Diary Entry for Thursday, April 7, 2022
Dear Diary,
4:30 PM - the day before- Thought I’d check my Bloomberg to see how the Asian markets were opening. Yikes! They’re hammering bonds again. About damn time.
It looks like it is going to be a ‘RISK OFF” day. Better fasten my seat belt, put on my hard hat, and get ready for a busy day. No rest for the wicked. At least for the first 15 minutes.
5:00 PM - the day before Call from one of the top New York hedge funds. What’s going on with the markets? Prices for bonds and the major stock indexes look like they are in free fall.
Worse, he is losing money.
I told him that the memo is out. The bull market is over, as I have been predicting all year, and we are now probing for the lows. The “buy the dip” crowd retired to their Caribbean yachts.
Look what happened after the Pandemic surprise in 2020. Those who dumped stocks back then are still trying to get back in. Every dip was a “BUY” for two years. This is why 70% of active managers are underperforming their benchmarks this year.
By the way, had he read my new book, “Stock to Buy for the Coming Roaring Twenties”? (click here for the link). It outlines which sectors you should be accumulating now for the next bull market.
I said he owed me a nice dinner at Masa at Time Warner Center on Columbus Circle because he’s made so much money off me last year.
I don’t care if it costs $500 a person. High-end Japanese sake is cheaper than the best Bordeaux’s because Chinese billionaires have bid up the prices so much. Just get an algorithm to make a reservation, as it is now almost impossible for a human to get one.
Then he told me the real reason for his call. He knew I grew up near Hollywood, had dated several movie stars, and even appeared in a movie as an extra (Francis Ford Coppola’s Apocalypse Now).
What did I think of Coda, which his firm had put up the money to make? Is the film worth seeing?
I said only for the guys. I saw the film on the day it came out to gain insights on what my hardy ancestors went through. It’s about deaf family trying to run a commercial fishing business out of Gloucester, Massachusetts.
Even on a good day, this is a tough business. When I was a kid, my dad took me out on a commercial boat to see how the other half lived and I was seasick the entire time.
9:00 PM-Call from a friend at the People’s Bank of China in Beijing.
Who is going to win your midterm election? If the Republicans win, they will go to war with China immediately. Should we be worried?
I told him to put his concerns out of his mind. By November, the economy will still be booming, unemployment at record lows, inflation will be lower, gasoline will be cheaper, and the stock market might be at all time highs. With Trump still the party leader Democrats should maintain control….just.
Markets love a pro-globalization candidate, as this has been buttering their bread for the past 70 years. China does too, which has seen the Shanghai Index ($SSEC) finally crawling off the bottom after an 18-month meltdown. Mexico (EWW) looks good too.
Then he asked, did I, by any chance, recommend the film, No Time to Die, the latest James Bond flick and Daniel Craig’s last? Everyone in the Politbureau was seeing it.
“Absolutely,” I answered. I loved it. I always see the Bond films because I can revisit the many places around the world in have visited over the past 60 years. Got to love the cars, the gadgets, and the beautiful women. Real spies don’t look anything like them.
The plot does take a modern twist with a biotech weapon of mass destruction that looks suspiciously like covid. When did Bond learn how to fly a seaplane? Is there anything this guy can’t do?
Rumor is that the next Bond will be female.
There is also a nice family-oriented back-story, so it is safe to take the wife.
9:30 PM- Hit the rack and try to catch some shuteye before the next call.
2:00 AM-One of my former staff members at Morgan Stanley calls me from a Private Bank in Geneva to tell me that the Euro (FXE) is getting killed. Is it time to buy?
Not yet. After all the hawkish Fed talk on Friday, the US will certainly become the first developed country to raise interest rates in a decade.
As interest rate differentials are far and away the biggest drivers of the foreign exchange markets, that means the dollar will remain strong and the Euro weak for the foreseeable future. The war is also dragging on the Euro.
Then he moved on to the real purpose of his call. He was planning to take his kids out this weekend. Should they go to see Disney’s new film Encanto?
I loved it. The technology and graphics have taken a generational leap forward and the colors are amazing. It has an upbeat story, as do all Disney films. It gave my Spanish a workout. Notice how many Disney films are now aimed at minorities? That’s because the US is becoming a minority majority country, which is now only 58% white.
I slammed the phone back on the hook and went back to sleep.
6:00 AM - My website administrator called me in a panic. My online store is down. A hack attack prompted PayPal to suspend my account. Since I am one of their larger customers, I call my account rep and get it reopened.
The North Koreans should know better than to try to take down my site. One call to Beijing and I could have them all shot. Go hack Sony instead. I hear it’s a lot easier.
7:00 AM - Another call from my website administrator. The website is down. My book, the “Mad Hedge Guide to Trading Bitcoin,” (click here for the link) brought a traffic spike that is causing the servers to melt. I am burning up the Internet.
Is it something I said?
10:00 AM- I get a call from a leading money manager in London’s Mayfair district. Europe is closing. With gold flatlining last month, is it time to buy?
