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Soros Goes To 75% Cash As Fed No Longer Telegraphing Trades

Tyler Durden's picture




 

Earlier today we saw what happens to investment banks when the Fed no longer clearly telegraphs its intentions vis-a-vis which asset has to be frontran (see Goldman post earlier). It is not just banks. In the absence of the Fed semaphore, it turns out even such "legendary" hedge funds as Soros' $25 billion Quantum are about as clueless as everyone else. Bloomberg reports that "the fund is about 75 percent in cash as it waits for better opportunities, said the people, who asked not to be identified because the firm is private." The reason: "“I find the current situation much more baffling and much less predictable than I did at the time of the height of the financial crisis,” Soros, 80, said in April at a conference at Bretton Woods organized by his Institute for New Economic Thinking. “The markets are inherently unstable. There is no immediate collapse, nor no immediate solution." But, but... what about relative and fundamental value, pair, cap and M&A arb? What about long-term investment opportunities in the growth of the world? What about arbing the so-called business cycle? Are none of those strategies worthy of investment? Or has ubiquitous central planning made the only profitable trade simply frontrunning the Fed's beta wave with as much leverage as possible? What's that you say? Yes? Thank you, the defense of formerly fair and efficient markets rests.

From Bloomberg:

Louis Bacon’s Moore Capital, with $15 billion in assets, cut risk as its flagship Moore Global hedge fund dropped 6 percent this year through June 30, with all the declines coming in May and June, according to investors who asked not to be named because the New York-based fund is private. Spokesmen for Soros and Moore declined to comment.

Funds such as Moore’s and Soros’s, which chase macroeconomic trends by buying stocks, bonds, currencies and commodities, have been the worst performing hedge-fund strategy this year. They fell 2.25 percent through June 30, according to Chicago-based Hedge Fund Research Inc., as managers made losing bets that the euro would fall against the dollar and that the yield on U.S. Treasuries would rise. Some managers also got caught when prices for oil and other commodities dropped in May.

The biggest macroeconomic managers aren’t the only ones hesitant to make large wagers. The proportion of asset allocators, including hedge funds, with lower-than-average risk across their portfolios jumped to a net 26 percent in June from a net 15 percent in May, according to the survey by Charlotte, North Carolina-based Bank of America.

The aversion to risk is reflected in trading volumes. Trading in the 50 companies in Goldman Sachs Group Inc.’s index of stocks most commonly owned by hedge funds fell to 4.11 billion shares in June, the lowest monthly level since August 2008, according to data compiled by Bloomberg.

Here is Bloomberg coming as close as it ever will to bashing the same central planning that pays the bills for all the 130,000 or so Bloomberg terminal clients:

Part of the uncertainty stems from the fact that so much of what happens in global markets is dependent on government actions, which can distort prices and affect supplies.

“Most of our funds are in an uncomfortable position in that the fundamentals are bearish, but the governments are intervening,” said Harold Yoon, chief investment officer at Hong Kong-based SAIL Advisors Ltd., which invests in hedge funds on behalf of clients. “Instead, managers have focused on tactical trading; shorting when markets are getting bullish and then covering into panic-driven selling.”

Yes, we all lament the days when capitalism was not skewed, when risk/return was not distorted, and when the Fed's crony interests were not the only ones that were pursued. We also lament that absent a major revolution, these will never come back.

 

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Tue, 07/19/2011 - 10:00 | 1469864 Dr. Engali
Dr. Engali's picture

Translation...I need plenty of cash to insure Obummer's re-election.

Tue, 07/19/2011 - 10:13 | 1469915 Pladizow
Pladizow's picture

Key Question - Cash in what currency?

It has been also reported he liquidated his paper gold holdings but is it possible he moved to physical and he considers this cash?

Tue, 07/19/2011 - 10:18 | 1469939 SeverinSlade
SeverinSlade's picture

Agreed.

I had a good laugh a few months back when every news headline read "Soros sells his gold!  Bull market over?"  MSM conveniently ignored the fact that Soros sold his PAPER gold and not his physical.  Also reinvested the proceeds into two major gold miners (Freeport-McMoran and Goldcorp).

I'm with you.  Bank on Soros using the proceeds to acquire even more physical.

Tue, 07/19/2011 - 10:18 | 1469941 Dr. Engali
Dr. Engali's picture

Well according to uncle Benny gold is not money.

