hedge funds often invest in debt-ridden economies, buying up bonds at low prices, and looking to flip them for quick profits. and puerto rico is their latest target. the strategy has earned them a reputation among critics as so-called "vulture funds." >> a group of hedge funds that own puerto rican debt hired claudio loser to find ways for puerto rico to solve its debt crisis. among the former imf economist's recommendations - even more cuts to education. >> but it shows the expenditure and school enrollment, how it has declined, school enrollment and how education expenditure has increased enormously. we have been very careful to say that we believe that is is a decision that has to be taken by the authorities of the island. education is too important to be played with and be cut in a irrational or discretional fashion. >> but your co-author briefed reporters that puerto rico is massively overspending on education. >> i mean, that was the message, that came out from the report. >> this is true. people-- i mean, this is for the government to decide. >> that they're massively overspend

the hedge fund dominoes are falling.he latest is seneca, which managed about $500 million to is the new year going to be any better in the hedge fund world? and we are watching stocks on the second to last trading day of the year. ♪ times --sign of the doug hirsch, one of the founders of seneca capital, is returning money to clients from his hedge fund after almost 20 years. in a liturgy wrote last week, s a t wrote last week, "i am no longer able to make the commitment and sacrifices required to run outside capital. i cannot start with the dedication required for your capital." --ning us is seamount foxman simone foxman. is this a water shed moment in hedge fund world? simone: when you look at the numbers there is not so many more shutting down than in years prior. maybe we are approaching this and people are just less excited about hedge funds than they used to be in alaska when years. for the first three quarters of were close.4 funds 2014, 661. it is a little bit. slightly fewer funds launch. betty: is it because of

the hedge fund, however, was essentially worthless. at this point he along with outside counsel evan grabel conspired to create a series of agreements detailing the payoff to msmb capital investors without the approval of the board of directors. in the end the settlement resulted in investors suffering a loss in excess of $11 million. while the charges announced today are significant, they are but one example of what's left to come as the fbi continues this investigation. many thanks as always to our partners there the eastern district of new york, chief of business ask securities fraud section winston pace, and ausa alexander smith. i would like to thank our partners and securities and exchange commission specifically director of enforcement andrew and last but not least sincere congratulations to the special agents christopher delzato and the robbering on their investigation. now i would like to deduce director of enforcement andrew -- introduce director of enforcement. >> thank you very much. today the sec filed an enforcement actio

why wouldn't i hedge and their reaction is investors can hedge, no mutual fund can go out there and hedgeany can and if i know i'm driving the price down, why don't i protect my cash flow rather than see the market cap dropped by 60% in a two-year period. ofie: this is a graphic refined world copper production and just to tie it back to what can is talking about, -- talk it back -- tie it back to what kenneth is talking about, it has been trending higher after a big drop. david: the point is nothing like what the demand has looked like. brendan: when will the supply curve again to notice the demand curve and adjust? eric: i have no idea on that, what i will say is we have seen nothing but outflows from gold etf. -- one day in 2011, it was bigger than sp y at 76 million, now it is at 22 billion, falling like a stone but we do see there is forsionally some flows but the most part, investors are taking their money out of geo d -- gld. is still outperforming the s&p 500 since it launched in 2004. youad as gold has been, if take it back, it is still beating the markets. brendan: something that

the hedge fund managers started to trade in sync with each other based on the computers. they all spit out the same exact programs. the algorithms. so many hedge funds bought the exact kinds of stocks and futures and old the exact same commodities and did it with borrowed money. when many of these events they couldn't see coming. they had to sell everything because they were positioned wrong. their very survival was at stake. i called it hedge funds gone wild. i told you it was to create an artificial buying opportunity. not everything deserved to go down. a lot of the companies were doing fabulous. they didn't deserve to go down at all. this thing continues to happen to this day because so many still buy and sell stocks the same ways. like their commodities. not pieces of paper that represent vastly different companies with different prospects. we saw spring of 2014 when they're hit with huge amounts of new stocks. and certain sectors just collapse even as many of the companies and sectors are doing well. before you try to cook up excuses for why the moves make sense, as

