Money Flow Trading Method along with Risk Management

https://www.zerohedge.com/markets/fa...-destiny-lower

Fade The Rally, The Dollar's Destiny Is Lower

https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg

BY TYLER DURDEN

FRIDAY, MAY 26, 2023 - 07:20 AM

Authored by Simon White, Bloomberg macro strategist,

Debt-ceiling worries are driving the dollar up for now, but real yields, the fiscal deficit and structural overvaluation favor the medium-term downtrend remaining intact.

All of the recent move higher in nominal yields (discussed here) has been driven by real yields. Inflation, erroneously, is seen as yesterday’s problem, with breakevens remaining near the lower end of their two-year range.

Higher real yields might be expected to be good for the dollar. The currency has indeed risen in recent weeks, but this is more to do with safe-haven demand in the event the debt ceiling becomes binding.

In fact, using real yields on their own to gauge the performance of the dollar risks oversimplification. Higher real yields aren’t an automatic boost for the currency.

To understand why, we must look at the real yield curve.
This gives us a proxy for the real return an FX-hedged overseas investor would get for buying longer-term US debt. Dollar returns at the margin are driven by this, as can be seen in the robust leading relationship in the chart below.
https://assets.zerohedge.com/s3fs-pu...?itok=agTQ5p2I

The chart also shows that it is short-term real yields that have been rising more than longer-term real yields, flattening the real-yield curve, a process that started last summer ahead of the dollar’s peak in October. The flattening trend is intact, strongly suggesting the dollar will continue its decline once the debt ceiling is out of the way.

This cyclical outlook accords with two important structural factors that are dollar negative.
The first the US’s yawning fiscal deficit. At ~7% of GDP it is among the largest of major countries, and is historically wide - even before the US has entered a recession.
https://assets.zerohedge.com/s3fs-pu...?itok=gOieP0Ej

Furthermore, the US currency remains one of the most overvalued. The dollar’s real-effective exchange rate continues to look expensive on a long-term basis, even after the last eight-months’ sell-off.
https://assets.zerohedge.com/s3fs-pu...?itok=VXJKhzo1

Tellingly, the dollar’s weakness is not eliciting the typical demand for trade, cross-border credit and FX reserves it would normally, strongly suggesting its dominance has peaked.

Banking Crisis Not Accidental: It’s the Last Leg of the Fed’s Master Plan Warns Jekyll Author.
https://mail.proton.me/api/core/v4/i...tyqpscg3qvzj3t
Gregory’s Newsletter is free today. But if you enjoyed this post, you can tell Gregory’s Newsletter that their writing is valuable by pledging a future subscription. You won't be charged unless they enable payments.

https://www.reuters.com/markets/us/w...ts-2023-05-28/

https://finviz.com/futures_charts.ashx?p=i5&t=YM

https://traderfeed.blogspot.com/2023...rading_28.html

Sunday, May 28, 2023
The Greatest Challenges of Trading Psychology - II: Ever-Changing Markets

https://blogger.googleusercontent.co...geOften.jp.jpg
The first post in this series took a look at how one of the greatest challenges to our trading psychology comes from failing to navigate the process of expertise development. Too often, traders put their capital at risk before they have properly undergone a process of learning grounded in deliberate practice.

In many performance fields that learning process continues throughout one's career. As soon as a surgeon masters surgical techniques, new approaches to surgery (microsurgery, robotic surgery) come along and promise better outcomes. That means that physicians always participate in continuing education, updating and upgrading their skills.

Similarly, in business, consumer interests, needs, and demands are ever-changing. As technology changes, what consumers wanted yesterday (high performing cars) ends up being very different from what they want today (electric motors) and tomorrow (self-driving vehicles guided by AI). The successful business thus always reinvents itself.

Financial markets are ever-changing, and that means that any single "edge" in trading cannot be permanent. A stationary time series is one that is relatively stable with a constant mean and standard deviation. Tosses of a fair coin form a stationary time series. I recent asked ChatGPT4 whether financial time series in the stock market are stationary and the response, in part, was:

"No, stock market time series are generally not stationary. Stationarity refers to a time series that exhibits constant statistical properties over time, such as constant mean, constant variance and constant autocovariance structure. In the context of the stock market, prices and returns tend to exhibit non-stationary behavior.

Stock market prices often show trends, meaning they have a tendency to increase or decrease over time. Additionally, stock market returns typically exhibit volatility clustering, where periods of high volatility are followed by periods of low volatility, and vice versa. These characteristics violate the assumption of stationarity."

What this means in practice is that the patterns exhibited by the market at one point in time can be very different from other times. Any trading "setup" that worked in the recent past has no guarantee of working in the future. Volumes change as market participants change. That alters volatility and trends. Just like the surgeon or business person, the successful trader has to reinvent themselves to find new sources of "edge". Failure to detect market changes and adapt to those is one of the greatest challenges to our trading psychology. In such cases, it's not simply that our psychology undermines our trading. Our inability to recognize market shifts creates our drawdowns--and that undermines our psychology.

Many traders ground their edge in a particular set of market conditions: trend, momentum, bullish or bearish movement, etc. This makes these traders inherently vulnerable. The real edge in financial markets is the ability to detect when markets change and identify the nature of that change. Too many traders simply label markets as "directional" or "choppy". They make money in the directional markets and lose money in the chop. This has recently been the case among many stock market traders.

A more promising view is that there are at least three kinds of markets: trending, cycling, and rotating. It is often the rotating market that appears to be choppy and impossible to trade. If, however, we recognize the nature of the rotation, then we can trade trends and cycles in the strongest and weakest market sectors. (Consider tech stocks and real estate shares in the recent market, for example). In the rotational market, we have to look under the hood to see what is trading in coherent patterns. That might point us to AI stocks; it might point us to regional banking shares. In other macro markets (FX, rates, commodities), rotational conditions might lead us to trade in relative terms rather than outright (long West Texas Intermediate crude vs. short Brent crude, for example) or trade spreads within a given asset class (trading shapes of the yield curve in rates, for instance).

A successful approach to trading would not first look for trends or reversals. It would look for conditions of stationarity. We would first identify what is trading meaningfully. Not one in ten traders do that. They look for *their* kinds of markets and impose their meaning onto what they're trading. That is fertile ground for emotional upheaval.

Because markets are ever-changing, we must be ever-flexible. Just as a football team adjusts its offense to field conditions and the defense they're facing; just as a restaurant adjusts its menu to adapt to a new breed of young diner, we have to adjust our trading in the face of markets that sometimes trade in trends, sometimes in cycles, and sometimes rotationally.

An open and flexible mindset is best positioned to be a positive mindset.

Further Reading:

How to Adapt to Changing Markets

Crescat Capital May Research Letter - Gold: A Far Superior AlternativeMay 30, 2023 9:30 PM
Crescat Capital

Summary

1. The inflated valuation of financial assets hinges on a low cost of capital environment, making it a crucial factor in the overall economy.
2. The US government is likely to default on its debt if the debt ceiling is not raised.
3. A default on US debt would have a devastating impact on the global economy.
4. Gold is a safe haven asset that can protect investors from the risks of a financial crisis.

https://static.seekingalpha.com/cdn/...o=getty-c-w750

https://static.seekingalpha.com/uplo...1x681.png.webp

The US debt ceiling issues likely present a much greater risk to financial markets than currently perceived by investors. Although prior concerns related to this matter have proven to be mostly peripheral, today’s set of circumstances is different. The possibility of a technical default looms once again, however, our main concern is the potential macroeconomic consequences following a resolution between the political parties. Allow us to explain.

During periods that require a debt ceiling extension, the Treasury cash balance for daily operations tends to be at extremely low levels, which is the case again today. Once an agreement is reached, the government must issue debt promptly in order to sustain its functions due to the persistent fiscal deficit imbalance. Over time, the issuance of Treasuries has been increasing steadily, and this time around, we anticipate an unprecedented surge in the amount of debt being raised in the ensuing months. All else equal, this should exert major downward pressure on the price of these fixed-income instruments.

In the past, the lack of inflation concerns, the willingness of foreign trade partners to buy rather than sell Treasuries, the absence of domestic bank failures resulting from their holdings of these instruments, and the Fed’s highly accommodative stance allowed the market to smoothly absorb the growing Treasury supply without significant disruptions. Today, given the adverse macro environment, the emergence of a supply-side problem requires much greater attention.
It cannot be overstated that the US Treasury market serves as the cornerstone of the entire financial system. The inflated valuation of financial assets hinges on a low cost of capital environment, making it a crucial factor in the overall economy.

https://static.seekingalpha.com/uplo...e1-42.png.webp


Foreign Buyers Are Far Gone
It is worth noting that the recent positive developments related to a potential resolution of the debt ceiling have coincided with upward pressure on long-term interest rates. Market participants are beginning to recognize that the true risk this time around lies not in the failure to reach an agreement, but rather in the escalating and concerning nature of the debt problem. This concern is further amplified by the diminishing availability of buyers for Treasury securities.

In the last three years, the responsibility of absorbing this debt fell on the Fed and US banks, but now both entities have withdrawn from that role. Additionally, as shown in the chart below, foreign investors have not been net purchasers of US Treasuries despite the substantial influx of issuances in the last decade. The current lack of demand is indeed a growing problem that may ultimately necessitate the intervention of the Fed as the buyer of last resort.

We can recall the historic selloff of UK Gilts last year, triggered by a tax cut announcement that investors perceived as posing a significant risk to the country’s financial stability. This situation led the Bank of England to reverse its quantitative tightening (QT) course and intervene as a buyer of UK bonds.
In our strong opinion, the US is primed to have its own BOE moment.

https://static.seekingalpha.com/uplo...e3-39.png.webp


Central Banks Reversed Their Stance Once Again
Given the dire levels of global debt, foreign central banks are compelled to prioritize enhancing the quality of their international reserves to support their monetary systems. In essence, these institutions function similarly to traditional businesses that require high-quality assets on their balance sheets to establish financial stability.

Following the end of the gold standard in 1971, central banks continued to purchase gold for the next decade. At its peak, gold holdings constituted 72% of their overall balance sheet assets. Subsequently, due to a prolonged period of increase in interest rates, central banks opted to accumulate US debt at historically attractive valuations. This occurred during a time when the world economy was also progressively becoming more globalized, which significantly fueled the substantial demand for Treasury instruments. Consequently, these instruments experienced nearly 30 years of continuous appreciation. Other notable institutions such as pension and endowment funds soon followed suit, resulting in the highly favorable 60/40 portfolio position from the early 1980s until recently. This created a structural effect where the high demand for Treasuries resulted in decreased interest rates, consequently contributing to inflated equity market valuations.

Now, foreign central banks have reversed their stance again. They are significant buyers of gold while some have become major sellers of US debt. Escalating geopolitical conflict has increased the importance of owning a neutral asset with no counterparty risk that also carries centuries of credible history as a haven. Gold is the only asset that qualifies. Central banks have thus pivoted to being substantial buyers over the last several years leading to a rising percentage of gold ownership on their balance sheets. As a percentage of foreign reserves, if this measurement were to return to its historical average of 40%, all else equal, it would be an injection of approximately $3.2 trillion of new capital into the gold market.

