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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Julius Wong who wrote (163827)	10/17/2020 11:44:15 PM
From: TobagoJack	Read Replies (3) \| Respond to of 217732

Hmmmmnnn; this below is interesting, might be a bugle call, or a death wish. Time shall tell ...https://www.zerohedge.com/markets/worlds-most-bearish-hedge-fund-just-did-something-it-hasnt-done-8-yearsThe World's Most Bearish Hedge Fund Just Did Something It Hasn't Done In 8 Years At the start of 2012 Horseman Global did something which virtually none of its peers dared or would dare to do: it took its formerly 100% equity net long exposure to deep net short, launching an 8 year period in which the fund would be bearish month after month on stocks, yet as the monthly P&L table below shows, it also manged to generate impressive annual returns over this same period (with the exceptions of 2016 and 2019) despite constant central bank intervention pushing stocks relentlessly higher, largely thanks to the Fund's significant bond long position. Yet after a dismal 2019, in which fund CIO Russell Clark finally met his match in Powell as it full-on fought the Fed and the Fed won, resulting in a 35% drop last year, things changed dramatically at Horseman, which has since rebranded itself as Russell Clark Investment Management. First, as we reported back in April, the fund suddenly ditched its long-running bet on deflation, with Clark saying he used the opportunity offered by the Covid-19 crisis "to exit deflationary positions. We have sold all our government bonds, and I am now trying to short assets that have benefited from very low interest rates, wages and commodity prices, namely commercial property, restaurants and utilities (and potentially private equity)." World Bank: More Debt Relief Needed From Hedge Funds, China And yet, the fund was still net bearish on stocks, because as Clarke explained, "if inflation appears, then US markets are in big trouble. For me, the 1970s and stagflation beckons. Short bonds and long commodities look right, with a bias to shorting US equities. I see inflationary assets outperforming deflationary assets." Fast forward six months later, when things aren't working out quite as expected because in a year that had seen wild swing in the fund's P&L, September proved to be the worst month of 2020 for Clark, with the fund losing 9.25%, and cutting its return for the year by more than half to 8.75%. Worse, it also meant that the AUM for the Russell Clark Investment Management strategy had dropped to just $100 million, from $150MM at the start of the year. ... and was less than 20% of what it was at the start of 2019, which with a -34.9% return, would end up the worst year on record for Clark (in May of 2019, Bloomberg profiled Clark saying he is "betting it all on a market crash", which did in fact materialize... unfortunately several months too late to help the hedge fund CIO). But what we find most notable is that sometime in the past few months, Horseman, pardon Russell Clark, underwent a historic position and sentiment shift and after 8 years of being net short, the fund is now back on the bullish bandwagon with a 23.2% net long position (with no exposure to bonds). So what happened? Well, as is customary, Russell first gives a big picture view of what is going on in the hedge fund world, where it is hardly a secret, nothing works any more as central banks flipped the market on its head in their nuclear bomb response to the covid pandemic, and handed it to 16-year-old Robinhood daytraders on a silver platter. Needless to say, that made chasing momentum and consensus positioning critical, and crushed any contrarians who shied away from the herd. Sadly for Clark, he was among them, and the result has been a rollercoaster for both the fund, and Clark's investment positioning, with the fund manager claiming that Covid-19 not only "allowed central banks to short circuit the natural de-leveraging process", but also "literally turned the world upside down" making it extremely difficult for Clarke to "develop new ideas." Your fund lost 9.25% this month, from the long book and the currency book. My big thing, for what it is worth, is finding something that no one else knows about and then building a fund around that. Ideas like Ireland was not going to default on its bonds, or iron ore prices were going to fall, shale oil drillers will never make any money or mall REITS are shorts. Simple ideas, which you can then build structures around, that both make money and fill an investment need for clients. For that reason, I have tended to shy away from consensus