Institutional Investors

Ignorance Is Not Bliss

You’re doing yourself a disservice if you don't have a basic working knowledge of what, say, a volatility surface means. We're not saying that we all have to become volatility traders to survive in the market jungle today, any more than we all have to become game theorists to avoid being the sucker at the Fed’s communication policy table. And if you want to remove yourself as much as possible from the machines, then find a niche in the public markets where dark strategies have little sway. Muni bonds, say, or MLPs. The machines will find you eventually, but for now you’re safe. But if you’re a traditional investor whose sandbox includes big markets like the S&P 500, then you’re only disadvantaging yourself by ignoring this stuff. Ignorance is not bliss...

GoldCore's picture

The “smart money” and by that we mean the more informed, aware and prudent investors and institutions internationally continue to have an allocation to gold and or add to existing allocations. The less informed continue to not understand or disparage gold and focus almost solely on gold’s short term price action rather than gold’s long term attributes as a hedging instrument and a safe haven asset.

Market Expectations Of A Stock Market Crash Have Never Been Higher

With VIX collapsing 10 days straight (for the first time since October 2010), one might be forgiven for thinking "everything is awesome." However, as always, the real news is in the nuance that the mainstream often misses. As VIX has plunged (complacency about 'normal' risk), Skew (which measures extreme tail risk) has exploded to its highest ever...

Frontrunning: October 13

  • Playboy to Drop Nudity as Internet Fills Demand (NYT)
  • Stock futures fall on weak China trade data (Reuters)
  • Any Hall is down 20% YTD (WSJ)
  • Global Stocks Slide With Metals After Chinese Imports Tumble (BBG)
  • Clinton's tack to the left to be on display in Democratic debate (Reuters)
  • Switzerland Said to Impose 5% Leverage Ratio on Big Banks (BBG)
  • AB InBev, SABMiller brew up $100 billion deal (Reuters)

Liquid Alts - The World's Most Popular Hedge Fund Strategy Explained

Today's most popular hedge fund strategy among institutional investors globally is "Alternative Global Macro Funds". Also known as a “go anywhere” investment style, active managers employ opportunistic trading tactics across asset classes, financial instruments, and geographic regions. Like many liquid alts, global macro funds grew rapidly following the financial crisis as investors looked for strategies that could diversify their portfolios in the midst of volatility in the global marketplace and historically high sector correlations against the S&P 500, thereby improving their risk-return profiles. Ultimately, success in this classification resides in selecting the right active manager given the strategy’s wide dispersion of returns.

Frontrunning: September 22

  • Pressure builds on Volkswagen CEO as emissions-cheating probe spreads (Reuters)
  • Volkswagen Emissions Scandal Relates to 11 Million Cars (WSJ)
  • Volkswagen Emissions Investigations Should Widen to Entire Auto Industry, Officials Say (WSJ)
  • Germany's Bosch makes VW's U.S. diesel components (Reuters)
  • Volkswagen scandal will have personnel consequences - state economy minister (Reuters)
  • Glencore Falls to Record as Mining Shares Lead Stock Losses (BBG)
  • Despite Slump, China’s Xi Jinping Pledges Economic Reforms (WSJ)
GoldCore's picture

The incredibly strong demand for physical precious metals around the world continues to be obscured by institutional selling of futures contracts on the COMEX. The paper or electronic market continues to dominate the spot price for now. But rising premiums and delays for popular bullion products suggests that proper price discovery reflecting real world supply and demand may be at hand.

Why The Fed's Credibility Is Crashing: The Market's Three Biggest Worries

The first is that by keeping rates lower for even longer, the EM imbalances the Fed is worrying about will grow even larger, making it harder to exit stimulus; The second is a question on the value of forward guidance, after the Fed has repeatedly called for a hike and then backed out; The third is that the Fed may have limited, or no ammunition to react to the next potential shock, and that financial booms and busts may grow even larger over time.

Japanese Stocks/USDJPY Plunge As China Cracks Down On Aggressive-Buying By "Sinister Stock Squads"

Despite the approval of various Asian nation officials (e.g. Japan's Amari: "Fed decision appropriate"), it appears non-hawkishness is not enough to keep the dream alive. Japan's Nikkei 225 is down over 600 points from its post-FOMC spike highs, and USDJPY has tumbled over 1 handle - back below 120.00. Chinese stocks are extending losses after last night's late tumble, as ironically, China's securities regulator has uncovered a number of market manipulators who boosted prices of some stocks to sky-high levels during the peak of the bull market, attracting numerous followers who have suffered heavy losses in the recent market crash. The PBOC strengthened the Yuan fix for the 2nd day in a row (by the most in 2 weeks).

The Fed Shouldn't Worry About Losing Credibility: It Already Lost It

It appears that the Fed no longer cares about doing the right thing for a very simple reason - the Fed no longer is worried about losing credibility. As the following chart showing the results of a survey of 150 institutional RBS clients and investors confirms, two -thirds already believe the Fed has lost credibility.