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What’s the Fuss About Hedge Funds?

The most reliable source for returns lately has also been shaken by turbulent markets

Hedge funds have struggled lately facing the worst quarter since the financial crisis as investor have pulled out more than $15 billion as higher fees is being charged across the industry. At the end of 2015, more than $3 trillion were rolling in hedge funds. The first quarter of 2016 has seen a market sell-off where market volatility had been on a high.

With the declining oil prices in recent month, hedge funds saw two consecutive quarters with net outflows which has not Continue reading

Figures point to further growth in Dublin but recovery outside the capital may be softening

about 7 hours ago

Fiona Reddan

Nationally, property prices rose by 7.4 per cent in the twelve months to March 2016, figures show, down from an increase of 16.8 per cent in the same period to March 2015. (Photograph: Cyril Byrne / THE IRISH TIMES)

 
 

 

 

Irish property prices rose by 7.4 per cent in the year to March, figures published by the Central Statistics Office on Tuesday show, with growth still strongest outside the capital. However, a fall in prices outside of Dublin in the month of March suggest that the recovery may be softening somewhat.

Nationally, property prices rose by 7.4 per cent in the twelve months to March 2016, figures show, with the rate of growth slowing from an increase of 16.8 per cent in the same period to March 2015.

Prices rose by 0.3 per cent in the month of March, compared with no change in February, and an increase of 0.9 per cent recorded in March of last year.

When Dublin is excluded however, the index shows stronger price growth, with property prices outside the capital surging ahead by 10.5 per cent in the year to March. However, prices outside of Dublin actually fell by 0.2 per cent in the month of March, softening annual growth from 11.5 per cent in February. This is the first monthly decrease for prices outside the capital since January 2015.

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Dublin

In the capital, prices rose by 3.9 per cent in the year to March, and by 0.9 per cent in the month, turning around four months of consecutive price decline. House prices advanced by 4.1 per cent in the year and by 1.2 per cent in the month. Price growth among apartments was less strong, increasing by 1.6 per cent in the year to March, but falling by 0.5 per cent in March.

Alan McQuaid, economist with Bloxham Stockbrokers, says that a lack of supply of houses is pushing up prices, while conversely, tighter mortgage lending restrictions imposed by the Central Bank is helping to contain house price growth.

Looking ahead, he expects house price growth to remain in positive territory on a year-on-year basis for a while.

“We are now looking for a more modest increase of 5 per cent in 2016, with the biggest gains coming outside Dublin,” he said.

Davy Stockbrokers is also forecasting annual price growth of 5 per cent for 2016.

Construction

However, given that the figures are based on mortgages drawn down, and hence do not include cash buyers who still account for about 50 per cent of sales, means that the figures are “almost meaningless” according to IPAV, the Institute of Professional Auctioneers & Valuers. IPAV is calling for Government finance to help boost supply and kickstart construction in the residential property market.

 
 

 

http://www.irishtimes.com/business/economy/property-prices-up-7-4-in-year-to-march-1.2624905

The economic climate is far from being a threat-free zone for the next US president

about 11 hours ago

Paul Krugman

For make no mistake about it: The world economy is still a dangerous place. Financial reform has, I’d argue, made our system somewhat more robust than it was in 2008, but fumbling the response to a shock could still have disastrous consequences.

 
 

 

 

Back in 2008, one of the ads Hillary Clinton ran during the contest for the Democratic nomination featured an imaginary scene in which the White House phone rings at 3 a.m. with news of a foreign crisis, and asked, “Who do you want answering that phone?” It was a fairly mild jab at Barack Obama’s lack of foreign policy experience.

As it turned out, once in office Obama, a notably coolheaded type who listens to advice, handled foreign affairs pretty well – or at least that’s how I see it. But asking how a would-be president might respond to crises is definitely fair game.

And military emergencies aren’t the only kind of crisis to worry about. That 3am call is one thing; but what about the 8am call – the one warning that financial markets will melt down as soon as they open?

Shocks

For make no mistake about it: The world economy is still a dangerous place. Financial reform has, I’d argue, made our system somewhat more robust than it was in 2008, but fumbling the response to a shock could still have disastrous consequences. So what do we know about the shocks we might face, and how the people who might be president would respond?