Price would have to be the reconciling factor in accommodating this demand. Since $3.2 trillion is 25% of the total value of all above-ground gold, or essentially all the gold ever mined, which now stands at $13 trillion, a 25% upward adjustment in price would get the gold price to $2,500 an ounce, Crescat’s minimum one-year target. More importantly, this dynamic is expected to prompt other major institutions and individual investors to follow suit, triggering an even greater influx of capital into the gold and precious metals markets. We expect much of this new demand will flow into the mining industry where the deep value is substantially more compelling in this macro environment with multi-fold appreciation potential in companies with big, viable new and incipient discoveries.

https://static.seekingalpha.com/uplo...e4-34.png.webp


A Rude Awakening for 60/40 Portfolios
Market correlations undergo changes when the macroeconomic regime itself undergoes a shift. Traditional 60/40 portfolios experienced a rude awakening in 2022, which likely marked a turning point in the interrelationship of asset classes. While both the equity and bond markets faced challenges simultaneously, gold showed exceptional resilience. This recent market behavior is reminiscent of the other inflationary periods, particularly the 1970s, although the circumstances then were significantly different from today. Given the substantial levels of debt and imbalances in asset valuations, we feel it is unlikely for interest rates to rise in the same manner as they did in the 1970s over the next decade without causing a financial calamity.

Therefore, in a world where policymakers must inevitably intervene to suppress the cost of debt, irrespective of varying perspectives on the potential effectiveness of such actions, gold would likely emerge as a key monetary asset to own carrying centuries of credibility as hard money. This is particularly relevant today as the valuation of US Treasuries remains historically expensive.

It is worth noting that during the 1970s, US 10-year interest rates averaged around 7.5%, making long-term Treasuries significantly more appealing in terms of valuation, with a price-to-earnings (P/E) ratio of 13x. In contrast, in the present day, with a P/E ratio of 28x, if the rationale for owning these instruments is solely based on the premise that the system cannot endure substantially higher interest rates, then gold would be a far superior choice.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


A Growing Debt Problem, But This Time Gold Prices Are Unpegged
While the 1940s serve as an important historical parallel due to the seriousness of the current debt issue, there is a significant distinction: during that period, gold was effectively tied to the US dollar, rendering it an impractical investment alternative. Today, with prices unpegged, it is highly probable that capital will divert from US Treasuries and flow into gold.

https://static.seekingalpha.com/uplo...e6-34.png.webp


Triple Tops Almost Never Work
We note that gold is the only macro asset trading near record prices today. While there are inexorable fundamental drivers to push it much higher, from a technical perspective, the metal has recently encountered historical resistance after re-testing previous highs. More importantly, triple-top formations often prove to be temporary with prices eventually breaking out to the upside in a significant way.

Once the metal decisively achieves record prices, it is likely to spark a new gold cycle. These cycles, characterized by long-term trends, have occurred only twice in the past 50 years: during the 1970s and the 2000s. The current market conditions present an exceptionally strong array of fundamental and macro drivers for precious metals, arguably the most robust in history, which include:

1. Central banks were compelled to purchase gold to enhance the quality of their foreign exchange reserves;
2. The likelihood of global gold production entering another secular decline, akin to the bull markets of the 1970s and 2000s which supports the supply side;
3. Failing 60/40 portfolios seeking alternative safe-haven assets;
4. Inflation expectations exceeding the historical average for this decade, driving the need for tangible assets;
5. Commodities are historically undervalued compared to financial assets;
6. A significant number of yield-spread inversions in the US Treasury curve, surpassing the 70% threshold, making a compelling case for owning gold and reducing exposure to overvalued stocks;
7. Major mining companies inclined to ultra-conservatism, prioritizing returning capital to shareholders over investing in the current and future production of precious metals;
8. Insufficient investments in exploration resulted in a lack of new gold and silver discoveries, compounded by the geological challenges of finding new mineral deposits;
9. ESG mandates and government pressure deterring the development of new resource projects;
10. Institutional investors pressuring traditional gold-focused companies to pivot to green metals;
11. Doubt surrounding precious metals due to the surge of speculative interest in digital assets, totally unwarranted due to the credibility and historical significance of gold as the one enduring and truly scarce monetary asset in contrast to a plethora of easy-to-produce digital assets; and
12. The US and other developed economies are currently facing a trifecta of macro imbalances:
    1. The debt problem reminiscent of the 1940s
    2. A speculative environment like the late 1920s and 1990s
    3. Inflationary concerns akin to the 1970s

    
    
    

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Structural Inflationary Forces Abound
Having benefited greatly from globalization, cheap labor, and abundant natural resources, it appears that we have entered a new economic regime. The pandemic crisis exposed several long-standing macroeconomic forces that are now beginning to permeate the economy. While the growth of consumer prices for goods and services has slowed, it is important to remember that inflationary periods tend to develop in waves.

Given the structural nature of many of today’s drivers, we believe it is only a matter of time before the next wave of inflation ignites.
The percentage of labor costs relative to corporate profits is starting to rise from historically low levels. Although a near-term recession could potentially slow down the pace of wage growth, structurally speaking, considering the persistently high cost of living, it is highly likely that we are witnessing the early stages of a wage-price spiral. This is especially relevant among the bottom 50% of households in developed economies.

Moreover, the availability of cheap labor was largely driven by globalization trends, which have decidedly shifted as geopolitical risks have increased worldwide. Since the souring of US-China relations in 2016, deglobalization trends have escalated in nearly all regions of the world. As a result, countries are prioritizing self-reliance at the expense of higher costs.

Tightening monetary conditions have made it more challenging for commodity businesses to access capital for new resource projects. Although the upward pressure on commodity prices has eased, the underlying issue of constrained resource availability has not been resolved. While policies like the selling of US strategic petroleum reserves may have a short-term downward impact on prices, it has an opposing and potentially more deleterious long-term effect. We believe it is only a matter of time before significant upward pressure on commodity prices resumes.

Furthermore, due to large social programs, investments in the green revolution, infrastructure construction, and defense spending, the US fiscal agenda has become highly extended. In fact, today’s government deficit is the largest in history relative to how low the unemployment rate is. The current situation can be viewed as one of the most conflicting policies in history, as the Federal Reserve is raising interest rates to address inflationary pressures while the government continues to engage in significant levels of expenditure. History has shown us repeatedly that excessive fiscal spending has inflationary consequences.
The recent technological advancements in artificial intelligence (AI) have the potential to be a countervailing and positive deflationary force in the long run, but AI is only in its early disruptive phases. It is an emotional factor driving the current speculation in popular tech stocks, but it not alleviating the structural inflationary pressures from more pressing issues like reckless deficit spending, the transition to a green economy, scarcity of natural resources, and trade deglobalization.

Additionally, the deceleration of inflation from peak levels has been rather slow when compared to other periods in history. To put it into perspective, we just had 10 consecutive monthly declines in CPI year-over-year and the index is still standing at 4.9%. Interestingly, the only other time this happened was during the aftermath of the 1919 Spanish Flu. Back then, CPI had a 12-month streak of declining year-over-year data, marking a bottom at the deeply deflationary rate of -15.8%. The current macro environment suggests that inflation is significantly ingrained in the economy.

https://static.seekingalpha.com/uplo...e8-27.png.webp


The Long-term Demand Thesis for Commodities
In our opinion, this is one of the strongest macro setups for the long-term demand for commodities ever. For the past two decades, US industrial production has remained stagnant, despite experiencing exponential growth for the preceding 80 years. This stagnation is reflected in the fact that today’s level of production is equivalent to that of the early 2000s.

So, what changed since then?

China’s accession to the World Trading Organization in 2001 led to a substantial increase in its global export share from 2% to 15% today. As deglobalization continues to gather momentum, developed economies are likely to reinvigorate their manufacturing capabilities to mitigate geopolitical risks and lessen their reliance on authoritarian countries such as China.

As a result, major economies are expected to invest heavily in the reconstruction and modernization of their industrial infrastructure, creating a strong tailwind for the already undersupplied commodity market. Remember what China’s infrastructure spree meant to the natural resource industries in the 2000s? This time it should be larger because it will be driven by the G7 and its allies.

The current situation presents a unique opportunity for natural resource industries to perform exceptionally well, particularly at a time when these companies remain a fraction of the overall global equity market.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Gold Becomes Attractive When Financial Assets Are Expensive
The valuation cycle of the overall equity market often follows the gold cycle itself, and consequently, commodities are highly interconnected. Using one of the most traditional ways of assessing the state of the market, also Warren Buffet’s favorite indicator, the total market cap of the overall stock market as a percentage of GDP is currently slightly above where it was at the peak of the Technology Bubble in 2000. Historically, such excessive levels in this measurement would suggest that a gold cycle, and a secular bull market in commodities, are both underway.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


The Most Relevant Macro Indicator
It is remarkable to observe how the gold-to-S&P 500 (SP500) ratio is once again aligning with its historical performance, following significant distortions across the US Treasury curve. Our empirical analysis indicates that the current outperformance of precious metals compared to the overall equity market is still in its early stages. Specifically, looking back to 1970, this ratio has tended to appreciate by an average of 72% over the next two years after the US Treasury curve inverts by more than 70%. This indicator issued a warning signal in November 2022. As depicted by the yellow line, note the strong acceleration in return initiating at the 8th-month mark, which would imply the end of July in today’s scenario.

Considering the historically high valuations of financial assets, particularly when compared to commodities and gold, it is highly likely that both components of this trade could perform, meaning that precious metals could rise while equity markets decline. This scenario resembles previous instances such as the stagflationary crisis of 1973-1974 and the tech bust in the early 2000s during which the gold-to-S&P 500 ratio performed nearly twice as strongly as during other periods as illustrated by the blue line in the graph.

Overall, these historical trends suggest the potential for a significant opportunity in precious metals relative to equities given the current market environment.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


A 2000-Like Meltup
The resemblance between the chart below, depicting the Nasdaq 100 (COMP.IND) during the year 2000, and the current melt-up in US equities is indeed striking. However, what if we were to tell you that for the next 2 years, the white line collapsed by 80%?

By no means we are suggesting that history will repeat itself exactly, but the behavior of today’s market appears remarkably similar to the still-early stages of the tech bust. It is difficult to recall a time when investors were more complacent, especially considering that we are already one year into one of the steepest rate hikes in history. This is compounded by the fact that a multitude of significant issues is currently unfolding, presenting a long list of concerns that warrant attention:

1. Corporate fundamentals deteriorating;
2. More than 90% of the entire Treasury curve is already inverted;
3. Soft data is mostly at recessionary levels;
4. Macro data starting to contract;
5. Banks severely tightening their lending standards; and
6. M2 money supply now falling the most in 60 years.

Never mind that as soon as these debt ceiling discussions are over, the government will be dumping at least another $1T worth of Treasuries into the market. This comes after a banking crisis triggered by a major decline in the value of these debt instruments. Now, ask yourself:
Are we appropriately pricing risk in this environment?

