I have had a few conversations with people recently who have been making noises about the impact of hedge fund redemptions in the coming months. As I wrote last month in a different context, if you can't sell what you want, sell what you can. Thanks to the reader who sent this blog to me. This article suggests that some hedgies may be trying to guess what other funds are doing and basing their trades on that. Hmmmm ... I don't know if it is as simple as is suggested here, but as they say in England "stranger things have happened at sea".
Read the article below and the preceding post referred to in his article.
Cannibalism: The Latest Hedge Fund Strategy? - Seeking Alpha.
There is no question that redemptions are having an impact and will do so increasingly. The deleveraging of the investment banks, the Fund of Fund managers and the hedgies themselves all require selling and closing out shorts. All forces that are contributing to a massive shift change in the demand side of the business.
Scary stuff. Very scary.
What about the US? Summary of the Bailout actions last week and the market reactions:
- Monday, the House defeats the bailout.
- Tuesday, the market goes up 485 points.
- Wednesday, the Senate passes the bailout.
- Thursday, the market goes down 348 points.
- Friday, Congress passes the bailout, and the market goes from up 300 to down 157 in three hours.
What will Monday hold? (And don't forget to vote in the Poll in the sidebar on where you think the US market will end the week.)
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