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CNBC – As losses mount, hedge funds no longer have the ability to drive speculation in the markets, Hugh Hendry, chief investment officer and partner at Eclectica hedge fund told "Squawk Box Europe" on Tuesday.
"There is no role for speculation or speculators today. This is kaput," Hendry said. "If we were Second World War generals, we’ve exposed our flanks. We’ve been wiped out. This is about fundamentals … this is about losing money."
As the crisis unfolds, the policymakers’ focus should shift from the threat of inflation to that of the world economic downturn, which could be more severe than economists anticipate, he said.
China, which many believe will balance out slowdowns elsewhere, will struggle if difficulties in the U.S. continue, while the current spike in producer prices is just a hangover from rising oil prices earlier this year, Hendry said.
"I fear that the central bankers of the world are fighting yesterday’s battle," he said.
This is Money – Perhaps you’ve been imagining that if Barack Obama becomes President of the US, he will impose tough new rules on Wall Street, sweep away the economic inequalities of the Bush years and demand that the gigantic banks that created the present mess are broken into a hundred powerless pieces. In which case, prepare to be disappointed.
On paper, the Democratic candidate sounds like a reformer.
He called the last Bush tax cuts exactly what they were: ‘The Paris Hilton tax break. It’s about giving billions of dollars to billionaire heirs and heiresses.’ Stirring stuff.
He claims that if elected he would increase the tax rate on capital gains to 25% and go after hedge-fund managers with venom.
Under Obama, the speculators would see gains on their income taxed at 35% rather then the measly 15% they currently enjoy. Other corporate taxes are also supposed to rise.
In practice he is unlikely to do any of those things for one simple reason: Wall Street owns him. Each year The Centre for Public Integrity in Washington DC compiles a list of the donors to top politicians for its annual book The Buying of The President.
Biloxi Sun Herald- The Senate voted Tuesday to move ahead with a Democratic plan to curb speculation in oil markets that has been blamed for some of the recent run-up in oil prices.
The 94-0 vote clears a procedural hurdle for the legislation, which would require the Commodity Futures Trading Commission to set limits on trading in oil markets by investors and speculators.
Despite the big tally, however, the rival parties are bitterly divided on how to address high gasoline prices and an underlying stalemate remains in place.
Daily Telegraph- The chief executive of the sugar refining group Tate & Lyle has hit out at hedge funds and other commodity speculators, calling for them to face greater regulation in a bid to hold back soaring food prices.
Hedge funds have been blamed for contributing to the rocketing price of commodities including oil, wheat and corn by speculating in the futures market with highly leveraged bets on forward prices.
Tate & Lyle boss Iain Ferguson called for limits to be placed on speculators’ involvement in the futures market and the way hedge funds and others finance their activity.
Mining MX- The question as to whether the oil price has been driven higher by speculators is highly emotive. Many supporters of the idea want a clampdown on speculation while others say that would be dangerous and futile interference in the market. Oil-producing cartel Opec blamed speculators and a weak dollar for US$45 of the price when it hit $142/barrel.
The oil price has doubled in a year and at the time of writing was trading below its peak of more than $140/barrel. Opec’s views on speculation received support from a serious source: George Soros, the billionaire hedge fund manager who has himself profited massively from speculation in the past. Soros told a US Senate Committee last month that a massive bubble had built up in the oil market.
Bloomberg – Whenever pension funds, mutual funds and insurance companies decide they should own dollar assets that are out of favor with hedge funds, the hedge funds lose.
Institutional investors bought more dollars than they’ve sold this year, according to State Street Corp. and Bank of New York Mellon Corp., the largest money managers for institutions. That’s significant because speculators such as hedge funds raised bets against the greenback by 36 percent, data from the Commodity Futures Trading Commission in Washington show.
History indicates institutional investors may be on to something. The dollar gained in 71 percent of the quarters over the past decade when they were net buyers, according to Boston- based State Street. They bought more than they sold in all of the quarters when, like now, benchmark interest rates were below inflation and the current account deficit, the broadest measure of trade, exceeded 3 percent of the economy.
"The dollar can do quite well in this slow-growth environment,” said Richard Batty, global investment strategist at Standard Life Investments in Edinburgh, a mutual and pension fund that manages the equivalent of $283 billion. "We’ve had for some time a positive position on the U.S. dollar.”
After falling to a 13-year low of 78.993 in March, the dollar has gained 2.5 percent to 80.993, according to a trade- weighted index maintained by the Federal Reserve that includes the euro and yen. It has rallied by the same amount versus the euro to $1.5554 since hitting a record low of $1.6019 on April 22.
Bloomberg- Hedge-fund managers and speculators reduced bets on higher oil prices by 80 percent since July as crude futures rose to records and U.S. regulators started investigating trading, government data show.
So-called speculative net long positions fell to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27 from a record 127,491 on July 31, according to a U.S. Commodity Futures Trading Commission report on May 30.
The decline may complicate the CFTC’s probe as regulators try to determine how much of the rise in oil to more than $135 a barrel last month was caused by speculators who may have manipulated the market instead of consumer demand.
Bloomberg- Whenever pension funds, mutual funds and insurance companies decide they should own dollar assets that are out of favor with hedge funds, the hedge funds lose.
Institutional investors bought more dollars than they’ve sold this year, according to State Street Corp. and Bank of New York Mellon Corp., the largest money managers for institutions. That’s significant because speculators such as hedge funds raised bets against the greenback by 36 percent, data from the Commodity Futures Trading Commission in Washington show.
History indicates institutional investors may be on to something. The dollar gained in 71 percent of the quarters over the past decade when they were net buyers, according to Boston- based State Street.
Daily Telegraph- German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
Uwe Beckmeyer, transport chief for Germany’s Social Democrats, said his party would call for joint measures by the G8 powers to prohibit leveraged trading on energy contracts. "It’s an extreme step but it has to be done," he told the Berlin media.