The Volatility Index (VIX) is at a mere 16, credit spreads are sub 200bps, and stocks have one of their most extreme valuations in history. To be clear, the recent market rally has been almost entirely driven by mega-cap tech stocks.
A wise market timer once said, “Beware when the generals lead and the soldiers are not following”.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Tech Stocks Are Way Over Extended
The notion that a potential reversal in the Fed policy back to easing mode would help to fuel the technology sector again appears to be broadly misguided. If interest rates were to be significantly lowered again, it would likely occur in a difficult macroeconomic environment where the fundamentals of tech companies would also be under severe pressure. It is worth mentioning that their overall earnings have already started to contract.

From our perspective, the cost of capital for corporations is in the midst of a structural increase that is not transitory. It should result in continued margin pressure making it increasingly challenging to justify today’s highly inflated valuations across the broad market, outside of undervalued resource industries.

Valuations matter, and this idea that tech companies will continue to exponentially improve their fundamentals is a likely false extrapolation of a past trend that is unsustainable, especially considering the remarkable earnings growth witnessed during the 2010s. Investors seem to be valuing businesses as if we are on the cusp of another decade of robust growth and low-cost capital. We vehemently disagree with this perspective. Furthermore, the conventional thought that the market has already factored in the potential risks of a significant economic downturn is entirely counter to the balance of evidence across our arsenal of macro and fundamental indicators.

What transpired in 2022 in equity markets was merely the initial duration shock caused by a sharp increase in long-term Treasury yields. We have yet to experience a further decline in prices to reflect worsening corporate fundamentals and significantly rising credit spreads.

The chart below should be on everyone’s mind. The tech sector’s outperformance compared to the broader market has never been more extreme. As shown in the chart below, the ratio between tech stocks and the S&P 500 is now over two standard deviations above the historical mean. During other times when this indicator also reached such high levels, the tech sector significantly underperformed in the following decade. It’s unlikely that this time will be any different. When discount rates are structurally rising, the significance of valuations becomes more pronounced, especially when the growth rates in these businesses are substantially deteriorating.

https://static.seekingalpha.com/uplo...ure15.jpg.webp


A Critical Juncture in Corporate Fundamentals
There has been a significant contraction in diluted earnings, despite basic EPS being near all-time highs. Like the economy, corporate fundamentals undergo short and long-term cycles, and we are likely at the peak of another prolonged earnings growth period, which appears to be unsustainable.
The complacency of market participants during times of sustained expansion leads them to assume that the same level of exceptional growth will continue, but historical evidence suggests otherwise. It is important to highlight that the previous decade, the 2010s, witnessed an unprecedented surge in earnings. A similar development occurred during the 1920s and 1990s. Both decades experienced exceptional economic growth that was followed by significant contractions during the Great Depression and the Tech Bust.

Today, the risk of major deterioration in corporate fundamentals will likely be attributed to the mounting pressure from escalating labor and material costs, deglobalization problems, as well as the substantially higher cost of capital. Note that on the chart below, the aggregate earnings per share for the S&P 500 index has been confined within a rising 70-year channel. The upper part of this range historically marks critical turning points. At peak levels today, we believe we are at another key moment.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


When Earnings Turn, Revenues Are Next
Thus far, one of the key takeaways from this earnings season is that profits have begun to disappoint while revenues have remained resilient. This is a common trend during a business cycle downturn. According to historical data, changes in EPS tend to precede changes in top-line growth by approximately one quarter. Recent reports indicate that corporate profits have fallen by 13%. By comparing this trend to previous hard-landing scenarios, such as the Tech Bust and the Global Financial Crisis, earnings contracted by 71% and 54%, respectively.

There is a reasonably high chance of a similar macroeconomic event unfolding this time, and it is evident that today’s valuation of the overall equity market still does not factor in this significant risk. It is important to keep in mind that the current market and fundamental downturn started from one of the most expensive stock markets in history and therefore has a substantial further downside in the stagflationary hard landing scenario that we envision.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


A Bear Market Rally Fueled by Looser Financial Conditions
Interest rates and financial conditions have been one of the primary factors affecting the recent moves in US equities, particularly during inflection points. Given these macro correlations, the potential for an increase in 10-year yields from current levels raises fundamental questions about the stability of financial markets.
To be more specific, the debt ceiling issue is setting the stage for one of the largest Treasury issuances in history. As the interest from significant buyers of US debt continues to decline and secular inflationary pressures persist, it is natural to wonder how the market will receive this flood of Treasuries.

Although investors have attributed the rise in 10-year yields in the last 2 years to inflationary factors, the surge in supply was arguably even more impactful. Keep in mind that every financial asset is intricately connected to US Treasuries.
For instance, the substantial decline in 10-year yields year-to-date has provided enormous support to long-duration assets, especially megacap stocks, which have accounted for nearly the entire gains in the S&P 500 so far this year. Our view is that long-term yields will experience upward pressure in the upcoming summer months, which could potentially result in significant implications for financial markets, with a particular impact on corporate bonds, megacap stocks, and private equity funds.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Megacap Techs At Risk
Valuation imbalances take time to deflate. After the initial phase of the bear market, complacency among investors has resumed at full steam while fundamentals continue to weaken. Megacap technology stocks are perceived as long-term future growth stocks today so they are priced like ultra-long-duration assets. The assumed future high long-term growth is also another important factor contributing to the overvaluation. Neither the likely crimped future growth of these mature businesses nor the higher cost of capital is being discounted. Hence, there is still extraordinary downside risk for these overly popular and over-owned investments collectively in the unfolding macro environment.

https://static.seekingalpha.com/uplo...ure21.jpg.webp


Nvidia (NVDA): The Clear AI Winner to Everyone Now
It is very clear to us that Artificial Intelligence is in the speculative froth stage. Just like the Internet bubble in 2000, from an investment standpoint, we the think biggest threat from AI is to investors in the abundance of hyped-up overvalued technology businesses that are all perceived to be big future winners, even perhaps among the biggest past AI market share winners and perceived juggernauts. At current valuations, the tech stock leaders of the unprecedented prior 14-year cycle, who all claim AI as a key driver of their future business model, collectively have much more to lose than to gain in the ultimate reordering. Too many of these past tech winners are perceived to be big future winners once again in the emerging AI battle, which is simply not how it works. The really big future winners in AI are likely to be the much earlier-stage businesses that are highly successful in applying AI technology in totally new and disruptive ways. The truth is that the investing world at large has absolutely no clue who these companies are going to be yet. As historical evidence to support this thesis, two of the biggest disrupters from the Internet era were Google (GOOG, GOOGL) and Facebook (META). Both these companies did not even emerge until AFTER the tech bust.

We would like to point out that Crescat featured Nvidia in its July 2014 investor letter and recommended it at a value investing conference to a group of money managers in June 2014 at a price of $4.73/share. That was the time to buy NVDA based on our model score and deep-dive fundamental analysis to get ahead of the AI craze, and we did it across our client portfolios. It led to an entire Rise of the Machines macro theme at Crescat. Nvidia went on to be the number one performing stock in the S&P 500 for each of the next three years straight. We sold it after a 5-bagger based on a deteriorating model score. In hindsight, we sold too soon. If we had held it until now, it could have been an 80-bagger. Such is the curse of the too-extreme value investor, which rest assured, we are still trying to learn from and improve on. For now, with just under a $1 trillion market cap and a P/E of 184, we believe the stock has overshot. Nvidia scores only in the 44th percentile in our overall fundamental model rank today and a low 11th percentile in our more-narrow value-rank component. We would caution strongly against buying it here.

https://static.seekingalpha.com/uplo...22-16.png.webp


FAANG Stocks Facing Secular Decline in Revenue Growth
All FAANG stocks have reported earnings now, and median revenue growth confirms a gradual long-term declining trend, which is now approaching negative levels. To be clear, this data is calculated in nominal terms. In other words, the recent upsurge in consumer prices due to inflation has significantly contributed to their top line. Real revenue growth is already substantially negative.

Investors continue to praise these companies for their defensive growth stock properties given the supposed stability and predictable nature of their businesses. The reality, however, is that FAANG still averages high double-digit P/E multiples and offers little to no growth in revenue and declining profits, which look even worse after inflation. In our view, what is transpiring is that these stocks, which indeed had been great growth stocks in the prior economic cycle, are now revealing their cyclical nature in their current much larger state. In other words, their businesses are vulnerable to stagflationary economic pressures today which is counter to the defensive thesis. The bigger point is that the popular large and mega-cap tech growth stocks of the last economic cycle look much more like cyclical stocks today and pose a much greater risk to overall markets than is currently acknowledged.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


From Cash Cow to a Cash Bleeding Business
There’s been a clear fundamental shift in Amazon in the last couple of years. Their business has severely changed from being highly profitable to now experiencing major free cash-flow losses to a degree that we have never seen before. Even though their top-line growth has been stalling, the stock still trades at an incredibly high multiple of earnings (110x), which seems completely unreasonable. It is noteworthy that other megacap companies are also struggling with the same issue of hitting a ceiling in terms of their revenue growth potential, while still trading at historically expensive multiples. Discount rates better not stay at their current elevated levels, otherwise, mega caps will likely be under severe pressure to be drastically re-priced.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Top Line Also Under Pressure
To note, Amazon’s (AMZN) earnings just collapsed by ~50% YoY and the stock still trades at 115x earnings with virtually no revenue growth in real terms.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Why Bother Buying Corporate Bonds Yielding Less Than Risk-Free Rate?
Corporate bonds yield less than the Fed Funds rate today. Such a depressed spread wasn’t even the case during the peak of the tech or housing bubble. This begs the question, why would anyone take significant extra risk to invest in these instruments?
During the Global Financial Crisis, credit spreads surged from almost 0% to 8.10% at the worst of times. Wait until these companies go back to the market and start refinancing their debt at significantly higher interest rates. Hard landings occur alongside large credit events, and we have yet to experience a blowout in corporate spreads as the economic downturn develops.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


The Cost of Debt Is Structurally Rising While Equity Volatility Remains Suppressed
Junk bond yields are materially diverging from overall equity volatility, which appears to be unreasonably suppressed. To put this into perspective, the last time junk bonds yielded near the current levels, the VIX was hovering around 50. Today, equity volatility is at the same level as it was at the height of the S&P 500 in December 2021.

