This teflon stock market fells another star hedge-fund manager — here's his advice – MarketWatch

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While no one is ready to “triple-dog dare” North Korea, financial markets have faced down the latest in Kim Jong Un defiance with a collective yawn.

The isolated country lobbed another missile over Japan last night, but the only market action going is a huge rally for the British pound. We all know the Korean Peninsula’s potential to cause chaos shouldn’t be underestimated:

For now, though, confident investors in an apparently unbreakable market seem unwilling to sell, no matter what, notes CrackedMarket’s Jani Ziedins. “Few things calm nerves like a rising market,” he says.

It’s been a fairly solid week for stocks, with a smattering of record closes likely to help major indexes close out with 1%-plus gains, providing nothing goes badly wrong today.

On to our call of the day, which lends credence to that teflon-market theory. It comes from famed contrarian hedge-fund manager Hugh Hendry, who has shut the doors on his struggling Eclectica Asset Management firm. Offering up some final advice to clients, he suggested stocks will remain a solid bet.

Bloomberg

Eclectica’s Hugh Hendry pictured in 2016

“The “implications of a sustained bout of economic growth are good for you,” he says. Also good, according to Hendry, is the fact he “can’t see interest rates rising abruptly to interrupt the upward path of equities.”

He also thinks commodities will keep trending higher, as they’ve “already acknowledged the upturn in the fortunes of the global economy.”

But it seems all this good news was the undoing of Hendry’s macro-oriented Eclectica, whose flagship macro fund posted a 9.8% year-to-date loss as of September. The outspoken Scotsman shot to fame in 2008, when a bet against banks earned his fund a 31% return.

In November, he was preaching gloom on Europe, but alas now joins several hedge funds in tossing in the towel this year.

“It wasn’t supposed to be like this, and it is especially frustrating as nothing much has gone wrong with the economy over the summer,” explains Hendry in a letter to clients.

Read: This legendary value-investor is another stymied by expensive stocks

He adds that the fund’s “substantial risk book became strongly correlated over the short term to the maelstrom of President Trump and the daily news bombs emanating from the Korean Peninsula.”

It’s worth reading Hendry’s entire farewell, seen here on MacroBusiness, in which he offers up his views on other assets.

Key market gauges

The pound GBPUSD, +1.3136%  rose above $1.35, hitting its highest level against the dollar since the Brexit vote. Meanwhile, the dollar index DXY, -0.26%  is off a bit.

It’s looking like a steady start for Wall Street, with Dow industrials DJIA, +0.20% S&P SPX, -0.11%   and Nasdaq COMP, -0.48% futures flat.

Asian markets ADOW, -0.26%   mostly kept their cool amid the North Korean headlines, with the Nikkei NIK, +0.52%  logging a 0.5% gain. European stocks SXXP, -0.21%  are mixed, but headed for a weekly win. Oil CLZ7, +0.38%  is flat, and gold GCZ7, -0.20%  is dipping.

See the Market Snapshot column for more.

The chart

Even if you’ve got no skin in the game, bitcoin BTCUSD, -9.73% is a fascinating trade to watch right now. After the big plunge yesterday, it’s up 3.3% to around $3,335, with a bunch of other crypotocurrencies also in recovery mode.

Bitcoin slumped 8% Thursday, amid fallout from bearish talk by J.P. Morgan CEO Jamie Dimon and as regulatory worries ramp up out of China.

So is bitcoin on the road to recovery or ruin? The below chart from IG’s chief market strategist Chris Weston, lays out the big levels to watch:

“Bitcoin has been smashed of late, and the cynics would say the “bubble” has popped, although I would be fully focused now on the 4 August gap high of 2,877. That is the key line in the sand for me, and the bulls will want to see this hold,” says Weston.

The buzz

Oracle ORCL, -0.02%  is off nearly 4% in premarket after its outlook released yesterday raised questions over the software maker’s future growth.

Google parent Alphabet GOOGL, -1.08%   may be looking to take a stake in ride-hailing giant Lyft.

Mike Hopkins, CEO for Hulu — a Disney DIS, -0.93%  , Comcast CMCSA, -0.95%  , 21st Century Fox FOXA, -0.34%  and Time Warner TWX, -0.29%  joint venture — said the company will spend $2.5 billion on content this year. That’s bigger than Apple AAPL, -0.86%  or Facebook FB, -1.21%  , but far less than Amazon AMZN, -0.74%   or Netflix NFLX, -0.55%  .

Rovio has set the pricing for its IPO, which values the “Angry Birds” maker at $1 billion.

CashShield, whose clients include Alibaba BABA, -1.04%  and Razer, has raised $5.5 million in funding for the first time since it was founded in 2008.

The economy

It’s a big day for data. Updates on retail sales and a manufacturing survey for the New York state area are due at 8:30 a.m. Eastern Time. That’s followed by industrial production at 9:15 a.m., then business inventories and consumer sentiment at 10 a.m.

The quote

“I spoke to a woman … who said she was standing there and all of a sudden heard a bang — and saw a wall of flames, flames in the carriage.” — That was BBC News presenter Sophie Raworth , at the scene of an explosion on a London Underground train this morning.

At least 18 have been injured in what police are treating as a terrorist incident.

The stat

Nearly 24,000 — That’s how many Venezuelan bolivars are needed to buy just one dollar on the black market (h/t The Daily Shot, venezuelaecon.com). The currency continues to free-fall as a the country’s economy spirals downward.

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Crocodile kills FT reporter in Sri Lanka.

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Get ready to sing it again: “Frozen” the musical.

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