Displaying items by tag: alts

President Biden spoke at the Port in Baltimore to celebrate the passage of the $550 billion dollar spending bill which will allocate $17.1b to ports like the one he spoke at. In order to expedite the spending spree, the White House said that $240 million of the bill will be allocated to grants that they plan to move on in the next 45 days. The Biden administration sees port infrastructure spending as part of a key process to alleviate the supply constraints in the U.S. economy that are a key contributor to record inflation in many policy makers' eyes. The Bill is already facing criticism from former President Donald Trump who says only a fraction of the bill's allotment will be spent on infrastructure. However, it was 11 republicans who stepped across the aisle that was key to passing Biden’s first signature piece of infrastructure legislation.

FINSUM: It would be a big win for the U.S. economy if the infrastructure bill could make substantial gains toward reducing inflation which has markets flummoxed and consumers concerned.

Strategists at JPMorgan Chase & Co see a weak market in traditional stocks and bonds coming in 2022. They say the remedy for your portfolio is in alternatives like hedge funds and real estate. It's not a small margin of victory either, JPMorgan is predicting a 6% gain in hedge funds and real estate over the traditional composition of stock and bonds. However, they are recommending investors be weary of crypto as they do expect gains but they will be too rocky to ride. In fact, volatility almost halves the value in the investment firm’s mind. JPMorgan sees macro trends dominating the funds because of a variety of factors like inflation and Fed tapering.

FINSUM: Macro hedge funds have struggled in leading up and going through Covid, but with inflation moving, the tide could be turning.

Goldman Sachs has a new financial product that is giving its investors a chance to bet on special purpose acquisition vehicle performance. The new product acts as a two-year bond that plays out according to SPAC performance, and gives institutional investors an income option with SPAC exposure. Goldman will take a portion of the SPAC stock itself as opposed to a fee, and will offer the option for investors to lever-up on the SPAC as well. Some are concerned about Goldman’s relationship because they are also financers and advisors of SPACs themselves, potentially posing a conflict of interest.

FiNSUM: This is one of many new products that can replace income investors’ missing-link in their portfolio, and with rates at ultra lows it’s a nice alternative to dividend stocks.

Credit rating agency Moody’s Investor Service, has issued a warning to investors that the debt poses ‘systematic risk’. The factors that Moody’s sees sourcing that risk is an opaque market, eroding lending standards and liquidity concerns. Private credit has seen a flood of inflows this year to venture capital, private equity, real estate and infrastructure as the industry is more robust to the pressures from the mainstream economy on traditional bonds and equity. However, the risks in the medium sized boutique bond market are hard to capture because they fall in regulatory limbo and could cause broader economic disruption. Finally private equity relies heavily on leverage and while that's fine for the time being, it may pose serious structural issues for the illiquid market as interest rates begin to normalize.

FINSUM: The 2008 financial crisis was primarily driven by the rise of the lesser regulated shadow banking industry. Private credit’s swell is very reminiscent of the housing bubble creation.

It was fun and games when GSA Capital’s Chris Taylor was investing in the crypto craze and run up in ‘doge coin’, but now GSA is all-in in strategic crypto trading. The $2.6 billion hedge fund sees profits in the early development of crypto as swelling hype and volatility will generate inefficiencies. Taylor is Cambridge-trained mathematician and will be part of the crypto research team. GSA was launched at the trading desk in Deutsche Bank, and they will continue arbitrage strategies with crypto. By shorting derivatives and going long on the spot they will continue their history of arbitrage, and further capitalize on crypto’s 40% swell already in 2021.

FINSUM: Quantitative strategies are ripe for exploiting less liquid, less developed markets like crypto.