The Mad Hedge Fund Trader closed out a blockbuster month in May, increasing customer assets by a lip smacking 3.93%.

The home runs were in short positions in the S&P 500 (SPY), the Japanese Yen (FXY), and the Euro (FXE), where we earned 10% to 16% a pop.

We even caught an overnight drop in the price of oil (USO) to pick up a few shekels on the short side.

We used the latest flip flop on Fed policy indicating a surprise tightening to stop out of our long gold trade, capping our losses in an asset class that was clearly rolling over.

You don?t want to be anywhere near the barbarous relic during a rising rate environment, no matter how brief it may be.

It should be a boring week of low volume summer trading, as traders sit on their hands awaiting this week?s big economic reports.

A further incentive to do nothing will be the dark cloud hanging over the upcoming June 14-15 Federal Reserve Open Market Committee Meeting.

A rate rise means ?RISK OFF?, while no action brings ?RISK ON?.

It?s going to be a fairly active week on the data front, despite the shortened four days.

Tuesday morning, the Case Shiller S&P 500 Home Price Index should show continued heady gains in residential real estate prices. Your home could become your top performing asset this year.

The next day, the Fed provides its Beige Book, which should confirm a slow reacceleration of economic growth from the Q1 mini recession. We already got the hint with Q1 GDP revised up on Friday from +0.50% to a still milquetoast +0.80%

Thursday, the weekly Jobless Claims should confirm figures close to 40 year lows. Everyone in the country who wants a job has one, except ?your cousin Milton, who never worked a day in his life.

On Friday, we get the big kahuna of the month, the May Nonfarm Payroll Report, which should show a steady 200,000 in monthly gains, keeping the headline unemployment rate to 5.0%. The U-6 structural long-term unemployment rate should continue its grind down into single digits.

As a result, near term trading opportunities may be few and far between. We may levitate at the top of the range for stocks all the way until mid-June, when the Fed shows its hand on its near term monetary policy.

If they don?t move, as I expect, risk assets everywhere will rally. But I don?t think we will break out to new all time highs until August or September. If they take action, risk assets will dive.

My former Berkeley economics professor, Janet Yellen, didn?t give us any help in her Harvard speech on Friday, essentially saying rates will rise somewhere, someday, and now you can all take off for the Hamptons.

Thanks a lot, Janet!

The one interesting thing she did say is that the Fed actually considered negative interest rates as a policy option. That means we?ll get them FOR SURE in the next recession three or four years down the road.

In any case, I plan to be well out of the market by June 13, taking profits on my remaining positions. Those include shorts in the (SPY) and the yen (FXY), and a long in the Treasury bond market (TLT). I?m deliberately keeping my book small, retaining lots of dry powder for better entry points.

When an upcoming event risk becomes too random, it is better to step out of the market and scale back your risk. Leave the coin tosses to the kids. The CNN Fear And Greed Index is screaming at you that new longs initiated here will end in tears.

If by chance we get the upside breakout now, let your few lucky friends who caught it pay for he next round of drinks. It is a low quality trade.

Sound like a good time to me for a vacation to me.

Ships Ahoy, and damn the torpedoes!

I love banks, especially American ones.

I like those imposing, monumental edifices. I am attracted to those smooth marble surfaces. Those wrought iron grills at the teller windows are not to be trifled with.

They all reek of safety, stability, and certainty. What better place to park your life savings.

And I never hesitate to grab one of those free breath mints on the way out the door.

What?

They got rid of those during a 1980?s cost cutting binge? You always know that when they have to dump the breath mints to preserve their profit margin, there?s a problem.

The airlines did it 40 years ago, and look what happened to them.

However, today, banks and financial shares in general offer some unique investment opportunities.

What is a manager to do when the stock market is at a decade high valuation? You only buy cheap stuff.

What do you do when stock markets move in a narrow sideways range with no net movement? You only buy more cheap stuff.

What is a trader to do in a stock market characterized by rapid sector rotation? You only buy, you guessed it, cheap sectors.

Enter the banks.

You remember the banks, don?t you? That was the sector that was priced for perfection in anticipation of eight consecutive quarter point interest rate raises starting in December.

It only took a 10% stock market correction to rain on that parade, as the prospect of any further rate hikes was put on ice. Bank stocks plunged 40% in a heartbeat.

Now that the April Open Market Committee minutes have put a rate rise back on the table, we?re seeing that movie replayed one more time.

Banks stocks have already recovered half their January losses, except for JP Morgan Chase (JPM), which has already made back all the lost ground.

Nice trade Jamie Diamond!

This time around, banks have attractions that were missing in past cycles.

Oversight is now at record levels of intensity.

Nearly a decade of new share issues has brought bank capital to record levels, and liquidity is at an all time high.

Book values are growing at a decent pace.

Energy loan losses were wildly over exaggerated by the rumor mill.

Share valuations are discounting a full scale recession that, worst case, is at least 2-3 years off. Earnings are coming off the floor.

Efficiencies are growing by leaps and bounds. One of the reasons that New York City has had the worst residential real estate market for the past couple of years is that bank layoffs have reached the hundreds of thousands.

Bank subleasing of office space has been so prodigious that it is even starting to drag on the red hot San Francisco commercial real estate market.

In fact, you could write off an entire new housing crisis now and still have more capital left over than last time.

Stocks could double over the next interest rate cycle. They offer a double discount in price to book value (70%) and earnings multiple to the main market multiple (9X versus 19X). Dividend yield are the highest in history.

Even Facebook (FB) and Apple (AAPL) are unlikely to beat that.

The fines and penalties that came out of the financial crisis are now a distant memory. They are even getting reversed, as was the case with Bank of America last week.

Banks share are in fact a levered put on the bond market (TLT) and a call option on interest rates ($TNX).

There has been a lot of uninformed chatter about fintech eating the banks? lunch. But the reality is that the staggering regulation imposed on the banks by Dodd-Frank and the Treasury will act as an unassailable moat protecting the industry.

My guess is that entrepreneurs, developers, and coders will take one look at the morass of new rules and walk away to find some other industry to prey upon (real estate brokerage?).

The long promised breakups of the big banks will never happen, lest the US give away its competitive advantage with the rest of the world. If they do, it will unlock massive shareholder value, enabling the shares to double yet again.

You can buy any of the big household names, like (BAC), (JPM), Citibank (C), Wells Fargo (WFC), Morgan Stanley (WFC), or Goldman Sachs (GS) and do fine.

Or you could diversify and buy the basket through the Financial Select Sector ETF (XLF)? (click here for their prospectus at https://www.spdrs.com/product/fund.seam?ticker=XLF .

The smart regional bank play here is Comerica (CMA).

As a result of all of this, bank stocks are offering the lowest entry point in a generation.

After the January meltdown, I announced that banks and energy would become the top performing stock market sectors of 2016.

So far, I have been dead right on both calls.

The big question is if this is yet another bull trap and fake out with the banks, or whether this is the beginning of a long-term sustainable trend up.

We may well find out on Friday, May 27 at 10:30 PM EST, when chairman Janet Yellen addresses an economics forum at Harvard University.

Will her commentary be hawkish, dovish, neither, or both?

If?s she?s smart, she?ll talk about the weather.