Better watch your step, Mr. Market! I know you don’t give a damn about the economy these days. You’re all about momentum and the Fed put. Well, the momentum guys, the hedge funds, are losing their asses chasing ever slimmer returns with ever greater leverage.
The sexier hedgies with the most aggressive strategies (buy distressed super-junk bonds with borrowed money) are folding, while the more established funds are getting complaints from institutions around the country over high fees and negligible returns. Two of the marquee names, Greenlight Capital and Pershing Square are down, year-to-date, 21% and 20.8%, respectively (Zero Hedge, 11/2/15)
More money is coming out of hedge funds than going in presently (in my notes, but I can’t locate the source), Who’s left to buy stocks? Clueless 401K investors. Oh, and corporations buying their own shares back to shrink the capital base so that diminished earnings look good and CEOs can exercise stock options that put their earnings at 257 times the average worker, (up 40% in the last five years, while worker’s wages are flat to down over the same period). (Zero Hedge, 5/28/14).
As for the so-called “Fed Put,” the Fed’s money printing to pump up the economy, it ain’t working: per the latest reports aggregated by Zero Hedge:
…Carnage in commodities, a revenues recession (corporate), plunging EBITDA (“Earnings before interest, taxes, depreciation, and amortization.” In other words, bullshit reports), a collapse in US manufacturing, housing rolling over, and auto sales fading…
If you are better off than you were five years ago, you’re either a CEO, or you live in a wealth pocket with superzippers for clients/customers. It is to be hoped that you’re putting money aside. Rich people seriously quit spending when the market goes south. The ’07-’09 period was a clear warning for anyone servicing that sector.
Last week, Bob Prechter said he was leaning towards one more high in the major stock averages. The market has not shown any verve during selloffs, but then, the rallies are sickly affairs with poor breadth and volume. No time to be complacent-which is what the sentiment figures say is the case among investors and economists. I don’t blame investors, but economists? Puh-leeze.