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Don’t expect the global recession to be over quickly: Crescat Capital

Updated : October 27, 2020 02:42 PM IST

We are in a global recession right now led by the shutdowns due to COVID-19, said Kevin C Smith, CFA- Founder, CEO & CIO of Crescat Capital.

“I don’t think this a recession that is going to be over quickly. What we have to look forward to is more government stimulus, more deficit spending, more money printing, and ultimately it is not unquestionably a bullish thing for equity prices especially when you ultimately are going to rising inflation as a result of these policies,” he said in an interview to CNBC-TV18.

Speaking about the US market, Smith said that it has much further downside. “There is a lot of uncertainty still regarding the election. In terms of the macro setup, when it comes to the stock market here, in the global credit market, we are still at a place where we see record valuations in the US stock market and record global debt to GDP, not just record debt here in the US. We have a setup that is speculative market that we think has much further downside.”

Smith added that there is an alternative for investors to buying record overvalued stocks. “That alternative today is record undervalued precious metals… Especially precious metals and mining stocks,” he said.

According to Smith, every country is forced to devalue currency to deal with domestic debt value. “One would think that the dollar would be under pressure with the Fed in full easing mode, fiscal stimulus, deficit, and so on and so forth. But the problem is that it is not just the US that has a global debt problem today, it is the whole world. So, we are in what we call a global synchronized debasement and every country in the world is forced to simultaneously trying to devalue their currency in order to deal with their own domestic debt problems,” he added.
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