At 9:30 every weekday morning in a pristine, century-old stone mansion in Rowayton, Connecticut, Kenneth Tropin gathers the seven members of his risk committee to perform what has become, since November 2007, a 30-to-40-minute ritual: the forensic parsing of risk. Tropin, the 55-year-old founder and chairman of Graham Capital Management, initiated the meetings as a way to stay nimble and responsive to the ever-evolving global financial crisis and safeguard the firm’s $4.9 billion in assets under management. Through the lens of their macro trading strategies, Tropin and his team scrutinize market risk, liquidity risk, cash management, margins, counterparty risk, operational risk and strategy-specific risk, delving into each portfolio manager’s gains and losses from the previous day. Nothing is left to chance.
Their greatest test to date, Tropin says, came unexpectedly one cold Sunday evening — March 16, 2008 — when Bear Stearns Cos. crumbled. That night, Mark Werner, Graham’s president, called Tropin to warn him that the investment bank was on the verge of insolvency. The two men promptly rallied the members of their risk committee and worked the phone lines, calling every one of Graham’s 15 portfolio managers, as well as the trading desk that was responsible for executing the firm’s program trades, to discuss the potential impact on Graham when the markets opened the next morning.
Their vigilance paid off. In the weeks before the crisis hit, the risk committee had moved all of its trade execution away from Bear, and by the end of the night, Tropin was confident that the business he had spent 15 years building was safe. His systems would be able to execute their programmed trades; his portfolio managers were on the right side of the markets, poised to make money. And they did. Every one of Graham’s 13 funds was profitable in 2008; the majority delivered double-digit returns ranging from 11 to 52 percent, net of fees. For all his success, however, the impeccably groomed Tropin sounds frustrated when he describes the widespread aversion to global macro strategies among the major institutions that invest in hedge funds.
“For a long time there was a perception that the biggest returns, the best risk-adjusted returns, were in strategies other than macro,” Tropin says. “A decade ago some people began saying macro was dead, but I don’t think it was ever really dead — it just wasn’t producing the kinds of returns that investors were getting out of other strategies, like arbitrage.”
Once synonymous with the hedge fund industry, when the likes of Julian Robertson Jr., George Soros and Michael Steinhardt made sweeping bets on currencies, interest rates, stocks, bonds and commodities around the world, macro fell out of favor for years: Assets under management in the strategy, as a percentage of the global total invested in hedge funds, declined every year from 1993 through 2000, falling from 33.4 percent to just 11.6 percent, according to Chicago-based Hedge Fund Research. Although macro totals recovered slightly in the aftermath of the equity market implosion early this decade, assets started drifting away again from 2004 through 2007, dropping from 19.1 percent of the total to 15.4 percent, as cheap financing fueled the growth of a whole range of arbitrage and relative-value strategies. Deemed too volatile and idiosyncratic by many institutions, macro allocations languished. Macro managers’ emphasis on delivering uncorrelated returns, rather than beating a known benchmark, didn’t resonate with prospective clients. In an era of benign global growth, macro just didn’t seem to make sense.
Oh, how the world has changed.
Over the past 22 months, in the wake of what many are calling the worst financial crisis since the Great Depression, the masters of a new global order — many of whom have been quietly plying their craft away from the limelight for more than a decade — are reasserting their power. In 2008 macro funds posted average industrywide returns of 5 percent, according to HFR, a remarkable achievement in a year that saw the typical hedge fund fall by 19 percent and the Standard & Poor’s 500 index crater by 38.5 percent. Such battle-tested macro investors as Tropin, David Gerstenhaber, David Harding and Paul Touradji did even better, delivering double-digit returns across many of their funds — but their investment strategies are as distinct as their thumbprints. At one end of the spectrum are the classic discretionary macro managers like Gerstenhaber and Touradji, who take a big-picture view of the markets; at the other are systematic traders and statisticians like Harding and Tropin, who design mathematical models to capture economic trends without regard to the market’s direction. But whatever the approach, all macro managers still face an uphill struggle to work their way through investors’ outdated assumptions about one of the hedge fund industry’s most original, individualistic strategies.
