?Ask not what your country can do for you, but what you can do for your country,? said John F. Kennedy, America?s 35th president.
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Global Market Comments
June 14, 2016
Fiat Lux
Featured Trade:
(TAKING OFF FOR EUROPE),
(TESTIMONIAL)
Terrorist attacks, mass beheadings, and crashing airlines all spell one thing to me.
Travel bargains!
Of course, my first choice for a vacation destination this year was the civil war in Syria, so I could find out on the ground what is really happening there. In addition, I could shop for a refugee camp in Jordan for one of my non-profits to help support.
Unfortunately, my family was not too hot on this idea, not wishing to buy me back from kidnappers at an inflated price, again (the last time was Cambodia in 1976).
The Joint Chiefs were not too thrilled either. At my advanced aged, I simply know too much to fall into the wrong hands.
So I compromised. This summer will find me camping out in London for the ?Brexit? vote, circling Ireland, holing up in a villa in medieval Dubrovnik, touring museums in Florence, Italy and retreating to my chalet in Zermatt, Switzerland.
My tux and white dinner jacket are packed, the five star hotels are booked, and the limo is waiting outside. The Cessna is fully fueled and the flight plan filed. I am taking off for my 2016 European Strategy Luncheon Tour.?
I have worked the hardest in my life the past year, and it is time for a break. I have also put myself through the most grueling training regimen, hiking 2,000 miles and snowshoeing another 600, all with a 60-pound pack.
Every year it seems to get harder to keep the calendar at bay.
Along the way I will be meeting with other hedge fund managers, senior government officials, CEO?s at major banks and Fortune 500 companies, large institutional investors, and a Nobel Prize winner or two.
Getting out into the real world and soaking up new data and opinions in invaluable in shaping my own global view, and your performance benefits from it. Since I don?t stumble across these people in my living room, I have to travel the world to seek them out.
In New York I?ll board the Cunard Line?s Queen Mary II at the Brooklyn Cruise Terminal to take residence in the owner?s suite. If the ship?s satellite link cooperates this year, I will be filing live reports along the way.
As we pass over the wreck of the Titanic on the second day out, we?ll throw a bouquet of flowers as a mark of respect.
In London I?ll catch William Shakespeare?s Taming of the Shrew at the Globe Theater (click here for the link at http://www.shakespearesglobe.com/theatre
I?ll spend an evening at the Royal Ballet (click here for that link http://www.roh.org.uk/about/the-royal-ballet ), and visit the Royal Academy of Arts Summer Exhibition.
At least one morning will find me catching an old-fashioned straight razor shave at the Jermyn Street Barbers, and topping up my supply of business shirts at Turnbull & Asser.
The cheese trolley at the Bibendum restaurant is to die for. For accommodations, I?ll be staying at the ever reliable, if not spartan, British Navy Officers Club. You know, the place where Horatio Nelson used to drink with his junior officers?
I?ll then board the Orient Express for Venice, where dinner is black tie only. Hopefully, there won?t be any murders this time.
If a new Brioni suit and pair of Gucci shoes throw themselves at me while I stroll through the Galleria in Milan, I may be unable to resist.
In Geneva I?ll be consulting with the representatives of several Middle Eastern royal families while they vacation in the Alps.
One afternoon will be devoted to taking the paddle wheel steamer on Lake Geneva to the Chateau de Chillon in Montreux where Lord Byron used to live, sipping fine Swiss white wines along the way.
The grand finale will be my annual assault on the Matterhorn at Zermatt, which at 14,692 feet, is higher than anything we have in the continental US. After training all year for this, it?s now or never.
I spend my evenings there at public steam baths where, afterwards, I roll around in the snow and beat myself with birch branches. It is invigorating, to say the least.
I will be traveling with my laptop and keeping in touch with the markets. While 18th century internet service is passable, the bandwidth can be snail like. So unless I see something extraordinary, I will cut back on new Trade Alerts.
After running up a 204% return in five and a half years, and beating 99% of the hedge funds in the industry, I deserve a break. I need to spend some time alone on a mountaintop, communing with the spirits, attempting to discover the new long-term market trends through the mist.
While on the road, I will continue writing my newsletter, giving you my daily dose of market insight. I will also be re-running some of my favorite research pieces from the past when my travel schedule does not allow internet access.
This is to introduce my thousands on new subscribers to the golden oldies, and to remind the legacy readers who have since forgotten them.
I will be back in San Francisco in early August, glued to my screens once again for another year of toil. In the meantime, please feel free to email me.
