Come join me for lunch at the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in San Francisco on Friday, October 24, 2014. An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, currencies, commodities, precious metals and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Tickets are available for $188.
As a special bonus this year, anyone who buys a ticket can bring a guest for free, provided that they are a trader or investor who may benefit from the services of the Mad Hedge Fund Trader. Just email Nancy at support@madhedgefundtrader.com with your guest?s name and email address so we know who is coming.
I?ll be arriving at 11:00 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a private club in downtown San Francisco near Union Square. Exact location will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my?online store.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/02/San-Francisco-e1410363065903.jpg238359Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-22 01:05:592014-09-22 01:05:59Friday, October 24 San Francisco Strategy Luncheon
If you want to delve into the case against the long-term future of US Treasury bonds in all their darkness, consider these arguments.
The US has not had a history of excessive debt since the Revolutionary War, except during WWII, when it briefly exceeded 100% of GDP.
That abruptly changed in 2001, when George W. Bush took office. In short order, the new president implemented massive tax cuts, provided expanded Medicare benefits for seniors, and launched two wars, causing budget deficits to explode at the fastest rate in history.
To accomplish this, strict ?pay as you go? rules enforced by the previous Clinton administration were scrapped. The net net was to double the national debt to $10.5 trillion in a mere eight years.
Another $6.5 trillion in Keynesian reflationary deficit spending by President Obama since then has taken matters from bad to worse. The Congressional Budget Office is now forecasting that, with the current spending trajectory and the 2010 tax compromise, total debt will reach $23 trillion by 2020, or some 130% of today?s GDP, 1.6 times the WWII peak.
By then, the Treasury will have to pay a staggering $5 trillion a year just to roll over maturing debt. What?s more, these figures greatly understate the severity of the problem.
They do not include another $9 trillion in debts guaranteed by the federal government, such as bonds issued by home mortgage providers, Fannie Mae and Freddie Mac. State and local governments owe another $3 trillion. Double interest rates, a certainty if wages finally start to rise and our debt service burden doubles as well.
It is unlikely that the warring parties in Congress will kiss and make up anytime soon, especially if we continue with a gridlocked congress after the November midterm elections. It is therefore likely that the capital markets will emerge as the sole source of any fiscal discipline, with the return of the ?bond vigilantes? to US shores after their prolonged sojourn in Europe. If you don?t believe me, just look at how bond owners have fared this week. Ouch!
Since foreign investors hold 50% of our debt, policy responses will not be dictated by the US, but by the Mandarins in Beijing and Tokyo. They could enforce a cut back in defense spending from the current annual $700 billion by simply refusing to buy anymore of our bonds.
The outcome will permanently lower standards of living for middle class Americans and reduce our influence on the global stage.
But don?t get mad about our national debt debacle, get even. Make a killing profiting from the coming collapse of the US Treasury market through buying the leveraged short Treasury bond ETF, the (TBT). Just pick your entry point carefully so you don?t get shaken out in a correction.
Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-19 01:03:462014-09-19 01:03:46The Structural Bear Case for Treasury Bonds
Like a deer frozen in a car?s onrushing headlights, markets have been comatose awaiting Federal Reserve governor Janet Yellen?s decision on monetary policy and interest rates.
Interest rates are unchanged. Quantitative easing gets cut by $15 billion next month, and then goes to zero. Most importantly the key ?considerable period? language stayed in the FOMC statements, meaning that interest rates are staying lower for longer.
Personally, I don?t think she?s raising interest rates until 2016. The number of dissenters increased from one to two, but then both of them (Fisher and Plosser) are lame ducks. And, oh yes, the composition of the 2015 Fed will be the most dovish in history.
The latest data points made this a no brainer, what with the August nonfarm payroll coming in at a weak 142,000, and this morning?s CPI plunging to a deflationary -0.20% for the first time since the crash.
Of course, you already knew all of this if you have been reading the Mad Hedge Fund Trader. You knew it three months ago, six months ago, and even a year ago, before Janet Yellen was appointed as America?s chief central banker. Such is the benefit of lunching with her for five years while she was president of the San Francisco Fed.
