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Bailey McCann, Opalesque New York: Hedge funds and investors alike are keeping a close eye on the markets following last week's volatility. China, a recession, and FX speculation have all been floated as possible reasons for the recent swings in the market, but according to Ryan Tolkin, Chief Investment Officer Schonfeld Group, savvy observers will be keeping their eyes on commodity prices and the Federal Reserve.
"As long as uncertainty remains, more volatile markets are here to stay – we won’t go back to a 12 VIX world anytime soon, though levels should moderate some from what we have seen the last few weeks," Tolkin says. Schonfeld is a family office that works with a handful of quantitative and market neutral managers.
Tolkin notes that the yuan devaluation caught the market by surprise but does not believe that the devaluation on its own would have had a destabilizing effect. "In combination with looming uncertainty around a Fed rate hike, however, it has done just that," he says. "It’s all interconnected. The aggressive moves in commodities have opened the markets’ eyes as to the fragility in emerging markets and pain these movements cause for Brazil, Russia, etc. While some of this was already there, in isolation it was underappreciated, but the yuan devaluation brought it to the forefront."
The role of banks in the post-crisis marketplace may also be adding to volatility in the short run. "The unwillingness/inability of banks to take risk on their...................... To view our full article Click here
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