Volatility is back, and for the first time in a while, humans are beating the machines.
Global hedge funds posted a robust +2.2% return in January, according to a new JPMorgan client note. Unlike 2025, where returns were driven by defensive positioning (avoiding the DeepSeek AI selloff), this month’s gains were powered by aggressive trading around three massive macro dislocations.
📈 THE TRADING TRIFECTA:
- Geopolitics (Venezuela): The US military capture of Nicolas Maduro on Jan 3rd—and the subsequent $2B oil export deal—triggered a massive repricing in energy and sovereign risk.
- Commodities (Nat Gas): A brutal cold snap sent natural gas futures soaring 140% in just 8 days (Jan 20-28), creating a massive squeeze for energy traders.
- Rates (The “Warsh” Curve): Trump’s nomination of Kevin Warsh as Fed Chair sparked bets on a steeper yield curve, fueling gains for macro desks playing long-dated Treasuries.
🏆 WINNERS & LOSERS:
- Stock Pickers (L/S Equity): +2.7%. (Alpha is back).
- Multi-Strategy (Pod Shops): +1.6% to +3.2%. Giants like Balyasny, Citadel, and Point72 capitalized on the cross-asset volatility.
- Quants: ~ -1.0%. Systematic funds struggled to digest the rapid-fire headline risks.
💡 ANALYST TAKEAWAY: January 2026 marks a shift from “Tech Beta” to “Macro Alpha.” The fact that fundamental stock pickers and macro pods outperformed quants suggests that this market is currently driven by idiosyncratic events rather than historical correlations. With natural gas ripping and the Fed leadership in flux, the “Great Moderation” is over. For Q1, the money isn’t in holding the index; it’s in trading the headlines.
👇 Macro Traders: Was the Nat Gas squeeze a “once in a decade” event, or just the start of a volatile commodities super-cycle?