High-yield bonds are not the only instruments presenting this issue. Investment-grade bond yields are also elevated and completely disconnected from VIX levels, which are now at 2-year lows. Assessing the relevance of historical events, the current high multiples in US equity markets have not yet factored in the potential impact of a contracting economy and a cost of capital that exceeds the historical average. Hence, the existing low volatility among overall stocks is unwarranted and poised to rise significantly.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Options Craze
Call option volumes surged again to all-time highs this last quarter. This level of interest in derivatives is highly associated with the current retail trading frenzy. To be clear, this is not representative of a market bottom. Yes, the explosive growth in very short-term contracts also played a role, but broadly speaking, this is one of the most speculative environments in history.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Soft Data at Recessionary Levels
This business outlook index by the Philadelphia Fed clearly deserves more attention. The survey shows another sharp drop-in economic activity, approaching historical lows. This indicator has consistently foreshadowed economic downturns when reaching similarly depressing levels in the past 50 years.
To add, the current tightening of lending conditions among banking institutions is likely to exacerbate the risk of a recession in corporate earnings. Despite this, credit spreads at 2% and VIX below 20% do not accurately reflect the severity of the situation, and both are poised to rise significantly from today’s levels.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Business Loans Contracting
Commercial and industrial loans just had one of their worst 2-month contractions in history. The only other times we have experienced a similar problem was during the three last economic recessions. While the annual growth of business loans remains positive, it’s crucial to emphasize the short-term changes given the developments of the recent banking crisis. At a time when corporate fundamentals are weakening and the risk of a recession is looming, financial institutions are being compelled to tighten their lending conditions.
Let us not forget that the yield curve has been warning us all along. In November, more than 70% of the entire Treasury curve inverted, which is a signal that has never failed in forecasting severe economic downturns.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


QT Picking Up Steam
The Fed’s holdings of US Treasuries had its largest weekly decline in history. While the credit support for the banks remains in place, the Fed is letting its security holdings mature at the fastest pace ever. This is not positive for the overall Treasury market, which is likely to be under severe pressure again given the massive amount of government debt issuances underway. We are likely experiencing a tectonic shift away from crowded 60/40 portfolios. US Treasuries, corporate bonds, technology stocks, and historically overvalued long-duration assets are at the heart of this transition and may suffer as a result.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Strong Jobs Market?
While the unemployment rate remains sub 4%, the number of permanent job losses has begun to rise significantly. The latest 2-month increase was as steep as in every recession that has transpired over the last 30 years. The prevalence of layoffs in higher-paying jobs has been increasing, causing a rise in the loss of permanent jobs. It is essential to point out that the current strength of the labor market has been disguised by the ongoing demand for workers to perform jobs that are of a relatively lower skill level. The overall labor market is not as healthy as it seems.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Unskilled Jobs in High Demand
Low unemployment rates are obfuscating a larger issue in the labor market today. The recent strength in employment data has almost entirely been driven by unskilled jobs. In fact, the employment-population ratio among people with less than high school diplomas have recently surged to all-time highs. That is completely diverging from the same metric for workers with bachelor’s degrees and higher. Even though we have nearly 2 job openings for each unemployed person, most of those jobs available are not high-paying jobs.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Bank Failures
A reminder that back in the Global Financial Crisis over 150 banks went out of business. Today, 4 failures already equate to nearly the entire amount of assets financial institutions held during the banking crisis issue of 2008 and 2009.
If you are asking yourself whether the Fed will allow the same systemic problem to unfold today, look no further than gold prices starting to sniff out future liquidity injections to sustain financial stability.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


The Case to Own Commodities and Sell Overall Stocks
While an economic crisis is looming, there is a significant long-term opportunity for investors to capitalize on the major valuation mismatch between tangible and financial assets. In simpler terms, commodities and businesses related to natural resources are currently undervalued, especially when compared to overall equity and bond markets as a whole. The chart below, provided by Incrementum AG, effectively illustrates this macroeconomic perspective and is arguably the most significant chart of the decade.

This represents the phenomenon known as the Great Rotation, wherein historically overvalued long-duration assets are being shifted towards a less populated and more undervalued segment of the market that is focused on the tangible assets at the core of the global economy. In our portfolio’s long positions, we have identified five important macro themes to capitalize on:

1. Global Fiat Debasement: Gold is expected to regain its status as a central bank asset and serve as a hedge against inflation.
2. Electrification Metals: There is a growing demand for resources that will power the ongoing transition towards a greener economy, while supply remains historically constrained.
3. Energy Shortage: Investing in financially robust oil and gas businesses with high-quality assets that generate strong cash flow.
4. Resource Underinvestment: This encompasses various natural resource industries that could benefit from a commodities cycle, including companies involved in uranium, agricultural commodities, fertilizers, and others.
5. Brazil Liftoff: Geopolitically neutral economies driven by commodities are likely to be significant beneficiaries of the current macro environment.

These macro themes form the basis for our investment strategy, as we aim to seize the opportunities presented by the current macro landscape.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Commodities Are Interconnected
Commodity rallies are almost never isolated developments. Natural resource assets are highly interconnected and once one starts moving, the others follow accordingly. The relationship between gold and agricultural commodities is a good example.
Although we may assume these commodity assets have entirely unique price dynamics, the historical correlation between them is remarkably strong. As shown in the chart below, that was particularly the case during the precious metals bull market of the 2000s. We are likely experiencing the initial phase of another long-term gold cycle, and soft commodities shouldn’t be too far behind.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


The same logic applies to base metals. Investors often contrast the cyclical nature of these metals, but their price behavior is notably analogous. The bottom line is, the current macro imbalances are setting the stage for tangible assets to perform exceptionally well over this decade, especially relative to historically overvalued stocks and fixed-income markets. While analysts love to argue about which inflationary period today’s environment resembles the most, it is important to emphasize that commodities outperformed financial assets during all three decades of the 1910s, 1940s, and 1970s.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Falling Copper Production
Chile’s overall copper production is currently as low as it was 18 years ago, nearly down 10% from its recent peak. It is important to note that Chile holds a dominant position in the supply of this metal, accounting for nearly 30% of the total global production, akin to the OPEC of the copper market. The potential transition to a green economy relies on an ample and accessible supply of metals, which is unattainable today.

High-grade copper discoveries are becoming increasingly challenging as most deposits found in the last decade are characterized by having low-grade mineralization that would not be economically viable at the current metal prices. Additionally, the potential nationalization of Chile’s lithium industry raises critical questions about the stability of the country’s copper market, which could further complicate the global supply of this metal.
These factors are among the main reasons for such a compelling demand and supply case for copper in the long term. In our strong opinion, the metals and mining industry is well-positioned for the next likely run-up of this commodity cycle.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Agricultural Commodities Lead Food Prices
Agricultural commodities are starting to appreciate again, indicating that food prices are poised to rise considerably from their current levels. Inflation continues to embed itself into the economy through various channels. To highlight some pivotal ones:
The lack of adequate investment in natural resources, combined with increasing living costs and consequent upward pressure on labor costs, as well as irresponsible fiscal spending and a trend towards deglobalization, have all contributed to the current economic landscape.
In contrast to the inflationary pressures experienced in the preceding three decades, the recent upsurge in consumer prices appears to be largely driven by persistent structural factors.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Energy Supply
US oil and gas companies have officially begun to reduce their number of operating rigs. This was the first 5-month contraction since 2020. These businesses are in no hurry to increase production in a market where supply remains incredibly limited. In fact, oil production is still 6% lower than pre-pandemic levels. If anything, the overall tightening of monetary conditions and the recent price volatility in energy commodities are severely affecting the capability of these companies to expand their resources.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Commodity Super Cycle
To address the recent comparisons with 2008, today’s macro setup could not be more different than the Global Financial Crisis. Back then, capital spending for oil producers was at record levels after a decade-long bull market in natural resource businesses. Today, aggregate capex is historically depressed while the commodities-to-equities ratio is near 50-year lows.

It’s important to consider the cross-asset correlations during the stagflationary crisis of 1973-4. Back then, tangible assets and resource businesses rallied drastically despite the collapse in stocks and bonds. Yes, one could claim that the oil embargo event was quite unique for this comparison. However, investors should not ignore other key tailwinds driving the energy market today:

1. ESG mandates and ongoing political efforts against commodity businesses;
2. Historically tight supply;
3. Rising geopolitical tensions.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Gold Majors Lack Vision
Newmont reported earnings recently, and despite gold prices approaching new highs their revenues continue to diverge materially. In fact, sales per share are at the same levels they were almost a decade ago. This phenomenon contributes significantly to the persistent underperformance of major gold companies relative to metal prices. The lack of vision among industry leaders is apparent and it’s imperative that investors start demanding these companies to re-direct their focus toward production growth and resource expansion.

This is laying the groundwork for early-stage mining businesses that are well-positioned to benefit from the inevitable need from major companies to replenish their aging assets.

https://static.seekingalpha.com/uplo...pg_thumb1.webp


Brazil has arguably the cheapest commodity-led market/economy in the world today. Local banks are currently trading at one of the lowest price-to-book levels in history. Prior times when this industry was trading at such undervalued multiples also marked great buying opportunities.
While the political environment may portend some level of risk, today’s setup reminds me of the early 2000s. At that time, the rise in commodity prices created major capital interest from investors seeking further exposure to natural resources, completely disregarding the party in power. We would also argue that the degree of political polarization makes today’s leadership significantly more fragmented.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Overall Brazilian equities are now at their most undervalued levels since the impeachment of the president in 2016. Additionally, these stocks are being traded at similarly low multiples as they were during the global financial crisis. Unlike US markets that remain historically expensive, Brazil is one part of the world that offers a compelling macro and value opportunity.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Crescat’s Activist Metals’ Strategy and Performance Update
What an incredible time for shrewd investors to be putting money to work in early-stage, high-growth opportunities in the precious and base metals mining industries. For us, it is with great anticipation and excitement that we see gold prices leading the charge in the macro landscape today. We believe that gold is poised for a significant breakout.

We see the really big appreciation potential opportunity not in gold, however, but in the fragmented metals’ exploration segment of the mining industry that has been under continued pressure thanks to the Fed’s interest rate hikes which we think are soon to be over. We own many of these stocks as part of our Global Fiat Debasement and Electrification Metals themes. Unfortunately, they have been the largest contributor to the pullback year-to-date across Crescat’s three hedge funds and they have been under pressure during the Fed’s interest rate hiking campaign of the last 14 months which is about to end.

At Crescat, our value investment principles and models are what give us the confidence to hang tough during pullbacks with the strong faith that the intrinsic value of our portfolios is substantially greater than the current market price at any given time. As such, we believe pullbacks in Crescat’s strategies offer great opportunities for new and existing investors to deploy capital.

While nobody likes to see the market value of their investment portfolio go down, we are very comfortable accepting a moderate amount of risk in this regard, in the short run, in order to realize the strong returns that are possible from our macro themes and valuation models both in the short run and over complete business cycles. Given our strong value-investor orientation that drives our high-appreciation-seeking strategy, it is important to understand that significant upside volatility is the goal. But in achieving that goal, downside volatility is also a necessary and integral part of the path. In our experience, this is the only way that we know how to achieve returns that outperform the broad stock market and inflation over time. However, clients that desire less overall volatility can also just make a lesser relative allocation to Crescat’s strategies and/or can combine Crescat’s strategies with cash and short-term fixed-income investments to reduce their risk.

Most importantly, we ask our clients to embrace a mindset that inevitable pullbacks in Crescat’s strategies are not a permanent loss of capital and to be able to hang in there with us through them for their ultimate good. Otherwise, our strategies will not be suitable for them.

