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Hedge funds make retreat from US stocks after big swings hurt returns

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Hedge funds make retreat from US stocks after big swings hurt returns

Hedge funds have dramatically scaled again their footprint within the US inventory market as sharp swings have pummelled large cash managers.

Funds that commerce with among the largest banks on Wall Avenue together with Morgan Stanley, Goldman Sachs and JPMorgan Chase have quickly minimize lengthy and quick inventory positions, or bets on costs rising or falling, in keeping with interviews with merchants and information that the banks have circulated to their purchasers.

The strikes accompany the worst sell-off within the $46tn US inventory market because it was rocked by the coronavirus pandemic two years in the past. The benchmark S&P 500 index has fallen 11 per cent this 12 months as traders react to surging inflation, tighter financial coverage from the Federal Reserve and Russia’s invasion of Ukraine, which has helped to drive up commodity costs and thrown international development forecasts into doubt.

“This has turn out to be a ‘nowhere to cover’ market,” stated Charlie McElligott, a strategist on Nomura’s buying and selling desk.

Morgan Stanley final week notified purchasers that they’d seen one of many largest five-day intervals of promoting in North American shares by hedge funds on document, noting that the scale of the gross sales trailed solely the ultimate week of January 2021, when the retail meme-stock frenzy was roiling markets, and the onset of pandemic lockdowns in March 2020.

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Goldman Sachs famous that within the first week of this month, hedge funds bought tech and shopper inventory holdings on the quickest price for any five-day interval up to now decade, in keeping with a notice despatched by the financial institution’s prime brokerage service seen by the Monetary Occasions.

John Flood, who works in Goldman’s buying and selling enterprise, advised purchasers on Tuesday that promoting on March 11 and 14 was “eye-popping”, with shares in each area of the globe hit. He added that the pullback by hedge funds underscored the “excessive ranges of derisking” being undertaken by traders.

Many hedge funds use borrowed cash to amplify returns, although they typically reduce and start shrinking positions during times of rising market volatility, one thing analysts name “de-grossing”. Nomura’s McElligott warned final week that funds had been unwinding positions when the market rallied as they lowered the dangers they had been keen to take.

Even earlier than the newest flip decrease in monetary markets, many fairness funds had been slicing the scale of trades made with borrowed cash. Knowledge from Barclays’ prime brokerage unit confirmed that gross leverage in February fell to its lowest stage in not less than a 12 months.

A number of hedge funds with ties to Julian Robertson’s Tiger Administration have suffered large losses from broadly held tech and shopper shares. Tiger World Administration, one of many largest tech traders, fell 23.2 per cent in its primary hedge fund by way of February this 12 months, stated one individual briefed on the numbers.

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The top of buying and selling at one in every of Wall Avenue’s largest banks stated there was “huge, huge confusion” amongst traders and that many tech-focused fairness funds had been nursing steep losses, typically exceeding 20 or 30 per cent.

“I don’t hear any conviction in anybody’s voice,” the individual added.

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Newsom Suspends State Environmental Rules for Rebuilding After Fires

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Newsom Suspends State Environmental Rules for Rebuilding After Fires

Governor Gavin Newsom has signed a broad executive order that aims to make it easier to rebuild after the fires by suspending California’s costly and time-consuming environmental review process for homeowners and businesses whose property was damaged or destroyed.

The order is likely to be the first of several permit streamlining measures issued by state, county and city agencies in the wake of the devastating fires across greater Los Angeles.

Mr. Newsom’s three-page order, signed Sunday, covers all of Los Angeles and Ventura Counties and directs state agencies to coordinate with local governments to remove or expedite permitting and approval processes during rebuilding. The most significant piece is a waiver on permitting requirements under the California Environmental Quality Act — a landmark environmental law known colloquially as C.E.Q.A. or “See Qua.”

The governor also announced that he had suspended all permitting requirements under the California State Coastal Act for properties rebuilding after the fires.

California is one of America’s most difficult and costly places to build — a driving factor behind the state’s longstanding affordable housing shortage. Between state agencies and local land use commissions, the process of developing buildings, from office complexes to subsidized rental complexes, is longer and more expensive than in almost every other state.

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Of all the hurdles a project can be subjected to, few are more difficult and time-consuming than C.E.Q.A. The law often requires developers to fund in-depth environmental studies on a project’s potential impact on everything from local wildlife to noise, views and traffic. Groups who oppose a particular development often use C.E.Q.A. lawsuits to try to stop them. This can add years even to small projects.

While the state’s powerful environmental groups are fiercely protective of any attempts to amend C.E.Q.A. or the Coastal Act, the laws are routinely suspended in emergencies and for large projects such as sports stadiums.

Still, Mr. Newsom’s order was unusually extensive. For instance, after other disasters C.E.Q.A. suspensions have typically required rebuilding property owners to show they tried to comply with the law, even if they weren’t subjected to it. The order announced Sunday is a full waiver: For anyone rebuilding after the fires, C.E.Q.A. is effectively gone.

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California fires could be costliest disaster in US history, says governor

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California fires could be costliest disaster in US history, says governor

The California wildfires could be the costliest disaster in US history, the state’s governor said, as forecasts of heavy winds raised fears that the catastrophic blazes would spread further.

In remarks to NBC’s Meet the Press on Sunday, Gavin Newsom said the fires — which have burnt through more than 40,000 acres, according to CalFire, the state’s forestry and fire protection department — would be the worst the country has seen “in terms of just the costs associated with it, [and] in terms of the scale and scope”.

