Last year we saw low volatility, high volatility, greed and fear play out. With the average hedge fund down in 2011, there were some exceptional value makers. Forbes reports;
For most hedge fund managers, 2011 was a year to forget. The average hedge fund fell by 5% even as the U.S. stock market eked out a tiny gain. Big shot investors like billionaire John Paulson were humbled and lost massive amounts of money. Yet even in a down year, arguably its worst ever, the hedge fund industry demonstrated its unmatched ability to make people rich.
No hedge fund titan made more in 2011 than Raymond Dalio. The founder of Bridgewater Associates, the world’s biggest hedge fund firm, made an estimated $3 billion in 2011 as his funds produced net returns in the 20% range. As a result, Dalio tops Forbes’ list of the 40 highest-earning hedge fund managers of 2011. Full article here.
As the markets cheer the Spanish bond sales, protests in Barcelona are getting out of control. Austerity sucks, at least for the people. El pais reports;
Demonstrations took place across Spain on Wednesday in protest against spending cuts in the public education sector.
Some 20,000 students took to the streets in Valencia, according to EL PAÍS’ calculations, where the protests began in earnest in mid-February at the Lluís Vives public school and swiftly escalated after the arrest of a minor, resulting in bloody clashes between police and protestors during which dozens of youngsters were detained.
While the LTRO is saving the banks, people of Southern Europe are pulling money out of the local system and moving it to Northern safety. From Spiegel;
More and more people in southern euro-zone countries are moving their money north amid fears of losing their savings in the crisis. The capital flight makes things difficult for banks back home, but experts say there are no legal measures to stop it. Any steps would probably come too late, they say, and might even endanger the European project.
The TARGET2 numbers also show that a growing share of the money flow in crisis-stricken euro-zone member states is “involuntary.” The totals represent money borrowed by individual central banks from the ECB — and not foreign investment. Commerzbank analyst Lutz Karpowitz has calculated what capital flow balances would look like without the TARGET2 system. The result, as seen in the graphic below, is not terribly encouraging.
Guest post by Doug Short.
Over five months have passed since the latest Federal Reserve intervention, Operation Twist, was officially announced on September 21. We’ve now seen several bouts of aggressive Fed attempts to manage the economy following the collapse of the two Bear Stearns hedge funds in mid-2007 about three month before the all-time high in the S&P 500.
Initially the Fed Funds Rate (FFR) underwent a series of cuts, and with the bankruptcy of Bear Stearns, the Fed launched a veritable alphabet soup of tactical strategies intended to stave off economic disaster: PDCF, TALF, TARP, etc. But shortly after the bankruptcy filing, the Fed really swung into high gear. The FFR fell off a cliff and soon bounced in the lower half of the 0 to 0.25% ZIRP (Zero Interest Rate Policy). The thud to the FFR bottom coincided with the first of two rounds of quantitative easing in an effort to promote increased lending and liquidity.
North Korea agreed on Wednesday to suspend nuclear tests, long-range missile launches and its activities at a key nuclear facility in an announcement that represents a surprise breakthrough for nuclear diplomacy, http://ftalphaville.ft.com/thecut/2012/03/01/905291/n-korea-agrees-to-suspend-nuclear-tests/
Fannie Mae, the US government-controlled mortgage financier, will ask taxpayers for another $4.6bn after recording a $2.4bn loss last quarter, the company has said. The FT reports the latest appeal brings its total request from the US Treasury to $116bn, http://ftalphaville.ft.com/thecut/2012/03/01/905161/fannie-mae-to-ask-treasury-for-4-6bn-more/
Apple will probably start paying a dividend this year, Bloomberg says, based on the news agency’s own data and projections which forecast a quarterly dividend of about $2 a share before 2013. The projections are based in part on the dividends paid by other large technology providers, http://ftalphaville.ft.com/thecut/2012/03/01/905131/apple-dividend-predicted/
Malaysian Air, the nation’s largest long-haul carrier, reported a fourth straight quarterly loss on rising fuel costs and provisions for returning leased aircraft early, reports Bloomberg. The net loss of 1.28bn ringgit ($426m) in the three months ended in December compared with a profit of 225.9m ringgit a year earlier,http://ftalphaville.ft.com/thecut/2012/03/01/905031/malaysian-air-in-crisis-after-big-loss/
Federal Reserve chairman Ben Bernanke offered a tempered view of the US economy on Wednesday, says Reuters, pouring cold water on the notion that recent upbeat signs herald a stronger recovery. Mr Bernanke told Congress that unless growth accelerated, http://ftalphaville.ft.com/thecut/2012/03/01/904991/bernanke-downbeat-on-economy/