23095052321715661284394680

  Stone Mountain Capital - Alternative Investment Advisory
  • About
    • Partners
    • Ventures
  • Team
    • Oliver Fochler
    • Ashvin Chotai
    • Pascal Hasler
    • Alexander Rothlin
    • Claudio Calonder
    • Joaquin Abos
    • Alliances
  • Advisory
    • Corporate Finance
    • Solutions
    • Mandates
  • Research
    • Perspective Subscription
    • News
    • Awards
  • Contact
    • Privacy Policy
    • Anti-Bribery Policy
    • UK Stewardship Code
    • ESG Policy
    • Disclaimer
  • Login

Alternative Markets Update And Macro Outlook August 2019

28/8/2019

 
*|MC_PREVIEW_TEXT|*
RESEARCH PERSPECTIVE VOL.114
AUGUST 2019
Alternative Markets Update August 2019
The hedge fund industry experienced a decline since its performance of H1 2019. However, the performance remains positive with both of our cross-asset indices achieving a gain of 0.41% in July. The decline of interest rates worldwide helps to increase the attractivity of hedge funds in a currently highly unstable economic environment. Our best performing strategies have not changed, since the last month. Bitcoin Altcoin Actively Managed is still the best performing strategy in 2019 with a YTD of 167.90%, despite the loss of 20.40% in July 2019. The Discretionary Global Macro strategy achieved a YTD of 39.24%, followed by three US equity strategies, including Long/Short US Equities Disruptive Technologies, Long-only US Equities High Conviction and Equities US Activist Event Driven. 
Macro Outlook August 2019 by Aquila Markets
“It’s our currency, but its your Problem.” John Connally, US Treasury Secretary, 1971.
 
I periodically mention this famous phrase from Nixon’s treasury secretary, which was said to the other members of the G10 in 1971 in Rome after Nixon had taken the dollar off the Gold Standard and ushered in the current system of floating global exchange rates. Upon reflection of the events of the past few days, and finishing reading Fear, by Bob Woodward (which I regret not reading sooner and I would encourage anyone who hasn’t read it to read it as soon as possible), I have come to realise that Donald Trump as the President of the United States is a defining moment. This is an individual who the world has to come realise has no plan, has no plan to make a plan, has no strategic objectives that are in any way realistic, who’s basic understanding of economics is illiterate nonsense. He has no concept of the link of US/Global security to the US economy, nor does he care to learn. He is surrounded by sycophants who now will not challenge him, unlike the original cabinet which tried to. In a nutshell, he does not recognise, nor wishes to recognise, what the US Dollar represents to both the United States, and the Globe at large.
 
This has been bought into sharp focus in the past week. China has finally had enough of pandering to him, and is calling him out. The G7 meeting was effectively a slightly lame Biarritz beach party, where many of the very significant global issues that could have been on the agenda were lost in an argument about Amazonian fires and insults to wives. In the middle of this, Trump’s stream of consciousness made the world recognise several things; EVERYTHING he says is nonsense. It may be the case that he makes statements that are in fact true, but this is a coincidence. He makes no effort to be truthful, so it is impossible to handicap his statements.
 
For this reason, arguably the most interesting speech given at Jackson Hole was by Mark Carney, where he openly verbalised what the world has clearly been talking about behind closed doors for some time- we need a new currency, to act as a corner stone for global commerce. An new reserve currency, not controlled by any one nation, but a currency for all. More importantly, it is NOT the US Dollar. After all, the world has realised that the US system of government, with a constitution that can election an executive who can act in ways that harm both his own nation and the globe, does not work. And so, having the key medium of exchange for global commerce effectively controlled by this nation, is now intolerable.
 
It is for this reason, that the US administration’s negotiating style is being called by the counterpoints. As a poker player, when you know the guy across the table just bluffs every hand, you wait for a decent set up and call him hard. When you know that the rest of the table knows this too, and they are going to do the same, it becomes even easier. China has made it clear they have had enough of the trying to deal with Trump, whilst Macron walked out of a joint press conference leaving Trump alone. In response to his sudden desire to talk with Iran, President Rouhani rules out a meeting until the US lifts sanctions. In short, they know that trying to engage in dialogue with the US is pointless. Meanwhile, Kim continues to test fire missiles, clearly supported by the Chinese.
 