The markets reacted predictably, with the Euro (FXE), (EUO), and the yen (FXY), (YCS) hitting new multiyear lows, Treasury bonds (TLT), (TBT) breaking down, and precious metals (GLD), (SLV) taking it on the kisser.
What Janet did not do was give us an entry point for an equity Trade Alert (SPY), with the indexes close to unchanged on the day. The high frequency trader?s front ran the entire move yesterday.
Virtually all asset classes are now sitting at the end of extreme moves, up for the dollar (UUP) and stocks, and down for the euro, yen, gold, silver, the ags, bonds and oil. It?s not a good place to dabble.
Putting on a trade here is a coin toss. And when you?re up 30.36% on the year, you don?t do coin tosses. At this time of the year, protecting gains is more important than chasing marginal gains, which people probably won?t believe anyway.
If you want to understand my uncharacteristic cautiousness, take a look at the chart below sent by a hedge fund buddy of mine. It shows that investor credit at all time highs are pushing to nosebleed altitudes. Not good, not good. Oops! Did somebody just say ?Flash Crash??
This is not to say that I?m bearish, I?m just looking for a better entry point, especially as the Q????????? 3 quarter end looms. I?ve gotten spoiled this year. Maybe the Scottish election results, the Alibaba IPO, or the midterm congressional elections will give us one. Buying here at a new all time high doesn?t qualify.
It?s time to maintain your discipline.
Sorry, no more pearls of wisdom today. I?ve come down with the flu.
Apparently, this year?s flu shot doesn?t cover the virulent Portland, Oregon variety. Was it the designer coffee that did it, the vintage clothes, or those giant doughnuts dripping with sugar?
Back to the aspirin, the antibiotics, the vitamin ?C?, and a chant taught to me by a Cherokee medicine man.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/09/John-Thomas5-e1410989501597.jpg400266Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-18 01:04:402014-09-18 01:04:40She Speaks!
Global Market Comments September 17, 2014 Fiat Lux
Featured Trade: (THURSDAY OCTOBER 9 INCLINE VILLAGE, NEVADA STRATEGY LUNCHEON), (WHY I HAVE NO POSITIONS), (TLT), (TBT), (AAPL), (XLE), (XLV), ?(IBB), (BIDU), (FXE), (FXY), (YCS), (TAKING A BITE OUT OF STEALTH INFLATION), (SGG), (WEAT)
iShares 20+ Year Treasury Bond (TLT) ProShares UltraShort 20+ Year Treasury (TBT) Apple Inc. (AAPL) Energy Select Sector SPDR ETF (XLE) Health Care Select Sector SPDR ETF (XLV) iShares Nasdaq Biotechnology (IBB) Baidu, Inc. (BIDU) CurrencyShares Euro ETF (FXE) CurrencyShares Japanese Yen ETF (FXY) ProShares UltraShort Yen (YCS) iPath DJ-UBS Sugar SubTR ETN (SGG) Teucrium Wheat ETF (WEAT)
For the first time in three years, the model trading portfolio of my Trade Alert service has no positions. It is 100% in cash.
I took a small profit on my last remaining position on Friday, a long in the ProShares Ultra Short 20+ Year Treasury ETF (TBT), a bet that Treasury bond prices would fall and yields would rise. Call it rocketing back up to breakeven.
It?s not that I have suddenly fallen in love with the bond market. Au Contraire, I think this is the beginning of a move in Treasury bond yields that could take the ten year yields up from last month?s lowly 2.32% all the way to 3.0%, possibly by yearend.
That would boost the (TBT) by another 35% from here. However, discretion is the better part of valor, and it is better to allow markets to breathe, especially after bonds have made a whopping great six point move down in a week.
That last tactical move left me up 30.36% for 2014. This compares to the average hedge fund that is up only 7%, a Dow average that has appreciated by a mere 3%, and 90% of managers are underperforming even these arthritic benchmarks.
I have to tell you, I kind of like being up 30.36%. In fact, I like it so much that I have taken to standing back and admiring it.
I like to drive it around the block at least once a day. I have had a temporary tattoo made for my forearm that says ?30.36%.? I now wear a button on my lapel that says ?30.36%.?
At my club I have moved my locker to number 3036, although the members there are getting sick of me talking about it all the time and are thinking of having me blackballed.
