“All Hell Will Break Loose” Warns Legendary Hedge Fund Manager

by | May 30, 2017 | Headline News | 23 comments

Do you LOVE America?


    This report was originally published by Tyler Durden at ZeroHedge.com


    It took Paul Singer’s Elliott Management less than 24 hours to raise $5 billion earlier this month, however it is safe to say he won’t be using any of that cash to buy stocks at current prices, or even BTFD. Instead, as he writes in his Q1 letter to investors, the legendary hedge fund manager thinks “that it is a good time to build a significant amount of dry powder,”

    The reason for that is if, or rather when, Trump’s pro-growth agenda fails to be implemented, “all hell will break loose” and that a recession looms as the artificial crutches propping up risk assets are pulled out:

    Given groupthink and the determination of policy makers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose (don’t ask us what hell looks like…), a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral. The only way to take advantage of those opportunities is to have ready access to capital.

    Isolating the impact of the “Trump Put” as described recently by Deutsche Bank, Singer writes that “although the growth agenda of the Trump administration is slow to get off the ground, markets still anticipate that much of it will be enacted, sooner or later.” And yet, according to most metrics, the Trump trade has already been priced out of most markets with the notable exception of equities, which as Bank of America pointed out in a note last week, are now the “last one standing”.


    Elliott’s warning of a negative reaction in equity markets if Trump’s economic policies are not delivered takes place as the US Congress debates how to fund proposed tax cuts for individuals and companies, and whether lawmakers are prepared to blow out the budget deficit as Trump’s plan would. So far, all of Trump’s various economic initiatives appear to have stalled permanently in Congress, with the market giving pricing in little possibility of their passage.

    In this context, Singer warns that “there are actually forces in place that could point to a relatively near-term recession in the absence of solid new pro-growth policies.” And with rates already at ultralow levels, the Federal Reserve won’t be able to provide a sufficient QE cushion, as it did during the great financial crisis. Which is why absent a procyclical push, the US economy may have no choice but to contract. Which is ironic because Singer, a prominent Republican donor, originally staunchly opposed Mr Trump as its candidate, before meeting the President at the White House in February where Trump claimed “he’s given us his total support”.

    The manager of $32.6 billion in AUM once again points to his favorite nemesis, the Federal Reserve, and says that “we live in a time when extraordinary worldwide monetary policies have created bubble after bubble.” Warning that QE has done nothing to address the fundamental issues of the economy, Singer said that rising sovereign and private debt loads will come back to haunt the markets and policy makers.

    Expounding on a popular theme from his previous letters, Singer said that not only has the mess from the great financial crisis not been cleaned up, but all the wrong measures have been used to address the problem.

    “Since the GFC, we have believed that the extreme monetary policy (ZIRP, NIRP, and QE) prevalent throughout the developed world was unsustainable and risky.” He explains – as he has done every other quarter since 2008 – that the solution to a crisis resulting from financial engineering isn’t more financial engineering, but addressing the real issues that caused the problem to begin with. That has not beed one, and instead “the solution to overindebtedness should not have been the creation of more debt, and the problem of inadequate growth should not have been solved by money-printing and ZIRP/NIRP.

    Singer also blames failed policies for the current breakdown between heightened geopolitical risk and record low volatility:

    “On the face of it, year after year of the unusual and risky policy mix has not caused the collapse of any major currencies or significant inflation (other than in asset prices),” resulting in a world that has been put to sleep by pervasive complacency. “This seeming lack of empirical proof of the lurking danger has lulled most investors into thinking that the elevated prices of stocks and bonds, and the historical fall in price volatility in financial asset markets, is somehow a permanent condition.

    To be sure, Singer has been one of the most outspoken market skeptics during the “central planning” phase of markets, issuing periodic warnings about China’s debt-fueled boom and price bubbles in financial markets inflated by central banks’ ZIRP/NIRP and bond buying policies of central banks. Maybe this time will be different.  Even so, Singer’s stated skepticism hasn’t prevented him from outperforming not only the S&P in recent peers, but the vast majority of his peers.

    So what is Singer’s advice for today’s investors? In a time of historic market complacency, Singer believes that “the trick in such periods is to keep out of trouble.” Eventually the markets wake up, and when they do, that’s when “all hell will break loose.” When that moment comes, Singer is confident he will be ready.

    This report was originally published by Tyler Durden at ZeroHedge.com


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      1. So what else is new.

      2. Takes money to make money!

        • Makes money to take money.

        • Takes tangible Silver to Make some Wealth. Fiat dollars is not money or wealth, its Debt Instrument IOU’s. Most everything written or printed on paper, can be defaulted on and become worthless. Its a broken promise in the making, in the failure to perform an obligation. Only Real Hard Tangible Assets are real and creates value such as Silver. A skill can also be an asset, but if you can’t perform a job, your skill becomes worthless as well. Silver is real, Hard assets that will perform a value, such as wealth no matter your skill level or if you become disabled. Know the differences of all of the above.

          • Keep real in gold and silver. You can always make bullets with it.

      3. I hope Trump declares a $100 bounty on every illegal rounded up. I could make thousands ?Just ratting out my friends and neighbors.

      4. All Hell will break loose? My ex-wife is out on bond?

      5. Better get your Bitcoin now!!

      6. Silly Wabbit. “Fundamentals” are for the 1970’s.

        This post brought to you by sarcasm.


        Throws some chicken bones… DOUBLE TOP DOUBLE TOP WOO!