Tue, 07/19/2011 - 10:52 | 1470126 dark pools of soros
dark pools of soros's picture

Soros is high on Tradition

Tue, 07/19/2011 - 10:52 | 1470127 dark pools of soros
dark pools of soros's picture

captcha dupe

Tue, 07/19/2011 - 10:19 | 1469944 r101958
r101958's picture

CHF?

Tue, 07/19/2011 - 16:14 | 1471669 LongBalls
LongBalls's picture

Indeed that is the question!

Tue, 07/19/2011 - 10:18 | 1469938 Infinite QE
Infinite QE's picture

And to buy FEMA flooded farmland in the Midwest along with propping up the `rebels' in Libya to ensure the oil goes to those of the chosen variety.

Tue, 07/19/2011 - 10:24 | 1469973 Long-John-Silver
Long-John-Silver's picture

They do learn. FDR burned crops, cattle, and pigs in an effort to stop deflation. Obama simply washes away the farms guaranteeing years of no food production. He did this at no cost to the government.

Tue, 07/19/2011 - 10:01 | 1469867 monopoly
monopoly's picture

Perfect Tyler, just perfect.

Tue, 07/19/2011 - 10:04 | 1469878 slaughterer
slaughterer's picture

“Instead, managers have focused on tactical trading; shorting when markets are getting bullish and then covering into panic-driven selling.”

 A difficult way to make a living. 

Tue, 07/19/2011 - 10:03 | 1469874 THE DORK OF CORK
THE DORK OF CORK's picture

When exactly was capitalism not skewed ?

Tue, 07/19/2011 - 10:03 | 1469876 Leo Kolivakis
Leo Kolivakis's picture

If Soros is 75% cash, I blow all of you here! C'mon guys, wake the fuck up, Soros is just as greedy as the rest of them!

Tue, 07/19/2011 - 10:13 | 1469914 Sophist Economicus
Sophist Economicus's picture

Sometimes being in cash is being greedy.    Contrary to popular delusion, 'TPTB', whomever they are,  are as clueless as the rest of us most of the time and as lucky as most of us, some of the time. 

Tue, 07/19/2011 - 12:21 | 1470616 Bonesetter Brown
Bonesetter Brown's picture

I suggest it is a classic game of Prisoners' Dilemma among TPTB

Tue, 07/19/2011 - 10:54 | 1470140 jerry_theking_lawler
jerry_theking_lawler's picture

where can we meet so you can get started??? i'm not ashamed, a blow is a blow....

Tue, 07/19/2011 - 11:44 | 1470416 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Can I set my beer on your head?

Tue, 07/19/2011 - 10:06 | 1469884 -Michelle-
-Michelle-'s picture

In what form is his cash?  USD?

Tue, 07/19/2011 - 10:11 | 1469902 Cognitive Dissonance
Cognitive Dissonance's picture

Pink and red jelly bellies. I'm partial to the baby blue.

How's the baby Michelle?

http://www.jellybelly.com/

Tue, 07/19/2011 - 10:35 | 1470028 -Michelle-
-Michelle-'s picture

10 months old, can you believe it?  And four teeth coming in at once; we're not getting much sleep around here.  It's all worth it, though. :)

Tue, 07/19/2011 - 10:07 | 1469886 williambanzai7
williambanzai7's picture

This limbo we find the markets in is very similar to 2008 when everyone was watching Lehman, AIG and the GSEs foundering in a rough sea of obvious problems with no apparent solution in sight...Only now we are looking at much bigger rigs caught up on the rocks.

Tue, 07/19/2011 - 10:09 | 1469899 Cognitive Dissonance
Cognitive Dissonance's picture

Clearly they need a new script girl. You know, that man or woman who stage whispers the line when the actor forgets his or hers?

Tue, 07/19/2011 - 10:09 | 1469903 doomandbloom
doomandbloom's picture

lets fire all these 80 year old men .... why are they still working...why dont they retire? how will new ideas ever come up?

Tue, 07/19/2011 - 10:13 | 1469912 espirit
espirit's picture

We better hope Soros doesn't discover a longevity drug.  Let him and the other aged oligarchs expire already.

