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Brevan Howard Made Money In 2011 Betting On Market Stupidity, Sees "Substantial Dislocation" In 2012

Tyler Durden's picture




 

While Paulson's star was finally setting in 2011, that of mega macro fund Brevan Howard was rising, and has been rising for years by never posting a negative return since 2003. The $34.2 billion fund, now about double the size of John Paulson's, returned 12.12% in a year marked by abysmal hedge fund performance. But how did it make money? Simple - by taking advantage of the same permabullish market myopia that marked the beginning of 2011, and that has gripped the market once again. "The Fund’s large gains during the third quarter were due predominantly to pressing the thematic view that markets were ignoring clear signs of economic slowdown and were not correctly pricing the probability of central bank accommodation, particularly the reversal of the ECB rate hikes in April and July." Not to mention the €800 billion ECB liquidity accommodation that started in July and has continued since. So yes: those betting again that the market correction is overdue, will once again be proven right Why? Because "we are about to witness an unprecedented policy move. In the US, Eurozone and UK, fiscal austerity is being prescribed as the cure following the bursting of the credit bubble and to overcome the malaise following a balance-sheet recession. Unfortunately, there is no historical example of when this approach has been successful." As for looking into the future "we continue to believe that markets remain at risk of  substantial dislocation."

Lastly, for all those who believe Europe is "priced in", the right thing to say it is not priced at all: "One risk that we are particularly careful to avoid is betting on the outcome of the Eurozone crisis. Its resolution will ultimately be a political decision and we have no real edge in understanding which way the politicians may go. For us, the better trade is to look to the macroeconomic picture and position around macroeconomic developments rather than try to second guess the politicians." Alas, macroeconomic developments are now more defined by politicians than ever. We, unlike Brevan Howard, instead would bet on the stupidity of these politicians, and the certainty that as usual, they will screw things up, only to be bailed out by immense printing as the usual last ditch resort. Which means that stupidity hedging precious metals, are and continue to be since March 2009, our preferred "investment" category.

From the letter:

As we wrote in the Fund’s Annual Investment Manager Review this time last year, our strategy for 2011 was to strike a better balance between harvesting modest short-term profits and pressing large thematic trades. This strategy proved successful.

During the first half of the year, a balance between general optimism on the state of the global economy on the one hand and fear of possible large  event risks on the other hand kept markets in a broad trading range; this allowed the Fund to make steady, modest gains by trading tactically. For example, the Fund held both long and short positions in European interest rates during this period, depending on the  market’s probabilistic pricing of future ECB rate hikes at any one point in time.

The Fund’s long interest rate volatility positions also benefited from this environment, generating steady returns through gamma trading. Tactical opportunities in other areas including yield curves, bond versus swap spreads, commodities and credit also generated positive returns.

The Fund’s large gains during the third quarter were due predominantly to pressing the thematic view that markets were ignoring clear signs of economic slowdown and were not correctly pricing the probability of central bank accommodation, particularly the reversal of the ECB rate hikes in April and July. The Fund took significant long positions in G7 interest rates, with a concentration in European short-term and US medium-term rates.

As the economic data softened over the summer and the euro crisis escalated, forward interest rates fell sharply in G7 and the Fund’s positions made substantial profits. The Fund’s structural volatility positions also paid off from this move, as interest rate option deltas were allowed to expand, thereby increasing the size of the Fund’s positioning during the rally. The decision to position early and in size for a decline in interest rates was the primary driver of performance in 2011.

Apart from the basic long rates position, the Fund profited from gains made across several strategies during the third quarter including bond versus swap spreads, libor basis, foreign exchange, commodity and equity trading, while credit proved modestly unprofitable. The Fund’s general positioning, although reduced, was maintained into the fourth quarter, resulting in further gains in November which were partially offset by small losses in October and December as markets settled once again into a more mean-reverting, tactical environment, with interest rates and the euro initially rising before resuming their downward path.

I am particularly pleased to report that a meaningful part the Fund’s return was generated by newly recruited traders. At the end of 2010 and in the early part of 2011, the closure of bank prop activities caused by the introduction of the Volcker rules allowed Brevan Howard to add 13 new risk takers to our trading group and 3 new people to our research efforts. These additions made a material contribution to our results in 2011. Brevan Howard has never had a deeper, broader or more talented investment team.