An increasing pace of replacing the US Dollar as the global reserve currency seems inevitable, but the US and its media seems to believe that this will not happen, and US exceptionalism will triumph. I don’t believe it will, and I believe we have crossed a rubicon in terms of global reliance on the US Dollar. The consequence for the US is stark; who will fund the budget deficits that have allowed the US to live beyond its means for so long? In the medium to long term, it is clear we can make an increasingly strong case for a structural Dollar decline. Additionally, as the Fed cuts rates hard as I believe they will (whether they should is another matter), this is likely to encourage SAVING, and not consumption, a phenomenon we have seen in both Japan and Europe as we cross the zero bound of interest rates. This is simply not supportive of growth.
 
Reverting to a note I wrote last week; that variance in markets will increase, I increasingly believe that a weaker dollar in the medium term, as opposed to being vol negative, is likely to be vol supportive. This is significant, as it suggests the risk reversal should not be so skewed to USD calls (please see volometer below), but that implied vols will increase on both sides of the distribution.
 
In the near term – I continue to favour owning gamma and weighted vega in AUD, NZD, GBP, and JPY families. The near term chop created by the algos, provide variance to cover decay bills. Additionally, I have tried hard to think of a bull case for equities, given the global data flow, leading indicator weakness in things like US transports, geopolitics and I struggle. I continue to favour downside plays in equity indices either as owning puts to hedge long portfolios, or via put spreads for risk reward defined bets to the downside.
Figure 1a: Risk & Volatility of Currency Pairs: August 2019, Source: Aquila Markets
Figure 1b: Risk & Volatility of Currency Pairs: August 2019, Source: Aquila Markets
The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Stone Mountain Capital LTD. Readers should refer to the Disclaimer.

Chris Eagle
Aquila Markets
E :
chris.eagle@aquilamarkets.com
M : +447712885718
 
Chris is an experienced executive who runs his own consultancy service which focuses on business development, market structure, financial market analysis and training. He worked on the sell-side for twenty years. He left Jefferies in 2015, where he worked in the Global Foreign Exchange and was Head of FX product distribution.

This perspective is neither an offer to sell nor a solicitation of an offer to buy an interest in any investment or advisory service by Stone Mountain Capital LTD. For queries or for further information around our research and advisory services please contact email: research@stonemountain-capital.com under Tel.: +442037228175.

 
 
STONE MOUNTAIN CAPITAL
Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London and Swiss representative office. We are advising 30+ best in class single hedge fund and fund of fund managers across equity, credit, and tactical trading (global macro and CTAs). In private equity and private debt, we advise 10+ general partners across the sectors real estate, infrastructure / real assets and capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. As per 26th April 2019, Stone Mountain Capital has total alternative Assets under Advisory (AuA) of US$ 53.8 billion in hedge funds and private assets. Stone Mountain Capital has arranged new capital commitments of US$ 1.54 billion across hedge fund, private asset and corporate finance mandates and has been awarded over 25 industry awards for research, structuring and placement of alternative investments.
 
Our Team   Our Solutions   Our Mandates   Our Research   Our News
 
 

Contact

We are able to source any specific alternative investment search and maintain relationships with dozens of best-in-class hedge fund managers, private equity and private debt general partners (GPs) and real estate and infrastructure developers. We don’t pass any costs on to our investors, since our compensation comes from our mandated managers, GPs and developers. Please contact us, should you require further information about our solutions.  

Schedule a call with the team
We have updated our privacy policy to take into account the new requirements of the GDPR. Please take some time to read the policy, which explains what personal data we collect, why we collect it, how we use it and other relevant information. You can review our privacy policy here, our anti-bribery policy here and our commitment to the UK stewardship code here.

No action is required if you wish to remain in contact, however please reply if you want your details removed by contacting us at info@stonemountain-capital.com or by using the unsubscribe button below. In case this newsletter has been forwarded to you and you want to subscribe, please click here.