Right now there are two fairly obvious potential economic flash points: China and oil. Many economists, myself included, have been pointing out for a while that China has a severely unbalanced economy, with too little consumer spending and unsustainable levels of investment.

So far, unfortunately, China hasn’t made much progress in dealing with this fundamental imbalance; instead, it has papered over the problem with a huge expansion of credit. Now, with capital fleeing the country at the rate of a trillion dollars per year, it may well be headed for a bust. And China is a big enough player that a bust there could have major spillovers to the rest of the world.

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Then there’s a potential oil crisis, very different from the ones we used to have: the problem now is a glut, not a shortage, with many producers having run up large debts they probably can’t repay. You could say that shale oil is the new subprime.

Turmoil

Nobody knows how big these problems could become, or what other potential crises we’re missing. But it seems all too likely that the next president will have to deal with some kind of financial turmoil. How will she or he perform?

At this point there are three candidates who have a serious chance of receiving their party’s presidential nomination. Barring the political equivalent of a meteor strike, Clinton will be the Democratic nominee. Donald Trump is the clear front-runner on the GOP side, but if he falls short of an outright majority on the first ballot, Ted Cruz might still pull it out. So what do we know about their economic policy skills?

Well, Clinton isn’t just the most knowledgeable, well-informed candidate in this election, she’s arguably the best-prepared candidate on matters economic ever to run for president. She could nonetheless mess up – but ignorance won’t be the reason.

On the other side, I doubt that anyone will be shocked if I say that Trump doesn’t know much about economic policy, or for that matter any kind of policy. He still seems to imagine, for example, that China is taking advantage of America by keeping its currency weak – which was true once upon a time, but bears no resemblance to current reality.

Inflation

Oh, and coping with crisis in the modern world requires a lot of international cooperation. Things like currency swap lines (don’t ask) played a much bigger role than most people realise in avoiding a second Great Depression. How well do you think that kind of cooperation would work in a Trump administration?

Yet things could be worse. The Donald doesn’t know much, but Ted Cruz knows a lot that isn’t so. In a world in which gold bugs have been wrong every step of the way, repeatedly predicting runaway inflation that fails to materialize, he demands a gold standard to produce a “sound dollar.”

He chose, as his senior economic adviser, Phil Gramm – an architect of financial deregulation who helped set the stage for the 2008 crisis, then dismissed warnings of recession when that crisis came, calling America a “nation of whiners”.

Cruz is, in other words, a man of firm economic convictions – convictions that are utterly divorced from reality and impervious to evidence, to a degree that’s unusual even among Republicans. A financial crisis with him in the White House could be, let’s say, an interesting experience.

I don’t know how much play the candidates’ readiness for economic emergencies will get in the general election. There will, after all, be so many horrifying positions, on everything from immigration to Planned Parenthood, to dissect. But let’s try to make some room for this issue. For that 8am call is probably coming, one way or another.

 
 

 

http://www.irishtimes.com/business/economy/paul-krugman-who-you-gonna-call-when-the-market-melts-1.2624040

The U.S. dollar was slightly lower against the yen during Asian trading Tuesday, with many participants reluctant to take strong positions ahead of U.S. and Japanese central bank meetings later this week.

The U.S. dollar

USDJPY, -0.26%

 weakened to as low as ¥110.85 before recovering slightly to ¥110.97. That compared with ¥111.17 late Monday in New York.

Tokyo-based currency dealers and Continue reading

Crude-oil prices edged higher in early Asian trade Tuesday on U.S. dollar weakness but analysts caution a raft of new supplies from the Middle East and Africa are expected to put a strain on prices.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in June

CLM6, -0.30%

 traded at $42.94 a barrel, up $0.29, or 0.7% in the Globex electronic session. June Brent crude Continue reading

South Korea’s economy slowed sharply in the first quarter from the previous three months, as sluggish exports continued to weigh on growth, likely adding to pressure on the central bank to take further action.

Gross domestic product expanded a seasonally adjusted 0.4% in the January-March period from the previous quarter after a revised 0.7% gain in the last three months of 2015, preliminary data from the Bank of Korea showed Tuesday. The latest figure missed a median forecast for a 0.6% expansion in the first quarter, according to a Wall Street Journal survey.

On a year-over-year basis, the economy grew 2.7% in the first quarter following a revised 3.1% gain in the previous three-month period. Economists had forecast 2.6% growth Continue reading