July Research Letter-Not Your Mother’s Inflation

Crescat Capital Quarterly Letter

July 27, 2021

Dear Investors:

Investors are always looking to history for guidance by attempting to find the most economically comparable period to the present. Two timeframes are the most conspicuous, the 1940s and the 1970s. Some macro investors today are citing the 1940s to validate the Fed’s hypothesis that the recent rise in consumer prices will prove to be transitory. Ironically, if the past …

June Performance Estimates

Crescat Capital Quarterly Letter

July 11, 2021

Dear Investors:

US Stock Market at Risk of P/E Deflation The US stock market is 51% overvalued and at risk of a 34% decline. The catalyst is inflation which has arrived in spades and is likely to stay for a while. We think shrewd investors should be getting positioned now for the Great Rotation to both protect against and profit from this …

June Research Letter-A Tale of Two Destructive Outcomes

Crescat Capital Quarterly Letter

June 26, 2021

Dear Investors:

A Tale of Two Destructive Outcomes The greatest long-term investments are those capable of performing well under opposing inflationary and deflationary economic forces. Today’s abundance of macro, fundamental and technical reasons to be a gold investor have never been greater. The ongoing monetary and fiscal disorder in the global economy underpins the onset of a secular bull market in precious …

May Performance Estimates

Crescat Capital Quarterly Letter

June 05, 2021

Dear Investors:

We are pleased to report that Crescat had a strong May across all strategies: Performance was driven by our global fiat debasement macro theme which is the largest exposure across all Crescat strategies today. We express this theme through our activist precious metals’ positions. Seven of these positions contributed outstanding gains in May across our hedge funds and precious metals …

May Research Letter-The 3 Pillars of Inflation

Crescat Capital Quarterly Letter

May 19, 2021

Dear Investors:

The Three Pillars of Inflation We strongly believe investors will want to get positioned now for the Great Rotation which is being catalyzed by the three macro drivers of inflation all firing in sync today: Demand Pull Cost Push Monetary Debasement Let us explain why we think inflation is real and what investors should be doing about it. The Demand …

Crescat April Investor Letter

Crescat Capital Quarterly Letter

April 30, 2021

Dear Investors:

April 30, 2021 Dear Investors: “Miner” Setback It is time to evaluate your level of exposure to precious metals. We believe the macro cycle for gold and silver has turned. This could be the last chance to build a position at depressed prices. The economy is likely headed into an inflationary period and it is time to act. Deloitte has …

March Research Letter

Crescat Capital Quarterly Letter

March 30, 2021

Dear Investors:

March 30, 2021 Dear Investors: Two diverging schools of macro thoughts are prevalent today. One calls for a “Roaring 20s” redux while the other believes in a forthcoming liquidity crisis. Both narratives have valid points and flaws. To be clear, we find ourselves right in between the two. Let us elaborate. The central argument of the reflationary thesis is that …

Crescat Capital Quarterly Investor Letter Q4 2020

Crescat Capital Quarterly Letter

January 28, 2021

Dear Investors:

Crescat finished strong in 2020 to capture the top three spots in the Bloomberg News US hedge fund performance table for December. All three Crescat funds made it into Bloomberg’s top 10 for the full year with the Crescat Precious Metals Fund taking the #1 spot. We are working as hard as ever to continue to deliver in 2021. We …

Crescat Capital Quarterly Investor Letter Q3 2020

Crescat Capital Quarterly Letter

October 27, 2020

Dear Investors:

History does not exactly repeat, but it often rhymes. The art and science of macro investing is comparing past business cycles with the present across a mosaic of different indicators and time frames to determine the most probable path forward for markets. Throughout time, financial markets and the economy have been intimately linked to cycles of expansion and contraction of …

Crescat Capital Quarterly Investor Letter Q2 2020

Crescat Capital Quarterly Letter

August 28, 2020

Dear Investors:

A New Bull Market for Precious Metals Central banks are facing a serious predicament. After decades of ongoing accommodative monetary policy, the world is now sitting at record levels of debt relative to global GDP. In our view, there has never been a bigger gulf between underlying economic fundamentals and security prices. We are in a global recession, but equity …

Crescat Capital Quarterly Investor Letter Q1 2020

Crescat Capital Quarterly Letter

April 14, 2020

Dear Investors:

Equity bulls are coming into Q1 earnings reporting season amped up on Fed liquidity after a record $2.3 trillion of monetary stimulus announced last week. The problem is that the US economy just entered a massive asset bubble bursting recession. The fundamental downturn was in motion even before coronavirus blanketed the country. Earnings for the broad Russell 3000 stock index …

