Below you'll find a list of all posts that have been categorized as “Quarterly Letter”
The Crescat Global Macro Fund delivered a great month in April, up 10.2%, during a broad selloff in the US equity market with the S&P 500 and Nasdaq 100 indices down 8.7% and 13.3% respectively. Our US dollar versus Chinese yuan long call options, equity short themes, and high yield bond put options delivered the bulk of the profits as …
We are currently experiencing profound changes in the global economy that are likely to unleash a plethora of early-stage secular trends in a new inflationary regime. These are long-overdue structural shifts powered by decades of easy money policies and record levels of debt-to-GDP among developed economies: Governments and central banks to seek high-quality international reserves in attempt to restore the …
We are excited to report that Crescat has delivered strong absolute and relative performance across the firm year to date as financial markets have been in turmoil. Crescat’s flagship Global Macro Fund is up an estimated 25.6% net year-to-date through March 18. In comparison, the S&P 500 is down 6.1% while the HFRX Global Hedge Fund Index is down an …
For the first time in history, the US is experiencing a confluence of three macro extremes all at once: High government debt to GDP like the post-war 1940s Excessive stock market valuation on par with 1929 & 2000 bubbles A resource-driven inflationary crisis environment comparable to the 1970s Any one of these three economic states endangers the health of markets …
The Year of the Great Rotation Welcome to 2022. More than ever, we believe it is time to get out with the old and in with the new. At Crescat, we believe investors today face a twofold problem: The imperative to not get sucked into a financial asset bubble destined to implode. The need to outpace structurally rising inflation. Starting …
Pipe Dreams and Ponzi Schemes Normally, as part of the creative destruction process in economic downturns, the financial system gets purged of excesses. In the subsequent recovery, the health of the economy is restored in a natural way as new leadership arises from sectors and industries that are inherently different from those of the prior expansion. In the wake of …
Equity Market Warning The recent weakness in the broad US equity market is being masked by the outperformance of mega-market cap companies that remain near record valuations. With that in mind, it is remarkable to us how the NASDAQ Composite is just 2.6% from all-time highs while only 35% of its members are above the 200-day moving average. Such a …
The Catalyst for The Great Rotation Based on the firm’s current equity and macro models, and our investment team’s analysis, we believe we are in the explosive first wave of an inflationary cycle in the US and globally that will elevate consumer prices at a much higher annualized rate and for significantly longer than priced into financial markets today. The …
Where are we in the precious metals cycle? There is no shortage of questions on why gold has significantly underperformed during such an ideal macro setting. Let’s start by looking at the usual fundamental trends of this industry as part of prior historical cycles. Gold and silver stocks have never peaked at historically undervalued levels. Miners are now trading at …
We are experiencing a macro regime change that is an abrupt reversal of a four-decade trend of disinflation in the most financially repressive moment in history. With the largest imbalances yet in both overall debt to GDP and financial asset valuations, the levitation of the entire equity and fixed income markets, and the stability of the economy, have become dependent …
The Psychology of Inflation Today’s macro environment is indeed very different than any other period we have experienced in the last four decades. Inflation is infiltrating the mindset of US households in a way not seen since the wage-price spirals of the 1970s. Prices for the goods and services that individuals require to meet basic needs have been increasing at …
September 21, 2021 Dear Investors: Three Themes Coalescing With unsustainable imbalances in the global economy and financial markets today, we see unprecedented opportunities to grow and protect capital in both the near and long term. Crescat is focused on investment strategies that offer uncommon value and appreciation potential. We believe that all of Crescat’s strategies offer an incredible entry point …
August 30, 2021 Dear Investors: The Tech Bubble Then and Now In our analysis, the US stock market today is historically overextended and poses substantial risks. To understand, we need to start by comparing it with the tech bubble in 2000. When Bill Gates retired as CEO of Microsoft that year, he was the richest person in the world. His …
World-Renowned Gold Exploration Geologist, Quinton Hennigh, PhD, to Join Global Investment Manager, Crescat Capital Crescat Capital LLC, a Denver-based global investment manager, is pleased to announce Quinton Hennigh, PhD, will become its full-time Geologic and Technical Director, effective August 16, 2021. As Crescat’s former independent advisor, Dr. Hennigh’s expertise has been a vital component to the firm’s success in its …
We are excited to report that Crescat’s newest hedge fund, the Crescat Precious Metals Fund just finished its first full year with exceptionally strong results. The fund was up an estimated 235.4% net in its debut year compared to a 5.8% decline for the benchmark Philadelphia Gold and Silver Index. Spot gold was down 8.2% over the same time frame, …
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 …
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 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 …
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 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 …
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 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 …
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 …
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 …
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 …
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 …
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 …
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. …
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 …
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 …