In 2011, we took the unusual step of asking the Fund’s Board to return some capital to investors. This was done simply to alleviate ongoing investor concerns about the Fund‘s size and not because of liquidity issues or a poor opportunity set.

Following the Fund’s lacklustre performance in 2010, there was a degree of investor unease over the size of the Fund and whether it was an impediment to performance. It wasn’t. As we wrote in this letter last year, the reason 2010 was lacklustre was because the three major themes we positioned for in that year proved unprofitable.

Nonetheless, in order to assuage this investor concern, we undertook to return capital if the Fund got larger than $25bn. As a result of strong performance, the Fund exceeded the $25bn AUM level during the summer and, in line with our undertaking, we announced that we would return almost $2bn to investors. Having done so there are no plans at this time to return further capital. However, as always, we will monitor the size of the Fund, the opportunity set, our trading capacity and the market liquidity on an ongoing basis to ensure that we are comfortable with the size of the Fund. Looking forward, we continue to believe that markets remain at risk of  substantial dislocation. The European sovereign and banking issues appear to be approaching a head and may result in extreme outcomes (in either direction). The US fiscal situation remains highly strained and large imbalances remain in emerging market  economies. In short, the issues we raised in last year’s letter are still unresolved.

In light of the ongoing binary risks, we have taken decisive action to focus on liquid, uncomplicated strategies, to increase the Fund’s cash liquidity and to ensure that the exposure of the Fund to potentially vulnerable counterparties is kept to a minimum. One risk that we are particularly careful to avoid is betting on the outcome of the Eurozone crisis. Its resolution will ultimately be a political decision  and we have no real edge in understanding which way the politicians may go. For us, the better trade is to look to the macroeconomic picture and position around macroeconomic developments rather than try to second guess the politicians.

As we start 2012 the Fund’s positioning is once again quite tactical, with the only structural position being long volatility across multiple asset classes, in particular interest rates.

I want to thank, as I do each year in this letter, all of our investors for their continued support and I assure you once again that all of us at Brevan Howard will do our utmost to deliver another profitable outcome in 2012.

Sincerely,

Alan Howard

Market Commentary

In terms of market sentiment and the macroeconomic outlook, 2011 was a year of two halves for the US. In the first half of the year, markets and commentators expressed optimistic views about the future. Equities hit a high during the second quarter, with major indices up almost 10%. At the same time, buoyant forecasts were relying upon increasingly strained rationalisations in the face of worse-than-expected data. In the third quarter, another EU summit failed to deliver the measures required to resolve the European sovereign debt crisis and the normally pro forma vote to increase the US debt ceiling turned into a fiasco that cost the US its AAA credit rating. In response to these developments, investor and consumer sentiment collapsed, equities swung to 10% losses on the year, and the economy barely avoided a recession. Investors fled to the traditional safe havens of US Treasuries, German Bunds, the US dollar, and the Japanese yen.

By the end of the year, the US economy regained its footing, led by brisk business capital expenditure, improved consumer spending, and moderate gains in payroll employment. In addition, inflationary pressures eased, as total and core consumer inflation fell below an annualised rate of 1% in the fourth quarter, import and producer prices declined, and longer-term inflation expectations drifted into the lower end of their range for the last decade.

Additional monetary policy easing by the Federal Reserve ("Fed") and European Central Bank ("ECB") played a role in stabilising the economy in the second half of the year. In September, the Fed rolled out a Treasury duration extension programme and renewed its purchases of mortgage-backed securities. As a result, the Fed committed to buying virtually all of the net issuance of longer-term Treasury duration through to the middle of 2012, a move that, if nothing else, signalled that monetary policy would be utilised if the economy threatened to rollover. Despite the rollercoaster ride, equity markets were largely unchanged in 2011, Treasury interest rates ended at historic lows and economic growth registered somewhere near its long-term trend.