Global macro’s latest fall from grace coincided with a period of unprecedented hyperliquidity in the global markets and a near-total lack of volatility, which helped highly leveraged strategies flourish. The appeal of arbitrage to the hedge fund industry’s newest investors, such as pension funds and insurance companies, is easy to understand: Pension fund trustees eagerly gravitated toward managers who delivered incremental returns better matched to the pension plans’ liabilities — perhaps 1 percent a month — with very low volatility (ironically, just the sort of return pattern that convicted fraudster Bernard Madoff offered his investors). The demand for such strategies helped fuel the growth of a number of new, institutional-grade multibillion-dollar hedge fund firms, like Citadel Investment Group in Chicago and New York–based Highbridge Capital Management. As long as markets were rising and financing was cheap, leveraged arbitrage strategies worked beautifully — but no longer. The gearing is gone.
If hedge fund managers want to stay in business now, they have to be macro-minded — not least because their clients are disinclined to wait for unproductive strategies to come back. Investors yanked a record $152 billion out of the hedge fund industry in the fourth quarter of 2008. Investment banks, once the deep-pocketed providers of financing for arcane hedge fund strategies, have also cut their exposure to the industry. Arbitrage and credit strategies that were once liquid have frozen solid because many related securities and derivatives are still next to impossible to price. Even long-short equity strategies have been hit hard, as their high correlations to the broader equity markets — that is, their dependence on market beta — have cost their managers dearly and disappointed investors. In 2008 some 1,471 hedge funds shut down, nearly 15 percent of the global total at the start of that year.
“The current phase of hedge fund cleansing has to do with the fact that some people were selling a product whose attribution was incorrect,” says W. Gillespie (Gil) Caffray, former head of trading at Robertson’s renowned Tiger Management Corp. and now chief executive of New York–based Touradji Capital Management, a $2.6 billion commodities-focused hedge fund firm founded by one of Robertson’s former protégés, the 37-year-old Touradji. “Performance at a lot of hedge funds was based on gearing — and that particular form of financial methadone is now gone forever. In many instances, too, managers themselves didn’t fully understand the systemic risks incumbent in their portfolios.”
Global macro managers have always been expected to be keenly aware of systemic risks — they get paid to go hunting for them. Unlike most of their hedge fund peers, macro managers sweep through the markets looking specifically for unresolved tensions in the financial system or broader economy. Arguably, their real skill — if they are successful — is being able to identify those tensions quantitatively, qualitatively or by some combination of the two and then construct trades designed to profit from seismic changes to the status quo. In that regard global macro managers, particularly those who practice a classic discretionary style of investing, are pursuing a mean-diversion strategy. They are, in a sense, going long volatility, banking on disruptive, outsize price moves away from the historical mean. Timing those events is a crucial skill — and perhaps one of the most difficult for managers to master — which is why the strategy works so well in periods of major dislocation.
The vast majority of hedge fund managers, however, deploy mean-reversion analyses: That is, they look for securities that are over- or undervalued relative to a consensus fair value they believe should ultimately prevail. Mean-reversion strategies don’t work particularly well in periods of severe market stress — there simply may not be enough confidence or rational economic behavior to drive prices back to their fair values. The current dearth of risk capital in the markets only exacerbates price volatility, making asset prices move in new and often unexpected ways.
“For true diversification it is no longer enough to have money allocated among different asset classes,” says Timothy Crowe, founder and CEO of Coral Gables, Florida–based Anchor Point Capital, which in November 2006 launched a global macro fund of hedge funds that combines classic discretionary and systematic trading strategies. “It’s not even enough to have various investment approaches. You really also have to consider investment methodology, which can add diversification value. That truly was brought to the forefront last year when almost every mean-regression strategy, long-only included, just didn’t work.”
As stunning as macro’s success has been, it is actually nothing new. In a study released in March by Credit Suisse Group, global macro has consistently outperformed more popular strategies — specifically long-short equity, event-driven arbitrage and relative-value investing — through seven periods of market dislocation over the past 15 years, including such events as the Mexican peso crisis of 1994, the Asian financial crisis of 1997 and the terrorist attacks on September 11, 2001. Global macro has been the top-performing hedge fund strategy tracked by the Credit Suisse/Tremont hedge fund index since its 1994 inception, delivering a cumulative return of 483 percent as of December 31, 2008. By comparison, long-short equity delivered a cumulative return of 302 percent, and event-driven arbitrage had a return of 296 percent. Macro’s success comes as no surprise to Stanley Fink, former chief executive (and later deputy chairman) of Man Group, which has $47.7 billion in hedge fund and fund-of-funds assets under management.