interesting dynamic for hedge funds.or a lot of them that we talked to they're happy if they're flat to positive for the year. we'll see if this trend continues as these guys start to report over the coming weeks here. >> thank you so much. that's an important point in term of the ability to deploy assets right now. david einhorn for instance, he may have some powder that's try but we don't know about bill ackman for instance, he was buying valiant still. >> and redemptions. so you think about -- making phone calls to these funds, there's no question they're lining them up for redemptions from january. so if there is a chase, a move to the end of the year, it's a chase -- >> i disagree. a lot of the investors with these guys have been with them for a long time and they're not going to be running for the door based upon -- it's not been a bad year. probably a bad quarter and maybe a bad half year. let me say something else. as a hedge fund manager one of the biggest issues you run into is not when you're down a little bit

i regard it as a better hedge, a perfect hedge as opposed to shorting the market because the market keeps going higher than it did in 1999 or year before the great recession n 2008. you could face devastating losses as an overvalued market can stay overvalued and climb and climb and climb. i think cash may be the single most underrated of investments because nothing feels as g gd as cash w wn the market comes down. i know that from my charitable trust. it's one of the reasons why if you follow my meod how to trade around the stock, you will know as e market spikes, i take stock off, sell a little, trim here and there. yes, to get ready and reposition myself for the next correction. sell strength and buy weakness. when the time is right, i almost always have that casasto put to work because i believe so strongly in cash as an option. if you don't raise that cash, here's what could happen. you might end up sellingngour winners to subsidize your losers, that's another common mistake people make. so many bad portfolio managers always sell the best stocks to hold onto the worst ocks. you can a

system of ranking my stocks when things are good and times are placid as hedge funds -- these are hedges against yourself for when things get tough. when it's really calm out there you can do good decision-making. remember, not all stocks are created equally. when things go kerflooey, just like a wagon trail in the 1800s, buy them down to get take better basis or average price for your holdings. why does this matter so much? because we must expect corrections and much expect declines as a matter of course of the more on that later in the show. we must anticipate the days where we wake up and hear good people on "squawk box" saying futures are down, down a great deal and market looks to open down half a percent. you've heard that so many times. we've learned so much over the years about what triggers corrections. more on that later too. the most important thing is to have a game plan, where you know that even when you've done all of the homework and have the tremendous conviction, must assume there's something you don't know going on with your individual stocks or that there's something h

there were relatively few hedge funds and very, very few that were run by african-americans. so in some ways, there was a need that was just waiting to be met here by somebody like kirk wright. >> narrator: the two doctors use their contacts to tap professionals like themselves -- people with ample wealth and little time or expertise to manage it. >> so when people like mr. wright are able to come to them and use terms -- you know, margin costs and short sells and options trading -- and throw out the big words, the person's heard that word before, they might not completely understand it, but they think, "well, he's using the right terms." >> narrator: but even savvy investors get hooked, as well. in 2001, los angeles-based real-estate developer roger o'neal agrees to meet with wright. >> he seemed like a very knowledgeable, articulate guy, and he told me a little bit about his background, that he was from harvard. by the end of year 2002, i had pretty much liquidated most of my portfolio with my investment group and transferred it over to international management associates.

plus, the big hedge with steve weiss. the moves, the big money is making, but should you maybe have a feeling about being a little more bullish? halftime is back after this to discuss. >> welcome back to cnbc. a check on some consumer stocks. >> the best performing dow stock. -- a lot quicker than i expected. that's hats off to the management there. i think the next thing we've got to figure out is what comes after all-day breakfast. they're going to have to have something new that propels the stock from these high 100 teens into the 120s and beyond. >> i think the something new is they're going to finally really start to address the menu. we've talked about it and talked about it. too many different items on the menu. they've got to reduce that down. that's going to help out all franchises. >> i think they have streamlined. >> they're trying to get more and more -- all these guys are trying to get into that competition, the four for four, the two for four, the dollar menu. i think there are clever ways. >> here's a quest

now, why do the hedge funds want that?: because otherwise it's zero. >> no, they bought at 30. >> avoid default from the direct obligations of the commonwealth being the g.o.s or the ddds or the bonds which stand a lot higher in the food chain. and, you know, the potential restructuring will come from some of the lower tier credit like the highway, the infrastructure bonds finish. liz: can i just ask both of you, we're looking at beautiful pictures of this island nation. >> yeah. liz: moody's analytics says without congressional involvement, puerto rico will suffer an economic depression. >> well, they're already in an economic depression. i will say this, if you're the average bond holder and you held on to your bonds thinking there would be some bailout, you're going to get crushed. they're going to cut a deal here that you're not going to -- that most of the holders which are hedge funds are going to make a lot of money because they bought it at 30, the deal will -- the deal will be cut that the bonds will spike to mayb

