![]() ![]() ![]() These were the companies that built the infrastructure for the Internet, but they were way ahead of themselves on similar hype and hope. In the 2000 market top, the stock prices of the top-ten mega-cap tech leaders had a similar bear market rally and attempted to retest their highs. The above yield curve analysis is in strong opposition to such dreams. In our view, this is a massive head fake. The countertrend rally year to date in the megacap techs has been based on the hope of a soft landing as well as hype over advances in artificial intelligence. With zero false positives yet, this macro model, which is totally independent of our tech bubble analysis, is forecasting a near-term economic contraction. This yield curve signal developed here at Crescat by Tavi Costa foretold seven of the last seven near-term recessions over the last six decades including its first out-of-sample hit with the recent Covid one. Recessions normally follow euphoric market tops, and we think one is coming soon. That these companies were the former growth juggernauts of an unprecedented 14-year cycle is itself a signal of a forthcoming economic downturn. The overall fundamental earnings and free-cash-flow growth fundamentals at the median for the top-ten megacap tech stocks meanwhile have dropped precipitously with many of these companies already in profits and free-cash-flow downturns. While Nvidia ( NVDA) is the outlier still experiencing rapid growth, one is paying an extraordinarily high multiple for it. It was one of the most overvalued market tops in history according to our valuation analysis. It is our belief that the S&P 500 ( SP500, SPX) already peaked at the beginning of 2022 for this economic cycle. In the US, three new open-ended Congressional spending Acts are ready to lead the world out of the likely upcoming recession and drive the next global economic expansion cycle. Over the medium term, we envision a coming fiscal-stimulus-driven secular demand boom for commodities in G7 economies to rival China’s commodity demand boom of the 2000s.Gold is a haven asset that can provide an inflation hedge while also offering strong absolute and relative real return potential in the stagflationary hard-landing environment that our models are now forecasting. In aggregate, global central banks are already ahead of the curve as they have been accumulating the monetary metal recently as a reserve asset in preference over USTs. We believe a powerful new demand wave for gold is coming in the short term from both institutional and retail investors.We see highly overvalued long-duration financial assets as ripe for a second major leg down due to the rising cost of capital and the imminent trigger of a deluge of new US Treasury issuances now hitting the market after the recent debt ceiling deal that the Fed will ultimately need to accommodate.At Crescat, we have three overriding, high-conviction macro themes supported by our independent research and proprietary models that we believe are poised to unfold in rapid succession over the short and medium term:
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