Morning Coffee: A philosophical hedge fund legend reflects. The pain of FX traders

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Macro hedge fund managers may not be having a good year, but they still make good interviewees. Moneyweek has managed to secure a three interview series with Hugh Hendry, the curmudgeonly Scottish hedge fund manager, whose macro fund, Eclectica, has been suffering significant withdrawals.

Hendry reveals himself to be oddly archaic in the way that he speaks and cryptically philosophical in the way that he thinks. Confessing that he’s ‘weird’, he suggests macro hedge fund managers are insightful disrupters who go against the trend. “”Would you rather upset God or have God just ignore you?” says Hendry, before adding, “There’s a degree to which [efc_twitter text="being a successful macro-manager is upsetting, not only God, but to the rest of the world"].” Hendry then implies that successful global macro managers are endowed with supernatural-type powers: they devise investment strategies that “can stand the test of time and come to actually define the future.”

Hendry also offers some controversial investment advice, claiming that investors are, “guilty of the misconstruing of a bull market in equities, for what is actually the ongoing degradation in the soundness of the fiat monetary system." However, he also confesses to mistakenly idolizing perma-bears like Albert Edwards and Marc Faber, in whose ‘polemics’ he says he mistakenly ‘luxuriated.’ Nowadays, Hendry is trying to be more bullish, but it hasn’t gone well. "I had constructed this argument that I wanted to be bullish, yes, and yet, with risk control, I found myself a seller at lower and lower prices,” he admits – which possibly explains all the recent redemptions.

Separately, this is a bad time to be an FX trader. Not only are FX bonuses likely to be much diminished by the gigantic fines levied in the wake of all the FX malfeasance, but FX professionals are losing their jobs. Reuters reports that Citigroup has made 35 traders in its London capital markets business redundant. The presumption is that FX traders are at the sharp end of the cuts - Valentin Marinov, head of G10 currency strategy at the bank is among those said to have gone.


Jefferies wants to increase its London office space by 33% and may therefore be hiring. (Evening Standard) 

Deutsche Bank is hiring for wealth management, investment banking and transaction banking in Asia, and says that its Asian revenues will increase by 10% in the next five to ten years. (Bloomberg) 

Average pay in the City of London is £83k. Average pay in Tower Hamlets (including Canary Wharf) is £75k. (Evening Standard)

Today. George Osborne will receive his first indication whether his attempt to overturn the EU bonus cap has been successful. (Guardian)

Morgan Stanley may be the place to be if you want to work in equities trading. (Forbes) 

Goldman Sachs may be the best place to be if you work in M&A. (WSJ)

People in banking are as honest as everyone else, until they start to think about their careers – at which point they become more dishonest. (Bloomberg) 

ANZ has suspended seven traders in a probe into LIBOR fixing. This seems a bit late. (Reuters)  

Although he’s quit RBS, Stephen Hester is still owed deferred bonuses by the bank. These could be withdrawn as a result of the ‘FX scandal.’ (The Times) 

Fidelity Labs, the 75-person R&D think-tank inside Fidelity Investments, has developed ‘StockCity’. This is another to provide its customers with another way to explore their investments, using virtual reality headset Oculus Rift. (Wall Street Tech)

Investors buy stocks on sunny days. (WSJ)

What is it like to be a banker? (Epicurean Dealmaker) 

More than 70 percent of Gen X and boomer men say their careers are more important than their wives' careers. (Slate) 

Employees typically spend two hours every day slacking. (WSJ) 

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