Hedge Fund Managers Lose Their Swagger - (www.bloomberg.com) In
six months, investors have withdrawn $16 billion. Doug Dillard followed the
path that once almost guaranteed entrance into the 1 Percent: Good college
(Georgetown), investment bank (Morgan Stanley), MBA (Harvard). Then a hedge
fund. A decade out of business school, he was heading Standard Pacific Capital,
a multibillion-dollar San Francisco firm that traded global stocks. It did well
by its clients, making money in 2008 as markets plummeted. But Dillard’s
returns—like most other hedge fund managers’—failed to keep pace in the
post-Great Recession bull market. Investors exited. In February, when assets
slid below $500 million, Dillard pulled the plug. “It has recently become clear
to both of us that sometimes there is a logical conclusion to even a good
thing,” he and his partner, Raj Venkatesan, wrote to clients.
Treasury’s Fannie and Freddie rip-off - (www.washingtonpost.com) The two federally chartered but privately owned
GSEs, which guarantee 80 percent of
American mortgages,
were created because Washington wanted to engineer — what could go wrong? —
more homeownership than market forces would produce. What could go wrong did,
and in 2008 the two GSEs floundered. In September 2008, the government rescued them with $187.5
billion and placed them in conservatorship, which is supposed to be temporary
and rehabilitative. A conserved entity should be returned to normal business in
private ownership.
Freight
Rail Traffic Plunges: Haunting Pictures of Transportation Recession - (www.wolfstreet.com) Total US rail traffic in April plunged 11.8%
from a year ago, the Association of American Railroads reported today. Carloads
of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to
944,339 units. The coal industry is in a horrible condition and cannot compete with US natural gas at
current prices. Coal-fired power plants are being retired. Demand for steam
coal is plunging. Major US coal miners – even the largest one – are now
bankrupt. So in April, carloads of coal plummeted 40% from the already
beaten-down levels a year ago. The AAR report:
Rail coal traffic continues to suffer due to low natural gas prices and high
coal stockpiles at power plants. Coal accounted for just 26% of non-intermodal
rail traffic for US railroads in April 2016, down from 36% in April 2015 and
45% as recently as late 2011.
Negative yielding bonds total near $10 trln,
Japan leads -Fitch - (www.reuters.com) The
sum of government bonds worldwide that carry negative yields was $9.9 trillion
in late April, with Japan accounting for two-thirds of the total and the rest
in Europe, Fitch Ratings said on Wednesday. Of that total on April 25, $6.8
trillion were in long-term bonds and $3.1 trillion short-dated maturities. Negative
yielding government debt was almost non-existent before central banks adopted
extraordinary policies such as massive bond purchases in the wake of the
2008-2009 global financial crisis. The hefty amount of negative-yielding
sovereign bonds in late April, due to unconventional policies adopted by the
Bank of Japan and the European Central Bank, has complicated the task of banks,
insurance companies, money market mutual funds and other investors, the rating
agency said in a report.
China Fertilizer Maker to Default on Bonds Amid
Rising Debt Woes - (www.bloomberg.com) A Chinese fertilizer maker said it
will default on bonds Thursday, becoming at least the eighth company to renege
on debt obligations in the nation this year as debt woes spread amid a
weakening economy. Inner Mongolia Nailun Group Inc. on Wednesday said that it
wouldn’t be able to meet demands of investors exercising an option for the
early repayment of notes on Thursday, according to a statement to the
Shanghai Stock Exchange. Chinese firms are struggling with record debt repayments
as Premier Li Keqiang seeks to wipe out zombie companies amid the weakest
economic growth in a quarter-century. Total defaults on local note payments
this year already exceed the tally for the whole of 2015, and there are
indications the number may increase further. Baoding Tianwei Yingli New Energy
Resources Co., which missed a note payment last year, said Thursday it is
uncertain if it can repay securities due May 12.
U.S. Stocks Stumble as Growth Anxiety Returns; Dollar, Oil Climb - (www.bloomberg.com)
Druckenmiller: Get out of the stock market, own gold - (www.cnbc.com)
‘Hot Summer’ of Turbulence Wilts Lira as Erdogan Tightens Grip - (www.bloomberg.com)
Rousseff's woes mount as Brazilian senator backs impeachment trial - (www.reuters.com)
China’s fizz goes flat, even with far bigger credit stimuli - (www.ft.com)
Negative yielding bonds total near $10 trln, Japan leads -Fitch
- (www.reuters.com)
Germany, Japan call for stable FX rates ahead of G7 meeting - (www.reuters.com)
Treasury’s Fannie and Freddie rip-off - (www.washingtonpost.com)
G-7 Should Weigh In on Asian Sea Disputes With China, Abe Says - (www.bloomberg.com)
Germany, Japan call for stable FX rates ahead of G7 meeting - (www.reuters.com)
Treasury’s Fannie and Freddie rip-off - (www.washingtonpost.com)
G-7 Should Weigh In on Asian Sea Disputes With China, Abe Says - (www.bloomberg.com)
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