Manufacturing and corporate profits are both in recession mode, even though the rest of the U.S. economy continues to limp along.» Read More
Just as it seemed as if 2015 would be a total wipeout for hedge funds, October brought the industry some life.
As a whole, the $2.8 trillion industry rebounded to a 1.8 percent gain in October, according to numbers released Friday by tracking group HFR, which gauges performance through its Fund Weighted Composite Index.
The bad news for the industry is that the returns badly trailed the broader stock market, where the S&P 500 gained about 8.3 percent for the month. But the good news is that the HFR index is now positive for the year, albeit barely by 0.03 percent.
By contrast, the S&P 500 is up about 1.7 percent now for the year, while the Dow Jones industrial average was up 0.25 percent as of Friday afternoon trading.
With few of the traditional indicators pointing to a recession, this could be just the time investors should start preparing for ... a recession.
Under ordinary circumstances, factors such as liquidity, the yield curve, gross domestic product growth, and fiscal and monetary stimulus would be key indicators to suggest the direction in which the economy is heading.
However, these are not ordinary times, and Jim Paulsen, chief investment strategist at Wells Capital Management, is warning clients that the chances of an economic shock are growing:
Policy officials, economists and investors have become conditioned by the post-war experience that recessions simply don't happen until economic policies turn restrictive Not before interest rates rise, the yield curve inverts and not until the Federal Reserve drains the punch bowl and the money supply slows.
However, the predictive relationships between traditional economic policies and future economic growth have weakened considerably in recent years raising the risk of an "unexpected recession."
Hedge fund compensation is catching up with performance, and for some of those in the business that's not going to be a good thing.
The nearly $3 trillion industry is slogging through a rough 2015, with some of its biggest names struggling to make money, due in part to slumping oil prices and troubles in emerging economies.
Consequently, those weak results are eating into compensation, particularly on the bonus side.
The decline will be felt most strongly at the intermediate level, or firms that have assets between $1 billion and $5 billion, according to estimates from industry tracker HFR.
Federal Reserve watchers will be parsing every piece of economic data between now and mid-December to figure out whether the central bank will raise interest rates before year's end.
What may well be the most important factor, though, is tilting in favor of a hike.
Fed fund futures, in which traders place their bets on where rates will be after each Federal Open Market Committee meeting, now indicate the probability of a December move at 58 percent. That's a jump of 4 percentage points on a daily basis and a huge surge from a month ago, when traders anticipated just a 2 percent chance of a hike amid market turmoil and indications of deflation in the U.S. and global economies.
Of course, day-to-day trading on anything is volatile, and that's no less true when the market is trying to read tea leaves for a group that has been as fickle as this Fed board.
But the shift is significant in that the Fed increasingly has changed its focus from being "data dependent," as it claims in public statements, to market dependent, which provides a clearer explanation for the Fed's rate indecision through 2015.
Renowned hedge fund manager Stanley Druckenmiller believes the Federal Reserve has created a type of bubble that won't end well.
On the heels of the financial crisis, the Fed cut its target rate to near zero and conducted three rounds of money printing during which it expanded its balance sheet to $4.5 trillion.
Activist investor Carl Icahn continues to think bad things lie ahead, even though his last prediction of doom failed to materialize so far.
Icahn repeated his prediction of problems ahead, telling a crowd at the annual DealBook conference Tuesday that he agrees with hedge fund titan Stanley Druckenmiller, who spoke before Icahn and said Federal Reserve policies are going to cause woes for the market.
"There are going to be real problems. We're walking into a minefield of what's going on with the Fed," Icahn said. "I could go on and on here, but I think we have problems."
Reed Hastings takes six weeks of vacation a year, and he's hoping his employees do the same.
"I take a lot of vacation and I'm hoping that certainly sets an example," the Netflix CEO said Tuesday. "It is helpful. You often do you best thinking when you're off hiking in some mountain or something. You get a different perspective on things."
The head of the video streaming service was responding to a question at the DealBook conference on why he's decided to extend unlimited parental leave to the company's nearly 2,200 full-time employees, who had been given unlimited vacation, as well.
Over the course of his years running the company, Hastings said he found that it's important to be flexible and focus on work-life balance. Others have joined the movement to unlimited vacation, to the opposition of some who say it actually discourages workers from taking time off as they worry they'll lose their jobs if they take more than co-workers.
Hastings said that's one of the reasons why he utilizes so much time off.
"What we're trying to do is earn loyalty and trust that they'll really care about Netflix in addition to caring about their families, and they'll find successful ways to integrate it," he said. "For all of you and all of your employees, it really is about work-life integration."
Goldman Sachs CEO Lloyd Blankfein is continuing a busy schedule while battling cancer, his top deputy said Tuesday.
Blankfein disclosed in September that he has a "highly curable" form of lymphoma that will require treatment. Since then, he's kept a low public profile as Wall Street wondered about the condition of one of its most familiar faces.
Speaking at the DealBook conference, Goldman's president and chief operating officer, Gary Cohn, said his boss is fine.
Blankfein takes the attitude that getting through the disease is "just another chore, just another task, and I'll get through it."
"He's in the office every day, he's engaged," Cohn said. "The days he's not in the office, he's on the phone all day long and the relationship has never been better."
Goldman's stock has been performing well in the days since Blankfein disclosed his health problem, rising more than 10 percent along with the market since the late-September lows.
Cohn said the company is continuing to function at a high level.
"We have a very deep bench," he said. "There's not a problem at Goldman Sachs. If anything, it's giving people opportunities to do things they might not have the opportunity to do."
With more than seven years gone from the seminal event of the financial crisis, Morgan Stanley CEO James Gorman said Wall Street has turned a corner.
Regulators have spent the years since Lehman Brothers blew up on Sept. 15, 2008, focusing on making sure a too-big-to-fail-style crisis does not happen again. Dodd-Frank regulations and other measures have forced banks to rein in risk.
Banks as a whole have paid more than $204 billion in fines and settlements related to bad behavior around the crisis and since.
Exchange-traded funds took the heat for the latest market "flash crash," but BlackRock CEO Larry Fink said Tuesday they shouldn't be blamed.
The Aug. 24 market tumult saw the Dow Jones industrial average plunge at the open, losing more than 1,000 points at one juncture. During the plunge, many ETFs, which trade like stocks, saw their prices tumble well below the net asset value of their components.
It wasn't the first time ETFs were at the center of a market storm. The $2 trillion industry also was faulted by some for the March 6, 2010, flash crash.
Markets seem to be be moving higher and shirking off bad news no matter what, strategist Michael Farr says.
Barclays was hit by a $108.5 million fine on Thursday as it allegedly worked with super-rich clients in a way that could have facilitated financial crime.
A class action lawsuit accuses banks of conspiring to limit competition in the $320 trillion market for interest rate swaps.