a saudis know about these hedging strategies. they know everything. they know if they can keep pumping that the pace for another year -- and they can because they're exporting newer cheaper ways to drill themselves -- all these hedges will go away and so will the credit lines. in short if they keep pumping at this pace the saudis can indeed crush the u.s. oil industry which has been their goal from the start. the chatter about how they might bend is the belief they may feel camaraderie with other opec members. be through's no camaraderie. the saudis don't want to make things better for iran which is practically their nemesis. they don't keir about nigeria or venezuela. out the refugee crisis in the middle east? please. these opec states are about as buddy-buddy with each other as the members of the medellin cartel were, although they may lack pablo escobar's natural charisma. while there are worries about saudi arabia's cash-strapped economy, the budget issue over there isn't all that pressing, they're not only swimming in oil, they're switching in ca

we feel like we have a-list hedge funds. we're happy with the returns and we see them as an alternative as mike and bob were saying. it's a portion of the portfolio, not the whole thing. >> i want to switch gears a little bit and talk about the markets. right now we are close to session highs with the s&p 500 at $20.79 and change. we're seeing a big rally in crude. but it's not all about crude today. it's a technology story. it's a biotech story much it's a health care story. >> this is one of the days where it's not just energy bouncing. it's not the leasers getting a lift. it's also not the big tech stock growth leaders performing all year. it's all of them. i look at the equal weight of the s&p 500. it was up .9%. so you're get a broad blow. a significant selloff in conservative bonds. so maybe there is some rotation going on at least on a one-day basis. >> i'm disappointed, mike that, the biggest losers of the year, chevrons and your caterpillars were up initially and they sold them off going into the middle of the day.

these hedge funds, the macro hedge funds have really suffered.hat is interesting is how many of these hedge funds are concentrated in areas and stocks, companies that are very similar, even the same. betty: hedge fund hotel. -- stephanie: many investors followed a trend, followed a guide. you can't necessarily follow. betty: they are paying two and 24 that. year, all until this you had to do was long and strong. you simply were along the market in the last five years as you were building assets. all you have to do. in these volatile markets, you have to be a tactical fundamental investor. if you aresay significantly bigger, it is harder, especially with liquidity today as it has been. he is not winding down the fund. he is returning investor cash and changing the structure of the fund. still ahead on bloomberg markets, unlucky times in macau, revenue and casinos is down for a row.h month and there may be a break. we will tell you what the outlook is next. betty: welcome back to bloomberg markets. i'm betty liu. lucky may be running out in macau.

and at the prices they are hedged at, let's say it's much lower. e best ones are lucky to have locked in that price of 60 bucks a barrel for a partial portion of production. some of them aren't hedged at alal so 2016 will be theheear of the credit crunch in the oil industry if crude keeps plummeting like it did today losing $1.85. a saudis know about these hedging strategies. they know everything. they know if they can keep pumping that the pace for another year -- and they can because they're exporting newer cheaper ways to drill themselves -- all these hedges will go away and so will the credit lines. in short if they keep pumping at this pace the saudis can indeed crush the u.s. oil industry which has been their goal from the start. the chatter about how they might bend is the belief they may feel camaraderie with other opec members. be through's no camaraderie. the saudis don't want to make practically their nemesis. they don't keir about nigeria or venezuela. did you see saudi arabia helping middle east? please. these opec states are about as

it hedges against a weak euro and weak yen. it has been around for a wild.t is interesting. they have been around for a while. i think of their offerings as a fisherman with a lot of polls in the water. couple salmonh a or trout on this one. they landed two wales with these . there's competitors that did well, too. is, it's only business is etf's. polesave all these other in the water. they just launched a long short etf. taking hedge fund approaches and putting them in etf's. that is a lot cheaper. whatever.oints or way cheaper than a hedge fund. they have a bearish u.s. equities etf. there's plenty of other competitors to these two in the space. they have a lot of lines in the water. good stuff. thank you so much, mike regan. you can read his commentary at .adf go and on bloomberg.com pimco finishing up its first calendar year without bill gross and a fairly strong year as well. ♪ we live in a pick and choose world. choose, choose, choose. but at bedtime? ...why settle for this? enter sleep number, and the lowest prices of the season. sleepiq technology te

