DALLAS is in confident mood. The city, one of the fastest-growing metropolitan areas in America, is investing around $11 billion in improving its road, rail and air links. The Perot Museum of Nature & Science is being built downtown along with a new park that will cover the Woodall Rodgers expressway.

THE past few years have been “as miserable as I can remember”, says Johnny Boyer of Boyer Allen Investment Management, a British hedge fund focused on Asia. The fund, which looked after $1.9 billion at its peak, faced the prospect of spending the next few years trying to claw its way back to pre-crisis asset levels. Instead the founders decided to shut the fund and give investors their money back.Others have also had enough. “I’ve been doing this for 15 years and I’ve never seen as many people give up as in the last three months,” says Luke Ellis of Man Group, a large listed fund. This trend is distinct from the round of closures in 2008. Then, managers were hit by investors’ redemptions and had no choice but to close; today many are electing to walk away.For some managers, the markets have become too stressful. Running a hedge fund today is “three times as much work for a third of the fun,” says one. But many are motivated by economics. Hedge funds typically get paid a 2% management fee on assets to cover expenses and a 20% performance fee on the returns they achieve for investors. Most funds do not earn performance fees unless they outperform their peak level or “high-water mark”. At the end of 2011, 67% of hedge funds were below their high-water marks, according to Credit Suisse, and 13% have not earned a performance fee since 2007 or earlier.Funds can survive off a...

Dear investor,In line with the rest of our industry we are making some changes to the language we use in our marketing and communications. We are writing this letter so we can explain these changes properly. Most importantly, Zilch Capital used to refer to itself as a “hedge fund” but 2008 made it embarrassingly clear we didn’t know how to hedge. At all. So like many others, we have embraced the title of “alternative asset manager”. It’s clunky but ambiguous enough to shield us from criticism next time around.We know we used to promise “absolute returns” (ie, that you would make money regardless of market conditions) but this pledge has proved impossible to honour. Instead we’re going to give you “risk-adjusted” returns or, failing that, “relative” returns. In years like 2011, when we delivered much less than the S&P 500, you may find that we don’t talk about returns at all.It is also time to move on from the concept of delivering “alpha”, the skill you’ve paid us such fat fees for. Upon reflection, we have decided that we’re actually much better at giving you “smart beta”. This term is already being touted at industry conferences and we hope shortly to be able to explain what it means. Like our peers we have also started talking a lot about how we are “multi-strategy” and “capital-structure agnostic”, and boasting about the benefits of our “unconstrained” investment...

CONSERVATIVE, cautious and cowardly: the Bank of Japan (BOJ) has endured all manner of insults over the years. Among the complaints from critics is the charge that the central bank could have boosted Japan’s economy if it had increased its balance-sheet more rapidly during the financial crisis.The BOJ believes there is only so much a central bank can do if businesses won’t borrow and banks won’t lend because growth prospects are meagre and firms are already stuffed with cash. But politicians are threatening to introduce laws to dilute the bank’s independence. And its counterparts are being embarrassingly dynamic. In January the Federal Reserve set an inflation target of 2% and promised near-zero interest rates until the end of 2014; the European Central Bank is lending money to euro-zone banks like there’s no tomorrow. Inaction is not an option.So on February 14th the BOJ tried to disprove its critics. First, it changed its wording on price stability. Instead of calling it an “understanding” among the nine individual policy-board members, it now refers to price stability as a “goal” of the institution. Importantly, the term in Japanese, medo, does not mean “target” but implies a vaguer aspiration, unsurprising given that Japanese bureaucrats must “take responsibility” if formal targets are not met. Nonetheless, it still marks progress.Second, the BOJ...

