Domestic Fund Formation It is a simple process to enter the hedge fund industry; practically anyone with $15k to $20k can start a hedge fund and forming a hedge fund gets easier every year.
Offshore Fund Formation An offshore hedge fund is simply a structure used by hedge fund managers as a way to attract offshore investors (non-U.S. citizens) or U.S. tax-exempt investors such as pension and endowment funds.
Today’s Headlines
  • Hagel Warns Russia on Ukraine Miscalculation Amid Crimea Unrest. U.S. Defense Secretary Chuck Hagel cautioned the Kremlin against making a “miscalculation” in maneuvering ground and air forces near the border with Ukraine, which is still without a full-time government after the toppling of its pro-Russian president. Joined by NATO allies, Hagel issued the warning after Interfax reported that Russia put fighter jets on alert, stepping up a military drill announced yesterday. Adding to tensions, the parliament of the southern Ukrainian region of Crimea was seized by armed backers of union with Russia. 
  • Yanukovych to Appear in Russia Tomorrow as Swiss Freeze Assets. Deposed Ukrainian President Viktor Yanukovych will hold a press conference in neighboring Russia tomorrow, one day after an interim government took charge in Kiev and the Swiss government told banks to freeze his assets. Yanukovych will brief reporters in Rostov-on-Don in southern Russia at 5 p.m. Moscow time, state-run RIA Novosti reported, citing a person close to Yanukovych. The location of the briefing will be announced separately, according to RIA. 
  • Emerging Outflows Top $11 Billion as Cash Sent to Europe. Investors are stepping up withdrawals from emerging-market exchange-traded funds and shifting into Europe as concern mounts that growth is faltering in developing nations while advanced economies strengthen. Withdrawals from U.S.-based ETFs investing in emerging-market equities and bonds totaled $11.3 billion this year, already surpassing the redemption of $8.8 billion for the whole 2013, according to data compiled by Bloomberg. Funds investing in European assets added $5 billion in the first two months of 2014, compared with $18 billion full-year inflows in 2013.
  • Allianz Names El-Erian as Chief Economic Adviser. Allianz SE (ALV) named Mohamed El-Erian to the new role of chief economic adviser following his surprise resignation at the insurer’s Pacific Investment Management Co. unit last month. El-Erian, the former chief executive officer and co-chief investment officer at Newport Beach, California-based Pimco, will spend 50 percent of his time working for Allianz, CEO Michael Diekmann said at a press conference in Munich today. He will dedicate the rest of his time to his family and book projects, Diekmann said.
  • European Stocks Retreat as Tension Escalates in Crimea. European stocks declined for a second day as tension escalated in Crimea, following Ukraine’s change of government. WPP Plc (WPP) slid 3.5 percent and Allianz SE dropped 2.3 percent after posting profit that missed estimates. Royal Bank of Scotland Group Plc (RBS) slumped 7.7 percent after the state-owned lender reported its biggest full-year loss since receiving a bailout in 2008. Man Group Plc rallied 14 percent after the world’s largest publicly traded hedge-fund firm announced a $115-million stock buyback. The Stoxx Europe 600 Index slipped 0.2 percent to 337.21 at the close of trading
  • Yen Climbs as Ukraine Tension Boosts Safety Bid; Ruble Declines. “Putin is conducting military exercises and putting Russian forces on high alert,” said Richard Franulovich, the chief currency strategist for the northern hemisphere at Westpac Banking Corp. “That’s risk-negative.” The yen strengthened 0.2 percent to 102.19 per dollar at 1:59 p.m. New York time, rising the most on a closing basis since Feb. 3. The Japanese currency was little changed at 140.07 per euro, having rallied as much as 0.9 percent earlier. The euro climbed 0.2 percent to $1.3707, after falling as much as 0.3 percent.
  • Copper Declines to Three-Week Low on China, U.S. Demand Concerns. Copper futures fell to a three-week low in New York on concern that the U.S. recovery may falter as China’s economy slows, hurting demand from the two largest users of the metal. Jobless claims in the U.S. increased by 14,000 to 348,000 in the week ended Feb. 22, the highest in a month and above all forecasts in a survey, a Labor Department report showed today. Chinese manufacturing probably slowed this month, economists surveyed by Bloomberg said before an official gauge due March 1. Copper prices are down 5.8 percent this year. “We need to see some real strong economic data before the market starts trading higher,” Tom Power, a senior commodities broker at RJO Futures in Chicago, said in a telephone interview. Copper futures for delivery in May slid 0.5 percent to close at $3.201 a pound at 1:18 p.m. on the Comex in New York, after touching $318.35, the lowest since Feb. 4. Prices dropped for seven straight sessions.
