Since the U.S. presidential election on November 3 th, the USD has started a descent that may have legs under the new administration. The easing of trade tensions and an accommodative policy mix could put additional pressure on the DXY, which was down -1.7% since the election, to the benefit of European currencies.

Several hedge fund strategies have momentum biases, in particular L/S Equity, and CTAs. Considering the fact that this rotation took place in a bullish environment, most hedge fund strategies ended the week in positive territory.

If past elections provide any guidance, prospects for a Trump reelection look slim. History suggests that a second term reelection almost always requires strong growth. In most past election campaigns, polls did not materially shift after October.

Momentum is a strategy which buys stocks trending higher and sells stocks on a downtrend within an index. It is systematic and has no considerations for earnings, valuation, or other fundamental metrics such as dividends.

The Special Situations strategy went through a roller coaster since February. Typically, due to their long structural market beta, managers tend to underperform in risk-off episodes. However, as they also tend to look beyond short-term volatility, they usually rebound faster.