“During the good times long-short equity became the predominant style, and even strategies like merger arbitrage and risk arbitrage ended up being either long market beta, or long credit spreads,” says Fink, who came out of retirement in September to become CEO of International Standard Asset Management, a $100 million-in-assets, London-based hedge fund firm that specializes in global macro strategies. “And so, when liquidity dried up, virtually every strategy got hit — and that wasn’t really what was meant to happen.”
In the annals of hedge fund history, few strategies are as proudly uncorrelated with the markets as global macro. Hedged long-short equity strategies may be older, and their practitioners may be able to trace their intellectual roots to Alfred Winslow Jones’s first investment fund in 1949, but global macro strategies are bolder. Discretionary macro’s oft-cited reputation for attracting brazen, swashbuckling traders probably owes its genesis to just one trade, by one man: George Soros.
In 1992, Soros and his investment partner, Stanley Druckenmiller — sensing weakness in the British pound — sold short more than $10 billion of the currency. With the U.K. economy in a severe recession at the time, they bet that the government would be unwilling to defend the pound’s high fixed exchange rate against the German mark by driving up interest rates. The resulting pressure was sufficient to force the U.K. to withdraw from the European exchange rate mechanism (a system designed to stabilize exchange rates in advance of the Economic and Monetary Union) and the pound fell precipitously. Soros, who earned an estimated $1.1 billion on the trade, made headlines as the man who broke the Bank of England — and the popular image of the macro buccaneer was born.
But not all the most famous (and famously profitable) macro bets were made in currencies: Commodities also proved immensely enriching. In 1994, Tiger founder Robertson, who practiced a fundamentals driven, value-oriented approach to the markets, realized that U.S., European and Japanese regulators were forcing the automobile industry to reduce emissions and that the best way to do so would be to design a more effective catalytic converter using either palladium or platinum. At the time, thanks to the opening up of the natural-resources-rich former Soviet Union, only one of the metals was economical — palladium, which cost about $130 an ounce, versus $400 an ounce for platinum. Robertson expected demand for palladium to double, and he knew that the mining companies, which were actually losing money getting the metal out of the ground, would be too financially strapped to boost production. Tiger gradually stockpiled some 3 million ounces of palladium, and made a killing as prices eventually rose to more than $1,000 an ounce.
Those were the days of massive bets and equally massive levels of volatility — qualities neatly summarized by the playful jibe, “have a hunch, bet a bunch,” that has been leveled at global macro managers ever since. Indeed, the phrase proved painfully accurate in describing Tiger, which lost $600 million when Russia defaulted on its debt in August 1998 and an additional $2 billion in a single day, one month later, shorting the Japanese yen. Robertson’s bearishness on technology stocks only compounded Tiger’s difficulties. Though history would prove him right, Robertson began returning money to his outside investors in March 2000 and refocused Tiger on managing his own money.
Touradji, who spent four years on Tiger’s macro team, eventually becoming a commodities specialist, felt the impact directly: He was just 28 when he lost his job at Tiger in 2000 after Robertson shuttered it to outside money. Now, nine years later, as founder and managing partner of his own firm, Touradji credits his time there for shaping his appreciation of risk. Sitting in a glass-walled conference room on the 48th floor of a Park Avenue high-rise in New York, where a coterie of second-generation Tiger funds have offices, Touradji says that successful macro traders have to have two key skills: One is an ability to analyze fundamentals and spot opportunities; the other is an ability to trade through messy, volatile markets. Last year Touradji combined both when he made an early call on the dangers looming in the commodities markets and then steered his funds through it.
On March 10, 2008, Touradji — concerned about the tens of billions of dollars pouring into commodities from pension funds, endowments and other hedge fund managers — sent a letter to his investors sounding the warning. Two weeks later commodities prices started to pitch and heave; by mid-July most had started spiraling downward. Oil, which hit a peak in early July when the price of Brent crude touched $147.50, dropped to $36.50 in late December. Copper got crushed, falling from a high of $4.27 a pound in July to $1.25 in late December. And hard red winter wheat, which peaked in the first quarter of 2008 at $13.85 a bushel, dropped to $5.70 in May, only to recover dramatically in late June before falling again to end the year at $4.90.
Having already shifted his focus from directional to relative-value trading strategies in January 2007 because of growing market volatility, Touradji was prepared. He also trimmed his use of leverage — cutting it in half, to just 1.7 times assets in 2007, and then cutting it again by half in 2008 — to help mitigate the fund’s exposure to market volatility. His flagship Touradji Global Resources Fund emerged unscathed, posting a net return of 8.1 percent in 2008; Touradji’s Diversified Fund did even better, delivering a net return of 13.0 percent.