He added that there were likely to be “a lot more” fatalities confirmed. The death toll on Saturday evening stood at 16, according to Los Angeles authorities.

The prospect of a pick-up on Sunday in the Santa Ana winds that have fanned the flames has left tens of thousands of residents under evacuation orders. The fires were threatening homes in upscale Mandeville Canyon and the Brentwood neighbourhood, although officials said they had made progress in stemming the advance there.

The National Weather Service has forecast gusts of between 50mph and 70mph, while drought conditions remain.

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“We know that elevated critical fire conditions will continue through Wednesday”, Los Angeles County fire chief Anthony Maroney said on Sunday.

LA is experiencing its second-driest start to its rainy season in more than a century, according to the non-profit Cal Matters news service. Halfway into the season, LA has only recorded about 0.2 inches of rain since October -— well below the 4.5 inches that is common by January.

Newsom, a Democrat, responded to a barrage of attacks from Donald Trump. The incoming Republican president has accused the governor of depleting water reserves to protect an endangered species of fish, and of refusing to sign a “water restoration declaration” that would have “allowed millions of gallons of water . . . to flow daily into many parts of California”. Newsom’s office has said no such declaration exists.

Trump, who has a long-standing feud with Newsom and refers to him as “Newscum”, also called on the Californian to resign, accusing him of “gross incompetence”.

“The reservoirs are completely full, the state reservoirs here in Southern California,” Newsom said.

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The charred remains of a jewellery store and other shops at a corner of Sunset Boulevard © Michael Nigro/Bloomberg
An air tanker drops fire retardant at the Palisades Fire © Ringo Chiu/Reuters

“That mis- and disinformation I don’t think advantages or aids any of us,” he added. “Responding to Donald Trump’s insults, we would spend another month. I’m very familiar with them. Every elected official that he disagrees with is very familiar with them.”

Newsom also said he had invited the president-elect to visit the affected areas, but had yet to receive a response from the Trump transition team.

Firefighters have tamed three fires since Tuesday, including the Sunset blaze that threatened the Hollywood hills. The Hurst fire in the San Fernando Valley, north of Los Angeles, was 80 per cent contained on Sunday afternoon.

But firefighters are still struggling to tame the two biggest blazes. Newsom said on social media platform X that the Palisades and Eaton fires were 11 per cent and 27 per cent contained. Thousands of firefighters have been deployed to battle the Palisades fire with heavy trucks and air support, the mayor’s office said Sunday. The city has also opened shelters to affected families.

The Federal Emergency Management Agency (Fema) has staff in LA to help Angelenos apply for disaster relief, while the Federal Small Business Administration is offering home and business disaster loans.

Newsom issued an executive order that he said would prevent those who lost their homes from being “caught up in bureaucratic red tape” so they could quickly rebuild.

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The head of Fema on Sunday raised the prospect of US troops being sent to Los Angeles to help control the blaze.

“There are active-duty military personnel that are on a prepare-to-deploy order, that are ready to go in and continue to support the firefighting effort,” Deanne Criswell told ABC’s This Week programme. Speaking on CNN, she warned that strong winds expected in the coming days could spread the fire further.

Map showing the perimeters of the fires in LA and evacuation orders and warnings currently in place

No official estimate of the cost of the damage has yet been released, but analysts at AccuWeather last week calculated the economic loss to be between $135bn and $150bn — short of the $250bn cost associated with last year’s Hurricane Helene. At least 12,300 structures had been destroyed, according to CalFire.

President Joe Biden on Thursday pledged that the US government would pay for “100 per cent of all the costs” created by the disaster, and would ask Congress for more financial aid.

Trump, who on the campaign trail last year threatened to withhold disaster funding from California, has thus far remained silent on whether he would provide similar assistance. On Sunday, he renewed his attacks on the state’s officials.

“The incompetent pols have no idea how to put [the fires] out,” he wrote. “There is death all over the place. This is one of the worst catastrophes in the history of our country. They just can’t put out the fires. What’s wrong with them?”

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On the way out: Transportation Sec. Buttigieg looks back on achievements, challenges : Consider This from NPR

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On the way out: Transportation Sec. Buttigieg looks back on achievements, challenges : Consider This from NPR

U.S. Secretary of Transportation Pete Buttigieg speaks to questions during a news conference at Ronald Reagan Washington National Airport November 21, 2024 in Arlington, Virginia.

Alex Wong/Getty Images


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Alex Wong/Getty Images


U.S. Secretary of Transportation Pete Buttigieg speaks to questions during a news conference at Ronald Reagan Washington National Airport November 21, 2024 in Arlington, Virginia.

Alex Wong/Getty Images

From handling crises in the rail and airline industries to overseeing the distribution of billions of dollars in infrastructure funding, Transportation Secretary Pete Buttigieg has taken on a lot over the last four years.

Now, his tenure is coming to an end.

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Host Scott Detrow speaks with Buttigieg about what the Biden administration accomplished, what it didn’t get done, and what he’s taking away from an election where voters resoundingly called for something different.

For sponsor-free episodes of Consider This, sign up for Consider This+ via Apple Podcasts or at plus.npr.org

Email us at considerthis@npr.org

This episode was produced by Brianna Scott, Avery Keatley and Tyler Bartlam. It was edited by Adam Raney.

Our executive producer is Sami Yenigun.

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