For us, the personal confidence for such a mindset comes from our overriding long-running experience and investment process which is grounded in a future-looking value-oriented strategy with a macro thematic overlay. Our process has been supported by extensive and evolving proprietary models throughout. Our models include:

1. A systematic AI-primed fundamental equity model for large and mid-cap stocks that we have continuously been running, evolving, and applying to managing client portfolios for 26 years;
2. A suite of totally unique, independent, and organically developed macro models
3. An emerging suite of deep-dive industry-specific models, developed in coordination with leading industry experts in hard rock mining, energy (Oil and Gas), and biotechnology

For us right now, in going through the recent pullback, our spirits are not down at all. On the contrary, we get very excited when assets with extraordinary intrinsic value and critical economic purpose get simply too cheap for unsustainable reasons because it is an opportunity to put money to work. For all the investors who have ever followed Crescat, and believe in what we are doing here, if you have been waiting for a decent-sized pullback as an opportunistic time to get in, we believe now is the time.

The Fed’s debt accommodation policies and interest rate suppression have served to create extreme overvaluation and speculation in financial assets that have built up over the last 14 years. The Fed is now being forced to burst that bubble. Our activist mining stocks are not the bubble. They have been battered enough already since the peak of the last mining cycle in 2011. Resource companies can absolutely be a productive part of the solution to containing inflation in the long run, but not if they are starved of capital which only makes the inflation problem and the world’s likely coming economic suffering worse. It takes years, often a whole decade or more to make a major metal discovery and then ultimately get it into production. The mining industry has been starved of capital for at least a decade already. The world has a huge supply gap.

This is entirely what Crescat’s value proposition as an activist investor in the industry is all about, bringing significant capital to the highly fragmented exploration segment and creating substantial value through expert-deployed activist capital to make substantial new metal discoveries. We have created a truly one-of-a-kind conduit for sophisticated high-net-worth and institutional investors to enter the space in a significant way. Our goal is to catalyze the entire industry by creating a diversified portfolio of new and incipient metal discoveries.

Traditionally, most large pools or capital have stayed away from this space. They view most of these companies as speculative small and microcap stocks with too little liquidity for them to play in any size. That is where the big value creation opportunity lies and where Crescat has come in. Making a viable economic discovery is not easy, but it is well worth the reward. The exploration and discovery side is where billionaires in this industry have made their fortunes. The appreciation potential is extraordinary, but the risk is high too. This is all the more reason why a diversified activist portfolio approach that Crescat is focused on can triumph.
The majors have abdicated Greenfield drilling and discovery to the smaller exploration companies, but there are limited capital markets to serve them. Crescat has been bridging the gap.

Serious high-net-worth and institutional investors interested in gold, electrification metals, and commodities, that would otherwise view this segment as being too risky and illiquid now have a means to invest with us to create extraordinary value. There is no shortage of opportunities for substantial capital deployment in this industry.

The world needs metals to make the green energy transition, but it does not have the future supply of them to meet this demand. The demand is happening whether we like it or not. The course has been set. At Crescat, we are not just looking for big new gold deposits to deliver wealth creation and inflation protection against reckless fiscal and monetary policies. We are also dedicated to finding the supply of silver, copper, nickel, and other critical metals that we need for the electrification wave, electric grid, Evs, batteries, wind, and solar.

Fortunately, Crescat has already had a three-year head start in this effort. We have directly funded and built an incredible portfolio of companies with 286 million target gold equivalent ounces of probability-adjusted bona fide and incipient discoveries. These include major new discoveries in viable mining jurisdictions around the world of gold, silver, copper, nickel, and other metals. Our portfolio is tremendously undervalued and underappreciated. In our model, Crescat’s activist metals portfolio is worth many multiples of where the market is pricing it today, with the highest appreciation potential since we developed the model two years ago. This is how we go to sleep at night when our head hits the pillow.

The Fed’s recent tightening has already been more than sufficient to burst the bubble in financial assets with its traditional lag effect, the year-to-date tech stock counter rally notwithstanding. We have significant short positions in our Global Macro and Long/Short funds to hedge to capitalize on this opportunity which has much more to play out in our view. When we use the term “financial assets”, it is meant to include mostly stocks and bonds at large. We say it this way, however, it is to distinguish financial assets from commodity assets and natural resource business. While the latter are also stocks and assets, of course, they can perform extremely well and in the opposite direction of financial assets during rising inflationary environments. We are confident that the Fed can do little to stop inflation over the next decade. Today’s inflation is broad and structural and occurs with a substantial lag. Reliance on deficit spending is at the core of future long-term embedded inflation, along with persistent wage-price spiral pressures, trade deglobalization, and critical natural resource underinvestment.

Because of these factors, it is the metals resource area that we have chosen to focus a substantial portion of our long exposure today for what we believe are extremely sound value and macro reasons. We believe an entirely new economic cycle is starting to unfold that will prove quite different from the one that began with the Global Financial Crisis in 2008-2009. We would like to accomplish something big and bold that we view as highly constructive and positive for the world and our investors in both the near and long term over the full course of this new cycle.

While most of the rest of the world is still busy chasing the bubble stocks of the last cycle, we have instead been busy working to find and fund the early-stage companies that have the highest-probability shot at being the -multi-bagger winners of the new one.

Recently, the market price of our portfolio has been overly impacted by selling pressure and limited liquidity in the exploration segment of the mining industry today. However, we believe the intrinsic value of these businesses is substantially greater than where the market is currently valuing them. Our holdings include bona fide and incipient major discoveries, and as we enter a gold cycle, we expect very strong demand for these high-quality assets, and we are determined to raise substantial new high-net-worth and institutional capital to be a leading conduit in providing new liquidity to the space. We believe our investors will be highly rewarded.

Over the past three years, we have accumulated activist investments in what we consider to be the most exciting companies in the precious and base metals sectors worldwide. Our portfolio companies control large new target metal deposits that offer multi-fold upside appreciation potential based on the unsustainably wide gap between current low market prices and the target size of our deposits based on estimates of those by our geologic expert Quinton Hennigh, Ph.D.

Together with Quinton, the Crescat investment team has built an extensive valuation model that we use to score and value our companies based on the stage of discovery, expected future profitability, style of deposit, grade, jurisdiction, level of engagement, quality of management and technical team, analysis of ongoing drill results and other geologic data, probability of M&A, and target valuation/appreciation potential. We use current commodity prices in our model. If our macro view for higher metals prices unfolds, our appreciation potential targets will increase. Having both the macro and micro value creation drivers is what excites us about our odds of delivering. When the market significantly deviates from our intrinsic value calculations, as it has this year, we are confident that it presents an excellent opportunity for both new and existing clients to deploy capital into Crescat’s strategies.

Additionally, the short side of our Global Macro and Long Short portfolio has also contributed to our recent underperformance. We believe that the current macro environment offers an incredible opportunity to short historically overpriced financial assets. The recent market strength outside of the scarce resource space and especially for mega-cap tech stocks reminds us of previous bear market rallies that eventually resumed their major downward trends. This time is unlikely to be different, and we strongly believe the next leg lower is imminent.

We sincerely hope this letter has presented a comprehensive and well-researched macro case for investing in tangible assets and commodity businesses as well as shorting financially overvalued assets. The pullback in our strategies from their high-water marks is not unlike the worst of it for us and our investors in 2008. We rebounded strongly in 2009 and 2010 to new high-water marks. We believe we are poised to rebound strongly again and have never been more excited about the combined long and short opportunities in the market. Please remember that our precious metals fund delivered 252% after fees in just its first 10 months. These are the type of upside returns that we are striving for and more within our activist metals themes and believe we can deliver to more than justify the risk. We certainly did not expect to be down as much as we are year to date, but we are confident this is an incredible opportunity for investors to add here, and our goal is to get performance turned around immediately and push to new high-water marks post haste. We strongly believe that we can and will.

https://static.seekingalpha.com/uplo...ng_thumb1.webp


Sincerely,
Kevin C. Smith, CFA, Member & Chief Investment Officer
Tavi Costa, Member & Portfolio Manager
2023 Crescat Capital LLC

Important Disclosures
Performance data represents past performance, and past performance does not guarantee future results. An individual investor’s results may vary due to the timing of capital transactions. Performance for all strategies is expressed in U.S. dollars. Cash returns are included in the total account and are not detailed separately. Investment results shown are for taxable and tax-exempt clients and include the reinvestment of dividends, interest, capital gains, and other earnings. Any possible tax liabilities incurred by the taxable accounts have not been reflected in the net performance. Performance is compared to an index, however, the volatility of an index varies greatly and investments cannot be made directly in an index. Market conditions vary from year to year and can result in a decline in market value due to material market or economic conditions. There should be no expectation that any strategy will be profitable or provide a specified return.

Case studies are included for informational purposes only and are provided as a general overview of our general investment process, and not as indicative of any investment experience. There is no guarantee that the case studies discussed here are completely representative of our strategies or of the entirety of our investments, and we reserve the right to use or modify some or all of the methodologies mentioned herein.

This presentation is not an offer to sell securities of any investment fund or a solicitation of offers to buy any such securities. Securities of a fund managed by Crescat may be offered to selected qualified investors only by means of a complete offering memorandum and related subscription materials which contain significant additional information about the terms of an investment in the Fund and which supersedes information herein in its entirety. Any decision to invest must be based solely upon the information set forth in the Offering Documents, regardless of any information investors may have been otherwise furnished, and should be made after reviewing such Offering Documents, conducting such investigations as the investor deems necessary and consulting the investor’s own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment in the Fund.

Risks of Investment Securities: Diversity in holdings is an important aspect of risk management, and CPM works to maintain a variety of themes and equity types to capitalize on trends and abate risk. CPM invests in a wide range of securities depending on its strategies, as described above, including but not limited to long equities, short equities, mutual funds, ETFs, commodities, commodity futures contracts, currency futures contracts, fixed income futures contracts, private placements, precious metals, and options on equities, bonds and futures contracts. The investment portfolios advised or sub-advised by CPM are not guaranteed by any agency or program of the U.S. or any foreign government or by any other person or entity. The types of securities CPM buys and sells for clients could lose money over any timeframe. CPM’s investment strategies are intended primarily for long-term investors who hold their investments for substantial periods of time. Prospective clients and investors should consider their investment goals, time horizon, and risk tolerance before investing in CPM’s strategies and should not rely on CPM’s strategies as a complete investment program for all of their investable assets. Of note, in cases where CPM pursues an activist investment strategy by way of control or ownership, there may be additional restrictions on resale including, for example, volume limitations on shares sold. When CPM’s private investment funds or SMA strategies invest in the precious metals mining industry, there are particular risks related to changes in the price of gold, silver, and platinum group metals.

In addition, changing inflation expectations, currency fluctuations, speculation, and industrial, government, and global consumer demand; disruptions in the supply chain; rising product and regulatory compliance costs; adverse effects from government and environmental regulation; world events and economic conditions; market, economic and political risks of the countries where precious metals companies are located or do business; thin capitalization and limited product lines, markets, financial resources or personnel; and the possible illiquidity of certain of the securities; each may adversely affect companies engaged in precious metals mining-related businesses.

