The third quarter is off to a vocal start for some of the world’s top hedge-fund managers, who are weighing in on everything from “stumbling” European governmentsto “dumb” internal bank trades and “Kafkaesque” domestic financial regulations.
The legendary hedge-fund manager Louis Bacon , who founded the $15 billion money manager Moore Capital two decades ago, made news Wednesday morning with an announcement that he’s returning $2 billion from his flagship fund, Moore Global Investments, to investors.
But perhaps more remarkable is his assessment of global markets, which he says have been rendered dysfunctional by a combination of “inchoate” financial regulation, consequently frightened banks and consumers, and government “brinksmanship.”
“I shudder to think of the stress that is going to occur during the next credit liquidation cycle — as bad as it has historically been in down markets, at least the banks would have made a market, however wide, and taken an inventory,” Bacon writes. In today’s environment, however, there’s little chance of market-making, he suggests.
And when it comes to the Fed actions that are hotly anticipated on days like Wednesday? Like “junkies,” he writes, markets “now demand more frequent monetary hits in greater size.”Page 1 of 4 | Next Page