  • Yellen Repeats Fed Likely to Keep Trimming Asset Purchases. Federal Reserve Chair Janet Yellen said the central bank is likely to keep trimming asset purchases, even as policy makers monitor data to determine if recent weakness in the economy is temporary. “Unseasonably cold weather has played some role,” she said in response to a question today from the Senate Banking Committee. “What we need to do, and will be doing in the weeks ahead, is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to softer outlook.”  
  • U.S. Retail Chains See First Profit Decline Since Recession. U.S. retailers last quarter suffered their darkest days since the recession. With results in from 62 of 122 retail chains, the industry has posted its first profit quarterly drop since the economic contraction that ended in 2009, according to Retail Metrics Inc. Revenue also rose at the lowest rate since that year, the research firm found. The results paint a grim picture of an industry hit hard by the sluggish job recovery and slow wage growth, which have turned U.S. consumers into a nation of penny pinchers. Earnings are expected to drop 6.1 percent on average during the holiday quarter, according to Retail Metrics data. The broader pool of Standard & Poor’s 500 Index companies, meanwhile, are estimated to see profit rise 8.5 percent.
  • Study Finds SEC Staff Sold Shares Before Cases Made Public. People working for the U.S. Securities and Exchange Commission who owned stock in companies under investigation were more likely to sell shares than other investors in the months before the agency announced it was taking enforcement actions, according to a new academic paper.
Wall Street Journal:
Fox News:
  • US-China ties could end badly: Scholar. (video) The United States needs to break out of its co-dependent relationship with China before it’s too late, the former chairman of Morgan Stanley Asia told CNBC on Thursday. China is already taking steps to reduce its “unhealthy reliance” on the U.S., which has been slower to make reciprocal strides, said Stephen Roach, senior fellow at the Yale School of Management.
Business Insider:
  • Australia Had An Ugly Day. Dylan Grice summed up the concerns when he wrote that Australia is “a credit bubble built on a commodity market built on an even bigger Chinese credit bubble.” 
  • Gunmen seize government buildings in Ukraine’s Crimea, raise Russian flag. Dozens of armed men seized the regional government administration building and parliament in Ukraine’s southern Crimean region Thursday and raised the Russian flag in a challenge to the Eastern European country’s new leaders. Crimea, a Black Sea peninsula with an ethnic Russian majority, is the last big bastion of opposition to the new political leadership in the capital, Kiev, after Ukrainian President Viktor Yanukovych’s ouster Saturday.
NY Post:
  • Russian warship in Cuban port while troops train near Ukraine border. In a pair of brazen moves that resembled 1960s Cold War tactics, a Russian warship cruised into a Cuban port Wednesday as President Vladimir Putin massed troops near his country’s border with Ukraine. The Viktor Leonov, an armed Vishnya-class intelligence-gathering ship, was mysteriously docked at the Port of Havana’s cruise-ship area. The warcraft, which has a crew of around 200, is reportedly armed with 30mm guns and anti-aircraft missiles.
Institutional Investor:
  • Fed’s Fisher says happy with pace of QE withdrawal. Dallas Federal Reserve Bank President Richard Fisher said on Thursday he would like the U.S. central bank to continue scaling back its monthly bond-buying stimulus at the current pace of $10 billion at each policy meeting. If U.S. economic growth picked up significantly, Fisher said, he “of course might be in favour of further reduction”, but even if he did support such a step, he said he knew he “wouldn’t win the argument”.
Financial Times:
  • Falling renminbi heightens derivatives risks. Chinese companies will face billions of dollars in losses from complex hedging products if the renminbi continues to weaken, analysts and investors have warned. Mainland companies and global investors have bought hundreds of billions of dollars worth of structured products that benefit from renminbi appreciation over the past year, and now face growing pressure after the Chinese currency fell to its lowest level since July.
  • GCHQ intercepted webcam images of millions of Yahoo users worldwide. Britain’s surveillance agency GCHQ, with aid from the US National Security Agency, intercepted and stored the webcam images of millions of internet users not suspected of wrongdoing, secret documents reveal. GCHQ files dating between 2008 and 2010 explicitly state that a surveillance program codenamed Optic Nerve collected still images of Yahoo webcam chats in bulk and saved them to agency databases, regardless of whether individual users were an intelligence target or not. In one six-month period in 2008 alone, the agency collected webcam imagery – including substantial quantities of sexually explicit communications – from more than 1.8 million Yahoo user accounts globally.
  • China to Mark Anti-Japanese War Victory Day on Sept. 3. Standing Committee of National People’s Congress also approves China to set Dec. 13 as memorial day for victims of Nanjing Massacre.
  • UN nuclear agency drops sensitive Iran report, sources say. IAEA worries probing deeper into Iran’s suspected atomic bomb plans could hinder talks. The UN nuclear watchdog planned a major report on Iran that might have revealed more of its suspected atomic bomb research, but held off as Tehran’s relations with the outside world thawed, sources familiar with the matter said Thursday.

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