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The downfall of Leon Black

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One factor to start out: For our US readers, we hope you had a contented Thanksgiving.

Fall of the home of Black

The stand out piece this week is the FT Weekend Journal cowl story by my New York-based colleague Mark Vandevelde

The autumn of the home of Black is a tragedy on Wall Road of Shakespearean proportions. It chronicles the downfall of billionaire Leon Black, probably the most feared man on Wall Road and a longtime good friend of Jeffrey Epstein

On the centre of the story is a legislation that, in December 2000, New York grew to become the primary metropolis within the US to move. It permits survivors of violent intercourse crimes to sue their attackers in civil courtroom, even when their allegations should not taken up by prosecutors working for the Manhattan district legal professional. The legislation created an alternate path to justice, which enterprising attorneys have used to win billions in compensation for shoppers.

Enter stage proper, Douglas Wigdor, a lawyer who measured in {dollars} is the undisputed authorized chief of the #MeToo motion. Over the previous 20 years, Wigdor has secured greater than $1.5bn in compensation for shoppers, together with some who had been assaulted by Harvey Weinstein

In 2021, Wigdor filed a lawsuit in opposition to Black on behalf of Guzel Ganieva, a Russian trend mannequin who claimed that the billionaire had mistreated her and broken her fame by accusing her of extortion. Black denies the allegations. He give up as chief government of Apollo World Administration quickly after they grew to become public.

Learn the complete story right here of how the authorized system twisted one girl’s rape allegations right into a struggle over the reputations of two highly effective males.

Lifeless cat bounce catches out hedge funds

Hedge funds betting on a decline in US and European inventory markets have suffered an estimated $43bn of losses in a pointy rally over current days, writes George Steer in London. 

Quick sellers, a lot of whom had constructed up bets in opposition to corporations uncovered to greater borrowing prices over the previous yr or so, have been caught out by a “painful” rebound in “low high quality” shares this month, mentioned Barclays’ head of European fairness technique Emmanuel Cau

That has come because the market has grown extra assured that the US Federal Reserve’s cycle of price rises is lastly over. The rally, which has left Wall Road’s S&P 500 index on monitor for its strongest month since July final yr, was sparked by Fed chair Jay Powell’s current perceived reluctance to tighten financial coverage any additional when he left charges on maintain in the beginning of the month. 

Weaker than anticipated US shopper value inflation knowledge launched on Tuesday final week then gave shares an extra enhance, with the S&P 500 and the tech-heavy Nasdaq Composite indices each having fun with their greatest days since April. 

Analysts mentioned the upswing triggered a brutal “quick squeeze” wherein some hedge funds repurchased shares to cowl their unfavourable bets, which helped push share costs even greater.  

“It’s been a really tough market this yr however this quick squeeze is basically killing yr finish efficiency for lots of funds,” mentioned Cau. “Nobody was capable of monetise the rally in rubbish shares.” 

The previous month’s “easing of economic situations could have induced some lifeless cats to bounce”, mentioned Barry Norris, chief funding officer at Argonaut Capital, referring to the rebound in decrease high quality shares. 

Funds suffered $43.2bn of losses on quick bets within the US and Europe from Tuesday to Friday inclusive final week, in line with calculations by knowledge group S3 Companions, which don’t take account of features that funds could have made in different shares they personal. Bets in opposition to know-how, healthcare and shopper discretionary shares had been among the many costliest for hedge funds. 

Indices monitoring closely shorted shares have rebounded sharply from current lows as market sentiment has quickly improved. Goldman Sachs’ Very Necessary Quick Place index, which tracks the 50 constituents of the S&P 500 with the best complete greenback worth of quick curiosity excellent, is on monitor for its greatest month since October final yr. An analogous basket of shares at Barclay is on monitor for its largest month-to-month acquire in no less than 10 years.

Chart of the week

Line chart of shekels per $ (inverted scale) showing Israel’s currency has more than recovered from its October slump

The Israeli shekel is the world’s prime performing foreign money this month, pushed by billions of {dollars} of purchases by the central financial institution for the reason that outbreak of the conflict with Hamas, write Mary McDougall and Stephanie Stacey.

The foreign money has risen by round 8 per cent in November to three.74 shekels per greenback on Friday, greater than reversing a fall of practically 6 per cent within the first 20 days of the battle when buyers took fright on the potential for a conflict to escalate throughout the Center East. 

The rebound is an indication that buyers consider the conflict will stay contained whereas additionally reflecting confidence within the Israeli authorities’s sturdy stability sheet and the financial institution’s willingness to defend the foreign money. The foreign money has additionally been supported by billions of {dollars} of economic inflows from overseas.

“The rally displays the easing of geopolitical tensions, particularly perceptions that the dangers of spillovers from the battle in Israel into the broader area have eased,” mentioned Oliver Harvey, a senior FX strategist at Deutsche Financial institution. He added that the shekel “usually performs properly with greater US equities and we now have seen a giant rally over the past month”. 

The current rally has additionally been fuelled by an unwinding of “excessive” quick positioning — bets on decrease costs — and the Financial institution of Israel’s willingness to make use of reserves to offset extreme foreign money weak spot.

Earlier this month it disclosed its reserves had dropped by $7.3bn in October because it sought to defend the shekel in opposition to additional declines.

“The BoI did a reasonably good job defending ranges past 4.00 per US greenback and the disclosure of central financial institution FX [currency] intervention firepower managed to suppress speculative quick shekel flows,” mentioned Luis Costa, head of rising market sovereign credit score at Citibank

5 unmissable tales this week

Buyers are promoting {dollars} on the quickest price in a yr as they elevate their bets that the US Federal Reserve has completed its aggressive marketing campaign of rate of interest will increase and can ship a number of cuts subsequent yr. That has helped put the buck on the right track for its worst month-to-month efficiency in a yr.

Sir Christopher Hohn’s $60bn activist hedge fund TCI has opened an workplace in Abu Dhabi, becoming a member of a wave of teams betting that the United Arab Emirates will assist energy the business’s development. Bronwyn Owen, the group’s head of buyers relations, is relocating from New York to run the workplace, which will probably be used to forge ties with native buyers. 

Scott Shleifer, the pinnacle of Tiger World’s $30bn-plus non-public fairness enterprise, will step down from his position on the hedge fund on the finish of the yr. The transfer will probably be a big change for $58bn group Tiger, which was based by Chase Coleman in 2001. Shleifer noticed huge alternatives from ascendant know-how corporations, significantly in China.

Blackstone is to shut a fund that gives buyers publicity to a variety of hedge funds and different buying and selling methods, after belongings fell practically 90 per cent in 4 years amid lacklustre returns. The US various asset supervisor has advised buyers it would wind down the Blackstone Diversified Multi-Technique fund by the tip of the yr.

Boots has agreed to switch £4.8bn of pension obligations to insurer Authorized & Common in one of many largest-ever such transactions within the UK. The deal paves the best way for a possible sale of the UK’s largest pharmacy chain by proprietor Walgreens Boots Alliance.

And eventually

The Fondation Louis Vuitton in Paris has established itself as France’s embassy for American artwork, writes our chief artwork critic Jackie Wullschläger. Its newest exhibition is a Mark Rothko retrospective, with greater than 100 work, half of them borrowed from museums throughout America. His work reply TS Eliot’s name to modernism in “The Love Music of J Alfred Prufrock”, writes Jackie: “It’s inconceivable to say simply what I imply!/However as if a magic lantern threw the nerves in patterns on a display.” To April 2, fondationlouisvuitton.fr

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