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Beverly Chandler, Opalesque London: Man Group’s fund of hedge funds business FRM, has published its early view of January, including a review of markets and hedge funds.

The firm finds that, while there were distinct signs of a classic 'risk-on’ environment in January in which one might expect more asset class dispersion, there was some evidence of the rally being unusually technical in nature.

FRM writes: "There are a range of macroeconomic risks on the horizon. In the US, fiscal cliff concerns will likely resume as the deadline on the automatic sequestrations are reached; without any mitigating action, commentators expect that the mechanised fiscal cuts would place a drag on growth of around 1%. While fiscal consolidation continues to be the standard policy response in Europe, political obstacles could threaten progression from here."

The firm also comments that the large-scale money-printing exercise undertaken by the major central banks since the 2008 crisis has resulted in large swathes of liquidity in financial markets: as assets have moved across borders (in search of yield) currencies have been forced to re-price. "We suspect that all the money borne from quantitative easing will find new homes at new prices as current regimes of currency pricing are recalibrated."

In terms of hedge funds, FRM contends that if policy intervention becomes more scarce than in 2012 (though not entirely absent), &#......................

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