Archivo de la Categoría ‘Financial Markets’

This seems odd but it is as it sounds. On Friday, we had the first hedge fund going public in the NYSE: Fortress. The main differences relative to others is how its assets under management are distributed. They have approximately 30 bn dollars distributed as: a) 60 % is in private equity; b) 30 % on hedge funds; c) 10 % is in real state.

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It seems that this is what we can interpret from the price of European Union Allowances for CO2 in Phase I (EUAs) within the European Trading Scheme (ETS). Yesterday, prices for EUAS prices were slightly above 1.5 euros per tonne. This means that any installation that emits above the allowances they were allocated, could comply just paying 1,5 euros per tonne of CO2 that they produce in excess. The ETS, considers two phases, Phase I going from 2005 to 2007 and Phase II going from 2008 to 2012. The amount of CO2 allocated to industrial installations in each phase is established in National Assignment Plans that have to be approved by the EU. Any amount of CO2 produced by installations in excess of their allocations has to be bought in the markets for EUAs.

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At the end of 2006, Goldman Sachs announced that they will be offering an index able to clone hedge funds returns synthetically. The index responds to the appealing name of ART (Absolute Return Tracker) and would replicate hedge funds performance at a much lower cost, just a 1 per cent flat fee. Anyone that buys it can expect to get the returns of the universe of hedge funds that it clones. The flat fee would undoubtedly attract many investors if we consider fees charged in the hedge fund industry. Some fees in the US can go up to 2 % of annual management fees and the corresponding performance fees can reach 20 % of returns. Goldman

These are very common words in the financial press since Central Banks gained independence. But what do they mean? A “Hawk” is a central banker who is a little more concerned with implementing monetary policy to fight inflation rather than to stimulate the economy. A “Hawk” has a bias towards higher rates whenever there are signs of overheating in the economy. A “Dove” believes in the stimulating properties of monetary policy and thinks that it is a relevant tool in keeping the economy growing. A

In a previous article I discussed the huge current account surpluses that some oil producing countries have accumulated in the last four years and how this has implications both from an asset allocation and an asset pricing perspective. I focussed there on where the inflows have been channelled from oil producing countries. I would like now to pay a bit more of attention on the asset pricing side of this story. Has the inflow from oil income affected asset prices worldwide? Which assets have been affected most?

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Oil markets have had a bumpy road from the start of the year 2007. On the first week of January the WTI (West Texas Intermediate) price dropped over 9 %. This drop in prices has been justified on warmer weather than usual and by some index fund initiated sell offs (one major commodity index seems to have reduced the share of petroleum in its portfolio). This trend has been exacerbated by some so called black box investors. It seems odd that this type of blind investors could have led prices plummeting towards 50 $ the barrel, but more than one source has reported these type of sellers being very active in the first two weeks of the month.

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Hedge funds have seemed to be attracted by renewable energies. Not so much because of private equity engineering into renewable firms but because of their movements into low carbon related assets.

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This has much looked like a movie award ceremony. And the winner is: The government of Japan. Last week there have been disputes on monetary policy in Japan between the Central Bank (BoJ) and the Government on different views about the future of economic developments and the appropriate interest rate policy. Finally the arguments (or influence) of the government of Japan have succeeded and any interest rates decision has been postponed.

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Last week Central Bankers came into stage with vengeance. Though only one took definite actions (the Bank of England

The Hedge Fund Forum has recently listed an article appearing in the Spanish newspaper Cinco D