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Top Links: Prominent hedge fund predicts ‘largest market correction since 2008’

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

It's only one opinion but hedge fund manager Robert Citrone, founder of Discovery Capital Management, has positioned his $12.4-billion (U.S.) in funds for a significant market correction,

"'We believe we are in the midst of the market correction we have been expecting,' Citrone, founder of Discovery Capital Management, told investors in an e-mail obtained by Bloomberg. 'It will likely persist over the next 3-4 months and be the largest correction since the 2008 crisis,' he said. The firm managed about $12.4 billion at the start of 2016."

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"Tiger Cub Citrone Sees Market in Biggest Correction Since 2008"- Foxman, Bloomberg

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Wednesday's Federal Reserve statement on interest rate policy was more interesting than usual. Most importantly, three voting members of the FOMC dissented from the decision to leave rates unchanged, a signal that a December hike is probable, not possible. Also, the Fed lowered its assessment of long term U.S. GDP growth prospects from 2.0 per cent to 1.8 per cent. This echoes the Bank of Canada's belief that future growth will be hard to come by.

"Fed keeps rates steady, signals one hike by end of year" – Reuters

"@TheStalwart Here's our conversation with @Torstenslok1 where he says the market is underpricing odds of a novdm rate hike bloomberg.com/news/videos/20… ' – (Link to Bloomberg video interview) Twitter

"@dkberman It's official: The Fed has abandoned its fantasy that the U.S. economy can grow more than 2%. HT @SoberLook pic.twitter.com/OCb6ZMMoIj ' - (chart) Twitter

Related: "@jbjakobsen Sad but true. Global trade continues to shrink pic.twitter.com/16ujPxAksq " – (chart) Twitter

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Those old enough to remember the sitcom Cheers will understand why the on again/off again plans for an OPEC oil production freeze reminds me of Sam and Diane's wedding. One report today cites Iranian sources as saying the time is right for a freeze, but another has Russian officials as saying there's no chance.

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"Iraq Sees Now as 'Right Time' for OPEC to Reach Oil-Output Deal" – Bloomberg
"Russian energy minister says oil production cuts not being discussed now" – Tass

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Gold is getting a lot of financial media attention lately, including from me, and when Bloomberg's "You're Not as Rich as You Think" includes the statement "the world's accumulated wealth -- around $250-trillion, according to Credit Suisse's Global Wealth Report -- is almost certainly incapable of realization at its paper value" readers can be certain that the concepts of 'hard money' backed by gold lie behind the sentiment,

"The postwar generation is wealthier than any before it. But the ultimate value of any investment depends upon being able to convert it into cash and thus generate purchasing power. In fact, the world's accumulated wealth -- around $250 trillion, according to Credit Suisse's Global Wealth Report -- is almost certainly incapable of realization at its paper value. The headline number thus vastly overstates the supposed savings glut. Most of these savings are held in two forms: real estate, primarily principal residences, and retirement portfolios that are invested in stocks and bonds."

"You're Not as Rich as You Think" – BloombergView
"Gold bug heaven: Fund manager predicts $4,000 an ounce" – Barlow, Inside the Market

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Tweet of the Day: "@ramez I was wrong about solar. It's getting cheaper waaaay faster than I expected. rameznaam.com/2016/09/21/new… pic.twitter.com/K3wzge0wdL " – Twitter

Diversion: Do NOT try this at home. "Jumping Into a Pool Off a Super High Balcony Is Frighteningly Crazy" – Sploid

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More

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