Looking to 2012, investors appear to be expecting moderate growth, inflation and financial market returns. At Brevan Howard, we expect the continuation of enormous uncertainty. On the one hand, policymakers appear to have a much-improved grasp of the dangers posed by the banking and sovereign debt crisis in Europe. Furthermore, we are one year further along the long road of deleveraging household balance sheets and repairing the housing market. On the other hand, we are about to witness an unprecedented policy move. In the US, Eurozone and UK, fiscal austerity is being prescribed as the cure following the bursting of the credit bubble and to overcome the malaise following a balance-sheet recession. Unfortunately, there is no historical example of when this approach has been successful. In the Great Depression, economies grew to the extent they pursued Keynesian stimulus and sizable depreciations in the exchange rate of their currencies. Presently, enthusiasm for additional stimulus appears to have come to an end and the room for competitive devaluation appears limited given that the largest economies are in a liquidity trap and emerging markets are slowing markedly. Financial markets and the economy are at the mercy of the convergence of these positive and negative forces in 2012. As such, developments in 2012 look set to mirror the ups and downs of 2011.

h/t Value walk

 

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Wed, 01/25/2012 - 01:01 | 2095452 Yen Cross
Yen Cross's picture

 I'll take stupidity +400 Alex.  2/1 risk reward.

Wed, 01/25/2012 - 01:04 | 2095459 Silver Bug
Silver Bug's picture

Volatility and dislocations are only going to increase in 2012, in fact they are going to increase over the course of this next decade. The one thing we can be sure of is that politicians will try to kick the can down the road further and further. The problem is... the can is getting pretty big.

 

http://ericsprott.blogspot.com/

Wed, 01/25/2012 - 01:10 | 2095473 Yen Cross
Yen Cross's picture

A little physical is ok " XAG Bug".  Just having fun. Good on ya.

Wed, 01/25/2012 - 02:56 | 2095603 The Monkey
The Monkey's picture

Explicit inflation target by the Federal Reserve to result in a lot more scutiny on the make-up of CPI. Any deft politician with something to gain will bring the increasingly dovish view of inflation measurements into the limelight. Afterall, American's feel the impact of inflation, and it's difficult (if not politically impossible) to justify open market purchases on the basis of deflating housing prices and increasing food and energy prices.

The Fed is positioning to present an inflation target as a hawkish argument to the public, but the government has no legs on which to stand when they keep moving the yardstick - the latest idea being chained CPI.

A difficult subject to simplify into just a few words, but it can be put in laymans terms.

Wed, 01/25/2012 - 03:06 | 2095608 TruthInSunshine
TruthInSunshine's picture

But...but....but...

Dudley said that the iPad3 will have 3x the processing power and capabilities of the original iPad, and cost the same, thereby offsetting massive inflationary inputs elsewhere (and especially in food and energy, and other necessities of life that people need to purchase every day in order to survive).

Wed, 01/25/2012 - 03:42 | 2095640 The Monkey
The Monkey's picture

Ha! Very true, very true. I think it was Evans, or more likely Dudley that came up with the idea of "catch up" inflation. The notion here is that if CPI deflates in one period (say by 2%), then in the next period the Fed would be accomodative to the extent of MAKING UP for the drop in prices + accomplishing their inflation goal.

Reading the headline on this announcement that was floated only minutes ago, I can already tell you that they are talking about core CPI, which means headline inflation could run at 4% in a given year and they still meet their 2% target. Total nonsense and a ripoff of the American public.

My guess: the Fed is about to put themselves in the crosshairs because using core CPI cannot withstand scrutiny in an election year (we actually have a chance to kick them out). They either print big time soon (where it's politicized), or, they manipulate duration on their balance sheet without an impact on real or nominal rates and the effect is tightening. After a blip, this will confuse markets and be politicized by Republicans that are looking for the senior vote.

Republicans will converge around this issue. This is what was needed for a winning coalition. Obama will not be able to explain higher headline inflation as a justifiable policy.

Wed, 01/25/2012 - 01:03 | 2095458 TruthInSunshine
TruthInSunshine's picture

As long as someone of The Bernank's ilk is carrying out massive central planning missives (picking winners & losers with both monetary and now fiscal policy), free market twister will continue, and there is no such thing as investing; there's only gambling. In gambling, just like in poker, if you don't know who the fool is, it's you.

The only non-gamblers active in "the markets" are the select best friends forever of the New York Branch of The Non-Federal Reserveless Bank, who get free money to leverage up into whatever risk pools they want, with a guaranteed taxpayer insurance policy against any losses whatsoever.