Tue, 07/19/2011 - 10:17 | 1469936 WonderDawg
WonderDawg's picture

Not arguing that they shouldn't be fired, they should be fired for: fraud, mismanagement, corruption, take your pick. But new ideas haven't been in short supply. CDS is a relatively new phenomenon, is it not? HFT and the algos behind them, pretty new in the historic timeline of the markets, no?

One could argue that it's the new ideas that have fucked up and destabilized the market.

Tue, 07/19/2011 - 10:26 | 1469983 doomandbloom
doomandbloom's picture

i am more inclined to say that the old guys will allow only those 'new' things that will help them...

 

anything that challenges existing system can easily be crushed...and it has

Tue, 07/19/2011 - 10:31 | 1470006 WonderDawg
WonderDawg's picture

Sure, absolutely, but the point I was responding to was "new ideas", and structured financial products are relatively new, from a big picture perspective, and we see where the new ideas have taken us.

Tue, 07/19/2011 - 10:35 | 1470025 doomandbloom
doomandbloom's picture

True.

 

So how do we evaluate ideas? Why do some ideas get chosen over others? I think at a personal level I have a tendency to choose things that continue the present state of being...even if it serves no purpose.

Tue, 07/19/2011 - 10:59 | 1470180 WonderDawg
WonderDawg's picture

Well, as it pertains to the old men running these investment houses, I think they choose the ideas that will put the most money in their own pockets in the short term, with no apparent regard for what it does to the system in the long term.

Tue, 07/19/2011 - 10:12 | 1469910 Everybodys All ...
Everybodys All American's picture

Since the Fed and proxies have taken one side of the trade off of the table. What else can you do when a market is overbought?

Tue, 07/19/2011 - 10:16 | 1469929 espirit
espirit's picture

Pay to play.

Tue, 07/19/2011 - 10:17 | 1469933 equity_momo
equity_momo's picture

Fuck Soros.

Tue, 07/19/2011 - 10:19 | 1469945 Dagny Taggart
Dagny Taggart's picture

Is this for the "when there is blood in the streets" part?

Tue, 07/19/2011 - 10:19 | 1469948 shushup
shushup's picture

And - the market doesn't care.

Tue, 07/19/2011 - 10:20 | 1469952 Franken_Stein
Franken_Stein's picture

 

George Soros fulfills no purpose.

His whole life was worthless.

I hope he dies soon.

 

Tue, 07/19/2011 - 10:23 | 1469966 oddjob
oddjob's picture

He is vile eurotrash at its very worst.

Tue, 07/19/2011 - 10:22 | 1469958 israhole
israhole's picture

George Soros (nee Schwartz) is a creep, but he sure can crush a central bank.

Tue, 07/19/2011 - 10:22 | 1469961 RobotTrader
RobotTrader's picture

Huge amount of money stuffed into the bond market, money markets, cash, etc.

I wonder what happens if all that money starts to chase stocks?

Tue, 07/19/2011 - 10:33 | 1470018 espirit
espirit's picture

You mean paper?

Too late for that.

Tue, 07/19/2011 - 10:36 | 1470035 espirit
espirit's picture

Maybe paper for paper, if cotton turns.

Tue, 07/19/2011 - 10:53 | 1470133 unununium
unununium's picture

> I wonder what happens if all that money starts to chase stocks?

LMAO.  Priceless!

Tue, 07/19/2011 - 11:35 | 1470363 Smiddywesson
Smiddywesson's picture

I wonder what happens if all that money starts to chase stocks?

Robo, you have got to be kidding.  Everybody who cares to play this market is already in.  There is nobody coming off the sidelines to keep the game going, and that has been the lesson of the last two years.  Weren't you paying attention?

The crooks have scared away the suckers, in most cases, forever.  That was the result of the 1929 crash and Depression and that has been the lesson during this crisis.  Mom and Pop are not coming back to equities.

Tue, 07/19/2011 - 10:27 | 1469992 RobotTrader
RobotTrader's picture

WFC now up 4%.

Maybe the banks finally bottomed out today.

Tue, 07/19/2011 - 10:37 | 1470044 Internet Tough Guy
Internet Tough Guy's picture

Oil soaring. You must be puking up blood. You are the perfect fade, momo. LOL

People don't care about gold, they only care about gasoline prices
RobotTrader - Mon, Jul 18, 2011 - 10:48 AM

I'm still getting gas at a bargain in Los Angeles, hasn't really budged much off of the lows of $3.59 last week, only up 4 cents.