?Mad Day Trader, Bill Davis, will be working straight through the summer. No rest for the wicked!
In the meantime, I shall be raising a glass to all of you at dinner, the loyal readers of The Diary of a Mad Hedge Fund Trader. Salute! Prost! And Cheers! Thanks for making this letter a huge success!
If you want to take the opportunity to meet me in person, please find my strategy luncheon schedule below. To purchase tickets for the luncheons, please click here, select the "STRATEGY LUNCH" Tab and the country and city of your choice.
Monday, June 20 - London, England
Wednesday, June 29 ? Dublin, Ireland
Thursday, July 7 ? Dubrovnik, Croatia
Saturday, July 9 ? Florence, Italy
Friday, July 22 ? Zermatt, Switzerland - Seminar
Wednesday, July 27 ? Basel, Switzerland
I?ll Meet You on Top
My Plug Adaptors Are Ready to Go
My Plug Adaptors Are Ready to Go
I can't tell you how much I enjoy your blog. It is the first place I go every morning and I miss you on the weekends.
I stumbled upon your site about 4 months ago and have been addicted to it since day one. I really appreciate not only your insight into the markets, but also your global and historical perspectives.
All of this served up with your great sense of humor makes it a must read! Thanks for all your hard work.
Chip
?It doesn?t take Herculean assumptions to get to $125 for S&P 500 earnings this year. Slap a 16 multiple on that, and you get 2,000 for the index,? said Brian Jacobson of Wells Fargo Advantage Partners.
Global Market Comments
June 13, 2016
Fiat Lux
(WHAT?S ON YOUR PLATE FOR THIS WEEK),
(SPY), (MUB),
(THE PASSING OF A GREAT MAN),
(JUNE 20 LONDON STRATEGY LUNCHEON)
SPDR S&P 500 ETF Trust (SPY)
iShares National Muni Bond (MUB)
Talk about someone sucking all the air out of the room!
That?s what Federal Reserve chairwoman Janet Yellen is doing, keeping us on the edge of our seats until 2:00 PM Wednesday, when the Open Market Committee?s decision on interest rates is announced.
Will she, or won?t she?
The bigger question is whether stocks will peak on the news, ending a torrid four-month, 30 handle upside move in the S&P 500 (SPY).
I bet she won?t, but then I have never been that good at predicting the needs of women.
Certainly the economic data is not there to justify a rise. And inflation is nowhere to be seen, the sole prerequisite for dearer money that Janet has told us she needs to see first.
In the meantime, a steady drumbeat of warning of an imminent stock market sell off from my old friends, George Soros and Carl Icahn, is rising to a deafening din.
Call them old fashioned, but equity price earnings multiple rising towards a nosebleed 20X against falling earnings, shrinking volume, and narrowing breadth does not scream ?BUY? to anyone with a memory.
Yes, global quantitative easing and negative interest rates may suck in enough foreign money to squeeze a few more points of upside from the S&P 500. But you can chase those pennies with your money, not mine.
In the meantime, individual investors are voting with their feet. According to data released by Lipper Analytical Services, some $850 million fled equity mutual funds last week, the sixth consecutive week out outflows.
The money fled into municipal bonds, $1.2 billion worth. No doubt investors find the stratospheric 1.32% yields irresistible. I guess the IShares National Muni Bond ETF (MUB) is the modern equivalent of a mattress.
It all sets up my scenario of the high frequency traders triggering a few more stop losses to squeeze a few more points of upside, then stocks rolling over and folding like a wet taco shell over the summer.
If that happens, US Treasury bonds will rocket to challenge century low 10-year yields of 1.36%. Fasten your seat belt, don your hard hat, and pass the ammunition!
I?m hearing that risk managers at all the major hedge funds are battening down the hatches and running scenario analyses until their mainframes melt.
Any other data releases will pale this week in the shadow of the Fed decision.
On Tuesday at 10:00 AM EST will be a yawn. The weekly Wednesday bond auctions should be well bid.
The Weekly Jobless Claims at 8:30 AM EST on Thursday will continue to peg numbers at four-decade lows.
It will be interesting to see if $50 plus oil will cause the Baker Hughes rig count to rise for a second week in a row at 1:00 PM EST on Friday.
A quadruple witching option expiration should provide the usual excitement at the Friday close as the plungers and market makers game the even money strikes.
If you have any questions on the above, you can call me via international radiotelephone on the Queen Mary 2 in the aft deck 10 Owner?s Penthouse Suite.
