Market turmoil causes sharp losses at US hedge
funds - (www.ft.com) Some
of the largest and well known US hedge funds have suffered further sharp losses
from this year’s rout in
equities and commodities, raising the prospect that investors pull more money
from the industry. Popular bets in equities, currencies and commodities have
backfired on a number of hedge funds this year, confounding some of the
industry’s highest profile investors such as Bill Ackman’s Pershing Square,
Glenview Capital run by Larry Robbins, while Carl Icahn has been hit hard by
the slumping energy sector. The current market turmoil follows poor results for
many hedge funds during 2015, increasing worries for managers about rising
redemptions, a process that intensifies further selling of assets like
equities. “It has been a challenging short-term period for many hedge fund
managers,” said Adam Blitz, chief executive of Evanston Capital Management.
“High levels of market volatility, and in some cases illiquidity, have caused the
prices of many individual securities to become divorced from their fundamental
value.”
Italian Banks Are All In It Together—and That’s
the Problem - (online.wsj.com) There
is an old saying: if you can’t pay a bank back $1,000, you have a problem; if
you can’t pay back $1 million, the bank has a problem. In Italy, everyone has a
problem. The point isn't that every bank has bad loans: They do, but these have at least stopped
growing. The point is that the bad loans of the weakest banks may ultimately
have to be partly paid for by the rest. This is a worry even for banks like Intesa Sanpaolo or Mediobanca, which have strong capital ratios and
improving or already low bad loan positions. The poster child for this concern
is still the world’s oldest bank and Italy’s third biggest by assets, Monte
dei Paschi di Siena.
Brazil's 5,500 Bankruptcies in 2015 Signal
Deeper Credit Crisis - (www.bloomberg.com) In his two decades covering Brazil, Fitch
Ratings’s Joe Bormann says he’s never seen the nation’s companies in such
a dire state. To appreciate just how bad things are, consider
this: Brazilian courts granted more than 5,500 bankruptcy filings in
2015, the most since 2008, according to Sao Paulo-based credit rater
Serasa Experian. Brazil’s deepest two-year recession in more than a century and
plummeting commodity prices are leaving businesses in industries from steel to
air travel among the most at risk of default, according to Fitch. And more pain
is looming in Latin America’s biggest economy as borrowing costs soar, predicts
Bormann, who oversees a team of 60 analysts responsible for rating more
than 500 companies in the region.
Five Countries Being Squeezed by Currency Pegs
- (www.bloomberg.com) Only
on the streets of cities like Cairo, Abuja or Tashkent can you gauge just
how much pressure developing countries are under to ease controls on their
currencies. Individuals and businesses in five nations across central Asia, the
Middle East and Africa are paying anywhere from 4 percent to 136 percent more
than official exchange rates to get their hands on dollars, according to a
Bloomberg survey. So-called black markets flourish at times when there’s a
shortage of greenbacks and are one indicator of how much a currency should be
allowed to depreciate to reach its fair value. Central banks that uphold pegs
have been under strain after tumbling commodity prices and slowing global
growth weakened currencies from Brazil to Russia by at least 18 percent in the
past year. In the four months that followed China’s shock devaluation of the
yuan in August, Kazakhstan, Argentina and Azerbaijan abandoned control of their
exchange rates to boost competitiveness and avoid draining reserves.
Dollar Fragile to China Return as Hedge Funds
Sour on Greenback - (www.bloomberg.com) The
dollar rose against the euro and yen after China boosted the yuan
following a week-long holiday, helping ease global financial turmoil that had
spurred investors to bet the Federal Reserve will delay raising U.S. interest
rates. The euro extended losses to fall the most in two weeks after European
Central Bank President Mario Draghi said policy
makers wouldn’t hesitate to act if price stability is threatened. The greenback
advanced for a second day versus the currencies often perceived as haven assets
after a report Friday showed U.S. retail sales increased more in January than
economists forecast. Large hedge funds and speculators cut their bets on the
dollar’s gains last week by the most since June.
China’s Stocks Tumble as Markets Reopen After Week-Long Holiday - (www.bloomberg.com)
China’s Exports Drop in January as Challenges Flow into New Year - (www.bloomberg.com)
Yuan Rises Most Since 2005 as PBOC Voices Support, Raises Fixing - (www.bloomberg.com)
Japan Leads Asian Stock Rebound as Yen, Gold Fall; Oil Near $29 - (www.bloomberg.com)
Oil Resumes Drop as Iran Loads Post-Sanctions Cargo to Europe - (www.bloomberg.com)
Yen Holds Retreat With Asian Stocks Outside China Set to Rebound - (www.bloomberg.com)
Dollar Fragile to China Return as Hedge Funds Sour on Greenback - (www.bloomberg.com)
Japan Fourth-Quarter GDP Fell Annualized 1.4% - (www.bloomberg.com)
Five Countries Being Squeezed by Currency Pegs - (www.bloomberg.com)
Market turmoil causes sharp losses at US hedge funds - (www.ft.com)
Severe Contraction and Falling Prices in Japan Signal Tough Test for Abenomics - (www.nytimes.com)
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