Stone Mountain Capital is a limited company (LTD) registered in England & Wales with registered number 8763463. The registered address is: 31 Compayne Gardens, London NW6 3DD, England, United Kingdom. Stone Mountain Capital LTD is registered (FRN: 729609) as Appointed Representative with the Financial Conduct Authority (‘FCA’) in the United Kingdom. Stone Mountain Capital LTD is the Distributor of foreign collective investment schemes distributed to qualified investors in Switzerland. Certain of those foreign collective investment schemes are represented by First Independent Fund Services LTD, which is authorised and regulated by the Swiss Financial Market Supervisory Authority (‘FINMA') as Swiss Representative of foreign collective investment schemes pursuant to Art 13 para 2 let. h in the Federal Act on Collective Investment Schemes (CISA). Stone Mountain Capital LTD conducts securities related activities in the U.S. pursuant to a Securities and Exchange Commission ('SEC') Rule 15a-6 Agreement with Crito Capital LLC, a U.S. SEC registered broker-dealer, and member of Financial Industry Regulatory Authority (‘FINRA’), Securities Investor Protection Corporation (‘SIPC’) and Municipal Securities Rulemaking Board (‘MSRB'). All information in this perspective including research is classified as minor acceptable non-monetary benefits ('MNMB') in accordance with article 11(5)(a) of the MiFID Delegated Directive (EU) 2017/593 and FCA COBS 2.3A.19.

Copyright © 2019 Stone Mountain Capital LTD. All rights reserved.
 
Any business communication, sent by or on behalf of Stone Mountain Capital LTD or one of its affiliated firms or other entities (together "Stone Mountain"), is confidential and may be privileged or otherwise protected. This e-mail message is for information purposes only, it is not a recommendation, advice, offer or solicitation to buy or sell a product or service nor an official confirmation of any transaction. It is directed at persons who are professionals and is not intended for retail customer use. This e-mail message and any attachments are for the sole use of the intended recipient(s). Our LTD accepts no liability for the content of this email, or for the consequences of any actions taken on the basis of the information provided, unless that information is subsequently confirmed in writing. Any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the limited company. Any unauthorised review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please notify the sender by reply e-mail and destroy all copies of the original message and any attachments. By replying to this e-mail, you consent to Stone Mountain monitoring the content of any e-mails you send to or receive from Stone Mountain. Stone Mountain is not liable for any opinions expressed by the sender where this is a non-business e-mail. Emails are not secure and cannot be guaranteed to be error free. Anyone who communicates with us by email is taken to accept these risks. This message is subject to our terms at our Disclaimer.
 

Comments are closed.
    British Pound Exchange Rate
    Tweets by @stonemountainuk
    Tweets by @stonemountainch
    Tweets by @stonemountainae
    Tweets by @stonemountaincp
    Tweets by @stonemountaincp
    Tweets by @OliverFochler
    Tweets by @ChotaiAshvin
    Tweets by @hasler_pascal


    ​Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    April 2019
    January 2019
    November 2018
    August 2018
    May 2018
    January 2018
    December 2017
    November 2017
    October 2017
    June 2017
    March 2017
    February 2017
    January 2017
    November 2016
    October 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015

    Categories

    All
    Bitcoin
    Blockchain
    China
    Corporate
    Credit
    Cryptocurrency
    CTA
    Direct Lending
    Emerging Markets
    Equity
    ETF
    Ethereum
    Fund Of Hedge Fund
    Global Macro
    Hedge Fund
    Index
    Middle Market
    Private Debt
    Private Equity
    Rating
    Real Estate
    Risk Premia
    SME
    State Owned Enterprise
    Stocks
    UCITS
    Venture Capital
    VIX
    Volatility
    VSTOXX

    RSS Feed

PRIVACY POLICY
ANTI-BRIBERY POLICY
UK STEWARDSHIP CODE
CONTACT
DISCLAIMER
ESG POLICY
Picture

​Stone Mountain Capital LTD is authorised and regulated with FRN: 929802 by the Financial Conduct Authority (‘FCA’) in the United Kingdom. 
The website content is neither an offer to sell nor a solicitation of an offer to buy an interest in any investment or advisory service by​
Stone Mountain Capital LTD and should be read with the DISCLAIMER.
© 2023 Stone Mountain Capital LTD. All rights reserved.
  • About
    • Partners
    • Ventures
  • Team
    • Oliver Fochler
    • Ashvin Chotai
    • Pascal Hasler
    • Alexander Rothlin
    • Claudio Calonder
    • Joaquin Abos
    • Alliances
  • Advisory
    • Corporate Finance
    • Solutions
    • Mandates
  • Research
    • Perspective Subscription
    • News
    • Awards
  • Contact
    • Privacy Policy
    • Anti-Bribery Policy
    • UK Stewardship Code
    • ESG Policy
    • Disclaimer
  • Login