“We call the last six months of 2008 the Great X-Ray,” Touradji says. “While everyone says the same thing, ‘We rigorously manage risk,’ well, gee, do they? We all were put through this X-ray, and most managers failed. Only a few passed.”
Across town, another Tiger veteran, David Gerstenhaber, passed the test of the markets. Like many of Robertson’s former protégés, the 48-year-old economist is intellectually relentless: He and his team at New York–based Argonaut Capital Management Corp., which has $475 million in assets under management, scour the markets for ideas, boring down through economic reports, government statistics and central bank policy to form a top-down view of the world — and then sort through the underlying markets for investment prospects based on that view.
Over the past year, Gerstenhaber says, Argonaut’s positive returns have been largely driven by its fixed-income investments, taking long positions in New Zealand, the U.K., the U.S. and parts of the euro zone. It has also profited from its currency trades, going long the U.S. dollar, particularly relative to cyclical currencies like the Australian and New Zealand dollars, as well as shorting emerging-markets currencies like the Russian ruble. The results, while volatile, have been strongly positive: The Argonaut Aggressive Global Partnership fund delivered a net return of 12.4 percent in 2008; the fund has never had a down year since its inception in 2000, achieving an annualized return of 18.3 percent with annualized standard deviation of 14.2 percent.
The athletically built Gerstenhaber — who radiates energy as he stands behind his screen-laden desk — has never doubted his ability to interpret reams of information. In 1982 he received both his BA and MA in economics from Yale University, where he studied with Nobel Prize–winning economist James Tobin. The next year he earned an M.Phil. in economics from Cambridge University, which he attended on a Fulbright scholarship. Gregarious and intense, Gerstenhaber first came to Robertson’s attention while working as a young economist at Morgan Stanley in 1987. He joined Tiger at the start of 1991 and made some spectacularly successful contrarian calls as founder and head of the macro trading and research team. His group correctly predicted that Japan was heading into a recession and bet that the exchange-rate mechanism in Europe would break down.
Gerstenhaber learned firsthand the dangers of investing in the thick of political and economic crosscurrents. Despite his success at Tiger, he had a rough beginning when he left to start his own firm. He launched Argonaut in August 1993 with $250 million; its inaugural fund was up almost 15 percent by the end of the year. Argonaut got hit hard in 1994 by the U.S. Federal Reserve Board’s surprise move to raise interest rates. The fund lost more than 30 percent that year, but Gerstenhaber persevered with the support of a small group of loyal investors.
The scars from that experience indelibly shaped his approach to risk — and inform his view on the current crisis. Gerstenhaber is still decidedly bearish on both the U.S. economy and the global markets, although he believes that the pace of economic deterioration has slowed since the fourth quarter of 2008. But many of the key market indicators he watches still point toward contraction, especially outside the U.S., making risk management a priority. To help mitigate risk, he and his team are typically net buyers of volatility — using options — which helps them contain the downside when they are wrong and gives them the potential to profit enormously on the upside when they are right.
“Rather than taking a strap-it-on approach and assuming a swaggering big macro vision of the world, we tiptoe our way into positions by using options,” he explains. “Going back to my early days at Tiger, if I could find a way to express an idea with options, my downside was closely defined. Likewise, any big idea that I have now will almost certainly be expressed with options. But back then, the emphasis was largely on the upside — not downside management. A lot has transpired in this industry in the interim.”
“When you’re trading through markets as rough as these, experience counts,” adds Jarrett Posner, Argonaut’s COO, who oversees risk management. “Everything for us starts with risk management and capital preservation. It’s a philosophy that demands that you take a step back. If you’re losing money on a trade, stop the bleeding, figure out what is going wrong and reevaluate it.”
Quantitative macro traders don’t have to take a view on the markets, as discretionary managers do, but they study them just as closely. On a blindingly sunny day in London last month, David Harding, whose firm Winton Capital Management occupies an elegant town house at the western end of Kensington High Street, pushed his overeager black cocker spaniel, Cosmo, out of the way — “my founding partner,” he quips — and pulled up a chair to discuss a recent project: his historical studies of the greatest market dislocations of the past 400 years. Like a University of Cambridge don, the white-haired, bespectacled 47-year-old hedge fund manager studies economic crises to see what he can learn and reacts with impatience at the mere mention of efficient market theory when discussing global markets. If it held true, he reasons, his quantitative macro strategy, based on proprietary trading algorithms, simply wouldn’t work — yet it does.