Depending on market conditions, precious metals mining companies may dramatically outperform or underperform more traditional equity investments. In addition, as many of CPM’s positions in the precious metals mining industry are made through offshore private placements in reliance on the exemption from SEC registration, there may be U.S. and foreign resale restrictions applicable to such securities, including but not limited to, minimum holding periods, which can result in discounts being applied to the valuation of such securities. In addition, the fair value of CPM’s positions in private placements cannot always be determined using readily observable inputs such as market prices and therefore may require the use of unobservable inputs which can pose unique valuation risks. Furthermore, CPM’s private investment funds and SMA strategies may invest in stocks of companies with smaller market capitalizations.

Small- and medium-capitalization companies may be of a less seasoned nature or have securities that may be traded in the over-the-counter market. These “secondary” securities 12 often involve significantly greater risks than the securities of larger, better-known companies. In addition to being subject to the general market risk that stock prices may decline over short or even extended periods, such companies may not be well-known to the investing public, may not have significant institutional ownership, and may have cyclical, static, or only moderate growth prospects. Additionally, stocks of such companies may be more volatile in price and have lower trading volumes than larger capitalized companies, which results in greater sensitivity of the market price to individual transactions. CPM has broad discretion to alter any of the SMA or private investment fund’s investment strategies without prior approval by, or notice to, CPM clients or fund investors, provided such changes are not material.

Benchmarks
HFRX GLOBAL HEDGE FUND INDEX. The HFRX Global Hedge Fund Index represents a broad universe of hedge funds with the capability to trade a range of asset classes and investment strategies across the global securities markets. The index is weighted based on the distribution of assets in the global hedge fund industry. It is a tradeable index of actual hedge funds. It is a suitable benchmark for the Crescat Global Macro private fund which has also traded in multiple asset classes and applied a multi-disciplinary investment process since inception.

HFRX EQUITY HEDGE INDEX. The HFRX Equity Hedge Index represents an investable index of hedge funds that trade both long and short in global equity securities. Managers of funds in the index employ a wide variety of investment processes. They may be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding periods, concentrations of market capitalizations, and valuation ranges of typical portfolios. It is a suitable benchmark for the Crescat Long/Short private fund, which has also been predominantly composed of long and short global equities since inception.

PHILADELPHIA STOCK EXCHANGE GOLD AND SILVER INDEX. The Philadelphia Stock Exchange Gold and Silver Index is the longest-running index of global precious metals mining stocks. It is a diversified, capitalization-weighted index of the leading companies involved in gold and silver mining. It is a suitable benchmark for the Crescat Precious Metals private fund and the Crescat Precious Metals SMA strategy, which have also been predominately composed of precious metals mining companies involved in gold and silver mining since inception.

RUSSELL 1000 INDEX. The Russell 1000 Index is a market-cap-weighted index of the 1,000 largest companies in US equity markets. It represents a broad scope of companies across all sectors of the economy. It is a commonly followed index among institutions. This index contains many of the same securities as the S&P 500 but is broader and includes some mid-cap companies. It is a suitable benchmark for the Crescat Large Cap SMA strategy, which has predominantly held and traded similar securities since inception.

S&P 500 INDEX. The S&P 500 Index is perhaps the most followed stock market index. It is considered representative of the U.S. stock market at large. It is a market cap-weighted index of the 500 largest and most liquid companies listed on the NYSE and NASDAQ exchanges. While the companies are U.S. based, most of them have broad global operations. Therefore, the index is representative of the broad global economy. It is a suitable benchmark for the Crescat Global Macro and Crescat Long/Short private funds, and the Large Cap and Precious Metals SMA strategies, which have also traded extensively in large, highly liquid global equities through U.S.-listed securities, and in companies Crescat believes are on track to achieve that status. The S&P 500 Index is also used as a supplemental benchmark for the Crescat Precious Metals private fund and Precious Metals SMA strategy because one of the long-term goals of the precious metals strategy is the low correlation to the S&P 500.

References to indices, benchmarks, or other measures of relative market performance over a specified period of time are provided for your information only. Reference to an index does not imply that the fund or separately managed account will achieve returns, volatility, or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking.

Separately Managed Account (SMA) disclosures: The Crescat Large Cap Composite and Crescat Precious Metals Composite include all accounts that are managed according to those respective strategies over which the manager has full discretion. SMA composite performance results are time-weighted net of all investment management fees and trading costs including commissions and non-recoverable withholding taxes. Investment management fees are described in Crescat’s Form ADV 2A. The manager for the Crescat Large Cap strategy invests predominantly in equities of the top 1,000 U.S. listed stocks weighted by market capitalization. The manager for the Crescat Precious Metals strategy invests predominantly in a global all-cap universe of precious metals mining stocks.

Hedge Fund disclosures: Only accredited investors and qualified clients will be admitted as limited partners to a Crescat hedge fund. For natural persons, investors must meet SEC requirements including minimum annual income or net worth thresholds. Crescat’s hedge funds are being offered in reliance on an exemption from the registration requirements of the Securities Act of 1933 and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act. The SEC has not passed upon the merits of or given its approval to Crescat’s hedge funds, the terms of the offering, or the accuracy or completeness of any offering materials. A registration statement has not been filed for any Crescat hedge fund with the SEC. Limited partner interests in the Crescat hedge funds are subject to legal restrictions on transfer and resale. Investors should not assume they will be able to resell their securities. Investing in securities involves risk. Investors should be able to bear the loss of their investment. Investments in Crescat’s hedge funds are not subject to the protections of the Investment Company Act of 1940. Performance data is subject to revision following each monthly reconciliation and annual audit. Current performance may be lower or higher than the performance data presented. The performance of Crescat’s hedge funds may not be directly comparable to the performance of other private or registered funds. Hedge funds may involve complex tax strategies and there may be delays in distribution tax information to investors.

Investors may obtain the most current performance data, private offering memoranda for Crescat’s hedge funds, and information on Crescat’s SMA strategies, including Form ADV Part II, by contacting Linda Smith at (303) 271-9997 or by sending a request via email to [email protected]. See the private offering memorandum for each Crescat hedge fund for complete information and risk factors.

Original Post
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Good morning Happy June Day

WWW.AVIELFOREXLEARNINGEDGE.COM

Good morning,
Here is my account to date.

Thanks very much - It is most appreciated your post.

Over the weekend share with everyone (HA HA) No one here.

Great Marketing Folks so share anyway what you learning and how much NET DEMO MONEY YOU MADE !!!

WWW.AVIELFOREXLEARNINGEDGE.COM

Great TRADES OPEN , DOMENICO !!! I HAVE THE EXACT SAME TRADES ON. NEXT WEEK THE MARKET WILL CRASH OR BY JUNE 17, 2023.

FED NOW RAISES 25 basis points. Excellent NEW JOBS Number !!!

https://dailyreckoning.com/the-fisca...nsibility-act/


The Fiscal Irresponsibility Act

Reports The Babylon Bee, in satire:
House Republicans have been awarded their very first Emmy Award for outstanding performance in acting like runaway government spending makes them sad.

“I’m so humbled to be receiving this prestigious award,” said a giddy Kevin McCarthy, holding the golden statue aloft. “This award belongs to all of us – every Republican who has gone on Fox News to complain about the national debt or give impassioned C-SPAN speeches to an empty House floor to convince the American people they care about this stuff, your acting really paid off.”

“Lastly, I would like to thank God, who gave me such great acting ability.” McCarthy then shed a single real tear without even faking.

https://images.ctfassets.net/vha3zb1...1-06-01-23.png

The “Fiscal Responsibility Act”
Under Speaker McCarthy’s generalship the United States House of Representatives has approved the “Fiscal Responsibility Act.”
Fully 149 Republicans issued their consent; 71 did not.

The thing will next proceed to the United States Senate — where it will receive the rubber stamp — then to the White House where the presidential signature will come applying.

Thus the debt roof will rise.

Need we mention that the United States House of Representatives that approved the “Fiscal Responsibility Act”…
Is the same United States House of Representatives that last year approved the “Inflation Reduction Act”?
It is true. It is the same legislative body — with a slightly different membership.

The Next Act
We next anticipate approval of the “Honest Politician Act.”
That is, we expect another cruel jest upon the American people.

That is because the title of the acts and the substance of the acts do not square.
They generally war with one another — and savagely.

The title camouflages the substance within. It is a lipsticking of a pig. Believe it:
The Inflation Reduction Act no more reduced inflation than kerosene reduces flames.
It represented — in actuality — inflationary kerosene itself.
It spent and spent. Then it spent more.

Does the sun rise above the eastern horizon each morning? Does it settle beneath the western horizon each evening?
Well, then, you can just depend on it:
The “Fiscal Responsibility Act” will prove no more fiscally responsible than a gutter sniping wastrel is fiscally responsible.

A Drop in the Bucket
The Congressional Budget Office estimates the thing could kick projected deficits by some $1.5 trillion over the following decade.
Did you see that? The act could kick projected deficits by some $1.5 trillion over the following decade.

And by a mere $1.5 trillion — over the following decade?

Fill an ice bucket to its brim with water. Now siphon up one solitary water drop.
There you have the flavor of it.

A $1.5 trillion siphoning over one decade represents — as the phrase runs — a drop in the bucket.
And recall: This very slight siphoning could occur. In every likelihood it will not.

https://ads.agorafinancial.com/www/d...&cb=91ec98b3db

Was There Ever Any Doubt?
Mr. Ryan McMaken, he of the Mises Institute:
After countless predictions of economic Armageddon and panicky entreaties to raise the debt ceiling with no strings attached, the Biden White House and congressional Republicans agreed on a new budget deal this week that does virtually nothing at all to change the status quo. The deal in no way returns federal spending to pre-COVID levels. At best, the deal does “limit” spending by placing tentative caps on spending which — assuming they are not abandoned in the face of some new economic or geopolitical “emergency” — allow for a 1% increase in spending each year over the next two years.

More:
What all this really means is that discretionary spending (which is generally around $2 trillion in miscellaneous and military spending) will continue upward without even a meaningful pause. Meanwhile, mandatory spending — such as Social Security, Medicare and Medicaid — is in no danger of actually going down. At a minimum we can expect annual increases of $60 billion or more each year in the near future. That’s the most “thrifty” scenario. After all, it’s only a matter of time until there’s a recession and thus a need for “stimulus” and bailouts. Or Washington may decide the U.S. needs another full-blown war. At that point, all bets are off when it comes to spending.

More yet:
There was never any doubt that the debt ceiling would be raised yet again, and of course, there would be no real cuts to overall federal spending. This is what has happened. Moreover, total spending remains more than a trillion dollars above where it was in 2019, even after the Trump administration was racking up near-trillion-dollar deficits.

Finally:
Moreover, if we compare federal spending in the last year of each presidential term, compared with the outgoing budget of the preceding presidential term, we find that the biggest big spender was Donald Trump, followed by Carter, Reagan (first term) and Ford. Again, there’s no reason here to place any hope in the GOP when it comes to fighting against growing spending.

