The Morning Brief: Bridgewater’s Dalio Backs Draghi’s Move

Bridgewater Associates’ Ray Dalio went out of his way to give public support to European Central Bank president Mario Draghi after several markets, including stocks and currencies, reacted sharply to the ECB’s easing announcement on Thursday. Investors, especially those who were short the euro versus the dollar, were hoping for a larger interest rate cut than was announced. “Huge (short) squeeze, obviously,” Jens Nordvig, Nomura global head of FX strategy, told CNBC. “Expectations were just too elevated, and positions sizeable.”

However, in a statement issued by Dalio on Friday, the head of the world’s largest hedge fund firm, which manages several macro funds, asserted: “Draghi and the body of those in the ECB who shape policy with him understand how the economic machine works.” He said they understand that the degree to which they tighten monetary policy depends upon several factors, including interest rate movements, quantitative easing movements, and currency movements. “With interest rates unable to move meaningfully, QE and currency movements matter most,” Dalio said in the statement. “Clearly there needs to be more easing and clearly the more the currency rises, the more (and more forceful in completion) the QE needs to be.” ___

Lee Ainslie III’s Dallas-based Maverick Capital lost a little less than 1 percent in November in its flagship fund, but the Tiger Cub is still up more than 15 percent for the year.Meanwhile, Christopher Hansen’s San Francisco-based Valiant Capital Partners posted a 0.54 percent loss in November in its flagship fund, which is now up around 5.5 percent or so for the year, according to an investor. In November, its liquid portfolio lost 0.66 percent, while the side pockets — which is what it calls its private investment portfolio — lost just 0.05 percent. For the year the liquid portfolio is up more than 8 percent, while the side pockets are down more than 4 percent. Hansen is a so-called Tiger Grandcub because he was previously a managing director at Tiger Cub John Griffin’s New York-based Blue Ridge Capital. ___

The Horseman Global Fund, the hedge fund managed by London-based Horseman Capital Management that has been net short for several years, rose about 0.90 percent in November, bringing its gains for the year to 14 percent, according to the database of HSBC. ___

Richard (Mick) McGuire III’s Marcato International rebounded by 1.80 percent in November, cutting its loss for the year to around 5.90 percent, according to HSBC. It is managed by San Francisco-based Marcato Capital Management. ___

Zachary Schreiber’s New York-based PointState Capital more than doubled its stake in Pampa Energia to 4.4 million shares, which works out to 6.49 percent of the Argentinian energy company.