ideas and momentum, unless it explicitly fits in with that big idea. In the last couple of years, the big idea was that clearinghouses were mispricing risk, market products that sold volatility would cause volatility to spike, and that this should result in a lot of financial bankruptcies and a significantly lower stock market. Covid-19 caused this to come to fore, but also allowed central banks to short circuit the natural de-leveraging process that would have occurred as a result. Usually I have a few ideas on the go, so that I can naturally move from one idea to another, but Covid-19 literally turned the world upside down, and so I have had to push myself harder than usual this year to develop new ideas. So what is the one unifying idea behind Clark's latest trades? As he says, "now the simple idea is that inflation is coming. All the inflation indicators that I look at; things like the Australian dollar, the Nikkei, Japanese Government Bond yields, the Transport index, Chinese Yuan and the CRB Raw Industrial Index, all say inflation but the loss in the fund this month says otherwise." In terms of specific trades, Clark had focused on the nat gas market whose rebalancing he thought was "signalling inflation." And certainly, there are signs of change there – but I can’t help noticing that it is Asian bond yields that are rising, not US bond yields, which is where you would think a rebalancing natural gas market would affect first." Perhaps there is a better place to bet on rising prices: Food. Towards the end of the month, I revisited my presentations and noticed that Chinese pork prices have been very strong and are at 6 times that of the US. Can Chinese food prices really cause inflation in the rest of Asia? The answer is probably yes, but whether that will be bad inflation or good inflation is hard to tell. Naturally, high food prices are negative for consumption, but Asia has more farmers than anywhere else in the world, and high crop prices have tended to create consumption booms in places like India, Indonesia, and the rest of ASEAN. If China starts to increase imports of food from Asia, it could be very economically beneficial. Still, as Asian bond yields have made it clear, "higher food price will cause bond yields to rise" according to Clark who adds that "food and food prices have been at the heart of every major Chinese revolution and crisis for the last 150 years. For that reason, I expect Chinese rates to stay high, and for the Chinese Yuan to keep appreciating." In short, Clark "started the month thinking that oil and gas prices were going to drive inflation, and ended the month thinking it will be food inflation." He is hardly alone, because as he noted, food exporting currencies are performing "surprisingly well, and food related stocks trading much better than oil and gas names." One key anchor to the fund's new food inflation obsession comes from none other than Warren Buffett according to Clark, who explains as follows: To answer one final question, how do I know that no one knows about food inflation? Well I just read a long article in The Economist, trying to understand why Warren Buffett bought the Japanese trading houses. The Economist had no idea of course. Japanese trading houses are the number one companies to benefit from food inflation in Asia. That is, I believe, why. If you don’t believe me, start googling about businesses that export pork, bananas or any other major food. We are moving to a portfolio that is long food, short bonds. One small caveat: last week we wrote " Food Shortage Simulation Predicts 400% Increase In Food Prices By 2030", so to say that "no one knows about food inflation" may be a bit of a stretch. Finally, Clark's latest dramatic portfolio reassessment means that "starting late September, and continuing in October", Clark is "moving our commodity longs to food related names." This is likely good news for the fund's remaining LPs as it also means is that Clark "can focus the fund down to fewer names on both the long side and short side, as I now have a better idea of what is going on, which should reduce volatility going forward."Two final observations: while the fund is net long some of the most inflation-sensitive sectors such as financials, basic materials, industrials and energy, it remains short the covid-impacted industries such as restaurants and transports; and while we assume the tech short is just a bet on mean reversion, the substantial short in utilities is just another way for the fund to go short Treasuries. Finally, in terms of geographic positioning, one can summarize Clark's latest view simply as "long Asia, short the US."

