Archive for October, 2013

Reuters: SAFT ON WEALTH-Early holiday courtesy of Fed

Stephen Jen at hedge fund SLJ Macro Partners has done research showing that the Federal Reserve is three times more powerful in driving equity markets over the past decade compared with 1980-2002. SLJ research shows that Fed actions now account for 40 percent of equity market variations compared with just 15 percent from corporate earnings.

“In sum, if the U.S. economy remains lukewarm in the remainder of the year, it is likely that we see the following: higher equity prices, lower bond yields and a relatively stable dollar, i.e., a dollar that will struggle to go lower, despite a dovish Fed,” Jen and colleague Fatih Yilmaz wrote in a note to clients.

Read the original article on the ‘Reuters’ website.

Bloomberg: Emerging-Market Currency Rout Will Worsen Next Year, Jen Says

Emerging-market currencies will probably see bigger declines next year when the Federal Reserve actually starts tapering its record stimulus, Stephen Jen, co-founder of hedge fund SLJ Macro Partners LLP said.

“Emerging-market currencies will have serious moments” in 2014, Jen, the former global head of foreign-exchange at Morgan Stanley who predicted the rout in April, said at a conference in Singapore. “What we have seen this year I think is just a pre-earthquake tremor. It was only the possibility that the Fed will start tapering that caused this volatility.”

Read the original article on the ‘Bloomberg’ website.

Bloomberg: Fed Relegates Default to Sideshow as Volatility Ebbs: Currencies

“If, during the lame-duck period at the Fed, volatility stays low, one could see carry trades becoming popular,” Stephen Jen, the co-founder of hedge fund SLJ Macro Partners LLP in London and former head of foreign-exchange strategy at Morgan Stanley, said in an e-mail yesterday. “This might be a two-month play, because the Fed will have to taper later if not sooner.”

Read the original article on the ‘Bloomberg’ website.

FT: Currencies funds feel strain of US deadlock

“Systematic funds are built on carry and momentum, and you have neither now because of the monetary policy distortions of quantitative easing,” says Stephen Jen, head of the currency hedge fund SLJ Macro. “Unless interest rates are allowed to reflect fundamentals . . . these models will continue to underperform.”

“It’s been very disruptive, very painful,” Mr Jen says. “The last month, September, was bad for the dollar and that hurt a lot of people. Now there are two and-a-half months left of the year: those who are up want to preserve their profit and loss and those who are not want more clarity before they leverage up again.”

Read the original article on the ‘Financial Times’ website.

FT: China is the biggest danger to emerging market rally

Individually, both rate increases and slowing Chinese growth represent big challenges to the developing world. Together, they have the potential to trouble almost every country, and create severe problems in some. “It’s a really combustible situation,” argues Stephen Jen of SLJ Macro Partners, a hedge fund. “They are all vulnerable.”

Read the original article on the ‘Financial Times’ website.