Harding, whose last name formed the founding “H” in commodities trading giant AHL (originally known as Adam, Harding & Lueck), launched Winton in 1997. The flagship Winton Futures Fund has delivered an annualized return of 19.15 percent since its inception in October 1997; in 2008 it returned 20.9 percent net of fees. The fund has never had a down year, but it has had considerable volatility — an annualized 19.52 percent, as measured by the standard deviation of its returns. (By comparison, the Standard & Poor’s 500 index had a standard deviation of 16.34 percent over the same period.)
Although Harding doesn’t like the typical definitions of discretionary and systematic macro trading strategies — “after all,” he says, “every system is discretionary, because it was designed by a particular manager” — he does concede that his investment style is as hands-off as possible. During the past dozen years, Harding has implemented an academic process of vetting potential pricing signals. His heads of research are referred to as principal managing scientists; his teams conduct peer-review assessments of potential new strategies and back-test them before running them in real time. The goal is not to take a top-down discretionary view but to study the statistical data points the market offers, use algorithms to create a trading program based on the findings and then turn to computers to execute it.
Unlike a long-short equity manager, Harding is completely agnostic about whether the market is heading up or down. He doesn’t care. All he wants to do is make sure that “the Winton engine,” as he calls it, is tuned as finely as possible to the probability of certain return distributions. The Winton system uses exchange-traded futures and options to invest across more than 120 markets, from soft commodities and base metals to equities, currencies, bonds and interest rates. Harding and his team subscribe to the discipline of maximum diversification in another way, as well. If two uncorrelated strategies deliver a positive expected return, then some combination of them will produce a better risk-adjusted return than either on its own.
“The human mind is programmed to make binary choices,” Harding says. “We lack an appreciation for subtlety.
In markets it manifests itself in people wanting to know whether things are going up or down, whereas the truth lies in between. All we here at Winton know is that we can forecast the whole probability of distribution of the markets and aim to get a small, consistent betting advantage.”
Systematic trend-following programs may seem old-school now, but advances in financial theory, improvements in the quality and complexity of quantitative research and the continued development of computing power all contribute to the ever-greater efficiency of proprietary trading systems. The liquidity of futures and options also helped managers like Harding honor redemption requests last year, offering monthly and even biweekly liquidity to cash-strapped clients.
“My view is that while gates were originally needed for a few illiquid strategies, they probably went into most people’s fund offering documents as a kind of boilerplate, and nobody ever thought that managers would use them,” says former Man Group CEO Fink, who has an appreciation for highly liquid strategies like Harding’s (Man Group bought a majority stake in AHL in 1989, ultimately acquiring the business completely in 1994).
The weakness of systematic macro trading programs is that they tend to overshoot when markets hit an inflection point — either up or down; discretionary macro traders can sometimes be quicker to catch the change. But even that dynamic is evolving, as systematic macro managers make their strategies more nimble by adding higher-frequency trading programs, diversifying by time period as well as by asset type. Last year, for example, Tropin’s Graham Capital introduced several new high-frequency and short-term trading systems. The number of trades executed across the firm’s systematic global macro strategies shot up — from a monthly average of 6,340 in 2007 to 16,350 in 2008 — while the size of those trades got smaller, making it more difficult for competitors to track Graham’s footprints in the market.
Tropin sees the two macro disciplines — systematic and discretionary — as complementary. He undertook the building of Graham’s discretionary capabilities in the mid-1990s to capture returns in the macro markets that wouldn’t be correlated with the firm’s systematic trading programs. Last year Graham’s systematic funds outperformed its discretionary funds, but this year the opposite is holding true. Through March the highest-performing discretionary fund was up 10.2 percent net; the lowest-performing systematic fund was down 3.2 percent. Intriguingly, the best-performing fund at Graham in 2008 — which ended the year up 51.92 percent — takes a multistrategy approach and is 60 percent invested across the firm’s systematic macro strategies and 40 percent invested in its discretionary strategies.
“Discretionary traders have their own opinions and in most cases, the market-data drivers of their investment decisions are fundamental, not technical, so they are not very correlated with each other — let alone with the markets,” Tropin says. “Systems-based traders are at times more correlated with each other, and so we think putting them all together, into one portfolio, in an effort to achieve strong risk-adjusted returns makes a lot of sense.”
