How 'bout 10 bucks for all of it?
Hedge fund managers have been prettywhiny about all of the things central banks are doing to keep the world economy from collapsing into a combined “Escape From New York”/”Cloverfield” hellscape, but which is apparently just making things much worse. And also less fun to be a hedge fund manager.
Every now and again, though, central bankers do hedge funds a solid, even if inadvertently. Like when the European Central Bank, Swiss National Bank and Federal Reserve join forces, accidentally or otherwise, to send the euro into the toilet.
A bevy of multibillion-dollar funds have gained as much as 9% this year as their managers bet against the euro, riding the European Central Bank’s push to weaken the currency and bolster Europe’s economy.
It has been “manna from heaven,” said one hedge-fund manager, who made money last year shorting the euro, or betting the currency would lose value.
Goldman, which like others has been scrambling to keep up with the euro slide, lowered its forecasts for the euro Friday to $0.95 in 12 months, $0.85 by the end-2016 and $0.80 for the end-2017. The previous forecasts were 1.08, 1.00 and 0.90 respectively.
And if that’s not enough excitement for you, Europe’s other major currency could offer a hell of a ride over the next few months.
The options market, which traders and investors use to shield themselves—or profit—from swings in exchange rates, shows that investors expect a sharp rise in sterling’s volatility against both the euro and the U.S. dollar….
“We could end up in a very ugly situation,” said Kevin Adams, director of fixed income at Henderson Global Investors, which has about $122 billion under management. Mr. Adams is buying options that will pay out if the pound tumbles around the time of the vote. “Sterling is looking vulnerable at the moment,” he said.
Hedge Funds Win As Euro Falls [WSJ]
Goldman Sachs Has Just Gone Super-Bear on the Euro [WSJ MoneyBeat blog]
Dollar Falls as Investors Await Fed Meeting [WSJ]
As U.K. Election Nears, Investors Brace for Sterling Volatility [WSJ]