To: Julius Wong who wrote (163827)	10/18/2020 12:05:35 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217732

Mumble jumbo but of merit by proof of pudding ... latest Expanded Weekend U.S. Market Forecast Report, issue no. 3974 as of Friday, October 16th, 2020, is now available at www.technicalindicatorindex.com Today's Market Comments: We start with the vital statistics, then move onto the pattern forecasts for the markets, then the economy. Stocks were mixed Friday, on high volume, and narrow breadth. The Industrials closed up 112, Trannies closed down 152, the S&P flat, Techs down slightly. The day started with decent gains, but the markets gave up most of the gains into the close, forming a Shooting Star candlestick pattern on the daily charts, which is oftentimes followed by a down day or two. There were no changes to our key trend-finder indicators from Friday's price action. There is another phi mate turn date scheduled for next Friday, October 23rd, 2020, +/- a few days. The last phi mate turn date was ideally scheduled for October 1st +/- a few days, which ended up being a bottom on September 24th, the Industrials' bottom for the September decline at 26,537, 5 trading days early, a phi .619 from the November 1st, 2012 high and the January 14th, 2000 inflation adjusted all-time high. The Industrials look to be rising inside Primary degree wave (C ) up (which started at the September 2020 lows) of Cycle degree wave B-up, within the new Bear market from February 2020. This is the final rising phase for corrective Cycle degree wave B-up (which started at the March 2020 lows). See charts on pages 32 to 34. Within wave (C ) up, stocks are tracking a five subwave move for (C ) up that started at the September 2020 lows. The first subwave Intermediate degree wave 1-up completed October 12th. Since then the Industrials have been dropping inside a corrective wave 2-down. This is an a-down, b-up, c-down move. The final subwave c-down of 2-down may have started with the afternoon decline Friday, October 16th. Once subwave c-down bottoms, likely around our October 23rd phi mate turn date, a strong rally leg should start, wave 3-up of (C ) up. The S&P 500 and the NASDAQ 100 are tracking similar paths. Gold is inside a corrective Primary degree wave (2) down move that started in early August 2020. In the chart on page 48, we show a declining Bullish Wedge pattern that may be occurring for Gold. If so, Gold is in the final subwave E-down for the pattern, which has a possible downside price target of 1800 to 1825ish. Once complete, Gold should explode higher in Primary degree wave (3) up. The touch points are pretty good for this pattern, which lends some weight to this scenario. Mining stocks have also been correcting since early August in an extended sideways move. We show a chart on page 53 that continues to lack clarity as to whether this correction is nearing completion or has more downside coming. Once complete, Mining stocks should rise sharply. We have updated charts for Currencies, Oil, Treasuries and the VIX on pages 54 to 60. As for the fundamentals of the Economy, we learned Friday that the Federal Budget Deficit exploded to $3.1 trillion for fiscal year ending in 2020, which was the worst ever, more than three times greater than last year's $984 Billion deficit. It was also more than twice the previous all-time worst deficit, $1.4 trillion in 2009. The 2020 deficit was the highest percent of GDP since 1945, during WWII, at 15.2%. The only way out of this hyper deficit is to inflate out of it, which devalues all assets in the U.S. with extraordinary monetary expansion by the Fed; to raise taxes on Americans and Businesses to something that will tank everything into poverty; or to hope that the economy will suddenly grow at historically record levels starting immediately. You are President of the U.S. -- take your pick. We also learned U.S. Industrial Production, the output from factories, mines and utilities, fell 0.6% in September, per the Federal Reserve. We also learned that 55 million people in the U.S. now live in poverty, an increase of 8.0 million since May 2020, and an increase of 6.0 million since July 2020, according to several studies from Columbia University, The University of Chicago, and Notre Dame University. The poverty line is $26,000, anyone earning up to that amount is considered impoverished for purposes of these studies. We learned Thursday that Initial Jobless Claims rose to 898,000 last week, the most since late August. 