Hedge funds have struggled to outperform the market in 2016. According to the Barclay Hedge Fund Index, the average net return for hedge funds year to date is 3.43%, compared to 6.1% for the S&P 500. Throughout the second quarter and third quarter, the market has continued its heated pace of growth, even as several worrying trends signal a disconnect from economic reality. For one, nonfinancial-corporate profits from current production (operating income) declined from a 7.6% increase in the year ended June 2015 to a 9.3% contraction for the year ended June 2016. At the same time, nonfinancial corporate debt rose from 601% in the second quarter 2015 to 697% in the recent second quarter, the highest since 717% reached in second quarter 2010, according to Moody’s Analytics.