US Economy

I happened to read an article that was written by one reporter, Emanuel Shahaf from Jerusalem. Nice article on the US economy. Good one ..very frank and straight. It says about the recent mess-up in Guantanamo Prison, the inherent ambigiuity in the US electoral process (where Bush won even when the majority wasnt with him) , but one statement that stuck me most was in which the author writes "A hugely negative balance of payments, combined with a below zero-rate savings has given rise to a situation where figurately speaking, americans now make a living selling houses to each other, financing the deal with chinese mortages"!!!

Wah thats a statement and majority of that is exactly true. In a latest report published by IMF , more than half of the investments being made in US capital markets and more than half of the money sitting in US banks are from China and Japan. This means, the moment these chinese and Japanese start drawing their money out of these banks in US, you will see the mighty US coming down like a building made of cards!! To end this blog, another interesting aspect is that more than 70% of US dollars floating in the universe are held outside the US.

Such a bloody situation for any country to be in...!

BONUSES in HEDGE FUNDS

Today i met one of my business friends. i met him during one business conference. He is a guy from greece and he is a hedge fund manager at a firm in singapore. We met at a danish restaurant...Nice guy. MBA from Harvard /Married at the age of 22 , now 28 and has two kids..!!!! Jesus..but he is a muslim..SO Allah!! Here i am already 26 and walking around hanging that stuff between my legs and as a useless bachelor.

The above was not that made me faint..He spoke about the Bonus structure in Hedge Fund firms..Last year his bonus was close to 2.1Mln USD.!!!!.Can you believe that..and he said he was rated down due to poor performance on one of his macro funds which went against our poor indian market..(For your info - Macro hedge funds bet against general market movements like sensex, dow jones etc than a specific industry).. With his poor performance he got 2.1Mln bonus so what would have been the case had he got it right? I asked him but he wasn't ready to give me that figure but told me it should be close to 10Mln in a wall street firm....

Ga Ga Ga....i want to be a hedge fund manager!!!!!!!

The only problem is hedge funds never recruit people. You need to start off in a Venture capital firm or as an equity analyst or a portfolio manager to get into a hedge fund firm..Once IN then its a Roll...lol!!!

Refinery Scheduler!

Well finally i made it! Now i am a scheduler..I always wanted to do this job. Mainly because this gives u first hand exposure to a refinery and how it works, various crude distillate units, how an economist manage a refinery..Its simply wonderfull!! If you ask me "whats the most complicated factory in the world?" i would say its a refinery..Its so complex that you will go haywire.

In this new role i will be managing LPG trading for three main refineries in south east asia..Pulau Bukom refinery in singapore, port dickson refinery in Malaysia and Tabangao refinery/terminal in Philipinnes. Special mention is the fact that pulau bukom refinery is the a fully complex refinery and second biggest in the world for shell after "Pernis" in rotterdam.

Ok i will mention a bit of refinery in this blog.. Mainly there are 3 types of refineries.
1) Simple refinery 2) semi-complex refinery 3)fully- complex refinery

A Simple refinery has a single distillate unit which is like a boiler in which you pour crude and get
middle distillates (namely jet, kero, gasoline, mogas, naptha) , upper distillates (namely LPG, chems) and lower distillates (fuel oil, base oil, lubricants and wax). Among this middle distillate makes money for a refinery and hence any refinery margin is measured as the difference between the price of crude and that of a single middle distillate (MD). A typical conversion rate of crude to MD is about 1o% in asia for a simple refinery. Inorder to optimise the MD's chemical engineers convert the upper and lower distillates to MD's by using various complex units namely hydrocrackers, naptha crackers etc..when you add more of these very very complex and dangerous units into a refinery it becomes a complex refinery..

Some of these crackers uses highly toxic and dangerous acids like hydrochloric acid etc to convert the double chain carbons to single chain and vice versa... so Bukom is a fully complex , PD in malaysia is semi complex and tabangao is a simple refinery. hence the exposure is very high for me here.. I am supposed to optimize the trading volume coming out of these refs. Its a cool but 24 hour job and the book itself is above 4Mln dollars a year. but its a challenge.

And when you take these cargos into the market and trade against time, geography and products you have a full trading markets in the name of futures, arbitrage and swaps..this is just what trading is all about and its so simple!! But how you combine these three factors to make a structured deal is what gives you those million bucks and its purely your intelligence..

Well on my personel front, i gave my CFA exam last week and am waiting for the result..If you ask me, the chances are just 50/50...