reports Hit to Liquidity from Private Equity Capital Calls; Are Fund Managers Exploiting the Dumb Money Yet Again?

In case you managed to miss it, public pension funds are under stress, to the degree that Mitch McConnell bothered kicking them while they were down. And as we’ll show shortly, public pension funds are facing more pain due to private equity funds making them cough up money to meet capital calls. Public pension funds tight on available cash to pay benefits may wind up selling assets at fire-sale prices, as CalPERS did in 2009. But any pension fund that winds up making private-equity-induced...

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Press Ferrets Out More Falsehoods by CalPERS CIO Ben Meng, Evidence of Poor Leadership, in Giving Up >$1 Billion Hedge Payday

Bloomberg, the Wall Street Journal, and Institutional Investor have published new reports in the last two days on the escalating controversy surrounding CalPERS CIO Ben Meng missing out on over $1 billion in gains1 by exiting a tail risk hedge right before the coronacrash. Meng’s self-defense is backfiring. Not only is the press exposing more layers of his misrepresentations, but Meng’s dogged refusal to admit error is proof of that he is unfit for his job. Meng keeps trying to pass of the...

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CalPERS Staff Seeks to Strip Board of Remaining Authority Even as Press Exposes Multi-Billion Cost of Lack of Supervision; Elected Board Members Thumb Nose at Public by Seeking to Be Paid for Doing Almost Nothing

Admittedly, most CalPERS board members have been working hard at imitating potted plants. The rare exceptions that attempt to perform their constitutionally-mandated jobs as fiduciaries, like JJ Jelincic and now Margaret Brown, are subjected to CalPERS-orchestrated attacks in the press and petty hazing. However, in a brazen power grab, the staff is about to have the board sign away its remaining power, even though the board members cannot escape their legal responsibilities by saying, “Oh,...

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Taleb Questions CalPERS Ben Meng’s Competence and Honesty in Defending Missed $1 Billion Hedge Gain; Taleb Estimates CalPERS Net Loss on Meng’s “Alternative Mitigation” Over Two Years at $19 Billion

Nassim Nicholas Taleb, a celebrated expert on complex risks, in a video Taleb has graciously allowed Naked Capitalism to run exclusively, challenges CalPERS Ben Meng’s rationalizations of his decision to dump both of CalPERS’ two “left tail risk” hedging strategies. That call resulted in CalPERS giving up over $1 billion gain, or a 3600% return, on the bigger of the two hedges that CalPERS closed out first, prior to the market free fall. As we’ll show below, Taleb is reacting to Meng’s...

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CalPERS Dumps Risk Hedge Right Before Coronacrash, Sacrificing $1 Billion and Confirming Doubts About Chief Investment Officer Ben Meng’s Expertise

If you have been paying even a modicum of attention to the financial press over the last few years, you would have noticed that the effect of a decade plus of super low interest rates has been across-the-board overvaluation of investments. Ironically, CalPERS former Chief Investment Officer Ted Eliopoulos, generally dismissed as an administrator rather than a money maven, took out a hedge against that risk. His supposedly more market-savvy successor Ben Meng proceeded to dump the bigger of...

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Global Level 4 Travel Advisory: Stealth Subsidy for Insurers?

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans. Last week. the State Department issued a global level 4 health advisory, recommending US  citizens not travel internationally, Global Level Four Health Advisory – Do Not Travel. I am one of many US nationals who was outside the US when the advisory was issued. The department recommended that we return immediately to the US. Yet at the time the...

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