This will continue until it can't, which may or may not be sooner than many sharp, realistic people think it can or can't.

'Until it can't' could be 6 weeks or 6 years (though I tend to SWAG that it's closer to 6 months) away, but I'll bet the double shock that then develops is the twice bitten never again moment that breaks long term confidence of investors in a similar fashion to what happened in 1933.

Wed, 01/25/2012 - 01:07 | 2095467 The Monkey
The Monkey's picture

(1932).

Wed, 01/25/2012 - 01:13 | 2095484 TruthInSunshine
TruthInSunshine's picture

I meant 1933 as in the follow on full year (and decade) where the sheeple thought of stocks in the same terms they thought of snake oil (and wisely so - Jeremy Siegel's deeply flawed propaganda on historical equity market returns, ignoring survivorship bias, the incredibly wealth destroying affect of churning from a tax perspective, and the constant reshuffling/re-rigging of equity indexes, as a prime example).

Wed, 01/25/2012 - 01:22 | 2095498 The Monkey
The Monkey's picture

Got it. Agreed.

Until there is widespread hatred of stocks, I'm sticking with treasuries.

Wed, 01/25/2012 - 01:04 | 2095460 The Monkey
The Monkey's picture

Most expect 2012 to be better than 2011 at this juncture.

Wed, 01/25/2012 - 01:48 | 2095537 Bear
Bear's picture

Maybe not the Mayans

Wed, 01/25/2012 - 01:07 | 2095464 slewie the pi-rat
slewie the pi-rat's picture

i think the biggest economic event of 2011 was fuk_u_shima

Wed, 01/25/2012 - 01:10 | 2095475 The Monkey
The Monkey's picture

Spreads (bonds) widened the most on Europe (October I believe had Jeffries 5 year debt trading upward of 13%).

Wed, 01/25/2012 - 02:14 | 2095567 slewie the pi-rat
slewie the pi-rat's picture

MFGlobal BK was the end of oct, and tyler did a ravening on both of em!

they were rendered here, also!

stay tooned!

[don't forget:  all these financials are "certified" before publishing; so only a crazyPerson would think the earnings and assets weren't "real"]

so, keep self-medicating, too, BiCheZ!!!

Wed, 01/25/2012 - 08:59 | 2095848 Pegasus Muse
Pegasus Muse's picture
How JP Morgan And George Soros Ended Up With MF Global Customer Money

http://deadlinelive.info/2012/01/11/how-jp-morgan-and-george-soros-ended-up-with-mf-global-customer-money/

Wed, 01/25/2012 - 01:12 | 2095481 Yen Cross
Yen Cross's picture

 I caught that update as well Slewie. Nice read, and well done.  Get ready for my " Yen" trade.

Wed, 01/25/2012 - 01:47 | 2095535 Bear
Bear's picture

New yen carry trade ... short the Yen and carry away the profits

Wed, 01/25/2012 - 04:26 | 2095656 slewie the pi-rat
slewie the pi-rat's picture

while carried away by trading, i developed a yen to stop [and withdraw capital from the "system" if possible]

the entities which will "move in" to "buy" the assets and fade the "systemic deleveraging" have the slewie credit rating of BK+ + BS- = F.L.E.E.

there may be "bigger fools" for them to attract, but i'm not gonna be one of them...

"retail" has had it with "wholesale", and if A and B want to lend each other a million bucks and pretend they're millionaires, people are capable of deciding for themselves how many shares of that "company" they would like to "invest" in

forget the bridge!  wanna buy a $12,000 tulip bulb? 

but, i guess people will buy/sell/trade/own whatever floats their boatz

once they convince you they can offer you index products to "diversify" your "investment assets", they deserve to get paid!  hypnotists competing for people's "trust", and people responding splendidly;  wouldn't want to miss a major move!  speaking of major moves,  L0L!!! ask Robo!

tyler banned Robo?  is that "true"?  way to go Robo!  on first blush, one might consider such a move beneath tyler, especially for speech

and, i'm on the rocord that i kinda like(d) Robo and may have learned an odd fact or two from mom'sCellarDweller, but Robo would not fight tyler here.  Robo didn't fight much, but one night on a silver string, took on the whole house offering to sell a greenBox @ right around melt, wasn't it?  500 troy ounces @ $40-something = $23K.  Robo sez:  cash, Bichez!  meet me in the parking lot (gives directions);  put up or STFU mofoz!!!  L0L!!!

so Robo wantz2give tyler shit on another website?  Robo is rarely mistaken for the sharpest knife in the drawer, but that is one for the ages!  see ya, archidiotRobo! 