Crescat Capital Quarterly Investor Letter Q4 2019

Crescat Capital Quarterly Letter

January 29, 2020

Dear Investors:

Download PDF Version Bear Market Looms The bear case for US stocks has never been stronger. The set-up looks like January of 2018 when we were similarly bearish yet the market kept screaming higher. Our views were strongly vindicated in February and over the course of that year. The speculative mania of 2019 was wholly unwarranted, not supported by macro …

Crescat Capital Quarterly Investor Letter Q3 2019

Crescat Capital Quarterly Letter

October 17, 2019

Dear Investors:

Read PDF Version Outlook for US Stocks and the Economy A breadth of deteriorating indicators is signaling an inflection point for the US stock market and economy. The percentage of inversions in the US yield curve surged to over 70% last month. This level of upside-down term premium has always led to severe bear markets and recessions in the past. …

Crescat Capital Quarterly Investor Letter Q2 2019

Crescat Capital Quarterly Letter

July 23, 2019

Dear Investors:

    Download This Letter in PDF Form We believe there is an opportunity to capitalize on a material downturn in the business cycle based on the composite of timing and imbalance indicators in Crescat’s 16-factor macro model. US Equity Markets The downturn could be particularly brutal for US stocks because we are record late in a fading economic expansion …

Crescat Capital Quarterly Investor Letter Q1 2019

Crescat Capital Quarterly Letter

April 18, 2019

Dear Investors:

    Download This Letter in PDF Form The year-to-date rally in global risk assets after the Fed flip appears to us to be a last gasp of speculative mania for the current economic cycle. In our view, three flawed narratives are driving late-cycle euphoria in financial markets today: “Central banks can always prevent a downturn in financial markets and …

Crescat Capital Quarterly Investor Letter Q4 2018

Crescat Capital Quarterly Letter

December 31, 2018

Dear Investors:

    Download This Letter in PDF Form We are happy to report estimates for Crescat’s 2018 performance: Profit Attribution by Theme Investment Outlook Summary September 20, 2018 should mark the closing high for the S&P 500 to end the second longest bull market in US history. It should also mark the top of the “everything bubble”, a term coined …

Crescat Capital Quarterly Investor Letter Q3 2018

Crescat Capital Quarterly Letter

November 16, 2018

Dear Investors:

    October was a frightening month for investors around the world. From Hong Kong to New York, stock markets were slammed by a wave of fears about slowing growth, trade wars, and higher interest rates. The Nasdaq took the brunt of the damage. Stocks like Amazon and Netflix both lost around one-fifth of their value as the Nasdaq Composite …

Crescat Capital Quarterly Investor Letter Q2 2018

Crescat Capital Quarterly Letter

September 15, 2018

Dear Investors:

Download Letter (PDF) Our three best macro ideas today are complementary plays on the unwinding of currency and financial asset bubbles at a likely peak of the global capital cycle, the most leveraged in history: Shorting US stocks at proven, historic-high valuations relative to underlying fundamentals with abundant catalysts for a near-term bear market leading to a US recession; Shorting ...

Crescat Capital Quarterly Investor Letter Q1 2018

Marek Iwahashi Quarterly Letter

May 11, 2018

Dear Investors:

Download Letter (PDF) With the Fed locked into a rate hike and quantitative tightening plan in the face of rising inflationary pressures in the US, the next several months and quarters should prove an excellent time for hedge fund short-selling strategies. Several asset bubbles already began to burst in February this year. Crescat’s hedge funds had strong absolute and relative ...

Crescat Capital Quarterly Investor Letter Q4 2017

Marek Iwahashi Quarterly Letter

January 26, 2018

Dear Investors:

Download Letter (PDF) “Believe me: We’re in a bubble right now. And the only thing that looks good is the stock market — but if you raise interest rates even a little bit, that’s going to come crashing down. We are in a big, fat, ugly bubble. And we better be awfully careful.” -Donald Trump, September 2016 Bull markets don’t ...

Crescat Capital Quarterly Investor Letter Q3 2017

Marek Iwahashi Quarterly Letter

November 18, 2017

Dear Investors:

Download Letter (PDF) US large cap stocks are the most overvalued in history, higher than prior speculative mania market peaks in 1929 and 2000. We prove it conclusively across six comprehensive dimensions: Price to Sales Price to Book Enterprise Value to Sales Enterprise Value to EBITDA Price to Earnings Enterprise Value to Free Cash Flow Brutal bear markets and recessions ...

