Real Talk on Ray Dalio, Hedge Fund Oil Bets, Donald Trump and the Hacienda Hedge

Apr 5 2017 | 1:53pm ET

Hair of the Dog

Quotes of the Day

“We believe (and many studies show) that poorly conceived and uncoordinated regulations have damaged our economy, inhibiting growth and jobs – and this has hurt the average American."

Welcome newcomers…

The tradition of deregulatory demands begins with the Airing of Greivances…

Jamie Dimon has “got a lot of problems with you people and now you're gonna hear about it.”

In an annual letter to shareholders, Dimon spent little time getting into his company’s rock solid balance sheet and instead focused on the state of the United States of America.

“Something is wrong,” he wrote. Dimon took aim at the education system, healthcare costs, income inequality, government institutions, and disappointment with globalizaton.

But the bigger issue – the current regulatory structure. Which leads to this question: Is this a letter to shareholders or is it a talking point to the American people?

Here’s his plan. [Emphasis, ours.]

“We are not looking to throw out the entirety of Dodd-Frank or other rules (many of which were not specifically prescribed in Dodd-Frank). It is, however, appropriate to open up the rulebook in the light of day and rework the rules and regulations that don’t work well or are unnecessary. Rest assured, we will be responsibly and reasonably engaged on this front. We believe changes can and should be made that preserve the safety and soundness of the financial system and lead to a more healthy and vibrant economy for the benefit of all.

If only it were that simple.

If Ray Dalio’s business principles of radical truth and radical transparency make him crazy, then he’s crazy like a buddha.”

Erik Larson offers an intriguing profile of hedge fund manager Ray Dalio.

The story highlights Dalio’s business practices and commitments to idea meritocracy, work relationships, and “radical truth and radical transparency.”

The profile offers some interesting statistics on decision making and discusses how technology will impact management in the future.

“This was after all the headlines are saying hedge funds have never bet this much on rising oil prices, in the history of oil trading. And now they have a historical decline in their long bets.”

That’s Taylor Muckerman talking to Sean O'Reilly about why hedge funds are betting on crude oil falling below $50 per barrel. The interview is a bit of pure madness, but it brings up an interesting point about the financial media’s continued inability to understand the difference between a trend and three or four deals involving oil sand projects and how assets factor into individual balance sheets.

The Financial Times is saying that there’s never been so much money betting on rising prices. Other headlines say that hedge funds are shorting oil. The media is all over the place…

When it doubt, refer to Reuters. John Kemp in London offered a much better assessment of what hedge funds have been doing in recent weeks as they scale back their bullish sentiments.

Here’s his breakdown.

“It’s the deal that all banks wait for each year. It’s so large that it can make or break their year.”

That’s a quote from Richard Fullarton, founder of commodity fund Matilda Capital Management.

Bloomberg pulls back the veil on an annual trade in Mexico called the “Hacienda Hedge.” It’s a multi-billion-dollar exercise that involves all the usual suspects… central banks… Goldman Sachs…government officials… and – just because – Ecuador.

Wall Street is going through an ecosystem change, where it’s all about content. And there are cost pressures on all sides.”

Blair Livingston, Street Contxt’s chief executive and a former RBC and IEX executive, offers his insight into the importance of technology and research.

The Financial Times discusses the trend of financial institutions using fewer analysts to do more investment research than ever. All at a time that profits are falling and regulations are increasing.

The newspaper does so by starting with a short tale about Steven Cohen’s Point72 Ventures making an investment in something that isn’t a Balloon Dog. The firm and a venture group led by Joe Lonsdale are pouring capital into  Street Contxt’s investment banking research platform.

There is no shortage of disruption happening on Wall Street thanks to technology. This month, Modern Trader took a deep dive into the major trends that are affecting more than just institutional research. In the magazine’s Annual Fintech Issue, Modern Trader editors spoke with dozens of Fintech leaders about the state of the industry. Pick up a copy. 

Hedge Fund Winners
GSA Capital Partners, a Mayfair hedge fund, took home a nice payday shorting Imagination. The company’s shares sank after Apple announced it would no longer use Imagination chips in its iPhone products. Writers at TechEye aren’t happy about the deal (evident from the jab of Apple tax dodging in the opening sentence.)

Hedge Fund Losers
Nehal Chopra’s Ratan Capital Group has lost the backing of Tiger Management. Julian Robertson Jr. told investors in Q4 2016 that he was pulling out from one of the sixth hedge fund managers to whom he provided seed funding.

Check Out Modern Trader

This week Modern Trader--the essential journal for professional traders & active investors, was named the Best Business-to-Business magazine by the Niche Media Awards committee.

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Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon.


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