Wed, 01/25/2012 - 08:03 | 2095747 Vic Vinegar
Vic Vinegar's picture

I've learned a lot from Tyler and friends and many of the commenters here, including yourself slewie.  But one concept I came to really appreciate came from Robot...that we are all riverboat gamblers, whether our next bet is on more physical silver, more ammunition or more shares of TZOO.  Kind of like how you note but, i guess people will buy/sell/trade/own whatever floats their boatz

Maybe I misssed something but I don't think RT talked shit about Tyler.  He disses commenters here all the time, some of it deserved, some of it not.  And truth be told, as we sit here today and probably tomorrow, next week, next year, 2030, for however long, he's been right!  Opportunity still knocks for those who are optimistic.  The doom and gloom crowd gets what they deserve.

I'll junk myself now for this trivial, off-topic post.  And yet this comment was still more substantive than the SOTU address. 

LOL, indeed!

Wed, 01/25/2012 - 01:45 | 2095531 Bear
Bear's picture

I think it was fuk_u_MFers

Wed, 01/25/2012 - 01:46 | 2095533 Nobody For President
Nobody For President's picture

Agreed.

NFP

Wed, 01/25/2012 - 10:10 | 2096046 HungrySeagull
HungrySeagull's picture

This.

Wed, 01/25/2012 - 01:09 | 2095471 RobotTrader
RobotTrader's picture

That guy must be kicking himself for not being fully invested in retail stocks, REITs, etc. the last 3 years.  Or even being fully invested in Uncle Gorilla bonds.

 

So many guys looking back and saying "shoulda, coulda, woulda"........

Wishing that they never heard of the bear case.

Wed, 01/25/2012 - 01:12 | 2095483 The Monkey
The Monkey's picture

Treasuries are for the bears and the bears won in 2011. 30 year zero coupon UST returned 55% last year. Beat pretty much everything.

Wed, 01/25/2012 - 01:47 | 2095536 TruthInSunshine
TruthInSunshine's picture

Robotard is truly confused tonight, wondering if he should dust of his Dow 12000 or Dow 13000 baseball cap.

 

Naw...Robotard's wearing his Dow 13000 cap. It's a no brainer. Since 1998 *and in nominal, non-inflation adjusted terms.

Wed, 01/25/2012 - 02:29 | 2095583 Max Fischer
Max Fischer's picture

 

 

This appears to be the last post before RobotTrader got banned.  

C'Mon Tyler....as much as I enjoy ZeroHedge, this place needs different opinions from time to time.  Otherwise, it's just a big echo chamber.  

If you Google "ZeroHedge.com RobotTrader banned" every result says that you'll be banned if you click the link.  What's up with that?

Max Fischer

Wed, 01/25/2012 - 02:43 | 2095591 TruthInSunshine
TruthInSunshine's picture

I believe, though I'm not positive, that Robotard had the stupidity to essentially taunt TD on another site, in a very juvenile way (a site where the solar panel & $5 an ounce to dig silver out of the backyard misfits end up).

Mess with the bull and get the horns.

Robotard should have had the common sense to have a serious and thoughtful vs. stupid and shallow comment ratio of something better than 1:278

I've taken exception to some of TD's work, on several occassions, but I did it in a constructive way, with a genuine attempt at offering a plausible counterpoint to something I may have disagreed with, and I even deliberately took the time to dig up actual statistics and/or facts to support my position (regardless as to whether I was correct or not).

Robotard is a drive by spewer of empty rattling and hollow sounds.

Good riddance.