Crescat Capital Quarterly Investor Letter Q2 2017

Marek Iwahashi Quarterly Letter

August 04, 2017

Dear Investors:

Download Letter (PDF) History has proven that credit bubbles always burst. China by far is the biggest credit bubble in the world today. We lay out the proof herein. There are many indicators signaling that the bursting of the China credit bubble is imminent, which we also enumerate. The bursting of the China credit bubble poses tremendous risk of global ...

Crescat Capital Quarterly Investor Letter Q1 2017

Marek Iwahashi Quarterly Letter

May 01, 2017

Dear Investors:

Download Letter (PDF) By keeping interest rates on the world reserve currency too low for too long, the Federal Reserve has created speculative asset bubbles in far-reaching areas of the globe: Currency and credit bubbles in China Housing bubbles in Australia and Canada Worldwide gluts in industrial commodities including fossil fuels, iron ore, and steel US passive index and ETF ...

Crescat Capital Quarterly Investor Letter Q4 2016

Marek Iwahashi Quarterly Letter

January 10, 2017

Dear Investors:

Download Letter (PDF) Crescat’s hedge funds ended 2016 on a positive note after the Trump presidential victory shocked global financial markets. Our flagship Crescat Global Macro Fund was up 8.9% in November and 12.5% net from November 9th through year end. BarclayHedge named it the #4 performing macro fund for the month of November after awarding it as a top-ten ...

Crescat Capital Quarterly Investor Letter Q3 2016

Marek Iwahashi Quarterly Letter

October 03, 2016

Dear Investors:

Download Letter (PDF) Here we are again at the peak of another financial asset bubble. An important macro indicator based on the valuation of US-held global financial assets is signaling extreme caution. The chart below measures the valuation of all global financial assets (stocks, bonds, and cash) owned by US persons relative to their after-tax income. Unsustainable extremes in this ...

Crescat Capital Quarterly Investor Letter Q2 2016

Marek Iwahashi Quarterly Letter

June 30, 2016

Dear Investors:

Download Letter (PDF) The markets have been turbulent in the wake of the unexpected Brexit vote. Crescat’s hedge funds were well prepared for the shock based on our diversified global macro themes, well hedged long/short positioning, and disciplined risk model. As evidence, our Global Macro Fund posted gains on both Friday and Monday when the S&P 500 was down 3.6% ...

Crescat Capital Quarterly Investor Letter Q1 2016

Marek Iwahashi Quarterly Letter

March 16, 2016

Dear Investors:

Download Letter (PDF) We are pleased to announce that Crescat Global Macro Fund was recently named 2015 Global Macro Fund of the Year in the HedgeFund Intelligence Absolute Return Awards for its absolute and risk-adjusted performance among hedge funds less than $500 million. All three Crescat strategies posted gains through the first two months of 2016 while the S&P 500 ...

Crescat Capital Quarterly Investor Letter Q4 2015

Marek Iwahashi Quarterly Letter

December 17, 2015

Dear Investors:

Download Letter (PDF) With pockets of weakness being exposed in the financial markets, Crescat’s three strategies have delivered strong performance year to date. Through 11/30/15, our Global Macro Fund was up 15.3% net, Long/Short Fund was up 8.3% net, and Large Cap was up 3.3% net. Emerging market dislocations, including a currency devaluation in China, plunging oil and gas prices, ...

Crescat Capital Quarterly Investor Letter Q3 2015

Marek Iwahashi Quarterly Letter

August 26, 2015

Dear Investors:

Download Letter (PDF) China’s economic crisis is in full swing and Crescat has been well positioned for it. The People’s Bank of China has begun unpegging its currency this month, just as Crescat had been predicting. As we explain below, we think it is only the beginning of further yuan devaluation. Through today’s close, Crescat Global Macro Fund is up ...

Crescat Capital Quarterly Investor Letter Q2 2015

Marek Iwahashi Quarterly Letter

June 11, 2015

Dear Investors:

Download Letter (PDF) Performance Update  We are pleased to report that the Crescat Global Macro Fund was recently named one of the top-ten performing global macro hedge funds by BarclayHedge for the three years ended 3/31/2015. As shown in the table below, all three Crescat strategies performed strongly in Q1 while the S&P 500 Index gained just 1%. Global Macro, ...