Understanding the world is never an easy task, and the current crisis has economists, politicians and investors scrambling for answers. For most macro managers, however, this is an inspiring moment. As students of market disruptions, they see opportunity where others see chaos and confusion. Macro managers embrace periods of high volatility, because the seismic changes they hope to exploit tend to happen more frequently and dramatically during them. Today, for example, trade protectionism is distorting markets; fiscal stimulus packages and interventionist economic policies are affecting currency valuations; quantitative easing programs are raising the specter of inflation; and rising unemployment is sparking concerns about civil unrest.
According to Kevin Harrington, head of research at New York–based Clarium Capital Management, a discretionary global macro firm with $2.5 billion in assets under management, the world is feeling the effects of two major phenomena: a massive global retraction of risk capital — namely, Middle Eastern petrodollars — and China’s decision to repeg its currency, the yuan, to the dollar, which has helped push the latter’s value higher despite the deepening U.S. recession.
The problem now is that the world’s banks, which made trillions of dollars’ worth of loans against all kinds of collateral priced at the top of the market, are seeing double-digit declines in prices. And they are tremendously exposed. The hyperliquidity boom is over, Harrington says, and the global economy, which seemed to profit even as oil prices rose sharply between 2002 and 2008, is suffering the hangover.
“The very sharp recession that we’re seeing at this point is a delayed reaction,” he explains. “Because the first response of the global financial system to the rising oil price was not the contraction that most economists would have expected — hundreds of billions of dollars were getting shoved into every risk market imaginable, and we had a very perverse boom as a result. But everyone was actually getting poorer; we just weren’t keeping the books that way.”
Poorer, yes, but despite the global economy’s woes, a mid-March rally in equities sparked a flurry of excitement that continued as the markets extended their climb through the first week of April. On Friday, April 3, the Dow Jones industrial average closed above the 8,000 mark for the first time in nearly two months, registering a fourth straight week of gains and its best performance since 1933. The market’s surge may not be indicative of a bull market comeback (it may still prove to be a bear market rally), but, Fink says, higher-than-normal correlations among asset classes have finally started to loosen.
Various political efforts to recapitalize specific banks and boost the flow of credit in the markets may be insufficient, says Argonaut’s Gerstenhaber, because the shadow banking system — which he defines as the underwriting of debt and its repackaging and distribution as securitized products — has largely disappeared.
“The monetary transmission mechanism was the shadow banking system, and it has been utterly disrupted,” Gerstanhaber says. “We keep emphasizing to our investors that unless and until something is done to restart the securitization process, we are in deep trouble.”
Touradji sees the retraction of risk capital as one of the key factors shaping the global markets but doesn’t consider it a negative for investing. “The world is actually not about to end,” he says, mock-serious. Touradji admits that, though he still takes a grim view of the global economy, he is less bearish than he was a few months ago. He is quietly excited about the lack of capital reinvestment in some basic industries, which he says may make for some terrific potential returns, and believes that the drawdown of some reserve inventories has already set the stage for minicycles, or bear market price rallies, in a few much-needed commodities like copper and oil.
Commodities may also experience a bounce if investors’ fears about inflation inspire them to seek out real assets like gold and other precious metals as a form of portfolio protection. But falling prices remain an ever-present danger, and investors must continue to try to balance the twin hazards of inflation and deflation in their portfolios. The risks, as Gerstenhaber points out, are not symmetrical: No one really knows how to stop a deflationary spiral, but inflation can be fought by raising interest rates, painful as that may ultimately be.
Unfortunately, despite recent market rally, the signs are not good. Graham’s Tropin believes that “an environment of continued uncertainty” is likely all that can be expected in 2009. Having nearly exhausted traditional policy options, he notes, the U.S. Federal Reserve seems destined to search for every nonconventional measure it can find to ease liquidity constraints and promote economic growth. And yet, despite all the fiscal policy efforts, the U.S. economy is facing a protracted period of negative growth and unemployment is skyrocketing, hitting 8.5 percent in March, the highest level since 1983.
But as painful as the recent economic developments are, for the most experienced global macro managers, all the news is good: They are moving from crunch to crisis to calamity, finding more opportunities than they have seen in years.
See related article, “Global Macro: A Hedge Fund, By Any Other Name”.
