Showing posts from June, 2016

Hedge Funds' Brexit Pain?

Christopher Langner of Bloomberg reports, Hedge Funds' Brexit Pain : Hedge fund managers won't admit it, but they live for the quarter. While some of the bigger firms update clients more often, regular outfits provide an update four times a year, after which investors often decide to redeem their holdings or leave things as is. So it couldn't be more unfortunate that Brexit happened just five trading days before the end of the second quarter. Even the savviest of money managers would struggle to recoup the kind of losses seen over the past two sessions. And a smaller gain, or a negative return, could spur outflows from an industry already under fire. Hedge funds globally saw a net $15 billion exit from January to March, reducing assets under management to $2.86 trillion from $2.9 trillion, Chicago-based Hedge Fund Research said in April. In Asia, investors redeemed $2.9 billion in the first quarter, the most in seven years, data from eVestment show. That wa

Profiting From Brexit?

Rachael Levy of Business Insider reports, A select group of hedge funds made some serious money on Brexit : The UK has voted to leave the European Union, a shock decision that sent markets crashing on Friday. For a small band of hedge funds, the decision, and its impact on the market, led to outsize returns. The gains are especially noteworthy, as many funds went in to the vote having reduced risk. "An unusually low number of client incoming calls and modest trading volumes away from the Russell rebalancing may speak to the already light positioning ahead of the UK referendum," Credit Suisse said in a note Friday. In addition, betting on a binary outcome such as Leave-Remain is a brave bet. Four out of five European hedge funds polled expected Britain to stay in the EU, according to a Preqin poll earlier this month, and most polling immediately before the vote suggested Remain would carry the day. Still, several funds posted impressive returns. Th

Europe's Minsky Moment?

Herbert Lash and Marc Jones of Reuters report, World stocks tumble as Britain votes for EU exit : Global capital markets reeled on Friday after Britain voted to leave the European Union, with $2 trillion in value wiped from equity bourses worldwide, while money poured into safe-haven gold and government bonds. Sterling suffered a record plunge. The blow to investor confidence and the uncertainty the vote has sparked could keep the Federal Reserve from raising interest rates as planned this year, and even spark a new round of emergency policy easing from major central banks . The traditional safe-harbor assets of top-rated government debt, the Japanese yen and gold all jumped. Spot gold rose more than 5 percent and the yield on the benchmark 10-year U.S. Treasury note fell to lows last seen in 2012 at 1.5445 percent. Stocks tumbled in Europe. London's FTSE dropped 2.4 percent while Frankfurt and Paris each fell 6 percent to 8 percent. Italian and Spanish markets, and

Canada's Next Pension Challenge?

Don Pittis of CBC News reports, Now that Bill Morneau conquered the CPP it's time to move on to a harder pension problem : Who would ever have guessed that hammering out a Canada Pension Plan solution would have been so easy? With such widespread support for Finance Minister Bill Morneau's latest pension reforms, perhaps the government will finally have the confidence and wisdom to solve the other giant pension problem: the case of the missing money . Only a year ago, calls for CPP reform seemed to be falling on deaf ears. Opponents labelled contributions to our own retirement a "payroll tax" and talked about the danger of big government. Job losses Small business hollered that their share of the contribution would slash profits and lead to job losses, something the government denies. Some of those objections have not gone away. "Finance ministers are putting ... jobs in jeopardy and willfully moving to make an already shaky economy even worse,&qu

To Brexit Or Not To Brexit?

John Geddie of Reuters reports, Beyond Brexit, easy central banks keep euro zone bonds in demand : Investors hoovered up euro zone bonds on Wednesday, daring to look beyond Britain's EU vote to a world in which the U.S. Federal Reserve is in no rush to raise interest rates and the ECB stands ready to do more to nurture weak growth. The recent rise in safe haven German bond yields -- which has come as investors discount the prospect of a vote for Brexit -- ground to a halt and low-rated debt was also in demand after interventions from the world's two most powerful central banks . European Central Bank chief Mario Draghi renewed his pledge to use all instruments to tackle weak growth in the bloc, before U.S. Fed chair Janet Yellen put the kibosh on a July rate hike as she bemoaned slowing momentum in the US labour market. "It took ECB President Draghi's statements, which were interpreted as being dovish, to usher in a bullish counter-movement on EMU (euro zone