I said, “Not yet.” Look at the long-term charts, and it is clear that the barbarous metal is attempting to put in a short-term bottom.
World gold production fell for the first time in Q4 and will continue for the next four years by as much as 20%. After going nowhere last year, gold is “sold out.”
Russia is buying more of the yellow metal to dodge the sanctions imposed by the US government. So is the Chinese central bank, which is attempting to diversify away from dollar assets.
The next big bull market for the yellow metal won’t begin until the 2020s, as the commodity boom continues. Then it should run to $3,000-$5,000. Not until then will gold bugs be able to afford new suits.
If you really want to play the precious metals, you’re better off buying silver, which has a huge tailwind from exploding EV and solar panel production.
In the meantime, the Fed will continue to torture gold bulls until their coming Open Market Committee meeting where they will raise interest rates by 50 basis points. Then it is off to the races again.
And go have a pint of bitter for me at the Pig & Whistle next door, will you? Tell the owner, Nigel, to put it on my running tab. He owes me from my last Manchester United win.
He then raved about last summer’s sci-fi film, Dune, which won six Oscars but didn’t even get nominated for best picture. Did I see it?
I did and liked it. As a hard-core Trekkie, I am always a sucker for new big-budget sci-fi films. What is “spice” anyway?
I hate to think that this is the direction in which Hollywood is moving. But foreigners love these things. Explosions are easier to understand than the English language.
1:15 PM - My friend, JR, a senior executive at an oil major, calls from Houston. What the hell was going on with the price of oil (USO)? Only two years ago, it was at negative $37 in the futures market, then he blinked, and it was over $100.
I said don’t worry. Oil will cool off once the Ukraine war ends. It isn’t going to zero, or even the $20 handle again. But we may never see $130 again either. US production is ramping up to a level thought impossible only a month ago. And Biden is dumping a million barrels a day from the Strategic Petroleum Reserve.
Investors piling into the sector now risk buying the next top.
The junk bond market (HYG) is suggesting that more than half of all energy issuers are going to default.
Eventually, the strong end up swallowing the weak (think Exxon (XOM)). However, major institutions have already started picking up shares in the companies with the best balance sheets, buying quality at a once-in-a-generation discount.
Activists, like Carl Icahn, and the value players, such as Warren Buffet, are already involved.
In the meantime, buy some solar plays while they are cheap, like First Solar (FSLR). Sales are soaring, and costs are collapsing, setting up a ten bagger for the whole industry.
A 26% alternative investment tax credit means government support for stretches as far as the eye can see.
He said thanks, and the next time I was in town, he would buy me a 24-ounce chicken fried steak at Billy Bob’s that spilled over both sides of the plate (2,500 calories). I can’t wait. I’ll let my doctor have the heart attack.
He then told me why he really called. He knew I was a science buff. His buddies down on the ranch had just seen Belfast and liked it. Should he bother?
I loved the film, but it brought back bitter memories for me. The Irish Republican Army blew up one Morgan Stanley office building in the eighties, the Commercial Union Building, and tried to destroy a second at the Docklands with a truck bomb. It was such a stupid war, Catholics flighting Protestants.
But if you collect mid-century modern furniture, as I do, it's killer. It's in almost every scene.
2:00 PM - Still haven’t started on the letter yet. I have been answering dozens of email requests for information about the Trade Alert Service. This always happens whenever I have a hot performance streak on. The watchers want to become players. With my 11-year return approaching 540%, new subscribers are pouring in.
4:45 PM - Well, I got the letter done, but I’m too late. The web editor has gone to the DMV to register his new Prius, and the backup has gone to the yoga studio.
5:00 PM - I put on a 60-pound pack and my heavy climbing boots and head out the back door on a ten-mile hike up to the Tahoe Rim Trail. Gotta stay boot camp ready!
You never know when Uncle Sam is going to come calling again. Who cares if I’m 70? I can still hit a quarter on a tree at 50 yards with my Winchester Model 98 30-30.
I listen to an audiobook on my iPhone 13, the seven-volume Truman, by David McCullough about our 33rd president.
It is an amazing story.
Considered by most to be an average man at best, he dropped the atomic bombs on Japan, negotiated with Stalin at Potsdam, created the CIA and the Defense Department, desegregated the Army, ordered the Berlin airlift, went forward with the Hydrogen bomb project, stared down a megalomaniac senator McCarthy (Donald Trump?), and fought the Korean war to a draw.
By the time I hit the trail, a layer of thick fog already blanketed the city below me.
9:00 PM Back to my screens. The Euro has broken $1.01 again. Where was I last week? Asleep? Still, I am going to avoid the Euro for now. It has recently had such a sharp move down over the past two years, that the risk of a sudden, rip-your-face-off, short-covering rally is ever present.
I rather keep some dry powder and buy it a few cents lower. At this point, The World is short the Euro. Maybe they read my letter?
10:00 PM-Time to call it a night and break out a bottle of Duckhorn merlot. Jeez, Louise, it seems people only wanted to talk about the movies today. Is the market really that hard to trade?
The phone rings. Does anybody want my job?
