This Hedge Fund claims to have discovered "the trade of the century"

One of the top-of-the-year hedge funds claims to have discovered the "deal of the century", with investors looking to buy gold and sell out risky assets like stocks.

According to Crescat Capital, it is a matter of time-sword positioning to pay off at times. Though the fund managed just under $ 50 million, it has passed the S & P500 in performance - with the Global Macro Fund holding a 41% return for only the past year. Now the investment company is ready to capitalize from the end of the current economic cycle, due to the early signals from the indicators that a recession is coming in the coming months.

According to the general mood, expectations are for a recession in 2020 or 2021. This is shared by Tavi Costa, who is a macro analyst at Crescat. "We think that resolutions may come earlier, as we get indications of several macroeconomic indicators." - says Tavi.

Opening long positions in gold and shortening stocks at the moment is the main hedge fund strategy. The company uses the MSCI World Index, using different models to predict the eventual deal. The models filter individual shares and ETFs against which the fund pays.

Among the early warnings, Crescat points out the signals from the corporate "insiders" who are currently selling shares - indicating potential bubble popping in the stock. At the beginning of 2017, these investors began to sell stock while the S & P500 continued to rise. This happened again in 2018. "Smart money" is selling again, as "the third time should be lucky."

Data from the US economy is worsening and investors remain alert especially to the bond yield curve. According to the Fund, 45% of the curve is now "reversed", indicating a recession in 30-year securities.

And for this 13% rebound in the world's start-of-year action, Costa says the company is strongly convinced that it's just a short bullish rally ahead of a new bear market. Nearly every sector reported a rebound since early 2019, followed by a strong decline in the Cboe Volatility Index (VIX).

"Soon, buy-the-dip and greed in this bullish market will become a fear, and selling will result in more sales, so the bear markets are working." - says Crescat.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

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