Global Macro - Global Macro Trading

Global Macro Trading

Global macro trading strategies are based on educated guesses about the macroeconomic developments of the world. Mike Novogratz, president of hedge fund giant Fortress Investment Group, discussed global macro trading in his video interview. Novogratz described global macro strategies as monitoring these macroeconomic stories, such as global imbalances, business cycles, the survival of the Euro, and changing growth models of emerging economies. He says that there is an inherent difference between global macro fund managers and traditional equity managers. Most long/short equity managers started in research as analysts and look to follow these macroeconomic stories based on what positions they believe in and stock positions they rely on.

On the other hand, global macro traders and managers come primarily from the risk side of trading. For macro traders and managers, the primary element in decision-making is risk, because when investing in such a speculative world there are so many risk factors and moving data points that they must take into account. Macro traders are not fundamentalists; they rely on risk management and staying liquid to avoid a liquidity crisis. In 2007 and 2008, with the credit bubble where there was a long period of low volatility and illiquidity, many global macro funds found themselves with liquidity problems.