Everything that happened today is extremely similar to back then.

Source: Wall Street Intelligence Circle

Former fund manager at Crescat Capital. He led the construction of Crescat's macroeconomic model, which accurately identifies the current phase of the US economic cycle by integrating 16 core factors.

Below is his remarks during a media interview this week:

1）Gold

This is just a shakeout, not a change in investment logic. One can observe "inflation expectations" (measured by the 10-year breakeven inflation rate), and the 2-year, 5-year, 10-year, and 30-year inflation expectations are all declining, with the 30-year expectations dropping the most. This will affect the Fed's judgment on inflation and may cause the market to shift back to a dovish outlook. I do not believe there will be a rate hike. The biggest negative factor is still the US dollar, but one positive signal is worth noting: emerging markets have not collapsed due to the dollar's rise, and "smart money" continues to buy into emerging markets. If they believed the dollar's current rally was a long-term trend, they would not be doing this.

2）US Dollar

The rising dollar is making the market more turbulent, but I do not think the dollar will remain strong for long. The US trade balance dictates that the US needs a weaker dollar. As a reserve currency, the US indeed needs to maintain net imports, but the current imbalance is too severe. The stronger the dollar gets, the worse things will become. Looking back at the 1970s, the dollar once devalued by 20%-30% against the German mark and the yen. In today's view, this seems unimaginable. But we should keep an open mind. In the future, dollar depreciation is likely to become part of policy.

3）Crude Oil

Host: I think oil prices will eventually break $200. Many people think I’m crazy, as oil is only $75 now. Although there is a gap near $60, I don’t think it will get filled. What’s your view?

From the perspective of an inflationary era, going long on oil is more effective than simply shorting equities. This is not a deflationary environment like in 2008; even if oil prices plummet, we could still be in an inflationary age.

A year ago, I built a very large position in energy. Not because I predicted war, but because macro analysis showed me that oil was clearly lagging behind gold, silver, and copper. Eventually, energy started to catch up, and when oil prices broke $110 and $120, I took a lot of profits. By then, the media was flooded with news about oil. I have an investment principle: buy on the last page of The Wall Street Journal, sell on the front page. So, when oil hit all the headlines in the media, I began to reduce my positions. Now the hype has cooled, the market is getting tired, and prices are back to discounted levels.

Looking at quarterly charts from the 1970s and 1980s, you’ll find oil prices are approaching a long-term resistance level; once it is breached, it could begin a new energy bull market.

4）Tech Stocks

My allocation to the tech sector is zero—not a single share. When the dollar returns to a long-term decline, capital flows will change dramatically. Smart money has already started moving, shifting gradually out of US assets and toward other regions around the world.

Back to the recent market downturn.

I keep asking myself: Have the fundamentals changed?

The only real change is that Waller has become Fed Chair. When Powell first took office, the market believed he understood the market better and would take care of equities. Some even joked that since he was 6 feet tall (“taller than previous chairs”), there was some “correlation” between the Fed Chair's height and the direction of interest rates. But the result was, after Powell’s first press conference, he immediately hiked rates by 25 basis points. Ironically, it was Trump who appointed him, and Trump was the first to become unhappy about it.

Everything happening today is remarkably similar to that time.