Brevan Howard is one of the largest alternative investment firms in the world. Based out of the UK, the firm manages several different hedge funds. Last year, the flagship fund, Brevan Howard Master Fund returned 12.12%, as we reported previously.
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The firm’s flagship hedge fund, Brevan Howard Master Fund Limited Class was down 1.74% for the month of May.
losses predominantly were due to interest rates trading, mainly from directional positions, and additional losses from credit. The fund had gains from FX macro trading.
The fund manager, Alan Howard, detailed his views on the economic conditions in five different ‘countries’; the United States, Europe, UK, Japan and China.
Alan Howard notes that he was too bullish earlier in the year on the US economy. He states with “an average of less than 100,000 new jobs being created per month over the last three months, employment is not expanding rapidly enough to materially reduce the unemployment rate.”
The European crisis threatens to further threaten the weak US economic recovery. Businesses are being more cautious as a result of uncertainty regarding Europe. Howard expects the Federal Reserve to keep interest rates near zero for the foreseeable future.
In Europe, the crisis has spread from the periphery to the core of Europe. Inflation has decreased and GDP for the second quarter should be negative. A key event for Europe will be the end-of-June EU leaders’ summit.
In the United Kingdom, the economy is showing mixed signed. While manufacturing has plummeted, the labor market has shown signs of strength. The economy is expanding rapid enough to prevent easing measures from The Bank of England, inflation will likely average between 2.5-3.0%.
Japan had impressive GDP growth of 4.7% in Q1, but it likely slowed down in the second quarter. Deflation still persists, however, the Bank of Japan is unlikely to induce further easing measures.
Inflation, industrial production and manufacturing all fell during the past month. China recently announced its first interest rate cut since 2008. Additionally, The People’s Bank of China has cut reserve requirements, the benchmark deposit and lending interest rates. However, the Government does not appear ready to announce a stimulus package, or induce easing in the property sector.