Sunday, July 5, 2009

Bloomberg: Currency Funds Crushed on Death of Trends


July 6 (Bloomberg) -- FX Concepts Inc., the world’s largest currency hedge fund, says it lost 5.4 percent in this year’s first five months. John W. Henry & Co.’s foreign-exchange fund told investors it lost 2 percent, after 2008’s 76 percent gain, the best since its 1986 launching.

Both use computer models to spot currency trends and, along with other momentum chasers, are getting hammered by this year’s lack of clear direction as the markets are pulled in opposing directions. Deflationary pressure from the first global recession since World War II is being countered by the inflationary forces of record stimulus spending and currency printing across the globe. contd at Bloomberg>

The confusion in currency markets stems from the fact there are no strong currencies. Everyone wants to be the weaker currency. Next will be rising protectionist legislation. That will be a disaster if Obama doesn't stand against it. He won't is my guess.

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