One reason I am out of the market is that everything I have done over the past four months has worked. The Euro (FXE) and the Yen (FXY), (YCS) collapsed against the US dollar as I expected. Stocks went to new all time highs, despite the abuse that my bullish predictions invited. The bond market peaked and began a precipitous slide.
Apple rallied into the iPhone 6 announcement, right on schedule. Oil crashed, and gold died a slow death. Only a snakebite from General Motors (GM) prevented this from becoming a perfect quarter.
It?s not like I am going to stay out of the market forever. You can?t rest on your laurels for long in the financial advisory business. You really are only as good as your last trade, and readers constantly want to know what I have done for them lately.
Markets are coming to the end of their ?TIME? correction, and there are two important triggers looming ahead of us. Today, Janet Yellen clarifies Fed policy for the next six weeks, and on Friday, the Alibaba IPO starts to trade.
You know that great sucking sound you?ve been hearing all month? That is the sound of managers selling other stocks to make room for their allocations on this gargantuan $20 billion issue.
First went other Chinese Internet companies (BIDU), then Apple (AAPL), then technology in general, then other highflyers in health care (XLV), biotech (IBB), and energy (XLE), then the main market as a whole (SPY).
That sucking sound ended five minutes after yesterday?s market opening. Then it was back to business as usual, shutting out underweight mangers trying to get in. I think this story continues for the rest of the year.
I worked so late last night that I ended up doing my daily ten-mile hike mostly in the dark. What do I come upon but an entire hind leg of a deer (see photo below). The draught in California is so severe that many animals are starving and becoming unusually aggressive.
So I called my mother, a true daughter of the old American West and one eighth Cherokee Indian. I asked ?Hey Mom, can a coyote take down a deer?? ?No, son,? she answered. ?They eat mostly small animals like rabbits. Only a mountain lion can take down a deer.?
I said ?Thanks Mom, call you later.? and hurried down the hill.
https://www.madhedgefundtrader.com/wp-content/uploads/2014/09/John-Thomas4-e1410963740960.jpg379275Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-17 10:38:522014-09-17 10:38:52Why I Have No Positions
Global Market Comments September 16, 2014 Fiat Lux
Featured Trade: (THE BULL MARKET IS ALIVE AND WELL), (SPY), (NFLX), (TSLA), (GOOG), (TLT), (BAC), ?(JPM), (AAPL), (COP), (OXY), (IBB) (IS THIS THE BIG TRADE OF 2015?), (JJC), (DBA), (CORN), (CU), (USO), (KOL), (TESTIMONIAL)
SPDR S&P 500 ETF (SPY) Netflix, Inc. (NFLX) Tesla Motors, Inc. (TSLA) Google Inc. (GOOG) iShares 20+ Year Treasury Bond (TLT) Bank of America Corporation (BAC) JPMorgan Chase & Co. (JPM) Apple Inc. (AAPL) ConocoPhillips (COP) Occidental Petroleum Corporation (OXY) iShares Nasdaq Biotechnology (IBB) iPath DJ-UBS Copper SubTR ETN (JJC) PowerShares DB Agriculture ETF (DBA) Teucrium Corn ETF (CORN) First Trust ISE Global Copper ETF (CU) United States Oil ETF (USO) Market Vectors Coal ETF (KOL)
Global Market Comments September 12, 2014 Fiat Lux
Featured Trade: (MAD HEDGE FUND TRADER TOPS 30% GAIN IN 2014), (AAPL), (SPY), (TLT), (TBT), (FXE), (EUO), (THE BIPOLAR ECONOMY), (AAPL), (IBM), (INTC), (ORCL), (CAT)
Apple Inc. (AAPL) SPDR S&P 500 ETF (SPY) iShares 20+ Year Treasury Bond (TLT) ProShares UltraShort 20+ Year Treasury (TBT) CurrencyShares Euro ETF (FXE) ProShares UltraShort Euro (EUO) International Business Machines Corporation (IBM) Intel Corporation (INTC) Oracle Corporation (ORCL) Caterpillar Inc. (CAT)
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2014-09-12 01:05:202014-09-12 01:05:20September 12, 2014
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