Crispin Odey: “It Feels Lonely Being Bearish”

zerohedge.com / by Tyler Durden / Apr 20, 2017 10:40 AM

In Crispin Odey’s latest letter to investors, the billionaire hedge fund manager laments “how quickly everything has changed”, notes that “without the reflation fireworks, equity markets feel vulnerable”, and concludes that while a year ago it was easy to be bearish – China was slowing, world trade was creaking, Europe was not recovering and the oil price was hitting new lows – “a year later to be bearish feels lonely, despite the fact that the reflationary story of the past year looks difficult to sustain and auto loan lending has joined a long list of risks along with Trump and Brexit.”

 And yet, unlike Horseman, he is not throwing in the towel just yet: “Money creation alone has taken markets to all-time highs but what strong arms take, strong arms must defend. Valuations demand that they do.”

And while Odey’s trenchant appeal that “when we look back at this madness, some people will feel ashamed” is accurate however, considering his YTD P&L of -4.9%, following a 1 year drop of 33.7% (and more than half over the past 3 years), Odey may not be among those looking back.

Full letter below:

Look how quickly everything has changed. Trump, defeated over the Obama Healthcare reform has, as it were, retreated into an aggressive foreign policy which is almost the opposite to the Monroe doctrine which he was adopting earlier. Bannon is on the back foot. In the absence of a corporate tax cut or any kind of VAT tax reform, the US economy is succumbing to an overvalued dollar and a growing crisis in subprime lending, centred on the second hand car market. The government bonds have already guessed Yellen’s mind. No more rate rises. We are now just waiting for the Fed to set up a lending business, loaning 5 year old cars to people who can neither drive nor borrow. That is what they need to do to stop the subprime losses ballooning.

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