UK-based wealth manager Ruffer LLP has taken the biggest bet in its history on cash, interpreting current indicators on liquidity as signs that we will see a steep market reversal.

Ruffer, with its $27.6 billion in assets believes that the US dollar index (DXY) will increase further in coming months and liquidity will continue to shrink, which is tantamount to betting against the health of the economy.

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Two-thirds of Ruffer’s money is in cash, according to fund manager Matt Smith. Should the stock market experience a downturn, its cash funds—sitting in credit default swaps and stock options—will profit.

“It could be within the next three months, which is a time when Fed liquidity is going to be coming out,” Smith said. “This huge volatility-selling ecosystem could go reflexively in the other direction.”

According to Bloomberg, Ruffer’s take on the market is among the most bearish. This is the case despite the recent Department of Labor report that showed an increase in inflation for the third month in a row.

Watch Patrick Bet-David explain a reverse market crash below, or read a text version of it here.

Shane Devine is a writer covering politics and business for VT and a regular guest on The Unusual Suspects. Follow Shane’s work here.

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