Dear PGM Capital Blog readers,
On Monday, August 15, regulatory filings with the U.S. Securities and Exchange Commission showed that in the second quarter of 2016, billionaire investor George Soros and Carl Ichan have increased their bearish bet against the USA Stock Market.
GEORGE SOROS:
Billionaire investor George Soros, who rose to fame and fortune by betting against sterling in 1992, on Monday showed his latest hand: nearly doubling down on his bearish bet against the S&P-500.
The 86-year-old’s fund, Soros Fund Management LLC, disclosed in a regulatory filing it had increased its bet against the S&P 500, by adding 1.9 million shares of the SPDR S&P 500 ETF (NYSE: SPY), which is almost double of his 2.1 million puts shares as of March 31 of this year.
So he owns now just puts of over 4 million shares of the exchange-traded fund which is also his fund’s biggest holding in the filing too.
Puts are used for a downside bet. Buying these S&P 500 puts, essentially gives Soros the right, but not the obligation, to sell them in the future. In other words, if the S&P 500 or the ETF that tracks falls, Soros should make a nice profit.
CARL ICHAN:
Legendary Investor Carl Ichan, recently said in an interview:
“I have hedges on, I’m more hedged than I ever was. The market is way overvalued at 20 times the S&P and I’ll tell you why: a lot of it is a result of zero interest rates.
That’s going to be hurt. There’s going to be a day of reckoning here. I’ve seen it many times in my life. When things look good, they look great. You go into the sky. But that’s when you have to really pull down and really stop buying.”
Billionaire Carl Icahn, hedge fund, Icahn Enterprises (NYSE: IEP) had kept on its record short bias, manifesting in a net -149% market exposure as can be seen from below chart.
PAUL TUDOR JONES:
Tudor Investment Corp, the hedge fund belonging to Paul Tudor Jones, the “legendary macro trader” as defined by Bloomberg, which reported Tuesday August 16, that it had fired 15% of its employees, and which is now said to be implementing minimum risk levels and urging its traders to take on much more risk to stem the losses.
It was interesting, because it revealed that Paul Tudor Jones is even more bearish than George Soros (and perhaps even of Carl Icahn), based on the surge in the fund’s S&P puts, which rose from US$490 million notional to US$1.7 billion notional, a nearly four-fold increase, and making it the biggest such position in the fund’s history, dwarfing the $301 million in notional calls the fund had on at the same time. This was the biggest delta between Tudor’s puts and calls on record.
PGM CAPITAL ANALYSIS AND COMMENTS:
Billionaire Carl Icahn, for example, recently threw up a red flag on broadcast in the USA, when he declared,
“The public is walking into a trap again as they did in 2007.”
Unfortunately, Icahn’s warning is tame compared to his peers.
Andrew Smithers, the chairman of Smithers & Co recently said:
“U.S. stocks are now about 80% overvalued,”
He backs up his prediction using a ratio which proves that the only time in history stocks were this risky was 1929 and 1999. And we all know what happened next. Stocks fell by 89% and 50%, respectively.
But the most warning of them all is an article by ZeroHedge in which they stated that the Rothchilds currently are buying gold.
In the article is stated that:
The Rothschilds are buying gold through their investment house RIT Capital Partners and Lord Jacob Rothchild is warning about the results of “the greatest experiment in monetary policy in the history of the world”.
British investment banker Lord Jacob Rothschild pictured with Joanna Lumley. (Source: Getty)
Rothschild also said:
“To date quantitative easing has successfully driven stock markets higher, but he rightfully fears this will not go on forever. He adds that a number of headwinds could also derail markets – including the very uncertain geopolitical risk.”
The Rothchild’s investment house has increased its allocation to gold by 8% and aggressively sold quoted equities and sterling to navigate choppy “uncharted waters” post-Brexit. Sale of shares have been used to buy gold and other non-disclosed precious metals, which, at the end of June accounted for 8 per cent of the £2.8 billion portfolio according to the trust’s half-year results, released on Tuesday August 16.
We believe that chances of the biggest market crash and a global reset is bigger than most people can imagine and that history has proven that Gold, Silver and other precious metals are the only insurance for ones wealth in times of uncertainties.
Last but not least, before following any investing advice, always consider your investment horizon, risk tolerance and financial situation and be aware that markets can remain longer irrational than that you can remain solvent and that prices of precious metals and the stock of their producers might be very volatile and that sharp corrections may happen in the short term.
Until next week.
Yours sincerely,
Eric Panneflek