Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Reuters Copenhagen – Business leaders met in Denmark to try to unite behind a common call for long-term climate policies, ahead of a U.N. conference in December meant to forge a new climate treaty to replace the Kyoto Protocol.
"For those who are directly or implicitly lobbying against climate action I have a clear message: your ideas are out of date and you are running out of time," U.N. Secretary-General Ban Ki-moon told a meeting of more than 500 business leaders.
"The smart money is on the green economy," he said. "Leaders sometimes are weak because they are short-sighted to get the votes," he added, urging businesses to lobby for carbon cuts.
Times Online – While many lose sleep over each twist and turn of today’s economy, New Jersey collector Ralph DeLuca has found a hedge against the recession in the musty memorabilia of Hollywood’s past.
A former private investment consultant, DeLuca hardly batted an eye when he bought a vintage poster from the 1932 cult movie "Freaks" at auction in March for more than $100,000. The poster had cost $10 in the early 1970s.A few minutes later he outbid competitors for a rare poster of the original "Dracula" from 1931, owned by actor Nicolas Cage, snapping it up for more than $300,000.
Reuters – Hedge fund manager Steven Persky plans to start betting on companies’ bad fortunes again.
Persky, who runs $1 billion hedge fund firm Dalton Investments, said on Wednesday he will re-launch his distressed debt strategy three years after liquidating two similar portfolios when the strong economy made such investing difficult.
Now that times have changed dramatically, Persky is among a handful of fund managers who expect to make money for their wealthy clients in the distressed area.
Bloomberg – Ronald Reagan used to joke that the nine most terrifying words in the English language were “I’m from the government and I’m here to help.” Barack Obama is making those words welcome.
As he approaches his 100th day in office, Obama is rolling back the Reagan Revolution and restoring government to a central role in the economy. He has passed the biggest budget stimulus ever, prepared the way for an overhaul of the U.S. automobile and banking industries and proposed a $634 billion government- funded expansion of health-care benefits.
“It’s profound,” says presidential historian Richard Norton Smith of George Mason University in Fairfax, Virginia. “There are very clearly taking place some long-term, even transforming shifts in priorities and resources.”
Bloomberg – Gold, little changed in London, may drop on lower demand for an inflation hedge after U.S. consumer prices posted their first annual decline since 1955.
The consumer price index fell 0.4 percent in March from a year earlier, the Labor Department said yesterday. That helped to ease concern that Federal Reserve actions to stimulate the economy will cause inflation to soar. Investors often buy gold as a hedge against accelerating prices. Rhodium climbed to the highest in more than four months on improved car sales.
MLive.com – The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis. The two-day event near Ft. Meade, Maryland, had all the earmarks of a regular war game. Participants sat along a V-shaped set of desks beneath an enormous wall of video monitors displaying economic data, according to the accounts of three participants.
“It felt a little bit like Dr. Strangelove,” one person who was at the previously undisclosed exercise told POLITICO.
Media Monitors Network – "The US Federal Reserve Bank, a private institution, is printing $1 trillion to buy toxic bonds to shore up the economy. Will this work? Perhaps temporarily but most economists predict a sharp decline in the value of the dollar within the next five years. With too many dollars in circulation and a massive debt, the dollar will fall in value vis-à-vis other currencies. The Chinese have already called for a new global reserve currency to replace the dollar as it did to the British pound after the Second World War."
Bloomberg – Theodoro Messa’s Paineiras Hedge FIM hedge fund beat 96 percent of its peers this year on bets Brazilian bond yields will fall as the central banks slashes borrowing costs to shore up Latin America’s largest economy.
Messa is buying bonds and avoiding stocks because the global recession will persist longer than investors expect, requiring Brazilian policy makers to deepen interest rate cuts, he said. He predicts zero economic growth for Brazil in 2009.
Time.com – To stop the economy’s deflationary spiral, President Obama and Treasury Secretary Tim Geithner need to get toxic assets off banks’ balance sheets so the banks can start lending again. With much fanfare and after much delay, Geithner on Monday unveiled the details of the government’s "public-private" collaborative plan to make that happen.
There was a lot at stake. When Geithner rolled out an initial version of the plan Feb. 10, the details were missing, the stock market tanked and his image went with it. To give his plan a chance this time, Geithner had to show private investors they could make money partnering with the government to buy troubled loans, and the complex securities based on them, from the banks.
Associated Press – The Obama administration’s latest plan to help banks get credit flowing again is drawing a tepid reaction from investors and academics, who say the proposal comes with too many strings attached and is unlikely to stimulate lending industrywide.
And even if banks are willing to start lending more money, they wonder if many people will be able to take on more credit until the economy gets going again.
"We went on a borrowing binge," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "Debt levels, especially in households, are too high or unmanageable."
10 News – Investors will be listening closely to details of the $1 trillion toxic asset-purchase program to be announced Monday as the Obama administration seeks to provide enough information to satisfy markets and avoid the kind of stock meltdown seen last month.
Then, Treasury Secretary Timothy Geithner disappointed by giving only broad outlines of the government’s approach to kick-start lending and the overall economy. With the sharp market plunge that followed Geithner’s speech on Feb. 10 still a fresh memory, administration officials Sunday sought to temper expectations for Monday’s announcement. "Ridding bank balance sheets of problem assets is the next step in that process of fixing the financial system, but it alone won’t solve the credit problem," Treasury Department spokesman Andrew Williams says.
Forbes – The cost of protecting Japanese government debt against default has risen sharply as political uncertainty and worries about the nation’s fiscal position grew after data this week highlighted the depth of recession in the world’s second-biggest economy.
But traders say the market is quite illiquid and dominated by foreign investors such as hedge funds.
Japanese players do not believe the government would default on its debt and seldom buy protection for their holdings of Japanese sovereign bonds.
