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After recent major sell-offs, hedge funds see an even more gloomy future for the world’s equity markets, according to the Financial Times.
“Life is going to be much more difficult for investors,” Crispin Odey, founder of Odey Asset Management, wrote in a note to clients last week. “Outages, shortages, strikes, and war will come along,” he warned.
Odey’s Opus Fund, which looks for growth companies, recently converted a significant portion of its assets to cash after gaining about 7 percent so far in 2022.
In contrast, his fund that can bet for or against stocks has shot up 87 percent this year.
BlackRock’s $9-billion Strategic Equity hedge fund now has more short holdings—bets that stock prices will fall—than long ones, persons familiar told the FT.
Many other hedge funds are cutting back their stock investments, according to a Morgan Stanley client note seen by the FT.
In the U.S., the spread between the number of bets on rising prices versus falling prices is close to its lowest since 2010, the note said, indicating that hedge funds are leaving stocks alone generally.
TREND FORECAST: As we have detailed in this Trends Journal, people such as top national Bankster Jamie Dimon fear the economic future.
The same is true with the nation’s largest gamblers, aka, ‘Hedge Funds.” Their aversion to equities has set in as the U.S. Federal Reserve has launched a continuing series of interest rate hikes and begun to empty its bond portfolio of its $9 trillion in corporate and mortgage debt.
Minutes from the Fed’s May meeting indicated that officials felt a more “restrictive” rate policy, which would mean hiking rates higher and faster, “may well become appropriate” in the central bank’s battle to lower inflation.
This Friday’s U.S. inflation reports will help indicate the speed and direction of Fed interest rate policy. If the inflation comes in lower than expected, observe the big Hedge Fund analysis and maneuvers… follow the money.