247wallst – With a stock market that has posted a 23% gain on the S&P 500 Index so far in 2013, the Prime Brokerage team at Credit Suisse is starting to see some interesting changes in hedge fund trading. Across the long/short client base, they have seen the U.S. proportion of global net exposure decline. This trend started in the summer, as funds added to European and Asian positions. Does this mean it is time for investors to rotate some funds out of U.S. stocks as well?
The Global Equity Strategy team at Credit Suisse sees four key macro trends that will have an impact on equity prices in the coming months. These trends may be anticipated by hedge fund managers, expediting their lowering of U.S. stock exposure.
1. Global gross domestic product (GDP) appears to be accelerating for the first time in three years. Credit Suisse expects growth to jump from 2.70% in the fourth quarter of this year to 3.75% by the fourth quarter of 2014.
2. They see falling macro uncertainty. This is a relief to many who watched tiny countries like Greece affect world markets a few years ago. The Credit Suisse proxy of U.S. macro uncertainty has fallen recently to a six-year low. Analysts also think it is set to drop further as the U.S. budget deficit continues to fall (the Congressional Budget Office projects a 2015 deficit of only 2.1% of GDP). They also point out that Europe is recovering, and bank deleveraging there is diminishing. This could be another reason hedge funds are shifting money overseas.
