Brief: Jeffrey Gundlach, CEO of DoubleLine, said Monday that the stock market could sell off again to retest the low in March as he believes investors are too optimistic about the economic recovery from thecoronavirus pandemic. “I’m certainly in the camp that we are not out of the woods. I think a retest of the low is very plausible,” Gundlach said on CNBC’s “Halftime Report.” “I think we’d take out the low.” “People don’t understand the magnitude of ... the social unease at least that’s going to happen when ... 26 million-plus people have lost their job,” Gundlach said. “We’ve lost every single job that we created since the bottom in 2009.” The so-called bond king revealed he just initiated a short position against the stock market.
Brief: The United States Oil Fund LP again roiled oil markets as it unexpectedly starting selling all of its holdings of the most active West Texas Intermediate futures contract, triggering a massive swing in the price relationship between the June and July contracts. The changes, detailed in a regulatory filing, are the latest in a series that have have wreaked havoc on crude prices. The fund said it’s moving its money to contracts spread between July 2020 and June 2021 due to new limits imposed upon it by regulators and its broker… The largest oil ETF has changed its investment policy five times in the last two weeks. It also warned investors its valuation may deviate significantly from the underlying oil price, in effect acknowledging that it’s momentarily less focused on the price of WTI crude.
Brief: The planned capital raising, via a discounted share sale, is the biggest by an Australian company since the virus outbreak, which has killed 83 people in the country and shut down large parts of the world’s 12th-biggest economy.The bank, Australia’s third-biggest, said it had decided to pay more than A$850 million in dividends, or about a third of what it paid last year, rather than scrapping it as it did not want investors who depended on the income to dump the stock.Its decision follows a regulatory directive to consider postponing shareholder payouts until the impact of the pandemic was better known.NAB, which brought forward its results by 10 days, is the first Australian bank to report earnings since the pandemic arrived in the country and so portends what could come from the rest of the sector.
Brief: Warn potential clients about screaming kids. Clean up your house. Don’t forget to shave. These are the rules for wooing clients to a new hedge fund while in a coronavirus lockdown. As if starting a hedge fund wasn’t tough already, this year it’s going to be even harder. At least 10 firms opened on April 1, with more slated for this year. Most will begin with substantially less money than their founders were expecting before the world came to a standstill, according to people involved in fundraising… For much of the past decade, raising money has been a slog. The industry faced ridicule for high fees and low returns, and clients were more likely to pull money than to add. Now startups also have to deal with much of the world under quarantine, and a global recession or worse, creating the least welcoming money-raising environment in years.
Brief: Scott Minerd, the chief investment officer of Guggenheim Investments, thinks it may take four years before the economy regains the level of activity it had before the coronavirus pandemic triggered a global crisis. “To think that the economy is going to reaccelerate in the third quarter in a V-shaped recovery to the level where gross domestic product (GDP) was prior to the pandemic is unrealistic,” he wrote in a note published on April 26. While governments are doing all they can to aid both businesses and individuals impacted by the virus shutdowns, Minerd said the help will likely be “insufficient, misdirected, and full of unintended consequences.” Many of the 26 million people who have applied for unemployment benefits over the past five weeks won’t be going back to work immediately even if the economy fully reopens, he added.
Brief: In recent months, global macro hedge funds, which profit from trading on big economic trends, have seemed terminally out of fashion. Long-term legends of the industry, such as Moore Capital’s Louis Bacon,called time on their careerslast year while global macro funds in general struggled to perform against a backdrop of perennially stable markets. Investors carried their concerns into 2020, yanking $22bn from global macro hedge funds in the first three months of this year, out of a total of $33bn pulled from the industry, according to data provider HFR. But times could be about to change. Volatility is back. And some asset managers who allocate money across different investment strategies say that global macro could be set for a return. Macro hedge funds are “very nimble and can weather periods of volatility”, said Karen Ward, chief market strategist for Europe, the Middle East and Africa at JPMorgan Asset Management.