jason: this ability to truly hedge, god for bid hedge funds do, which is to read the market in a certaincross the board and -- stephanie: the problem was, if you could not beat them, join them. there were people who were fundamentally negative on the market and it is kept losing, and now what what happened. jason is not going anywhere, when we come back, tom farley is with us. ♪ stephanie: look at that beautiful morning in london. -- we are noting focusing on london, we are focusing on new york's, -- on new york, bloomberg headquarters where we are. , jason kelly and a friend of mine, stuckey change president tom farley -- stock exchange president tom farley. here is, in the flesh, welcome. tom: thank you, it is great to be here. i get twitchy when i go north of 14 street. david: we will get you back. stephanie: let's dig into the news of the morning. -- the real estate air agreed to extradition by mid-august. in jail in new orleans since march on a weapons charge. matt: breaking news on personal spending, up 3/10 of 1%, staying in line with the estimate the survey for personal income wa

. >> hedge fund managers making all of america's kindergarten teachers combined? >> some have much more money than others. >> and this ted dollar bill hamilton's face is not on it and will be replaced by a woman. >> you know, who she is? no. no. >> bad government is printing money like crazy then doing what? squandering broke but the president says the deficits are already shrinking. >> he is right so what is the truest? that is our show. tonight. john: money confuses people with compound interest taxes and comparative advantage so it is fun to see a new book out called "popular economics" that sounds like more fun but what can they teach us? abroad james specializes is something else. >> what can he teach about economics? let's ask the author. >> he is a great example of comparative advantage he is the best free trade between the countries and all individuals trade but countries never trade he is the best basketball player in the world but it is well known he could be high indeed paid nfl tight end but he is blowball dependent he employs the clothes he wears he g

they are quite light on 16 hedges. -- light on 2016 hedges. for the u.s.bring in more rakes, unique prices above $45 -- $50 a barrel. jonathan: you look the energy sector and the remarkable sector is to cut the dividend in terms of majors. d spec that to change in 2016? -- do you expect that to change in 2016? into capital expenditure. from an energy perspective did there has to be a normalization that these prices are not good to move back into the 70's, 80's, 90's anytime soon. in terms of capital expenditure, the dividend payout has to be normalized. thank you for your time. abhishek deshpande is going to stay with us. i'm going to talk to michael now. he says about $40 oil. i would be fascinated to get his take. ♪ jonathan: welcome back. guy: michael spencer is good to chat. i am really intrigued to get his take on a number of things. him is $40 oil telling about the state of the world? he is feeling the effects of the markets now. what is the signaling mechanism he is seeing? m&a.han: he has this you got the brexit situation. i wonder if mr. spencer h

keri: he ran these hedge funds and hedge funds went bust. it talks about how these hedge funds became insolvent and he , anothernother company biotech company that specializes in pharmaceuticals. what he did without the permission of the company, and it is important to note the company is not under investigation, he took shares in cash from that company and used it to pay off his aggrieved hedge fund investors. basically taking money from one pot to pay off debt in another they put a lawsuit together and sued him in august in manhattan federal court outlining several specific transactions where he took money without permission. this in theave eastern district and the fcc releasing an indictment as well. sec releasing an indictment. keri: the sec case is interesting because, as it usually happens when you have fraud charges against a public company, some of them are public and some of them are private, you cannot be the ceo of a public company and have been convicted of securities fraud. that does change the dynamic and i think people are loo

burton, ourine hedge fund reporter.ening to "bloomberg advantage" on bloomberg radio and bloomberg tv. i'm cory johnson in san francisco, vonnie quinn on the east coast. you have the markets basically flat for the year. an amazing thing to see. this is bloomberg. ♪ betty: good morning. welcome back to "bloomberg markets." businessthe bloomberg flash. apple pay is making resolutions to grow in europe and in asia. the service allows consumers to pay using their iphone at consumer terminals. it will be introduced next year in china, hong kong, singapore, as well as spain. and jamaica may bring to mind marley, daiquiris, beaches, but it has a new claim to fame. the jamaican stock exchange newed, bolstered by acquisitions and a strengthening economy. the market has about 5 billion dollars, infraction of the dow's $5.2 trillion. now let's get to abigail doolittle live at the nasdaq where she is looking at stocks on the move. including qualcomm, abigail? absolutely. let's do a chip check. qualcomm, identified as one of the sto

