Edouard de Langlade, founder of macro hedge fund EDL Capital, says the Bank of England will have to act to stabilise the UK's currency and bond markets, which have cratered in response to the country's tax cuts and fiscal policies.
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The hedge fund manager, known for his aggressive trades, had been betting on a fall in the pound and took profits overnight as the currency weakened. He believes that he has a fifth of his bets against the currency and is betting against UK stocks in hopes of higher interest rates, which could eventually hit more than 10%.
In an interview Monday, the Bank of England is in La La Land, Switzerland-based De Langlade said. The more they wait, the more dangerous it gets. I think they will have to do an emergency meeting, but Bailey should resign. He referred to BOE Governor Andrew Bailey.
Following the UK's mini-budget Friday, a group of traders have been increasing their bets on the pace and size of interest-rate hikes by the BOE. The pound fell to an all-time low and the gilts crashed.
The market is betting that tax cuts will spur inflation and pricing by 150 basis points of rate increases by the BOE's next policy meeting in November. That would be triple the size of the central bank's last hike, which took the key rate to 2.25%.
EDL had $857 million at the end of last month and had gained 11.6% through August, according to an investor document. De Langlade said that the trading of this month has added more than three percentage points to the gains.
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