Morning Brief: Dalio Calls Out Mnuchin

January 26, 2018   Stephen Taub

Ray Dalio has openly criticized treasury secretary Steven Mnuchin’s casual acceptance of a weak dollar. In a LinkedIn comment — the Bridgewater Associates founder’s favorite public forum — Dalio stressed that a weak currency "is a hidden tax on people who are holding dollar-denominated assets" and a benefit to those who have dollar-denominated liabilities. He reminded his readers a weak currency reduces the currency holder’s buying power in the rest of the world and devalues debt denominated in the weakening currency, which hurts the foreign holder of that debt. It also boosts inflation and stimulates domestic activity, Dalio added. "None of this is what the U.S. economy needs now," Dalio wrote. "While it’s described as a desirable and intended thing, it might not be a choice. The size of dollar holdings of reserves (in dollar-denominated debt) and the dollar’s role as the dominant world currency are anachronisms and large relative to what one would want to hold to be balanced, so rebalancings should be expected over time, especially when U.S. dollar bonds look unattractive and trade tensions with dollar creditors intensify."

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Jamison Capital Partners LP is the latest hedge fund firm to shut down. The roughly $1.5 billion macro commodity fund, headed by former Morgan Stanley trader Stephen Jamison, is closing and converting to a family office, according to Reuters. One of the largest commodities funds, Jamison was said to be down 9 percent in 2017 thanks in part to losses in natural gas in the second half of the year, according to the report. The fund opened in 2009.

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Shares of hedge fund favorite Amazon rose 1.5 percent to $1,377.95 after D.A. Davidson boosted its price target from $1,500 to $1,800. In an interview on CNBC, analyst Tom Forte said his revised target is based on the notion that AWS, the e-commerce giant’s cloud business, will continue to grow rapidly. AWS is Amazon’s fastest growing and highest margin business, he said.

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In a wild day of trading, shares of Caterpillar rose 0.40 percent to close at $168.98 after the heavy equipment maker reported quarterly results that easily exceeded Wall Street forecasts and offered an upbeat economic forecast. In pre-market trading, the stock was indicating a big day. But in early trading the shares were off as much as 3.5 percent. One person who was anxiously watching the see-saw moves was David Einhorn of Greenlight Capital, who has been short the stock for more than a year.


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