Alex Gurevich 4.7 18 ideas

If BOJ raises interest rates that will necessarily lead to stronger yen. But if they don't raise rates then the elongated bonds which yield like three and a half percent will continue making money. So that's kind of a perfect trade lock. Japan offers an asymmetric, dominant macro setup. The Yen is historically undervalued. If the Bank of Japan hikes rates to fight local inflation, the currency will appreciate sharply. If they do nothing, investors still earn a positive carry on Japanese bonds because domestic funding costs remain at zero. Long the Japanese Yen as a high-probability macro trade with strong causality between potential rate hikes and currency appreciation. The BOJ refuses to hike rates while the US Federal Reserve keeps US rates elevated, causing the interest rate differential to widen and the Yen to depreciate further.

The way to get into emerging markets is after they blow up, not before... I'm cautious about emerging markets when they're already performing well. Emerging market currencies (like the Mexican Peso, Brazilian Real, and Turkish Lira) have provided strong carry trade returns for several years. Historically, these trades are prone to sudden, devastating drawdowns. Entering now is picking up pennies in front of a steamroller; it is safer to wait for a systemic crisis to reset valuations before allocating capital. Avoid emerging market currency and debt carry trades as they are late in their cycle and highly vulnerable to a sudden macro shock. Emerging markets remain stable and continue to pay high yields, resulting in significant missed income for those sitting on the sidelines.

Hundreds years of patterns of platinum, gold, silver, and platinum cycles going and usually gold is the one that goes first and then gold mining stocks tend to lag... silver caught up to gold... and platinum goes afterwards. So the cycle actually it's very natural to platinum cycle right now to start. Precious metals move in sequential, multi-decade cycles rather than moving perfectly in tandem. Because gold and silver have already experienced massive breakouts, capital will naturally rotate into platinum as a historical store-of-value catch-up trade, regardless of near-term industrial EV demand. Long platinum to capture the delayed, cyclical rotation of capital within the precious metals complex. Industrial demand for platinum (auto catalysts) drops faster than the monetary/store-of-value premium can compensate, keeping prices suppressed.

Compute power consumption will grow so quickly that people still do not comprehend what actually where the charts on compute power consumption actually lead... I don't think there's enough copper on the planet to so it's AI demand story. The exponential growth of AI requires a massive buildout of data centers and electrical grid infrastructure. Because electricity generation and transmission are highly copper-intensive, this will create a structural, physical supply deficit that cannot be easily solved by current mining output. Long copper and major copper miners to capitalize on the physical infrastructure bottleneck created by the AI energy boom. AI adoption slows down, or technological breakthroughs allow for significantly more energy-efficient compute, reducing the need for grid expansion.

We're having suddenly severe job losses start and we're having deflation across the board and job losses. They have no choice but by start cutting rates. AI will permanently eliminate entire sectors of white-collar economic activity (legal, medical consulting, basic coding), causing a severe deflationary shock. To combat this unprecedented structural unemployment, the Federal Reserve will be forced to aggressively cut short-to-medium term interest rates back toward zero. Long short and intermediate-duration US Treasuries to front-run the inevitable Fed easing cycle triggered by AI-induced job displacement. AI productivity gains create enough new economic growth to offset job losses, keeping inflation sticky and preventing the Fed from cutting rates to zero.

I'm picturing this scenario of a wall of ocean of fiscal stimulus in two years and then I'm not seeing necessarily rates being low five years from now. While the front-end of the yield curve will drop due to immediate deflationary job losses, the government will eventually respond to mass unemployment with extreme deficit spending and Universal Basic Income. This massive fiscal injection will reignite inflation, causing long-dated bond yields to rise and steepening the yield curve. Avoid long-duration US Treasuries because future multi-trillion dollar fiscal stimulus packages will destroy the value of long-term government debt. The deflationary impact of AI is so overwhelming that even massive government stimulus cannot generate inflation, causing long-end bonds to rally alongside the front-end.

Silver and Gold have had massive multi-year runs (Silver to $115 in this scenario). Platinum has remained dormant for much longer and is only just starting to move. Precious metals move in non-simultaneous cycles. Gold went first, then Silver. Platinum is historically cheap relative to peers and has not yet had its "catch-up" phase. LONG. Rotate out of overheated Silver/Gold into the lagging Platinum. Industrial demand for Platinum (catalytic converters) collapses faster than investment demand can compensate.

Japanese bond yields have risen significantly (touching 4% in this scenario), yet the Yen remains extremely weak against the Dollar and Swiss Franc. The yield curve in Japan is steep. This creates a "Perfect Trade" setup similar to the US in 2014. High yields + Cheap Currency = Capital Inflow. As investors realize they can get yield *and* currency appreciation, capital will repatriate to Japan, driving a powerful Yen rally. LONG. The trade structure (long Yen, long JGBs) benefits if the BOJ tightens (currency up) or stays loose (bond roll-down). Patrick Ceresna adds a specific call option structure to limit risk. The Bank of Japan maintains ultra-loose policy indefinitely, causing the Yen to devalue further into a spiral.

Gurevich states, "I think zero interest rates are not off the table... I'm seeing the path to deterioration of the labor market." He adds, "When the job growth is negative, 10-year yield should be much lower... who's selling them at 1% yield?" The market is currently pricing in a "soft landing" or "higher for longer" rate environment. Gurevich believes the labor market is silently rotting. If unemployment spikes, the Fed will be forced to cut rates aggressively (potentially back to zero). Bond prices and yields move inversely; if yields fall to 1% or 0%, long-duration Treasury bonds (TLT/ZROZ) will experience massive capital appreciation due to their high convexity. LONG US Treasuries (specifically long duration) to capture the move if rates collapse. Fiscal dominance (government printing money to stimulate) could reignite inflation, keeping yields high.