MAXIN GLOBAL FUND - USD is a Long / Short Directional hedge Fund incorporated in Luxembourg. It started trading on February,22 2022 and replaces MAXIN ADVISORS' MODEL PORTFOLIO which has been trading since January 1st 2014. At MAXIN ADVISORS, we manage FULLY TRANSPARENTLY and publish the transactions on a DAILY basis and the details of the portfolio on a WEEKLY basis.
As we have argued for months in our various articles, what makes the current environment extremely treacherous is the major imbalances that have built-up over the year in the Western economies following decades of highly dangerous monetary policy experiments that ultimately led to a massive surge in inflation, causing interest rates and bond yields to shoot up in a world where economic agents and Government piled up into excessive debt on the back of abnormally low and artificially-kept interest rates.
The global banking liquidity crisis comes entirely from the brutal re-pricing of money and is far more dangerous than the 2008 crisis because to is not caused by low-quality credits but by the massive unrealised losses accumulated on the largest, most liquid, and supposedly safest part of bank’s assets, Government bonds.
It is an industry wide crisis and a worldwide banking crisis.
As the extreme monetary policies of the past also fed massive asset bubbles in real estate, equities and speculative assets, the global undercurrents of the macro-economic environment is the most treacherous we have seen in decades at managing money, and the only true are place is actually China, whose economy does not have any of those imbalances, inflation is low, public finances are controlled and the banking system far more secure than the Western banking system.
Since October 13th 2022, equity markets embarked on a bear market rally that we accurately predicted, that peaked in February at 4195 on the SP500 as we initially expected. In Europe, the rally was even more impressive as the European Central Bank has remained dangerously accomodative in the face of a massive energy crisis and the highest inflation in 50 years.
The last weeks of February were climatic and saw a return of speculation and FOMO taking US technology stocks to new historical levels of valuation and European equities recording new all-time highs in some cases.
It was a difficult period to trade, as all irrational periods are, but we kept on adding to our shorts in Bothe Europe and the US, warning investors that Europe would soon peak as well, and that global equity markets would start the second leg of their secular bear market in April.
On Tuesday, the contagion effect spread to Europe with CREDIT SUISSE seeing its debt pricing a collapse of the too-big-to fail Swiss giant. Yesterday saw panic in Europe while US equities held the floor at 1808 marked on Monday. Volatility surged again.
With the decision of the Swiss National Bank to extend a CHF 50 Bln lifeline to CREDIT SUISSE, we have all the marks of a climatic sell-off for now.
It would be too long to detail all the transactions we did today, the details of which are listed below, but suffice to say that we took major profits on our long volatility positions, short positions in European indexes and US indices, as well as in many individual stock positions, we cut our short strategic shorts in AAPL, NVIDIA and took profits on our TESLA short position, and added to our long positions in China, some US stocks and even added to our long position in CREDIT SUISSE at CHF 1.77. We also took some profits on our long US bond positions and in our short in COCOA. We had closed our long OIL position previously and added to our long position in Nature Gas.
Our portfolio is now neutrally exposed having reduced risk considerably an taken some significant profits on the way.
With the ECB and the FED bound to announce their monetary policy decisions today and next week, uncertainty will still prevail, and we see the ECB forced to raise rates and expect the FED to keepmits path with a 0.25 % rate increase next week.
This could trigger another marginal down draft, testing Monday’s low, but our Roa ap is now for US equities to rally towards 4050 / 4100 into April, before starting the sharp downdraft that we expect for the summer. We shall take advantage of this bounce to re-instate our US and European stock specific shorts, particularity in the US tech mega caps.
Recession is there ! and the market will now come to terms with it. The psychological damage is considerable and Western Central Banks and Governments are now in the most challenging situation they have ever had to deal with since the 1970s.
After the wiping put of the Cryptospace and meme stocks in 2021, 2022, another segment of the US economy blew off last week; the Silicon Valley tech/VC ecosystem and it will take years to recover.
There two more segments that will drop ahead, Real estate and Private Equity.
The Western financial world have now entered an extended phase of contraction with banks downsizing their appetite for risk and managing liquidity while trying to maintain margins. This is highly negative for economic growth. After inflation fears in 2022, we have now entered the Recession fears and that will unfold over the next six months.
Bond yields have peaked and should be traded strategical on the long side, but the volatility will provide any opportunities to extract value.
Gold and Precious metals should correct for a few weeks before starting the next leg of the strong but market see in the later part of the year.
Chinese assets sold-off considerably as well, despite strong economic news, a normalisation of its economy and the fact that the current Western crisis does not affect it. We have accumulated Chinese shares and will continue to do so as the market is ready to mark a final bottom and embark on a new leg of its secular bull market.
New Asset Allocation
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