"I think equity markets will get devastated," warns famed $12bn AUM hedge fund manager Crispin Odey in his latest letter to investors. Having been one of the biggest bulls of this particular central bank artificial-bull cycle, his dramatic bearish tilt (as we discussed what he thinks are the biggest risks underpriced by the market previously), is notable. As InvestmentWeek notes, Odey fears major economies are entering a recession that will be "remembered in a hundred years," adding that the "bearish opportunity" to short stocks looks as great as it was in 2007-2009. Via Investment Week, In a letter to the clients of Odey Asset Management, sent earlier this month, the investor said he expects a recession to hit markets as a number of countries across the globe struggle with the current economic conditions. "I think equity markets will get devastated," the hedge fund manager said. "Equities are priced for perfection, pushed up by...investors looking for higher yields and better covenants than high yield bonds." He noted the "bearish opportunity" to short stocks looks as great as it was in 2007-2009. The manager has also warned against allocating to commodity-sensitive sectors, as well as international consumer companies or fund management groups, both of which are overexposed to emerging markets. "Volatility is rising. Not every trade will work," he continued. "Equity markets will struggle to understand the quarterly translation and transaction effects of currency moves on corporate profits." Apart from falling oil prices, currency moves and plummeting bond yields, Odey also predicts the markets will be moved by politics this year. "This time around the problem we have as well is that politics will start to rear its head and we are left to deal with politicians who are increasingly critical of the capitalist system's ability to allocate capital," he said. The manager is also concerned that investors are still seeing each major market move as an isolated event, whether it is the dramatic fall in the oil prices or the rally in the Swiss franc following the actions of the Swiss National Bank. "My point is that we used all out monetary firepower to avoid the first downturn in 2007, so we are really at a dangerous point. "If economic activity far from picks up, but falters, then there will be a painful round of debt default." The recent pickup in market volatility is the first sign this downturn is happening, added Odey. "We are in the first stage of this downturn. It is too early to see what will happen - a change of this magnitude means the darkness and mist is very great," he concluded. "This down cycle is likely to be remembered in a hundred years." * * *