FIGURES on employment tend to encourage a black-or-white view of an economy. Either conditions are worsening and firms are shedding workers, as they did by the hundreds of thousands in 2008 and 2009, or times are improving and businesses are creating new jobs. Spirits leapt on February 3rd on news that America’s private businesses boosted their payrolls by 257,000 jobs in January, capping the country’s best 12-month employment performance in the private sector for over five years. But the headline figures represent just the tip of a large labour-market iceberg. Data provided by the relatively new Jobs Openings and Labour Turnover Survey (JOLTS) illuminate these depths.Even in the darkest of days, labour markets remain busy. Growing firms hire to expand and even shrinking businesses seek out workers to fill important vacant positions. In December 2008, for instance, overall American employment dropped by nearly 700,000 jobs. Yet in that month more workers—over 4.1m in total—were hired into new positions than in December of last year, when net payrolls grew by 203,000. During a relatively placid economic period like the mid-2000s, about 65% of all hiring is associated with what economists have dubbed “churn”—the job-to-job movement of workers through the labour force, which neither adds to nor subtracts from total employment. Of the 12m or so hires that occurred in a typical...

ALL that glisters is not gadolinium. Even so, that mineral and its 16 “rare earth” cousins—found in everything from batteries to catalytic converters—do help make the modern world go round. And, as the world’s manufacturers of such products have been reminded recently, China has a chokehold on their production.China’s grip on rare earths first made headlines in 2010, when it suddenly cut exports to Japan. But it had been squeezing the market for years. In 2000 it exported some 47,000 tonnes of the stuff; by 2010 it exported only about 30,000 tonnes. This decline appeared to be the result of unfair export taxes and quotas.

Mine, all mine

THE first round of Japanese investment into America, during the 1980s and 1990s, was notable for being so emotive. Extraordinary prices were paid to buy up supposedly gilt-edged assets including golf courses, investment firms and a large part of New York’s Rockefeller Centre. Sellers were delighted; the public horrified. The real victims were the Japanese buyers themselves, who suffered huge losses.Not every deal flopped. In particular, a minority investment in Goldman Sachs by Sumitomo Bank that was initially seen as an embarrassment in Japan (Sumitomo thought the stake was to be a partnership rather than a spigot for cash) turned out to deliver good returns. The lessons of that approach—a discreet profile, a minority stake, a focus on finance—may characterise the next wave of Japanese investment.Western banks need to raise equity capital to meet new regulatory hurdles. Other financial assets are being sold off as part of post-crisis restructurings. Japanese banks are relatively healthy, have high capital ratios and are deeply sceptical about their own ability to grow in Japan. That has led them once again to look outward, and not just to the Asian backyard.On January 18th Sumitomo Mitsui Financial Group, Japan’s second-largest financial institution and the current incarnation of the old Sumitomo Bank, paid $93m for a 5% stake in Moelis & Company, a niche investment...

“IT SUCKED,” says the head of investment banking at one of Europe’s biggest banks, reviewing the fourth quarter of 2011. That succinct assessment will take few by surprise. The sale and trading of bonds and shares slowed to a trickle last year. Analysts at Credit Suisse reckon that investment-banking revenues among the big American banks slumped by a quarter in 2011. Trading bonds, currencies and commodities (activities known as FICC) is the industry’s bread and butter: FICC revenues fell by about 15% in America. Things are even worse in Europe. Credit Suisse reckons that European investment banks will post a 43% drop in revenue for 2011. On February 2nd Deutsche Bank announced a fourth-quarter loss for its investment bank.The first few weeks of this year also look dire. Markets have recovered relative to December, but there has not been the usual January leap. Analysts at Citigroup gloomily predict a further 10% fall in FICC revenues in Europe this year.The question dogging the industry is whether these falls are temporary or permanent. “Trading goes up, trading goes down,” Jamie Dimon, the boss of JPMorgan Chase, told journalists in January. “When things come back these numbers will boom again and we’ll be geniuses, and it won’t be because we did anything, it will be because we stayed in the game.”

In "By hook or by crook" (January 14th 2012) we mistakenly said that write-downs had boosted BBVA's capital by €400 billion. We were a little out: the bank's capital rose by €400m. Sorry.