10 million people are collecting unemployment benefits at this time. Interestingly, many retail establishments in our area of southeastern Pennsylvania can't find or keep workers. Now Hiring signs are all over the place. Many people are preferring the free money from the government instead. Welcome to socialism, the deliverer of shortages. Gold, Silver and Mining stocks were mixed and near the flat line Friday. The HUI key trend-finder indicators remain on a Buy signal, but are weakening. Our Blue Chip key trend-finder indicators generated a Neutral signal October 14th, 2020 and remain there Friday, October 16th, 2020. The Purchasing Power Indicator component triggered a Sell signal Wednesday, October 14th. The 14-day Stochastic Indicator generated a Buy on September 28th, 2020, and the 30 Day Stochastic Indicator generated a Buy on September 28th, 2020. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal. Our intermediate term Secondary Trend Indicator generated a Buy signal Wednesday, May 20th, and remains there Friday, October 16th, falling 4 points (out of a possible 9 points), to positive + 21. It will need to fall below negative - 5 for a new Sell signal. Demand Power Fell 3 to 434 Friday while Supply Pressure Fell 2 to 399, telling us Friday's Blue Chip price move was weak. This DP/SP Indicator moved to an Enter Long Signal October 5th, and remains there Friday, October 16th, 2020. The HUI generated a key trend-finder indicator Buy signal October 9th, as the HUI 30 Day Stochastic triggered a Buy signal October 9th, 2020, and our HUI Purchasing Power Indicator generated a Buy on October 9th, 2020. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator moved to an Enter Short signal August 21st. On Friday, October 16th, Demand Power Fell 4 to 383 while Supply Pressure Rose 2 to 395, telling us Friday's HUI decline was mild. DJIA/SPY PPI was Flat at negative -49.75, on a Sell DJIA 30 Day Stochastic Fast 80.00 Slow 79.33 On a Buy DJIA 14 Day Stochastic Fast 76.67 Slow 85.00 On a Buy DJIA % Above 30 Day Average 80.00 DJIA % Above 10 Day Average 63.33 DJIA % Above 5 Day Average 43.33 Secondary Trend Indicator Fell 4 to Positive + 21, On a Buy Demand Power Fell 3 to 434, Supply Pressure Fell 2 to 399 Buy McClellan Oscillator Fell to Positive + 8.25 McClellan Osc Summation Index + 2154.21 Plunge Protection Team Indicator -4.63, an "OFF" signal DJIA 10 Day Advance/Decline Indicator + 269.1 on a Buy NYSE New Highs 122 New Lows 9 Today's Technology NDX Market Comments: The NDX Short-term key Trend-finder Indicators generated a Neutral signal Wednesday, October 14th, 2020, and remain there October 16th, 2020. The NDX Purchasing Power Indicator generated a Sell on October 14th, 2020, the NDX 14 Day Stochastic triggered a Buy on October 8th, and the 30 Day Stochastic triggered a Buy signal on September 28th, 2020. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal. The NDX Demand Power / Supply Pressure Indicator moved to an Enter Long positions signal Wednesday, October 7th and remains there October 16th. On Friday, October 16th, Demand Power Fell 4 to 465, while Supply Pressure Fell 2 to 443, telling us Friday's decline was mild and due more to a lack of buying rather than a strong urge to sell, which is not Bearish at this time. The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal September 10th, 2020, and needs to fall below - 5.0 for a new Sell. It rose to positive + 27.4 on Friday, October 16th. NDX PPI Fell 2 to 231.11, On a Sell NDX 30 Day Stochastic Fast 82.93 Slow 81.95 On a Buy NDX 14 Day Stochastic Fast 76.19 Slow 83.33 On a Buy NDX 10 Day Advance/Decline Line Indicator + 27.4 On a Buy NDX Demand Power Fell 4 to 465, Supply Pressure Fell 2 to 443 Buy RUT PPI Fell 1 to + 94.46, on a Buy RUT 10 Day Advance/Decline Line Indicator + 306.1, On a Buy Today's Mining Stocks and Precious Metals Market Comments: Our HUI key trend-finder indicators moved to a Buy signal October 9th, 2020. HUI PPI Fell 2 to 283.31 on a Buy HUI 30 Day Stochastic Fast 40.00, Slow 50.56 on a Buy HUI Demand Power Fell 4 to 383; Supply Pressure Up 2 to 395 Buy McHugh's Market Forecasting and Trading Report and this Executive Summary