If the forecasts of Jay Feuerstein, the CEO of managed futures trading firm 2100 Xenon, come true, a lot of investors are going to get crushed by an oncoming train wreck in commodities and equities.
"You've got global tightening happening at exactly the wrong time," this Chicago-based former bond trader says, as well as "the removal of fiscal stimulus and monetary stimulus just when the market needs it most."
Feuerstein's outlooks are for sure the boldest I have heard anywhere, as he predicts "the Dow Industrials will trade decisively below 10,000 again by November 1st(that's just 4 1/2 months away, folks!)." And he's looking for the price of crude oil to tumble to $60 a barrel in the next 12 months.
If he's right, he'll be hailed as a genius, and a rich one, too. But let's back up a bit and look under the 2100 Xenon/Feuerstein hood, if you will.
His overall thesis -- on any asset class -- is derived from a combination of trend and macro analysis with an expected holding period of only 20 days. Though he admits it is a lot shorter currently and his firm can flip and go the other way in very short order. A "trend" in his universe could be as short as a couple hours or as long as a couple decades. Right now he says "the trends are pretty well established to the downside."
Not surprisingly, he thinks the U.S. and global economies are in "pretty tough shape." And with the Federal Reserve set to extract itself from the market with the end of QE2, "that means there's nothing holding up a very fragile situation."
If there is any silver lining in all of this gloom, it would have to be the dollar. Even though he says the greenback currently has a weakening technical picture, it will ultimately benefit as a safe haven hideout as the economy deteriorates.
Half of his portfolio is currently held in fixed income, and within that, Feuerstein says he's long U.S. debt but short Euro debt ahead of expected ECB rate hikes.
Who knows if any of this will pan out? But both Macke and I salute anyone willing to make and defend such a bold stance. Let us know what you think below or via email: Breakoutcrew@yahoo.com.