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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Dr. Engali's picture

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

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?

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.

Dr. Engali's picture

Well according to uncle Benny gold is not money.

LongBalls's picture

Indeed that is the question!

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.

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.

monopoly's picture

Perfect Tyler, just perfect.

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. 

THE DORK OF CORK's picture

When exactly was capitalism not skewed ?

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!

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. 

Bonesetter Brown's picture

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

jerry_theking_lawler's picture

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

-Michelle-'s picture

In what form is his cash?  USD?

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/

-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. :)

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.

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?

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?

espirit's picture

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

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.

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

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.

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.

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.

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?

Dagny Taggart's picture

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

shushup's picture

And - the market doesn't care.

Franken_Stein's picture

 

George Soros fulfills no purpose.

His whole life was worthless.

I hope he dies soon.

 

oddjob's picture

He is vile eurotrash at its very worst.

israhole's picture

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

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?

espirit's picture

You mean paper?

Too late for that.

espirit's picture

Maybe paper for paper, if cotton turns.

unununium's picture

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

LMAO.  Priceless!

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.

RobotTrader's picture

WFC now up 4%.

Maybe the banks finally bottomed out today.

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

 

 

 

gulf breeze's picture

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

poor fella's picture

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

sabra1's picture

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

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

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