Macro Trade Of The Century: Gold, Yuan, & Global Stocks…” Now insiders are selling heavily again in early 2019.”

Saturday, March 16, 2019
By Paul Martin

by Kevin Smith and Tavi Costa via Crescat Capital,
Sat, 03/16/2019

Dear Investors:

At Crescat we remain positioned to capitalize on a downturn in the economic cycle. Global equity markets peaked in January 2018 while US markets peaked in September 2018. Crescat’s hedge funds were two of the world’s top performing funds in 2018 as a result of our bearish macro views and positioning last year. We are confident that was only the beginning of a downturn in asset prices from record global leverage and central-bank-driven asset bubbles for this cycle. US asset bubbles only just began to burst at the end of last year as one can see in the chart below.

Year to date, global stocks and corporate credit securities have rallied sharply while economic indicators have continued to deteriorate. This is setting global risk-asset markets up for another down-leg. We haven’t even had a recession yet to end the economic cycle while US stocks are still near record valuations across a breadth of measures. There is tremendous shorting opportunity ahead! With the current quarter, we are now in a tie with the 1990s for the longest US economic expansion ever. Crescat’s macro models show that the expansion is about to turn into a recession within the next several quarters based on an abundance of indicators.

How do we get to a recession? The US stock market and corporate credit bubble must burst first. That is how the business cycle works. It started in the fourth quarter, but that was only the beginning. How do bubbles burst? The smart money sells first from record valuations, then the rest of the world follows. Note in the chart below how insiders began selling heavily in early 2017. But the rest of the world did not follow. The stock market kept going higher. So, they sold again in early 2018. That time, the stock market finally began to falter. Global stocks peaked at that point for this cycle and kept going down. But the US market went to new highs again in September 2018. Now insiders are selling heavily again in early 2019. The third time should be the charm for the stubborn US market.

The Rest…HERE

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