But after today's crude plunge, I bet it goes back down before the weekend

 

 

 

Tue, 07/19/2011 - 10:58 | 1470173 gulf breeze
gulf breeze's picture

great call for the 50th time. lever up on BAC

Tue, 07/19/2011 - 11:53 | 1470472 poor fella
poor fella's picture

On LAYOFFS..  Did you buy Cisco too on layoffs?

Tue, 07/19/2011 - 10:32 | 1470011 sabra1
sabra1's picture

in other words, Benny always gave me insider info, and without it, i'm just as good as RobotTrader!

Tue, 07/19/2011 - 10:36 | 1470037 dcb
dcb's picture

if this was a good base with the futures up so much it should sell off most of the day and be up a little at the end of the day. that would be a buy situation

Tue, 07/19/2011 - 10:36 | 1470040 dcb
dcb's picture

if this was a good base with the futures up so much it should sell off most of the day and be up a little at the end of the day. that would be a buy situation

Tue, 07/19/2011 - 10:46 | 1470109 camoes
camoes's picture

But they told me cash is trash!

Tue, 07/19/2011 - 10:52 | 1470129 PulauHantu29
PulauHantu29's picture

I thought my adviser was crazy two weeks ago when he told me to go into higher cash position and hold the PMs I already have. He predicts a steep plunge alos just like Mr Soros.

Tue, 07/19/2011 - 10:54 | 1470146 unununium
unununium's picture

Color me intrigued.  You found someone at Edward Jones with a clue?  I guess they can't weed them all out.

Tue, 07/19/2011 - 10:55 | 1470149 Catullus
Catullus's picture

Interesting that he doesn't even want to hold the paper gold anymore. I'm in cash too, but mine doesnt have a dead president's face on it. Just assayers' stamps. For right now, it's the same thing.

Tue, 07/19/2011 - 10:55 | 1470151 spekulatn
spekulatn's picture

Soros, 80, said in April at a conference at Bretton Woods organized by his Institute for New Economic Thinking. “The markets are inherently unstable. There is no immediate collapse, nor no immediate solution." But, but... what about relative and fundamental value, pair, cap and M&A arb? What about long-term investment opportunities in the growth of the world? What about arbing the so-called business cycle? Are none of those strategies worthy of investment? Or has ubiquitous central planning made the only profitable trade simply frontrunning the Fed's beta wave with as much leverage as possible? What's that you say? Yes? Thank you, the defense of formerly fair and efficient markets rests.

 

Mutha-f'n amen to that TD.

Well said.

Tue, 07/19/2011 - 10:55 | 1470152 anony
anony's picture

And you believe a multibillionaire is telling you the truth???

Jeesus!

That he's baffled"???

ohmygawd......there are still some out there who believe the check is in the mail, Beautiful women are faithful, and the rich tell you the truth.

No wonder 75% of the people on earth believe in an afterlife. 

 

 

Tue, 07/19/2011 - 10:57 | 1470167 Lazane
Lazane's picture

Soros is the master of misinformation, if you buy into anything coming from spooky you are going to lose.

here is some information one could rely on when determining the solvency of America.

https://www.theprojectveritas.com/civicrm/contribute/transact?reset=1&id...

 

 

Tue, 07/19/2011 - 11:06 | 1470227 Highrev
Highrev's picture

Fed No Longer Telegraphing Trades

Huh?

The Fed has been telegraphing a move to cash for 2 months now.

Tue, 07/19/2011 - 11:08 | 1470239 MobBarley
MobBarley's picture

And by 'Cash' we mean gold bullion, right? AHehaha, Thurston this

Chardonay is just VUNDERBAR

 

Tue, 07/19/2011 - 11:59 | 1470506 johny2
johny2's picture

Soros let his ego get too big, and did not keep low profile as other parasites feeding on the producers. So now he doesn't get the first hand info any more, and without it he knows that no matter of research or logic can help deduce the market moves. 

Tue, 07/19/2011 - 11:59 | 1470509 the grateful un...
the grateful unemployed's picture

the consequences of a centrally planned economy, nobody wants to play unless they know what the policy is, and then everyone wants the same side of the trade.

Tue, 07/19/2011 - 12:50 | 1470725 skipjack
skipjack's picture

The world would be a much better place without Soros and David Rockefeller.

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