Rep. Scott Perry is one of the 71 dissenting Republicans. From whom:
Trillions and trillions of dollars in debt for crumbs, for a pittance, every single thing. The speaker himself has said on numerous occasions the greatest threat to America is our debt and now is the time to act. We had the time to act and this deal fails, fails completely.

The late Joe Sobran labeled Democrats “the evil party.” Republicans were “the stupid party.”
Thus he concluded that “bipartisanship” yields outcomes both evil and stupid.

Down the River of Debt We Go
Perhaps Sobran hooked into something…
Under the deal Republicans get their guns. Democrats get their butter.
And the taxpayer gets the bill.

He pays now through higher taxes — or later through higher interest payments on the debt.
But pay he will.

What is the sole surprise about this debt ceiling deal?
That anyone could be surprised by this debt ceiling deal.
As we have maintained before:
Republicans and Democrats might stage a splendid combat for the crowd. They batten upon each other with savage and vicious blows.
But watch closer.

The combatants do not strike at the vitals. And the blood is fake.

When it comes to borrowing and spending… Republicans and Democrats are as united as any lovers could hope to be.
Threaten to cut them off.

Then watch the warfare immediately halt… and the hands of peace come extending from both sides.
This we have just witnessed. The debt ceiling is raised.

And so today we drop a mournful tear on the ashes of fiscal responsibility.
As we have noted before, Republicans once defended the approaches to the United States Treasury.

But they have since sold the pass.
And both parties have sold us all down a river…

https://www.zerohedge.com/political/...stroy-humanity

Steps To World Rule: First, Destroy Humanity
https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg

BY TYLER DURDEN

SATURDAY, JUN 03, 2023 - 11:30 PM

Authored by Todd Hayen via Off-Guardoan.org,

It has always been astounding to me that people think for even a second that their government makes decisions to help the people—that has never been the case.
https://assets.zerohedge.com/s3fs-pu...?itok=y7cgCon_

If a government’s decision helps anyone it is always an after effect…or an afterthought or a collateral unintended benefit.
The primary intent is for power, control, and money…to satisfy individual pursuits and goals of the global narcissistic/god-complex elite.

Anyone (which turns out to be most everyone) who supports this and thinks their government, or their nation, is operating in the people’s interest is signing their own death warrant.

“Don’t be so negative, Dr. Todd, there are good things in life too!”

Oh my yes, there are: newborn babies, sunsets, oceans, art, music, forests, waterfalls, sex with your lover, dogs…millions of things. But that is not what I am writing about right now. I am writing about the thing, and group of things, that will wipe all of that good stuff off the face of the earth. Sure, sure, sure, it won’t be forever. Good will prevail, but it could be a million years before it all comes back if we let it go now. And I think it is worth the fight to preserve what we’ve got.

Needless to say, people have always followed leaders. I am not an anthropologist, but I would take a guess that even in primitive times there were leaders of tribes, chiefs, kings, queens, or whatever. I would also guess that this arrangement probably worked well more often than not. Societies were close knit; if a leader went bonkers it was probably easier to just push him or her off a cliff somewhere. And considering how different things were back then, there probably was not as much incentive to be selfish, power hungry, wampum hungry, or weird in other ways. I also would guess this complacent sort of culture, if there ever was such a thing, did not last very long.

I’m sure adjacent tribes had some things the neighbors wanted, and sure the all too human trait of wanting power over others did not take too long to appear. Being the Grand Poohbah of many people had to have the same allure it has today. Wars broke out, discrimination certainly reared its ugly head (“that tribe over there has longer necks than we do, let’s kill them!”), and of course truly important issues caused conflicts, like need for food, water, etc.

Things were a lot worse back in history than today in a lot of ways. But things along these lines did actually get better, in my humble opinion, during a brief period in the West. The establishment of a new country with fresh ideals was a sight for sore eyes back in the late 1700’s. I don’t think anything like it, on that particular scale, had been attempted in the human experience post antiquity (which we, regardless of what we have been told, know very little about). It indeed was a grand experiment—the new colonies in North America shedding the shackles of the tyranny of King George III of England.

The new fledgling country created a Constitution that was truly inspiring at the time. The checks and balances incorporated in that government was also inspiring, and did hold itself together fairly well for quite some time. Of course there are always problems, as there would be with anything brave and novel. But it all hung together fairly well for a bit of time.

I’ll stop there with the history lesson, which may not be all that accurate anyway, but I think you get the picture. Even if you disagree that the new United States of America was an exciting bit of work, you probably can agree that putting one man, or woman, in charge of a lot of people, has never gone all that well. Before the presidency of the United States, there were of course Kings and Queens. Even the US was concerned about having a single person at the head of the executive branch of government, lest it be too much like a monarchy. Some continue (many actually) to believe that the US form of government is still the best, and if certain things are readjusted, the US will continue to be the greatest country in the world.

I digress.

Wherever you are on that fence, you must agree that things are rather different now than what the founding fathers envisioned. Why? That would take a book, or several, to address. Point here is that we can no longer trust this system to be objective, compassionate, fair, benevolent, and not self-serving and destructive. In fact, it seems that the system itself is selling out to foreign interests, and the actual sovereignty of the nation is threatened, and this threat is largely coming from within.

We see this with other nations as well, basically handing over their sovereign rights as a nation to the likes of the WHO, or the UN, or even the WEF. What we see is much like watching a Sci-Fi motion picture where the bad guys are stripping a nation of everything that makes it the “representation of the people” into a personal self-serving slave to unelected powers.

What does this mean? Well, when you really think about it, there is no way this sort of global take over could ever be in the best interests of other human beings living on the planet. Even if you could have a benevolent world power (which is an oxymoron, in my opinion) you would, just by its nature, have to rule in very broad strokes, i.e., everything you implemented would have to be implemented for the good of the majority. That leaves quite a few people out. The hundreds of diverse cultures and the billions of humans that make them up would have to be reduced down to manageable attributes—becoming more and more like each other.

What does this sound like? If you thought “prison” you win the prize. Look at cultures like North Korea, and you will get some idea of what would be happening. And it is worse than that, because North Korea did not start out as a diverse culture—unlike the diversity of the entire globe.

And all that assuming this world system is benevolent, which it most certainly is not. Of course they present themselves as benevolent, and much like all fictional evil leaders (as well as the real ones throughout history), they may even believe they are benevolent. But any world leader(s) will have to focus on the destruction of humanity before they can accomplish any sort of world control over its inhabitants. That is simply the nature of the beast. I’ll say it again: any world leader(s) will have to focus on the destruction of humanity before they can accomplish any sort of world control over its inhabitants. No two ways about it.

And of course, in our modern age, this destruction of humanity is quite a bit more complex than literally whipping people into compliance like they did in the old days. Right now (and this will probably change) most of the psyop is accomplished either through the carrot enticement and then ruling with the stick, or through fear (stick first, carrot as a reward for compliance.)

It is the same game.

https://www.markets.fallondpicks.com...ongestion.html

June 04, 2023
It was a good day for markets, but it was the Russell 2000 that went on a bender, pushing itself out of its scrappy, multi-week base and slicing through its 200-day MA. Not only that, it managed to clear $180 resistance, which means it's now in the process of shaping a right-hand-side base. This is important development as other indices are challenging resistance on weekly timeframes. There is room for the Russell 2000 to test support, and an intraday spike below $180 would be acceptable, as long as the index ends the day above $180.
https://blogger.googleusercontent.co.../IWM_Jun4e.png

With the Russell 2000 making strong gains, we can see key developments in the S&P and Nasdaq. The Nasdaq has managed to clock an end-of-week close above 13,000 resistance, marking its as a breakout, which incidentally was the swing high of last summer. Next up is 14,500 - although it could take until the end of the year before it gets there.
https://blogger.googleusercontent.co...ompq_jun4b.png

The S&P is also challenging last summer's high as it closed the week on resistance. If there is a chance for bears it will be a reversal based on a end-of-week close below 4,300, but with technicals net positive the probability of a resistance reveral is low.
https://blogger.googleusercontent.co.../SPX_Jun4w.png

The breakout in the Semiconductor Index is consolidating after the initial 15% gain. Assuming it can hold the breakout it will continue to feed the key weekly breakout in the Nasdaq.
https://blogger.googleusercontent.co...00/SOX_Jn4.png

The end-of-week finish will be key, particularly for the S&P. With the positive move in the Russell 2000 there isn't a bearish index in the near term, and I suspect, this will evolve into a more bullish stance on longer time frames across all indices.

Get a 50% discount on my Roth IRA with a 14-day free trial. Use coupon code fallondpicks at Get My Trades to get the discount.
---
Follow Me on Twitter

https://docs.google.com/drawings/d/1...ub?w=480&h=420https://docs.google.com/drawings/d/1...w=480&amph=420https://docs.google.com/drawings/d/1...ub?w=480&h=360

Investments are held in a pension fund on a buy-and-hold strategy.

Popular posts from this blog

"Inverse Hammer" on Russell 2000 Breakout
August 09, 2022

1. https://assets.faireconomy.media/nfs...ar392875_2.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 10,291 Posts | Online Now

Quoting BenjaminIs

WWW.AVIELFOREXLEARNINGEDGE.COM

Each day around 8:30 AM to 9:30 AM Eastern Standard Time, I determine whether we have RISK ON or RISK OFF. There is no indicator that can do this just as no technical indicator can effectively predict what will happen moment to moment as one MAJOR fundamental fact whether GEOPOLITICAL or FINANCIAL or now SUPPLY CHAIN or some New Covid-19 variant can cause the markets to go down 250 to 500 points in one day.

The Dow 30 has been doing this in the last 90 days and will continue to do so over the next 90 days


WWW.AVIELFOREXLEARNINGEDGE.COM

GREAT FOREX TRADING COURSE - 90 Days
IT IS SO EASY TO TRADE WHEN YOU KNOW HOW and you INVEST YOUR TIME

WWW.AVIELFOREXLEARNINGEDGE.COM

https://0901.nccdn.net/4_2/000/000/038/2d3/forex.png
As an experienced forex trader and educator, I have helped many people learn how to trade forex successfully and earn a lot of money. My comprehensive approach to trading combines fundamental and technical analysis with risk management strategies to identify profitable trading opportunities.

If you're interested in learning forex trading and earning a lot of money, my 90-day season course is the perfect place to start. This course covers everything from the basics of forex trading to advanced strategies for maximizing your profits. Best of all, for a limited time, I'm offering a 50% discount on the course fee.

During the 90-day course, you'll learn how to read and analyze charts, identify trends and patterns, and use technical indicators to make informed trading decisions. You'll also learn how to manage your risk and minimize losses so that you can maximize your profits.

One of the most important things you'll learn during the course is the psychology of trading. Trading forex can be stressful and emotional, and it's essential to develop a mindset that allows you to stay calm and focused under pressure. I'll teach you proven techniques for managing your emotions and staying disciplined so that you can make rational, well-informed trading decisions.

In addition to the 90-day season course, I also offer a range of other educational resources, including webinars, coaching programs, and one-on-one mentoring. Whether you're a beginner or an experienced trader, my goal is to help you succeed in forex trading and reach your financial goals.

