Greece ‘48 Hours Away From Unrest’

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Hedge fund managers turned cautious on global equities in the run-up to Sunday’s vote

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Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said.

Fund managers are questioning how the International Monetary Fund and Europe’s leaders can seal a deal with Athens following the “no” vote in a Greek referendum on Sunday. Sixty-one percent of voters rejected austerity, increasing the likelihood of an exit from the euro area.

“I don’t see a good resolution any time soon,” Colin Lancaster, senior managing director with Balyasny, a $9 billion fund based in Chicago, said in an e-mailed response to questions. “The big question is whether the EU adopts a strategy of waiting them out. The hope would be that the unrest leads to a unity government or change in government.”

Balyasny ended its direct exposure to Greece three weeks ago, Lancaster said.

Hedge fund managers turned cautious on global equities in the run-up to Sunday’s vote, with sales of stocks sending a gauge of manager bullishness sliding. The Evercore ISI index of hedge fund long versus short bets was at 50.5 in the week ending July 1, down from 51.8 at the start of June, data from the New York-based research firm show.

The survey, based on 31 hedge funds with about $86 billion under management, tracks investments on a zero through 100 scale. Readings of zero show “maximum” short selling, or the sale of borrowed equities with the hope of profiting by buying them at lower prices later; 100 means “maximum” bullish bets. The index has dipped below 50 only twice in the past year.
Plan B

There’s little chance of Greece accepting a deal unless the country’s debt is restructured, Philippe Ferreira, global strategist at Lyxor Asset Management, a Paris-based unit of Societe Generale SA with investments in about 100 hedge funds, said in an e-mail. Investors should be cautious as European Union leaders may not have an adequate plan B if negotiations fail, he said.

Greece has been targeted by some hedge funds seeking returns in a market viewed as too risky for many traditional investors. John Paulson of Paulson & Co. bought bank stocks, while Perry Capital, Knighthead Capital Management and Monarch Alternative Capital purchased Greek debt. Randy Smith, who runs Alden Global Capital, started a Greek-focused fund in December.

Bruce Richards, co-founder of U.S. hedge fund Marathon Asset Management, said last week Tsipras will be gone within 30 days regardless of the outcome of the nation’s referendum.

A “no” vote would cause “rioting in the streets come weeks from now when the banks are closing and you have drachma,” he said in an interview on the television program “Wall Street Week.”

Europe’s leaders run the danger of setting a precedent for other governments if they agree to a writedown for Greece, said Savvas Savouri, chief economist at Toscafund Asset Management, a $3 billion London-based hedge fund.

“Other debt-burdened countries will campaign for the same treatment,” he said. “That is especially relevant with a Spanish election in December.”

*(THOSE GENTLE GIANTS. IT JUST KEEPS GETTING BETTER IN CHICAGO)* 10 killed, 54 wounded in weekend violence

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By Peter Nickeas contact the reporter

Garry McCarthy Hadiya Pendleton

Breaking News
Gun violence 4th of July weekend
Police boss McCarthy on child’s death: ‘This has got to stop’
Police boss McCarthy on child’s death: ‘This has got to stop’

Among those killed was 7-year-old Amari Brown, shot in the chest as he watched fireworks near his father’s home in Humboldt Park late Saturday night. Police say they believe the attack was aimed at the father, whom they described as a ranking gang member.

Also gunned down was 17-year-old Vonzell Banks, who was shot as he played basketball Friday at a park named for Hadiya Pendleton, a high school student fatally shot in 2013 near President Barack Obama’s Chicago home.

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The wounded included a 16-year-old boy and a 15-year-old girl shot shortly after midnight Sunday as they walked in Old Town, and a 19-year-old man shot around 10 p.m. Saturday as two groups fought near Navy Pier after the fireworks display there.

The violence peaked from dusk Saturday until dawn Sunday, when 30 people were shot across Chicago — nearly half the total for the entire weekend, measured from 3 p.m. Thursday until just before dawn Monday.
Remembering Amari Brown

Friends and family of 7-year-old Amari Brown hold a candlelight vigil at his mother Amber Hailey’s home on July 5, 2015. Brown died after being shot in the chest on July 4, 2015. (Brian Nguyen, Chicago Tribune)

Last Fourth of July, 82 people were shot, 16 of them fatally, over 84 hours. Five of those shot were wounded by police. There were no police-involved shootings this year.

The shootings this Fourth of July were primarily scattered across the South and West sides.

Englewood — the police district with more shootings than any other in the city so far this year — did not have a single person shot over the holiday weekend.

A number of other neighborhoods saw several shootings: Little Village, four people shot; Back of the Yards, six shot; and the Austin neighborhood, eight people shot.

Two North Side neighborhoods — Old Irving Park and Albany Park — each had shootings in which three people were wounded. One man died in the Albany Park shooting.
Holiday weekend ends with 3 dead, 12 wounded in shootings
Holiday weekend ends with 3 dead, 12 wounded in shootings

Chicago Police Superintendent Garry McCarthy said the weekend outbreak in violence shows the number of officers working the streets isn’t as critical in preventing shootings as having effective gun laws that put gun offenders behind bars for a long time. McCarthy has long contended that Illinois’ sentencing laws for gun crimes are too lenient.

“If you think that putting more cops on the street would make a difference, then take a look at the fact that we put a third more manpower on the street for this weekend,” McCarthy said. “What’s the result? We’re getting more guns. Well, that’s great. It’s not stopping the violence.

“And it’s not going to stop the violence until criminals are held accountable and something is done to stem the flow of these guns into our city.”