During an otherwise quiet week for markets in the waning days of summer, the focus of investors globally remains the Kansas City Federal Reserve’s annual symposium in Jackson Hole, Wyoming. In particular, markets await Fed chair Janet Yellen’s address on Friday covering policy options available to the central bank. While allocators consider the future path of interest rate hikes, and wonder how it will affect different assets, one class of investment they have clearly lost faith in is alternative managers. An eVestment report released yesterday estimated more than $25 billion withdrawn from hedge funds in July, marking the biggest outflows for the industry in more than seven years. With historic low yields and corresponding low volatility, thanks to the intervention of global policymakers, hedge fund managers have found it increasingly difficult to generate returns that justify high fees and steady inflows.
Retailers fall short. Earlier today, Sears Holdings Corp. posted a net loss for the second quarter while revealing that it had taken on additional debt capital from ESL Investments, the hedge fund controlled by Sears CEO Edward Lampert. In the accompany statement, executives at the venerable mass-market retailer indicated they have received interest from bidders for some of the company’s iconic brands, including Craftsman tools and Kenmore appliances. On the other end of the consumer discretionary spectrum, luxury retailer Tiffany & Co. also posted second- quarter results that missed analyst estimates, as global uncertainty kept wealthy shoppers from opening their wallets.
Mylan retreats from high prices under political pressure. After coming under intense scrutiny by members of Congress and presidential candidate Hillary Clinton, Mylan announced yesterday that it will lower the price of its EpiPen antiallergy shots. The news follows comments by the Democratic nominee that sent Mylan share prices tumbling, with Clinton blasting the 400 percent increase in the cost of the EpiPen since 2007. Mylan CEO Heather Bresch is the daughter of Senator Joe Manchin of West Virginia, and recent media reports have linked Manchin to legislation that benefited Mylan.
Chinese regulators eye high-speed traders. Dutch high-speed trading firm IMC revealed yesterday that it is being investigated by the China Securities Regulatory Commission over its index-futures activities on the Shanghai exchange. There is no indication that regulators suspect wrongdoing and authorities in Shanghai and Beijing have made no public announcement about the probe. Domestic Chinese firm Yishidun International Trading was charged with market manipulation earlier this month as authorities continue to examine the extreme volatility last August.
Singapore charges brokers. Earlier today, the Monetary Authority of Singapore and other authorities brought insider trading charges against three men for frontrunning customer orders for a seven-year period ending in 2014. The news follows a series of regulatory investigations in Singapore, including raids on the offices of several brokerage firms during the spring.
