Wall Street vets raise concerns about interest rates, politics

Boy, several veteran hedge fund moguls on Tuesday appeared to wake up on the wrong side of the trade.

Buffeted by uneven markets and below average returns, the billionaire investors, speaking at a hedge fund conference in New York, griped about low interest rates and an uncertain political climate.

Each of the veteran investors took turns calling the current investment climate dangerous.

Many of the grumpy old men made their bones when delivering double-digit returns was the norm. In recent years, however, many hedgies are fighting just to keep pace with the S&P 500.

For example, hedge funds were up 3.5 percent through Aug. 31, according to HFR. The S&P 500, meanwhile, gained 7.9 percent over the period.

Bridgewater’s Ray Dalio — with $154 billion under management — was among those sounding words of caution at the Delivering Alpha confab.

Debt markets are in a “dangerous situation,” he said, as any benefits of years of near-zero interest rates have almost been exhausted.

“The United States is probably two steps ahead of China in terms of a limited ability to produce stimulation,” Dalio said. “So everybody will have a lower growth rate than we’re used to.”

Elliott Management’s Paul Singer rang the alarm bell, too, saying, “I think it’s a very dangerous time in the global economy and global financial markets.”

His biggest point of contention is with the “amazing arrogance” displayed by policymakers here and abroad. Their only defense for weak growth is, Singer said, “In the absence of what we’re doing, it would have been worse.”

Not even a filling lunch changed the mood.

Blackstone boss Steve Schwarzman opened up an afternoon panel, saying it was a “difficult time for liquid securities” and that equity markets, which have been propped up by low rates, were “a little expensive” for his taste.

Schwarzman also joined the chorus of those who believe that fees, which are usually 2 percent of assets under management and 20 percent of profits, should come down.

“You can’t deliver non-exciting rates of return and act like you’re doing something,” Schwarzman said.