If you're ready to learn forex trading from an experienced professional and start earning a lot of money then invest at least one hour each day of your time.

Sign up for my 90-day course today.
With the 50% discount on the course fee of $250.00, you'll get all the knowledge and skills you need to become a successful forex trader at $125.00 Canadian dollars.

APPLY FOR THE COURSE

Send E Transfer of $125.00 Canadian dollars to [email protected]

If you can generate a profit of 25% each month then the odds of your becoming a MILLIONAIRE are quite good.

Aviel Forex Learning Edge Corporation

WWW.AVIELFOREXLEARNINGEDGE.COM

Please look at the 5-minute chart by clicking on the link below.
https://finviz.com/futures_charts.ashx?p=i5&t=YM

Look at the DROP in the Dow 30 near 4:00 AM and the rise from 6:00 AM to 8:30 AM. We have major data released each day Monday to Friday which changes the MONEY FLOW !!!

The pattern is the same 90% of the time between Monday to Friday. If you sign up for my 90-day 24/7 course you will learn why and understand more about the world we all live in together in such a way you will become very wealthy over the next 3 years if you PASS my 90-day course with NO RISK of LOSS of your MONEY because you learn and develop your skills on the FREE DEMO account.

To join today please register to post on my thread and send an E Transfer for $125.00 Canadian to [email protected]

WWW.AVIELFOREXLEARNINGEDGE.COM

Our professional team looks forward to working with you each day for the next 90 days at whatever time in the day is convenient for you.

Be safe Be well and become wealthy. If you do not have the skills we can after we do our due diligence pn you make other arrangements.

KYC stands for Know Your Client and it is the law in Canada where our business offices are located.

5 Minute Chart of Dow 30

https://finviz.com/futures_charts.ashx?p=i5&t=YM

Knowing this pattern allows a qualified trained Forex trader the opportunity to earn $250,000 Canadian dollars within the rest of the year 2023.

APPLY FOR THE COURSE

Send E Transfer for $125.00 Canadian dollars to [i][u][email protected][/u][/i] {opening special offer}
and join the course.


WWW.AVIELFOREXLEARNINGEDGE.COM

https://0901.nccdn.net/4_2/000/000/038/2d3/forex.png
As an experienced forex trader and educator, I have helped many people learn how to trade forex successfully and earn a lot of money. My comprehensive approach to trading combines fundamental and technical analysis with risk management strategies to identify profitable trading opportunities.

If you're interested in learning forex trading and earning a lot of money, my 90-day season course is the perfect place to start. This course covers everything from the basics of forex trading to advanced strategies for maximizing profits. Best of all, for a limited time, I'm offering a 50% discount on the course fee.

During the 90-day season course, you'll learn how to read and analyze charts, identify trends and patterns, and use technical indicators to make informed trading decisions. You'll also learn how to manage your risk and minimize losses so that you can maximize your profits.

One of the most important things you'll learn during the course is the psychology of trading. Trading forex can be stressful and emotional, and it's essential to develop a mindset that allows you to stay calm and focused under pressure. I'll teach you proven techniques for managing your emotions and staying disciplined so that you can make rational, well-informed trading decisions.

In addition to the 90-day course, I also offer a range of other educational resources, including webinars, coaching programs, and one-on-one mentoring. Whether you're a beginner or an experienced trader, my goal is to help you succeed in forex trading and reach your financial goals.

If you're ready to learn forex trading from an experienced professional and start earning a lot of money, sign up for my 90-day season course today. With the 50% discount, you'll get all the knowledge and skills you need to become a successful forex trader at a fraction of the usual cost.

APPLY FOR THE COURSE

Send E Transfer for $125.00 Canadian dollars to [i][u][email protected][/u][/i] {opening special offer}
and join the course.

OUTLINE OF OUR 90-DAY FOREX TRADING COURSE WITH LIVE TRADING TEACHING ONLINE.

WWW.AVIELFOREXLEARNINGEDGE.COM

Each day around 8:30 AM to 9:30 AM Eastern Standard Time, I determine whether we have RISK ON or RISK OFF.

There is no indicator that can do this just as no technical indicator can effectively predict what will happen moment to moment as one MAJOR fundamental fact whether GEOPOLITICAL or FINANCIAL or now SUPPLY CHAIN or some New Covid 19 variant can cause the markets to go down 1000 points as the Dow 30 has been doing recently and will continue to do.

That is why my Unique Method of Forex trading developed during 2003 when I started trading Forex and later on during 2012 when I added to my business model and started teaching my unique 100% proven method of Money Flow trading.

It is no longer possible to trade without a STOP LOSS PERIOD.

Having a STOP LOSS of fewer than 100 PIPS is not a good strategy. That leads me to explain why most of the 95% of all Retail Forex Traders lose. They trade with small amounts of money and SCALP which makes it almost impossible to make profits over a period of one year because of the VIOLENT NATURE of the swings in the Asset Classes caused by world changing events.

Each Forex Trade that you do should not risk more than 2% of your trading Capital and that is based on trading Capital of $50,000 US Dollars INITIALLY learning on a $50,000 US Funds Demo account just as I did for a period of three years before I made my first Real Funds Trade.

PLEASE GO WITH THE MONEY FLOW

Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge.


SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.


20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

When successful traders aren't trading, they are researching, developing, and innovating. When unsuccessful traders aren't trading, they're staring at screens and forcing trades. There is nothing better for trading psychology than being at the cutting edge of a growing business.

What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines.

Thursday, September 25, 2014
A Preview of Trading Psychology 2.0: From Best Practices to Best Processes
http://2.bp.blogspot.com/-4zHYD5MY44...teenbarger.jpg

One of the great disappointments I encounter when I read writings on the topic of trading psychology is that they invariably touch upon the same themes: discipline, controlling emotions, etc. Having worked with traders and portfolio managers for over a decade now, there is so much more to the psychology of trading than "sticking to your process" that I decided I had to write a book about what I was experiencing but wasn't reading. The title reflects that interest: Trading Psychology 2.0: From Best Practices to Best Processes.

I think Ted Hayes hit on something important in his recent interview. He pointed out that the personality traits relevant to success among early career traders are different from those that generate success for experienced ones. Perhaps so much writing concerns discipline and emotional control, because those are the dominant concerns of the new traders who buy the books, haunt the websites, and seek the help.

At several of the firms where I work, no one even gets an interview unless they have years of experience managing significant capital with a solid track record of profitability and risk management. So by the time those traders join the firm, discipline and emotional control are not screaming priorities. Instead, they deal with other challenges. In Trading Psychology 2.0, I refer to these challenges by A-B-C:


* Adapting to changing markets
* Building on strengths
* Creating creativity

In adapting to different markets by leveraging their strengths and generating new ideas, successful market participants are not so different from successful businesses in fast-changing industries, such as technology or social media. When markets change from year to year, stasis is a formula for failure. The successful trader, like the successful tech firm, must constantly innovate. Moreover, once traders generate those innovations, they must turn best practices--what they do that is successful--and turn them into robust, best processes.

I think this is very, very important: What makes a trader successful is discipline: doing the right thing with fidelity. What keeps a trader successful is innovation: doing new things and turning them into disciplines. Conscientiousness makes for success, but it is openness that makes for adaptation. Trading psychology as a field has done a fine job of articulating the importance of discipline. My hope is that the new book will broaden the discussion to include a research-informed look at mastering change and innovation.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS.


For further information please send me an email to [email protected]

5 Minute Chart of Dow 30

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Ladies & Gentlemen

Everyday between Monday and Friday we have a horse race in the Forex markets. We at Aviel Forex Learning Edge Corporation have the photo finish of each day's races before the race actually starts so that is our explanation of why my Forex trading account opened on January 12, 2023 has such incredible results.

Please sign up for our 90 day Forex trading course and enjoy 90 days of fun while you learn each day how to become a professional Forex trader.

5 Minute Chart of Dow 30

https://finviz.com/futures_charts.ashx?t=YM&p=m5

Watch the same pattern between 2:00 AM Eastern Standard Time and 6:00 AM Eastern Standard Time.

It is just like knowing the results each day Monday to Friday of a Horse Race before the race is run.

Major Fortunes are made however no need to bet on a horse race or gamble with your hard-earned money. Just sign up for our 90-day Forex trading Course and let our top-notch team assist you to earn profits on a daily basis following our unique Forex teaching methods.

Our corporation website is WWW.AVIELFOREXLEARNINGEDGE.COM

Each day around 8:30 AM to 9:30 AM Eastern Standard Time, I determine whether we have RISK ON or RISK OFF.

There is no indicator that can do this just as no technical indicator can effectively predict what will happen moment to moment as one MAJOR fundamental fact whether GEOPOLITICAL or FINANCIAL or now SUPPLY CHAIN or some New Covid 19 variant can cause the markets to go down 1000 points as the Dow 30 has been doing recently and will continue to do.

That is why my Unique Method of Forex trading developed during 2003 when I started trading Forex and later on during 2012 when I added to my business model and started teaching my unique 100% proven method of Money Flow trading.

It is no longer possible to trade without a STOP LOSS PERIOD.

Having a STOP LOSS of fewer than 100 PIPS is not a good strategy. That leads me to explain why most of the 95% of all Retail Forex Traders lose. They trade with small amounts of money and SCALP which makes it almost impossible to make profits over a period of one year because of the VIOLENT NATURE of the swings in the Asset Classes caused by world changing events.

Each Forex Trade that you do should not risk more than 2% of your trading Capital and that is based on trading Capital of $50,000 US Dollars INITIALLY learning on a $50,000 US Funds Demo account just as I did for a period of three years before I made my first Real Funds Trade.

I am still waiting for your expert advice, you were busy before. You have my ears. Thanks

Good day loveandpeace

I have opened a new FXCM Friedberg Direct Forex Demo Account. Once you have your new DEMO account opened send me your User Name and Password. I will then set it up for you just as you see in this screenshot that I just took. You need to follow my directions to the letter and no matter what post to this thread at least once a day and invest at least one hour of your time learning and following my course. That includes reading the research reports and asking questions if you do not understand anything.

All questions and information is sent to [email protected]

The Demo account was opened on June 5, 2023, with $50,000.00 US dollars. I will start trading this account today. My daily profit target is $1000.00 US dollars a day. We do not trade every day as we only trade RISK-OFF days.

There are 24 Forex trading days in each month so at $500.00 US dollars a day the target for the month is $12,000.00 US dollars or a Net Profit of 24% which is called `ROI`Return On Investment.

Of course, that target will be my target as I have had 20 years of trading experience in the Forex Industry. Your target will be 5% for the month or $2500.00 US dollars. Some students can do better such as Thickpipe however his FLAW is he is a Bio Polar Manic type of individual so when he is in his depressive stage he does not even post here on the thread.

I will now do another screenshot of my opening position of $50,000 US dollars before I start trading today.

Benjamin Israel Margolese
President and Chief Forex Trader and Teacher
Aviel Forex Learning Edge Corporation

WWW.AVIELFOREXLEARNINGEDGE.COM