Hedge Funds Most Long The S&P500, Most Short The 10 Year In Six Months, Still Long Crude

Once upon a time hedge funds were actual rational, sensible, intelligent creatures whose PMs – rightfully – collected 2 and 20 (i.e., hundreds of millions) for not only outperforming the market but for providing a natural hedge to collapsing asset prices. Since then they have devolved into sniveling, expert network and insider trading-constrained, “beta is the new alpha”, leveraged momentum chasing E-trade babies (which have underperformed the S&P for 6 years in a row).
As such we doubt anyone will find it one bit surprising that as Bank of America observes in its latest weekly hedge fund monitor, “S&P500 longs increase to six month high” with all equities bought. And alongside that, and confirming that the short squeeze in the Treasury market will continue indefinitely, “10-yr contracts were sold at a strong pace to increase net short positioning to largest in six months.” Why? Because that imminent economic recovery which everyone has been betting on since the second half of 2013 is just not coming, seasonally adjusted low-paying temp, retail, teacher and secretary jobs notwithstanding.

This post was published at Zero Hedge on 12/08/2014.