Sand Spring Advisors LLC
The Next To Fall?
November 29, 2001
by, Barclay T. Leib
To date, most of the newspapers have focused on the bank debt (some secured and some not) outstanding from Wall Street to Enron.
In my opinion, the real risk in this situation is that Enron was easily one of the largest derivatives traders in the world in energy, FX, and interest rates. All those trades (excepting a small percentage where cross-margining existed) are now in quasi-limbo. No one knows whether they will be honored or not. Thus an entire financial system doesn't really know what its market exposures really are.
This is the type of "daisy chain" risk to derivatives that I have previously spoken of. When one major credit drops out, the trickle-on effects to bank and counterpart books elsewhere is very hard to quantify.
I spoke with two savvy hedge fund managers in New York City today, and both were concerned that the Enron situation could dwarf the problems caused by Long Term Capital Management.
I'm not sure if that will be the case or not, but reputedly the reason Dynegy was interested to buy Enron is that 20% of their many hedges have Enron as a counterpart. If Enron goes puff, could this bring Dynegy down as well?
That's another question to which I don't have an immediate answer to, but the chart pattern above of Dynegy certainly looks dangerously poised. In the words of one manager with whom I spoke today: "If we get news of just one other company being forced into Chapter 11 courtesy of the Enron situation, all hell is going to break loose in our financial system."
How Your Articles Are Delivered
Upon the processing of your credit card or the receipt of a personal check, Sand Spring will e-mail you the articles requested as a Word attachment, and also provide you with a WWW address and password to view the article on the web without using Word should you so desire. Confirmation of your order will be immediate, and the actual article will follow by e-mail typically within a few hours and in all cases before the opening of NYSE trading on the following day.
Ordering by Credit Card:
Our shopping cart is designed for both physical and subscription products, so do not be confused too much when it asks you for a shipping address. A correct address is important only for credit card authorization purposes. Your e-mail information is the most important piece of information to us for proper delivery of your article(s).
Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.
If you order by credit card, your credit card will be billed as "Sand Spring Advisors LLC"
Take me back to the Sand Spring Home Page
Comments or Problems
Thank you for visiting Sand Spring Advisors LLC, Inc. We hope to hear from you again soon. For more information on Sand Spring Advisors actual programs, services, or to request a copy of a Disclosure Document, please phone us at 973 829 1962, FAX your request to 973 829 1962, or e-mail us at information@Sandspring.com
10 Jenks Road,
Morristown, NJ 07960
Phone: 973 829 1962
Facsimile: 973 829 1962
Best Experienced with
The material located on this website is also the copyrighted work of Sand Spring Advisors LLC. No party may copy, distribute or prepare derivative works based on this material in any manner without the expressed permission of Sand Spring Advisors LLC
This page and all contents are Copyright © 2000 by Sand Spring Advisors, LLC, Morristown, NJ