        • Stock Market fundamentals became obsolete beginning mostly in the Dot Com Bubble. 401K’s were also a Ponzi scheme. Oh the masses will be pissed when it all crashes, like Enron Stock. Zero will be your new found friend for the majority. Creating wealth is one challenge, keeping it is another.

      7. Another article with an expert predicting imminent economic and financial disaster with the accompanying chart/graph to show the proof they are right. These type articles are the most popular, they see by the number of posts more people have interest in this type of story, therefore the highest probability of more people viewing the ads. They know a lot of readers love and crave the prospect of collapse.

      8. Same song and same old dance!!!! But don’t forget to buy gold!!!

      9. What? The governments aren’t going to cut spending! They have only just begun. The world PTB must DOUBLE inflate the world economies by 2024 or else face 0% growth. THINK ABOUT IT… MUST DOUBLE IN ORDER TO REMAIN AT 0% GROWTH!!!!!!! S&P 2,600 by xmas. DJIA 100,000 by 2022. …. the doom sayers have job security as they can just rehash the same old collapse story line over and over. What you ought to keep your eye on is the loss of your freedom, loss of your national identity and culture, and loss of your personal wealth stolen by ever increasing taxation and fees.

      10. Well whatever or whenever it happens, God only knows. But i guess ill just have to make due. Because there isnt much semblance anymore anyways. Wont be much of a transition period, we’ll just blend and fade into the abyss. I still think if the derivatives market ever wakes up, thats gonna be some crazy shit. 730 trillion in that market right now. WTF.

      11. When I subtract the price of Organic NonGMO chicken feed, corn grits, and diatomaceous earth, my free eggs are pretty expensive. But they are healthy range free chickens who lay healthy eggs.

        I have made so many meals using eggs, I could write a cookbook. Here is an idea for a substitute for tortillas. Make a flat pancake with eggs using a little flour and some spices. Then roll it up around avocado, sour cream, whatever you like. You can use a combination of corn and wheat flour, or add som ground flax meal or chia. Just be sure that the eggs remain liquid or you will get a puffy cake that won’t roll. If you want cakes add a bit of non-aluminum baking powder.

        You can save money by incorporating eggs into your vegtables, soups, and grains. Eggs are loaded with nutrients. Cholesterol prevents Alziemers. Eat a hard or soft boiled egg before going to sleep. This practice keeps your brain young.


        • We do sell our surplus eggs and over the course of a year we break even or close to it and have all our eggs free.

          But we buy day old bread and feed them household scraps to supplement the layer mash and the scratch. They eat well. A couple will get out and free range during the day but go back to the coop to lay and roost.

          • I bought some
            Cuckoo Maran chicks recently.
            They haven’t started producing yet
            but I expect to be donating excess eggs
            to the senior center soon. We did that for years
            in WA state. I can’t sell eggs as my insurance won’t cover
            it, and to get insurance and comply with federal
            rules is really expensive these days.
            My chickens can free range, but we have Mongoose
            and I haven’t killed them all yet, so I’m being cautious.
            The mule and the cattle usually attack anything that
            is small that they don’t like. One of my cows stomped a pig
            nearly to death.
            I’ve about killed off most the Cane rats,
            and at least can keep mice out of the houses
            and save the eggs.

            I’m curious to see how these chickens hold up.
            Looking forward to the eggs.

            Preparing for whatever.

            Any thoughts out there?

      12. “the solution to overindebtedness should not have been the creation of more debt,…”

        This is a disingenuous statement by one of the tribe who knows better.

        Modern money theory shows that ever since the gold standard was broken, ALL money or credit is created as debt(loan) with usury added. This system requires ever increasing debt to pay back principle plus usury. There are no constraints on credit creation except when resource constraints hit.

        The debt can never be paid off. This is why there will be no cutbacks or lowering of the debt and deficit. It will continue to expand exponentially until energy hits the wall of unaffordability(EROEI)…by the producers or the consumers.

        The late Professor Albert Bartlett said (paraphrase) the greatest failing of the human race is the failure to understand the exponential function.

      13. Aspartame is poison.

        It is hidden in many foods like all chewing gum and some yogurt. Pregnant women be on guard. Aspartame causes birt defects.

        In my opinion, unless packaged food says there is no aspartame in it, there very likely could be aspartame. It causes Alzeimers and high blood sugar. Aspartame causes strokes. Sugar free generally means it contains aspartame. Aspartame causes Cancer. Cook from scratch as much as possible if you want to be certain the food is safe.

        Real organic sugar is healthier than any artificial sweetener. It tastes better. It can be used as a preservative. Don’t overdue real sweets, but some sweet food won’t harm. Fruit has sugar but it is nurishing. Children who grow up eating fruit will grow to love eating fruit. If you live where fruit trees grow, plant a fruit tree.


        • I read that the Chinese government recommends only eating soy as an alternative to starvation . And every farmer knows you can feed livestock only 20? % soy or they will die before maturity or pass on birth defects? But Indonesians eat soy like crazy? Japs. Eat soy like we eat mustard. Soy is low grade animal feed? Finding truth on this planet seems impossible?

      14. just imitate warren buffet

      15. There is no market, what a joke, its the federal reserve and its plunge protection team, they have unlimited money off the books and they buy all of these financial products to keep the prices whatever they want, we dont have a stock market. Its all an illusion, why do you even print such garbage, none of the numbers are real.

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