Wed, 01/25/2012 - 01:11 | 2095476 Caviar Emptor
Caviar Emptor's picture

Eye-opening research reported in Forbes: 

Simon Lack’s just-published The Hedge Fund Mirage (John Wiley & Sons)... Here’s how the book begins: “If all the money that’s ever been invested in hedge funds had been put in treasury bills instead, the results would have been twice as good.”


from 1998-2010 the index returned only 2.1% annualized.... During that time frame, he estimates that hedge fund managers earned $379 billion in fees, while “real investors” earned only $70 billion in profits. Thus, the operators earned 84% of the investment profits and investors only 16%. But wait, there’s more. These figures don’t account for fund of funds, which add another layer of fees and through which around one-third of hedge funds are purchased. Including these brings industry fees up to $440 billion, or a whopping 98% of the profit pool, leaving only $9 billion for investors.

http://www.forbes.com/sites/greggfisher/2012/01/23/chasing-the-mirage-of...

Wed, 01/25/2012 - 01:14 | 2095486 Hulk
Hulk's picture

Where are all the customers yachts?

Wed, 01/25/2012 - 01:48 | 2095538 TruthInSunshine
TruthInSunshine's picture

The customers are lucky if they get a life boat.

Wed, 01/25/2012 - 01:18 | 2095492 mammoth mo
mammoth mo's picture

 

He was exactly betting on stupidity.  He was betting with the powers that be.  It is no illusion at all.  The wealth gap continues to get wider and the rich get richer.  The market acts as another transfer point of wealth.  Those without choice to those with it.  The average Joe can pick a few mutual funds for his retirement plan.  TPTB use that to buttress up their positions.  Sell when they want too and let the average Joe take the hit.  Right now Joe is riding high.  While anyone with 2 neurons can see its a house of cards.  Sure it will fall, but when.

 

Wed, 01/25/2012 - 01:19 | 2095495 zebrasquid
zebrasquid's picture

Romney will start to ascend in the polls, now that his tax "issue" is behind him, and the markets may like that prospect.  That is, until some black swan comes along, and reminds just how fragile

this wing and a prayer contraption of a financial system is, and the markets nosedive towards reality again.

 

 

Wed, 01/25/2012 - 01:43 | 2095515 Jefferson
Jefferson's picture

Buffett and Obama's handlers are setting up Romney the same way McCain got set up in 2008. Or maybe it was just coincidence that there was an election happening with a financial meltdown in the background.

Who else but a "black socialist community organizer" could give cover to the banking cartel and avoid rioting in the streets after the country was financially raped?

Not to mention who else but the "I didn't vote for the Iraq war and want to close Guantanamo Bay" manchurian candidate could start a new war in Afghanistan, expand the Patriot Act, sign the NDAA, conduct warrantless wiretaps and start up drone warfare?

Running against a wannabe Gordon Gecko is the only way Obama can get his totally disillusioned liberal base of support out to vote. He looks live a veritable OWS poster boy compared to Romney's chop shop image.

These orchestrated political productions are years in the making.

 

Wed, 01/25/2012 - 09:12 | 2095875 Ricky Bobby
Ricky Bobby's picture

That about sums it up!

Wed, 01/25/2012 - 01:23 | 2095500 Yen Cross
Yen Cross's picture

American Ingenuity is back!   All hail to " ALGO's"   / SARC on

Wed, 01/25/2012 - 01:46 | 2095529 chump666
chump666's picture

clear this Jan out then Feb volatility.

Market doesn't know what to price in, it's failing to see the Iran situation will go hot very soon.   EU slams sanctions on Iran oil?  Wants Japan to do the same hahahahahahaah, they just posted a full yr of trade deficits!!!  They are done.

This market is about to bleed, you went long now trying to chase the rally. You about to get played and thrown to the f*cking wolves.

No QE anything on USD swaps going into overdrive.

Then there is China.

Wed, 01/25/2012 - 02:51 | 2095599 falun bong
falun bong's picture

There will soon be plenty of vol but it won't be from Iran. They don't want war. The United States of Israel does, but Iran has some pretty big friends: China, Russia. And the Japanese and the Koreans are telling Black Bush that they need Iranian oil. The Indians say they'll trade gold for it. Those factors will overule the Zion Firsters in Congress, and Newt will crawl back under his rock. The increased vol will come from Europe, could be to the upside, who knows. Like Brevan Howard says, who can tell WTF the politicians will do.

Wed, 01/25/2012 - 01:46 | 2095530 chump666
chump666's picture

...and USD bids about to come back in vengeance once China comes on line.

