On the heels of the Dow hitting a new all-time high, today King World News spoke with the man who advises the most prominent sovereign wealth funds, hedge funds, and institutional funds in the world.

king-world-news-man-who-advises-top-sovereign-wealth-funds-in-the-world-says-2017-will-be-the-year-of-reckoning

Expect Major Market Turmoil In 2017
Michael Belkin:  “Eric, 2017 is going to be the year of reckoning…

Michael Belkin continues:  “Many global markets are at a major turning point.  For example, the FT just reported that speculators have an all-time record 816,000 short positions in Treasuries.  There has never been a number that high.  I had my global clients short bonds and we took out 15 points on the short side.  But recently I recommended they go long bonds because I think there is going to be a huge short squeeze in U.S. Treasury bonds.-

KingRetail Stocks Plunging
I also had clients across the world short retailers.  The FT then reported that Sears, Macys, Kohl’s, and Barnes & Nobles, all reported weak Christmas sales.  Last week Macys shares fell 14 percent, Kohl’s shares fell 18 percent, and many other retailers plunged as well.  It was also reported that the Limited, a major U.S. retailer, is closing all 250 of its retail stores.  They have been trying to take Neiman Marcus public for two years, but Neiman has now pulled its IPO because the retail environment is so bad.

King World News - China Now Dumping Unprecedented Amounts Of U.S. TreasuriesChina & Others Desperately Trying To Keep Currencies From Collapsing
Moving on to the U.S. dollar, the Wall Street Journal reported that last month Chinese foreign exchange reserves fell to the lowest level in six years.  Right now China is desperately trying to keep its currency from collapsing.  Bloomberg reported that the Turkish lira extended its losses, and the Wall Street Journal reported that the peso depreciated 17 percent against the dollar in 2016.  And last week the Bank of Mexico did a massive intervention, which didn’t work and the peso continued to weaken.  So we have three countries that are basket cases desperately trying to support their currencies.  

kwn-belkin-i-1112017Economist Magazine Nails Top Of Dollar With Magazine Cover
Having said that, I still think the dollar is topping, not necessarily vs those currencies but against others.  The dollar is a crowded trade on the long side and it will reverse to the downside.  And if you look at the latest cover of The Economist, they nailed the top of the dollar with what will become the famous ‘The Mighty Dollar’ front cover of their magazine.  What an incredible reverse indicator that cover is for the U.S. dollar.

When you put all of this together, Eric, institutions are positioned on the wrong side of markets.  They are short bonds, long stocks, and long the U.S. dollar.  So what’s happening is people are getting suckered in and the global markets are like a gigantic pain trade where people are getting sucked in to the wrong things at the wrong time.  This means that most investors will get torched in 2017 because money mangers are wrongly positioned in major markets in a big, big way.