Original upload date: Sat, 04 Oct 2008 00:00:00 GMT
Archive date: Fri, 10 Dec 2021 01:16:43 GMT
Hedge Fund expert, Charles Gradante, Co-Founder of Hennessee Group LLC, arguably the oldest and, by most every account, the preeminent hedge fund advisory firm on Wall Street, is shown on CNBC's 'Stre
...
et Signs' with Erin Burnett discussing the "undiscovered elephant in the room," which Gradante reveals are credit default swaps (CDS), A $27 trillion global market.
Gradante's commentary in this interview was uncannily accurate and preceded by nearly two years the unraveling of the financial markets in 2008:
- Big banks/insurance companies selling CDS insurance to hedge funds who are betting that credit spreads will widen
- Banks/insurance companies have concentrated bets against hedge funds which can become a systemic risk to the markets
- No one knows which financial institutions are long or short CDS, nor who is hedged or making directional bets
- On a scale of 1 to 10, this is an 8 or 9 problem
- There may be a problem with banks that have taken a concentrated bet against credit spreads widening by selling CDS to hedge funds
- Counterparty risk exists and is undefined
Gradante is the only completely independent, non-government expert to have testified before Congress on the hedge fund industry and the critical regulatory issues affecting the industry. In this interview, he makes very understandable, in plain English, some of the very complex issues that characterize hedge fund risk, most especially credit default swaps, bank specific risks, spreads, and counterparty risks.
The firm (www.HennesseeGroup.com) is located at 500 5th Avenue, New York, NY 10110 (212) 857-4400.