 

Wed, 01/25/2012 - 01:58 | 2095547 chump666
chump666's picture

* U.S. dollar hits one-month high against the yen

Nice bear signal from Japan. FX traders on here bring up your USD/JPY charts Aug 4 2011 Yen at 80 before the major market volatility kicked in, meaning?  Volatility is about to kick in...on everything.

http://www.youtube.com/watch?v=J4FtDkFgSa4

Wed, 01/25/2012 - 03:10 | 2095613 steveo
steveo's picture

Sasy something in fucking english, dislocation !!

use effen english!

Wed, 01/25/2012 - 03:51 | 2095644 Zola
Zola's picture

Message from Brevan Howard : Thank you FED for operation twist and rate to 0 until 2013 aka QE that allowed us to make money with our big long bond position which should have tanked. I m not impressed by those sucking up to the PTB to make money...

Wed, 01/25/2012 - 04:11 | 2095661 non_anon
Wed, 01/25/2012 - 05:27 | 2095689 BlackholeDivestment
BlackholeDivestment's picture

http://www.youtube.com/watch?v=_pocXYyHCuw&feature=related

...yes, betting on dislocation. http://www.youtube.com/watch?v=dKpC4MfW4mY&feature=related

 

Playing chicken with the Great Wal Mart of China in the New World Order Casino.

Hint number one: The ''Wal(l)'' always wins. Lol. http://www.youtube.com/watch?v=bDDoSb73rA8&feature=related

Wed, 01/25/2012 - 07:49 | 2095770 rawsienna
rawsienna's picture

This guy is a pro.  What a difference between him and Paulson.  

Wed, 01/25/2012 - 08:37 | 2095806 Kaaos
Kaaos's picture

I see this a bit disturbing. If I correctly understand their view, Brewan Howard seems to have a pessimistic view about the future, but quite opposite reasons than normally ZH is preaching (my views too). It seems like BH is praising the Keynesian approach (quote: "In the Great Depression, economies grew to the extent they pursued Keynesian stimulus and sizable depreciations in the exchange rate of their currencies. Presently, enthusiasm for additional stimulus appears to have come to an end and the room for competitive devaluation appears limited given that the largest economies are in a liquidity trap and emerging markets are slowing markedly.") and seeing the future uncertain because there is not enough stimulus (quote "On the other hand, we are about to witness an unprecedented policy move. In the US, Eurozone and UK, fiscal austerity is being prescribed as the cure following the bursting of the credit bubble and to overcome the malaise following a balance-sheet recession. Unfortunately, there is no historical example of when this approach has been successful.")

So we should have more stimulus and less austerity? More ink pls..

Wed, 01/25/2012 - 11:08 | 2096188 FMR Bankster
FMR Bankster's picture

He's a trader. Wants the movement goverment action brings to the economy. And keynesian stimulus will do it. Real GDP rose by 6% a year in 1934-1936. Then they attempted to pull back a little and things collapsed again in 37-38. Only the austerity brought about by WW2 forced the private sector to really pay down debt. No domestic goods, lots of military exports, and war time solidarity combined with a lot of overtime pay. Austerity in another form. One way or another this debt has to disappear. You either inflate it away or default on it.

Wed, 01/25/2012 - 08:49 | 2095822 Zola
Zola's picture

Exactly is all BS , someone with a bearish view is not buying Long bonds. They are just riding Bernanke's **** .

Wed, 01/25/2012 - 10:02 | 2096010 Terra-Firma
Terra-Firma's picture

We are on a long road trip and can't stop for gas because we have run out of money. So, every time the tank nears empty, along comes Bernanke et al to top up the tank before we stall out. Hence risk on-off days. If he puts too much gas in the tank he risks spillage, read inflation. If too little we slow down to conserve fuel.  Central  banks will continue the practice until we get to the promised land, wherever that is. This is a "Grapes of Wrath" journey and we are all on it. We know how that ends.

Wed, 01/25/2012 - 10:13 | 2096054 Stuck on Zero
Stuck on Zero's picture

Sounds like a lot of drivel to me.

Wed, 01/25/2012 - 10:22 | 2096083 ThisIsBob
ThisIsBob's picture

If one is "long volatility" is one a bear?

Wed, 01/25/2012 - 11:09 | 2096194 FMR Bankster
FMR Bankster's picture

Yup

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