Business

Having staged a dramatic reversal at the end of 2016, when the world's formerly most bearish hedge fund - it was net short over 100% in late 2016, which in turn led to a -24% return last year...

... rerisked, turning flat in just a few months, Horseman Global - now short developed markets and long emerging markets, and having lost 8.31% through the end of June - is once again dipping its toes in shorting stocks in general, and shale producers in particular. And, in Russell Clark's latest letter, the Horseman CIO explains why.

Several years ago, Gluskin Sheff's superstar economist (previously at Merrill), David Rosenberg (in)famously flipped from bear to bull, predicting what amounts to a victory for the Fed: a jump in (wage) inflation, a burst in economic growth, and an overall selloff in that most deflation-dependent asset, the US Treasury.

For the last two years, short interest in the US stock market's largest ETF has collapsed as bears have been squeezed back to their lowest level of negativity since Q2 2007 (the prior peak in the S&P). But, there's a bigger issue - despite record highs and 'no brainer' dip-buying, anxious longs have dumped S&P ETF holdings for four straight months - the longest streak since 2009 - seemingly confirming Canaccord's recent finding that "it's not complacency, it's paralysis."

Even as the Republican effort to repeal Obamacare in recent months has suffered one humiliating loss after another, at the hands of none other than the very same Republican party, one government agency has been repeatedly scapegoated for the GOP's failure to come up with a credible and passable alternative to Obamacare: the Congressional Budget Office. Then agan, while hardly an excuse for their sheer incompetence, the GOP is certainly right to point the finger at the CBO's track record of "forecasts", one which we have mocked here on occasion after occasion after occasion.

Authored by Adam Taggart via PeakProsperity.com,

Have you moved a material percentage of your financial portfolio to cash? Have you become so concerned about the meteoric ramp upwards in asset prices that you find it wiser instead to move to the sidelines, build "dry powder", and wait to re-enter the markets at saner valuations?

If so, you have my sympathies.