hedge fund investing is not changed.uys are still very smart guys that have an analytical edge on many investors, and they will outperform over the long-term. betty: who gets your a plus this year? mr. squire: my a plus -- in the activist world, there were not many. a lot of the guys you mentioned get a pluses. icahn?bill ackman, carl mr. squire: they had bad years. it is the worst year for pershing square ever. it is the first years since our inception we underperformed the s&p 500. betty: maybe nobody gets a plus. mr. squire: c is the a plus this year. but since inception, they all have a's. ♪ betty: it is 11:00 a.m. in new york, 4:00 p.m. in london, and midnight in hong kong. welcome to bloomberg markets. from bloomberg world here in new york, good morning. i am betty liu. here is what we are watching at this hour. oil prices rising after the u.s. government surprises with a drop in crude inventories. even some worries about the supply glut. we will look at where prices could go from here. shares of chipotle have been

there are ways you could potentially hedge it.going to take you quickly. 36 past the hour. six minutes into public trading day. take a look at the major indexes and you will see red arrows. little change on any of the big three. if you look deeper and i pulled up the imap on the bloomberg terminal. you can see that all of the industry groups are down, with the exception of i.t.. if i click into i.t. you see a big bright green spot. qualcomm is the reason that you see again. -- you see a gain. rise.r yields are on the up from a one-month low, they took a higher after the adp number came out. we were looking for 190,000 jobs. that has boosted the dollar. the dollar index, you can see a jump. this leg was after the adp number came out. right now about 4/10 of a percent. the euro is lower versus the dollar. gold and oil are trading near five-year lows. second straight down day. oil is at its lowest level since november 20. 4120.crude trading at the spread between wti and brent is getting smaller and smaller. down 20% in the last five

people use futures to hedge on both sides of that. that helps to exacerbate that. but the rally on wednesday felt like that is what you are supposed to do when you are given what you expect from a fed. and we closed on the highs that day -- on thursday and friday. and then it was lights out. the realization that fed was pushed into they had to do, to delivery for credibility's sake. and the global economy that they were worried about in september that caused them not to raise, is still bad. and the data is bad. it is a poor entrance into 2016. >> with the options expiration exacerbated the selloff we saw today, should we not be as concerned about it because options played suppose a huge role in this? >> no. i think we're transferring our concern. we had a reason why the market was under pressure when we broke through 2025 today because that created a wave of selling by people short that strike. but what we have now, of course, is the same thing flattening the yield curve. we have the fed taking away the punch bowl at the near end but the long end of the yield curve

what do hedge funds and wall street have to do with this debt and the default?bviously, the largest -- the last bond issue that puerto rico about $3.5s in 2014, billion, and that was largely bought up by hedge funds because no one else -- no other investors were willing to take a chance on puerto rico cost that knowing what bad shape the island was in. the hedge funds insisted on guarantees that its debt -- there debt would be paid before any other debt and that there issues to be resolved. they would be resolved in a new york art, not a puerto rico court. they put in all of these safeguards to put their debt at the front of the line. that is why hedge funds right now or in the position if the government does default, they have, they believe, the best legal protections to go into court and insist their money get paid first if that means cutting teacher salaries, closing schools, doing whatever needs to be done to get there debt paid. that is why think what edwin is saying, the issue of having an impartial judge adjudicate all of the debt of the island. but as yo

we know a lot of people use futures to hedge on both sides of that. that helps exasperate it. think that the rally that we had on wednesday felt like that's what you're supposed to do when you're given what you expect from a fed and we closed on the highs that day, you know, on thursday and friday, then it was lights out. i think the realization that the fed was pushed into doing what they had to do, they had to deliver for credibility sake and the fact that the global economy, the thing they were worried about in september that us cad them not to raise at the time still pretty bad and the data here is bad. to me i think it sets up for a very poor entrance into 2016. >> so the options expiration, mike, exacerbated the selloff that we saw today. should we not be as concerned about it because options played such a role in this? >> no, i think, look, we're transferring our concern really. we had a technical reason why the market was under some pressure when we broke through 2025 today because that created a wave of selling by people who were short that strike. but what we have no