I should be somewhere in the mid Atlantic sipping my Dom Perignon sailing over the wreck of the Titanic.
It was with a heavy heart that I boarded a plane for Los Angeles a few years ago to attend a funeral for Bob, the former scoutmaster of Boy Scout Troop 108.
The event brought a convocation of ex-scouts from up and down the West coast, and said much about our age.
Bob, 85, called me two weeks before to tell me his CAT scan had just revealed advanced metastatic lung cancer. I said ?Congratulations Bob, you just made your life span.?
It was our last conversation.
He spent only a week in bed, and then was gone. As a samurai warrior might have said, it was a good death. Some thought it was the smoking he quit 20 years ago.
Others speculated that it was his close work with uranium. I chalked it up to a half century of breathing the air in Los Angeles.
Bob originally hailed from Bloomfield, New Jersey. After WWII, every East coast college was jammed with returning vets on the GI bill. So he enrolled in a small, well-regarded engineering school in New Mexico in a remote place called Alamogordo.
His first job after graduation was testing V2 rockets newly captured from the Germans at the White Sands Missile Test Range. He graduated to designing ignition systems for atomic bombs. A boom in defense spending during the fifties swept him up to the Greater Los Angeles area.
Scouts I last saw at age 13 or 14 were now 60, while the surviving dads were well into their 80?s. Everyone was in great shape, those endless miles lugging heavy packs over High Sierra passes obviously yielding lifetime benefits.
Hybrid cars lined both sides of the street. A tag along guest called out for a cigarette and a hush came over a crowd numbering over 100.
Apparently, some things stuck. It was a real cycle of life weekend. While the elders spoke about blood pressure and golf handicaps, the next generation of scouts played in the back yard, or picked lemons off a ripening tree.
Bob was the guy who taught me how to ski, cast for rainbow trout in mountain lakes, transmit Morse code, and survive in the wilderness. He used to scrawl schematic diagrams for simple radios and binary computers on a piece of paper, usually built around a single tube or transistor.
I would run off to Radio Shack to buy WWII surplus parts for pennies by the pound, and spend long nights attempting to decode impossibly fast Navy ship to ship transmissions. He was also the man who pinned an Eagle Scout badge on my uniform in front of beaming parents when I turned 15.
While in the neighborhood, I thought I would drive by the house in which I grew up, once a modest 1,800 square foot ranch style home to a happy family of nine. I was horrified to find that it had been torn down, and the majestic maple tree that I planted 40 years ago had been removed.
In its place was a giant, 6,000 square foot marble and granite monstrosity under construction for a wealthy family from China.
Profits from the enormous China-America trade have been pouring into my home town from the Middle Kingdom for the last decade, and mine was one of the last houses to go.
When I was class president of the high school here, there were 3,000 white kids, and one Chinese. Today those numbers are reversed. Such is the price of globalization.
I guess you really can?t go home again.
At the request of the family, I assisted in the liquidation of his portfolio. Bob had been an avid reader of the Diary of a Mad Hedge Fund Trader since its inception, and he had attended my Los Angeles lunches.
It seems he listened well. There was Apple (AAPL) in all its glory at a cost of $21. I laughed to myself. The master had become the student and the student had become the master.
Like I said, it was a real circle of life weekend.
The Mad Hedge Fund Trader at Age 11
?Outsourcing is quickly becoming mostly outdated as a business model,? said GE CEO, Jeffrey Immelt.
Global Market Comments
June 10, 2016
Fiat Lux
Featured Trade:
(JULY 9 FLORENCE, ITALY GLOBAL STRATEGY LUNCHEON),
(MY YEAREND STOCK MARKET VIEW),
(SPY), (QQQ), (PANW), (GILD), (IBB), (BAC),
?(AAPL), (KBE), (GS), (LEN), (USO), (DIS),
(SAN FRANCISCO?S LONG SUFFERING RENTERS
?TAKE ANOTHER HIT)
SPDR S&P 500 ETF Trust (SPY)
PowerShares QQQ Trust, Series 1 (QQQ)
Palo Alto Networks, Inc. (PANW)
Gilead Sciences Inc. (GILD)
iShares Trust - iShares Nasdaq Biotechnology ETF (IBB)
Bank of America Corporation (BAC)
Apple Inc. (AAPL)
SPDR Series Trust - SPDR S&P Bank ETF (KBE)
The Goldman Sachs Group, Inc. (GS)
Lennar Corporation (LEN)
United States Oil Fund LP (USO)
The Walt Disney Company (DIS)