Tag Archives: Stocks

Hedge Funds Back Off Banks as Mutual Funds Dip In

Hedge funds who have tried to make money out of European banks during the euro debt crisis are becoming frustrated with the sector’s erratic movements just as some bigger, and more patient, institutions are dipping tentatively back in.

European bank stocks .SX7P have risen more than 25 percent since late July, fuelled by relief over new crisis-fighting plans, in particular the ECB’s latest announcements which have triggered hopes of a more lasting solution.

But the sector at the root of the global financial crisis has repeatedly disappointed investors after each attempt to call a floor, from a rally at the beginning of 2009 on hopes that the worst of the global credit crunch was over to short-lived optimism over the European Central Bank’s liquidity injections.

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Stock Ratings Not Better Than Hot Tips

A hot stock tip can be a bum steer as easily as it can be a big winner, but most investors would say that a solid “investment ranking” should never lead them astray.

Except few people understand what goes into rankings and ratings of investments, and yet they rely on those measures as if they were guaranteed recommendations.

Reported by Chuck Jaffe, there’s a fascinating case involving investment researcher Morningstar Inc. and the perception of the company’s powerful ratings system. While the case involves a hedge fund — and Morningstar’s hedge-fund research database is completely different from its traditional fund research — the underlying concepts should get investors everywhere to thinking about the information they rely on to make decisions.

Last week, Morningstar lost a bid to dismiss a lawsuit that alleges that the firm played a part in promoting a Ponzi scheme by giving a fraudulent hedge fund a five-star rating late in 2009.

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Ray Dalio Buys More Emerging Markets and Other New Stocks

Ray Dalio was the hedge fund world’s most successful investor in 2010 and 2011, with his $120 billion Bridgewater Associates LP. His firm invests based on his understanding of macroeconomic principles. 

In his second-quarter letter , Dalio said he believed global equity markets were pricing in “fairly pessimistic” long-term earnings growth rates and the worst real earnings growth rate in 100 years, while companies still “retain plenty of ability to protect their operating margins and profitability by keeping labor costs down,” despite global financial conditions posing a headwind to top-line revenue growth. He also noted that the dividend yield of U.S. non-financial corporation is higher than U.S. government note yields for only the second time in the past 50 years, and companies had ample liquidity to cover their dividends.

Analyzed by GuruForce, these are Dalio’s biggest new stock purchases in the second quarter…

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Swings In U.S. Stocks At Open Spur Computer Trade Concern

Dozens of U.S. stocks swung 10 percent or more without accompanying news in the first minutes of trading, whipsawing investors and spurring speculation that computers distorted prices for the second time in two weeks.

The New York Stock Exchange and Knight (KCG) Capital Group Inc. said they were investigating. Goodyear Tire & Rubber Co. (GT) rose more than 10 percent in the minutes after the 9:30 a.m. open in New York. Manitowoc Co. (MTW)gained 14 percent, Pandora Media Inc. climbed almost 11 percent and Level 3 Communications Inc. plunged 15 percent before the swings narrowed minutes later, according to data compiled by Bloomberg.

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Euro-Area Unemployment Rate Reaches Record 11.2%: Economy

The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs.

Unemployment in the economy of the 17 nations using the euro reached a revised 11.2 percent in May and held at that level in June, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. In Germany, unemployment climbed for a fourth straight month in July, a separate report showed.

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Fed Seen Forgoing Next Round Of Asset Purchases Until September

Federal Reserve Chairman Ben S. Bernanke will probably forgo announcing a third round of large- scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.

Eighty-eight percent of economists say the Federal Open Market Committee will refrain from starting new purchases at a two-day meeting beginning today in Washington. Forty-eight percent say the FOMC will announce the buying at its Sept. 12-13 meeting, according to the July 25-27 survey of 58 economists.

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UK seeks urgent Libor reform

Policy ideas on Libor reform due Aug. 10

LONDON, July 30 (Reuters) – Britain is seeking urgent reform of the key interest rate rigged by a number of banks, including Barclays, in a transatlantic scandal that is threatening to seriously damage London’s reputation as a financial centre.

The government on Monday set the terms for a swift review of Libor, to be carried out by regulator Martin Wheatley in time for recommendations to be included in a draft law making its way through parliament.

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