'... just like the Fed’s first interest rate cut warned us directly ahead of both the tech bust and global financial crisis'
The stock market has gotten off to a brutal start this month, with the S&P 500 SPX, +1.30% index down about 5% since it started unraveling last Thursday.
With that in mind, Smith says that all three legs of his “macro trade of the century” are performing “remarkably well” during this rough stretch, and he’s confident more gains are on the way. The recipe: Long precious metals — gold GC.1, +0.87% , silver SI.1, +0.69% and related mining stocks — short Chinese yuan CNYUSD, -0.2982% and short equities.
“Such a move, pressured by the bond market, is anything but bullish, and it’s certainly not acting like the ‘insurance cut’ advertised by Chairman Powell,” Smith said. “Instead, it’s a sign that our central bank is literally behind the curve. More ominously, it’s an indication that asset bubbles are poised to burst, just like the Fed’s first interest rate cut warned us directly ahead of both the tech bust and global financial crisis.
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