under that bet, taxpayers lose while some of the wealthiest hedge fund managers get even wealthier. this is why the wall street hedge funds want to stop efforts to protect taxpayers in hopes fannie and freddie could be re-capitalized and released from conservatorship. let me be clear, under that scenario, re-capitalizing and releasing fannie and freddie in their current form, we would fall back into the system of private gains and public losses, lining the pockets of hull if i millionaires -- multimillionaires while leaving taxpayers on the look for future bailouts. looking at what is at stake, one can see why these hedge funds are so engaged in stepping on the taxpayers and preventing reform from occurring. using a self-analysis from one prominent hedge fund under recap and release scenario, this fund, with an estimated current holding of $366 million, has a potential net profit of $8.1 billion. $8.1 billion, a total sale of $8.4 billion. to give you another example, using those same projections, another prominent hedge fund, with an estimated current holding of $501 million, has a

this is the environment you want to have a hedge portfolio in.to be able to play the shorts and the longs. that's how you actually make money. >> one thing we should bring out is small caps having a really, really bad time of it once the kallcalendar turned over to december. this is the strongest month seasonally for small caps. this month, they're down 7 out of the 10 trading days we've had. the carnage in iwm is pretty noteworthy. i think that's all tied in with the idea of smaller companies having a tougher time financing bonds. i think it's really all one story at this point. >> do the homework, do the due diligence, go short 'em. rates going up. a lot of pressure. >> does this though, weiss, lead you to believe that any thought of a santa claus rally, so to speak, a lot of hedge funds are throwing in the towel on that idea? >> no, i don't think so. i think they're just being rational about it and they're not -- you can buy anything, right in '13, the market was up 35, whatever it was, shorts were also up. even the bad companies were up 24, 2

interesting what goes on in the hedge fund business.ed $3 trillion in assets this year. >> the hedge funds, i've been in the presentations, you have to make them. maybe somebody is coming in saying we're part of your losing allocation. you have a lot of winners, you want to offset those with us. what is the sales pitch for a guy down 18%? what is the sales pitch? >> tax loss carries forward. >> next year, we'll have good drafts, moving up in the draft. there's no draft. playoffs! >> as expected, we are getting the house vote on the $1.1 trillion spending bill. eamon javers has that. we just passed the 218 threshold needed to pass the $1.1 trillion spending bill in the house of representatives. there was some pins and needles going into the vote because nancy pelosi said she didn't necessarily have the democratic votes they would need to pass this. looks like she came up with it. some of the gamesmanship in the voting, they went over the allotted amount of time here. right now the vote is 122 republicans, 119 democrats voting for this. s

there has been a dilemma with advisers, should i hedge? they cannot with an etf that is 50% hedged.u want coke and pepsi, you can have that. not as many assets yet, still pretty new. what i find intriguing, blackrock and wisdom tree have filings for flexible currency hedging etf's. advisers are saying i like the concept of hedging but i don't know where to do it. so these will look for signals and will change the hedging depending on signals in the market. control so you have no over that, as somebody who buys etf's. >> you are outsourcing the decision-making process, and a lot of people are happy to do that. these filings are in a race to see who could get out first. we talked about japan, but how about with insect there's, what is doing better than others? i'm sure there has to be an etf for that. wisdom tree launched a series of sectors that are hedged. they hedged health care, which is up 40% this year, which is amazing. a lot of structural reforms put into place. that one sector is now in a top 10 overall of all etf's. eric balchunas, thank you. our senior etf analyst. much mor

it's an open question if this whole area of these kind of hedge funds and mutual fund wrappers are aood thing or if they will be the worst of both worlds, you can't use the leverage and take the risk that a hedge fund can but you have the daily liquidity. >> the daily liquidity vehicles have been in vogue for the last few years and a lot of people have touted them as a great alternative to hedge funds, lower fees typically and you can pull out your money whenever you want. white box did. on the other hand there may be -- and this is a debate clearly -- some value to locking the money up longer if only to deal with those more liquid assets. there is an interesting lawsuit you may remember weinstein the head fund manager at saba capital being sued by a canadian hedge fund. long story short, part of his legal argument is, and this is all ongoing, you know, i had such a short period of time to get outs of these positions in order to redeem the money, i wasn't able to get terribly competitive bids, i did the best i could in the market. so that can be the down side to some of this paper. >

