Real Talk on the SALT Conference, Lehman Brothers, Blackstone and Goldman Sachs

May 22 2017 | 10:36am ET

Today, we talk about Citi’s financial glee, Lehman’s collapse nearly a decade ago, Blackstone’s infrastructure billions, the SALT Conference and today’s reading list.

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Quotes of the Day

“The fact that Mr. Trump's $110 billion arms deal with Saudi Arabia on Saturday is being hailed as a boost for American jobs, his more conciliatory and statesmanlike tone toward Muslim leaders is being applauded, as is his closer working relationship with China’s President, Xi Jinping. It perhaps shows that Trump is — finally — appreciating the value and importance of good foreign relations.”

Nigel Green, deVere Group founder and CEO, discussing the impact of Trump’s visit in Saudi Arabia over the weekend. Green continues to say in a statement that Trump remains mired by a series of scandals that will face investigation for the rest of the year.

There are four reasons Green considers Trump the largest threats to the global markets, bypassing concerns about a recession in China. Here are Green’s four Trump threats.

  • The ongoing scandals could quite feasibly distract the Trump Administration from its agenda of tax cuts, deregulation, infrastructure spending and other pro-business legislative measures, which are hoped to have beneficial effects for investors.
  • Trump appears to be less of a geopolitical risk now that he was at the beginning of his tenure. Whichever way you look at it, his administration is chaotic and unpredictable – and history shows that financial markets loathe uncertainty.  This was demonstrated by last week’s panicked sell-offs.
  • With such media scrutiny, investors could miss other important geopolitical and economic risks that could affect markets and, therefore, returns. These include the downturn in China’s credit impulse that could create an important drag on Chinese growth in the near future. Of course, this could have serious and far-reaching consequences – yet, few people are as interested in this, or other key risks, as they are in Trump.
  • It could be reasonably argued that a market correction is needed and that Trump and the scandals following him could be the catalyst for this.

"Ringing the register, homey.” 

That’s Thomas Giardi, a trader at Citi bank’s credit derivatives trading unit.

He wrote this message in a chat message at 6:40 a.m. on Sept. 17, two days after Lehman’s bankruptcy.

His subject line?


Not only is this a better title for Elizabeth Warren’s next book than her current one… but also Bloomberg dives into the “giddy messages,” the interesting relationship between Citigroup and the collapsed investment firm, and the seven-letter word Marc Pagano, head of emerging-markets credit trading, used to describe AIG.

“There is broad agreement that the United States urgently needs to invest in its rapidly aging infrastructure,”

That is Blackstone President Tony James.

The statement continues: “This will create well-paying American jobs and will lay the foundation for stronger long-term economic growth.”

What it doesn’t say… “Oh, and we’re going to MAKE $$$ in the process.”

“In light of the scant progress made on tax reform to date, the probability of a meaningful fiscal boost ahead of the 2018 midterm election had already appeared to be declining before the latest events, and has declined slightly further since.” 

That’s Goldman Sachs.

They are not convinced that a deal will get done on tax reform this summer.

“It was not in our plans to think that the permafrost would not be there and that it would experience extreme weather like that.”

That’s Hege Njaa Aschim, an official from the Norwegian government.

The Norweigen government owns a Global Seed Vault in the Arctic Circle, which is designed to protect global plant life and help society rebuild in the event of ecological disaster.

Melting ice led to a flood into the vault, which led to a wall of ice blocking the entrance to the emergency supplies. They had to chip away at it in order to get access to the seed supplies.

Keep in mind, the Global Seed Vault is buried in a mountain deep inside the Arctic circle.

They’ve blamed global warming, naturally. Not the original fact that they are hiding food in the Arctic Circle where ice has melted and refrozen since… well… why bother pointing this out?

You’re hiding food in the Arctic Circle…

Stories from SALT

Barron’s: One of the pleasures of the SALT Conference is hearing investors big and small discuss their ideas

New York Times: Steven Cohen Makes a Comeback at Premier Hedge Fund Conference

Business Insider: Joe Biden made a stunning admission about Hillary Clinton's 2016 election bid

Yahoo Finance: Top hedge fund managers shared these five trade ideas at the SALT Conference

New York Daily News: Jeb Bush tells crowd that he predicted 'chaos' president in Trump

Hedge Fund Reading List

Wall Street Journal: Preakness is Latest Victory for Hedge Fund Billionaire Seth Klarman

Financial Times: Tudor Jones backs AI hedge funds

24/7: Massive Hedge Fund Trades Highlight Insider Buying: GE, Pentair, Tempur Sealy, Apollo Global and More

HedgeCo.Net: Third Point’s Loeb Surfs on as Hedge Fund Washout Continues

IR Magazine: IR teams avoid targeting hedge funds

Grab the Newsletter 

The Daily Alpha is published on Finalternatives.

Signup here for the daily FINalternatives Newsletter, which includes the Daily Alpha.

Follow @FINalternatives 

Be sure to check out the award-winning Modern Trader and a very special offer for first-time readers and follow @moderntradermag. 

You can also pick up a copy of the June Hedge Fund issue at Barnes & Noble.

Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon. 


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