November 15th, 2007 by admin
The title says it all. We are half way through the second day of trading for OZM the IPO of Och-Ziff Capital Management. Och-Ziff is a large hedge fund company that decided to cash out to the public. Following FIG and BX OZM has sold off as well and is currently below its offering price. Only time will tell how hedge funds work out as a stock market investment but for now they have been bad.
Our guess is just like any industry the good ones will thrive over time and bad ones will not but the timing on going public couldn’t have been much worse. Everything has gone down lately so going public in the middle of all the turmoil didn’t help it out much. Several other fund companies have indicated interest in going public so only time will tell. One interesting thing is that we have not heard about any of the “legendary managers” wanting to go public. Bruce Kovner, Paul Tudor Jones, Stanley Druckenmiller, George Soros, and Nick Roditi. No doubt the thought has crossed their mind but we haven’t seen anything in the press showing interest.
-Trade Macro-
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November 13th, 2007 by admin
GlobalPensions.com says that many pension plans are planning on raising their allocations to Emerging Markets. Most of the reasoning given is that they have been pleased that the current credit crunch in the United States has not had a very strong effect on the emerging markets.
We think that they are mostly right. Being globally diversified is typically a good thing but their reasoning is a bit weak. In a short country specific credit crunch global diversity is a great thing but don’t fool yourselves. If the current crunch (todays market rally notwithstanding) is prolonged it will effect global markets as well. Especially the rapidly growing emerging markets companies that need financing to continue their growth.
Long-global diversification
Short-weak reasoning
-Trade Macro-
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June 17th, 2007 by admin
While we will probably get a short term pullback in interest rates we remain bearish on bonds. Basically every indicator and model that we follow show bonds as a sell. It is probably safe to say that the inflation numbers are a joke and while 2.7% may sound good it is wrong. Just like calling a fat man skinny doesn’t make it true, the same goes for “low” inflation. Guess what it is at least 1% higher and probably closer to double the reported numbers. There will be more posts in the future on this.
For Bonds
-Governments-Sell
-Corporates-Sell
-Junk/High Yield-Sell
The signals for Government and Corporates have been on sells for weeks now but the high yield only came in as a sell three weeks ago.
As for stocks as much as it pains us to say it we see the SP500 staying in bull mode for the immediate future. Virtually all of our models remain in a buy mode. So although we wouldn’t be initiating or adding to our positions right now we remain on a Hold.
Stocks
US Domestic-Buy/Hold
Favored Area-Large Cap Value
Top Two Sectors-Energy and Materials (XLE and XLB)
As for precious metals we are bullish on them right now. Not wildly so but we have had a few buys on for several weeks now. So for metals we are 40% invested with the rest in cash right now.
Gold-Long 40% of metals allocation.
As for the economy as a whole we remain short term neutral and long term bearish. In the next few months we should be alright but by mid fall we wouldn’t be surprised if we see the fabled recession. That is a ways off but we would not be surprised if it came about.
In the currency world we are short term short the Euro, Pound, Swiss Franc, and the Swedish Krona. In the coming weeks or months we will revert back to the short dollar position that long term has done so well. In addition to that we are long term bullish the Australian Dollar. If we actually go into hyper inflation mode the AUD will benefit significantly and if inflation stays where its at the AUD will still be OK. Overall a good risk reward trade.
That is it for now. Come back often because we are ramping up the posting.
Happy Trading and as always Manage Your Risk,
The Macro Trader
Disclaimer-None of this is investment advice. It is the opinion of the authors. If you choose to trade off of this you do so at your own risk and none of the gains (unfortunately) or losses (fortunately) are the fault of TradeMacro.com. Be safe, do your own due diligence on anything you see, and keep a level head.
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