another hedge fund is closing up shop. doug hurst closing seneca capital. the firm returns most of their outside capital on tuesday. it's an event driven fund making bets on corporate mergers, spin offs and restructuring. they're only down 6% this year but in a letter to clients, a r co-founder saying he can no longer make the commitment to run outside capital. meantime it's been a bruising year for hedge funds as a whole but will they fair any better over the next 12 months in 2016? kate kelly filed this report. >> 2015 was a rough year for hedge funds with almost 0 returns for the year as of mid december. with consolidation and closures as well as more predictable stock and bond picks. here are three things to look out for. many investors notified hedge funds of their intention to pull out capital and they'll have it back by january 1st. that means a decline in total investable assets that already saw the biggest down tick since the financial crisis. with regulators bearing down on hedge funds and expectations on performance increasingly tough to meet, ex

this hour, look at hedge funds and kate kelly is here. 2015 a rough year for hedge funds with almosteer rereturns for the year. this will be a year of retrenchment with closures and cosolidation and stock and bond picks. he's three things to look out for. in september, many investors notified funds of intention to pull out capital and have it back by january 1st, so decline in total assets for hedge funds already in q3 had the biggest down tick since the financial crisis. with regulators bearing down on hedge funds and expectations on performance increasingly tough to meet, expect to see some of the fun turn themselves into family offices. managing money for families and employees only, away from the harsh spotlight. big players have already set the trend. don't expect long shot bets like a billion dollar short on herbal life or beaten coal stocks or sovereign debt. after a bruising year like this, they return to what they know, things like straightforward activism and just fundamental research-driven buy and hold strategies. >> kate kelly is here. when you say they do what nay know,

] the hedge funds. give 5 reasons to invest in hedge funds. let me finish. number 2, for our dc plan talks about blended funds and perfornl ance, he talks about why need a active fund when they cannot perform a index fund. what is your cash position. these are lujtimate questions he hasn't got a response to. i think we have need a policy. and don't think it is appropriate to smile and laugh. >> what is not appropriate is chastise. >> i think it is inappropriate when i talk about responsiveness to members. this is a bad reflection on us that we condone this kine of behavior and don't want enable our staff to respond to lujtimate questions. it is poor reflection on us >> and also a poor reflection is when we burr at and belittle or staff members. we will continue to move forward. [inaudible] have you complighted your report? >> i have >> we will take public comment now. anyone want to comment on the report? okay, public comment is closed. thank you for giving us something to talk about, jay. next item. >>

hedge funds are hurting again.eturning billions of dollars to its investors after years of lackluster returns. we will tell you what this says about the overall hedge fund world. how do you make it easier for families to get access to the financial system? we will hear from treasury secretary jack lew. also, from the ceo of paypal. those injuries -- interviews coming up in a few moments. will it be a november to remember? automakers on a verge of a record after they report last month's car sales. some numbers from gm and ford disappoint. we have breaking economic numbers on isn manufacturing.

coming up in the next hour of bloomberg markets, it was once one of the biggest hedge fund. yearsith one of the best ever for auto sales. but the brakes were put on cheap borrowing. can the island be the next blooming -- meet its next payment on january 1? david: welcome back to bloomberg markets. it is time for the bloomberg business flash. we heard from chicago fed president charles evans today. he admits he is getting nervous about the next meeting on december the 16th. he reiterated he would prefer to have more confidence and i do today that inflation is beginning to have higher. regardless of the exact date and be well appropriate for the funds rate to be still under 1% at the end of 2016. the face of online spending slowed down on cyber monday. sales rose 26% and the beginning of the weekend. americans spent an estimated $3 billion. by nonprofit funded isa-cola to study obesity disbanding. an e-mail showing that they edited their mission statement, and suggested content for their website. you can always get more business news at bloomberg.com. but get a check it -- of

] the hedge funds. give 5 reasons to invest in hedge funds. let me finish. number 2, for our dc plan talks about blended funds and perfornl ance, he talks about why need a active fund when they cannot perform a index fund. what is your cash position. these are lujtimate questions he hasn't got a response to. i think we have need a policy. and don't think it is appropriate to smile and laugh. >> what is not appropriate is chastise. >> i think it is inappropriate when i talk about responsiveness to members. this is a bad reflection on us that we condone this kine of behavior and don't want enable our staff to respond to lujtimate questions. it is poor reflection on us >> and also a poor reflection is when we burr at and belittle or staff members. we will continue to move forward. [inaudible] have you complighted your report? >> i have >> we will take public comment now. anyone want to comment on the report? okay, public comment is closed. thank you for giving us something to talk about, jay. next item. >>