Using Hollywood Movies To Call Market Tops

By Tyler Durden
Created 08/14/2015 - 19:28
[1]
Submitted by Tyler Durden [1] on 08/14/2015 19:28 -0400
Previously we reported [6]on Horseman Capitals uncanny ability to generate marketbeating returns (outperforming 98% of peers since 2012) despite having a net -50% short
position offset by treasury longs. Now, we take a quick detour into one of the prop
investment bets used by Horsemans CIO, Russel Clark, namely Hollywoods ability to pull
a Dennis Gartman, and make a dramatic appearnace at all the key market inflection
points.
From the July Horseman Letter:
I notice with interest, that Hollywood still retains its unmatched ability to call market tops.
2014 film, Jack Ryan: Shadow Recruit details a plan by Russia to crash the US dollar
and destabilise the American financial system. At the time of the films release, 34 rubles
bought 1 USD, while at time of writing you require 62 rubles to buy 1 USD. If anything, you
could argue that sanctions, plus the US deal with Iran have been a plan hatched by the US
to crash the ruble and destabilise the Russian financial system!
Another 2014 film was Interstellar a film I enjoyed so much that I think I have seen it
three or four times. Curiously, the film begins in the future, but is never explicit in dates. A
search on the internet has most people suggesting the film being set in 2060s or 2070s.
The film implies that in the 2030 or 40s declining natural resources causes technological
progress to reverse and humans to seek a new planet to call home. Curiously, since
Interstellars release date sugar prices have fallen 35%, milk prices by 45%, and oil prices
by 35%.
While I generally cite Hollywood for its reverse indicator power, the literature world can
also work. 2014 release and Man Booker Prize nominated Bone Clocks, by David
Mitchell of Cloud Atlas fame, also imagines a future where energy and technology
becomes increasingly scarce, and that China is the dominant country globally. This comes
in a story set in 2045, although we can assume that the crisis occurs in the 2030s.
The themes in Bone Clocks seem to match up quite closely with the 2012 film Looper
which I discussed in my Hollywood note. The film was set in 2044 and depicted a future
where the US had fallen apart. The protagonists in the film solely used gold, silver and
Renminbi as currency, implying that the US dollar had continued to fall in value. We can
see that the creative industry views on commodities have been proven wrong. However,
the assumption in Bone Clocks and Looper that China will continue to be ascendant
versus the US has not been disproved. From an economic and currency perspective,
China has continued to be the one currency that has held its value versus the US dollar
recently, and the economy has continued to grow at 7% a year.
There are signs of weakness emerging from the Chinese economic growth perspective
and more and more companies report slowing growth. Furthermore, the Peoples Bank of
China has recently suggested widening of the trading band for the Renminbi to allow more
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flexibility. Perhaps a first step to devaluing? Your fund remains long bonds and short
equities.
***
The above letter was written just a few days before China devalued its currency by the
most on record.

Source URL: http://www.zerohedge.com/news/2015-08-14/using-hollywood-movies-callmarket-tops

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[6] http://www.zerohedge.com/news/2015-08-13/short-three-and-half-years-andoutperforming-98-traders-hedge-fund-did-it