?The government is now the biggest impediment to economic growth,? said my old friend, Steve Rattner, of the Quadrangle Group.
Global Market Comments
May 13, 2016
Fiat Lux
SPECIAL 200% ISSUE
Featured Trade:
(MAD HEDGE FUND TRADER HITS NEW ALL TIME HIGH),
(SPY), (GLD), (USO), (FXE), (EUO), (FXY), (YCS),
(SIGN UP NOW FOR TEXT MESSAGING OF TRADE ALERTS)
SPDR S&P 500 ETF (SPY)
SPDR Gold Shares (GLD)
United States Oil (USO)
CurrencyShares Euro ETF (FXE)
ProShares UltraShort Euro (EUO)
CurrencyShares Japanese Yen ETF (FXY)
ProShares UltraShort Yen (YCS)
Being the armchair historian that I am, I sense that I have just been through D-Day, the Battle of the Bulge, and Dien Bien Phu, ALL AT THE SAME TIME.
That is what it's felt like trading these violent markets this year. After snoring for months, volatility came back with a vengeance.
They?re now running the movie on fast forward.
So it has been a long four months since the performance of The Mad Hedge Fund Trader?s Trade Alert Service has hit a new all time high.
Yet, despite some non-fatal battle injuries and plenty of scars, and now wiser from the trying experience, here we are.
They say in the Marine Corps. that whatever doesn?t kill you makes you stronger.
Semper Fi.
So true, so true.
I have been using every short-term rally for the past six weeks to strap on short positions in the S&P 500 (SPY) through risk limiting vertical bear put option spreads.
Those who couldn?t trade options bought the ProShares Ultra Short S&P 500 (SDS) instead.
For the first few times I had to stop out with frustrating, but small losses.
Then, when I saw the rally in stocks rolling over I bet the ranch.
Guess what? I won another ranch!
That?s not all I have been doing.
I have also been using every dip in gold (GLD) to get long. So far in 2016 my track record here has been perfect, with four consecutive winners.
I have also been hammering both the Japanese yen (FXY), (YCS) and the Euro (FXE), (EUO) on the short side.
And for good measure I strapped on an opportunistic short position in oil (USO), which delivered an instant two-day 9.63% gain.
If you have been reading my daily research you know exactly why we have been executing these specific trades, with the fundamental and technical arguments displayed in all their glory.
No chance for indecision or waffling here!
So far in 2016 we have posted A BLISTERING 9.35% GAIN, putting us once more in the top 1% of all hedge fund performance.
And this is in a year when many of the biggest hedge funds have been wiped out, or are posting severe double-digit, life threatening losses, with lame excuses attached.
May so far has been as hot at the Sahara Desert that I recently escaped, UP AN EYE POPPING 8.14%, making it the best month since September, 2015, when we clocked a life changing +11.99% .
This brings my performance since the inception of the Trade Alert Service five and a half years ago to 201.03%. That annualizes out to 37.11% per year, not bad in this upside down, negative interest rate (NIRP) world.
It seems like only a Madman can prosper in these hopeless trading conditions.
The last nine consecutive Trade Alerts I issued have been profitable, most instantly.
Under promise and over deliver has always been a winning business strategy for me. The harder I work, the luckier I get.
This is against a backdrop of major market indexes that are all unchanged so far this year, despite sudden bursts of volatility and long stretches of boredom.
The key to winning this year has been to put the pedal to the medal during those brief, but hair raising rallies, and then take quick profits.
They don?t call me ?Mad? for nothing.
When the market is dead, you sit on your hands.
After all, you are trying to pay for your own yacht, not your broker?s.
When the market pays you to stay away, you stay away in droves.
Those who have made the effort to wake up early every morning and read my witty and incisive prose have an impressive row of notches on their bedpost to show for their effort.
My groundbreaking trade mentoring service was first launched in 2010. Thousands of followers now earn a full time living solely from my Trade Alerts, a development of which I am immensely proud.
Some 50% of my clients are over 50 and managing their own retirement funds fleeing the shoddy, but expensive services provided by Wall Street. The balance are institutional investors, hedge funds, and professional financial advisors.
The Mad Hedge Fund Trader seeks to level the playing field for the average Joe or Josephine. Looking at the testimonials that come in every day, I?d say we?re accomplishing our goal.
Quite a few followers were able to move fast enough to cash in on my trading recommendations. To read the plaudits yourself, please go to my testimonials page by clicking here.
Our business is booming, so I am plowing profits back in to enhance our added value for you.
To subscribe, please go to our website at www.madhedgefundtrader.com, click on the" STORE" Tab, click on "Subscription Types", scroll to the bottom of the ?Global Trading Dispatch? column, and click on the ?Subscribe Now? button.
And now for the rest of the year.
I can?t wait!
Daily Audited Trade Alert 201.03% Performance Since Inception
Off to Find the Next Great Trade
?Who knew the blockbuster this year would be a horror show,? said Tony Crescenzi, market strategist and portfolio manager at bond giant, PIMCO.
Global Market Comments
May 12, 2016
Fiat Lux
Featured Trade:
(THE SECRET FED PLAN TO BUY GOLD),
(GLD), (GDX), (PALL), (PPLT),
(WHO SAYS THERE AREN?T ANY JOBS?),
(TESTIMONIAL)
SPDR Gold Shares (GLD)
VanEck Vectors Gold Miners ETF (GDX)
ETFS Physical Palladium (PALL)
ETFS Physical Platinum (PPLT)
When I spoke to a senior official at the Federal Reserve the other day, I couldn?t believe what I was hearing.
If the American economy moves into the next recession with interest rates already near zero, the markets will take the interest rates for all interest bearing securities well into negative numbers.
At that point, our central bank?s primary tool for stimulating US businesses will become utterly useless, ineffective, and impotent.
What else is in the tool bag?
How about large-scale purchases of Gold (GLD)?
You are probably as shocked as I am with this possibility. But there is a rock solid logic to the plan. As solid as the vault at Fort Knox.
The idea is to create asset price inflation that will spread to the rest of the economy. It already did this with great success from 2009-2014 with quantitative easing, whereby almost every class of debt securities were hoovered up by the government.
?QE on steroids?, to be implemented only after overnight rates go negative, would involve large scale purchases of not only gold, but stocks, government bonds, and exchange traded funds as well.
If you think I?ve been smoking California?s largest cash export (it?s not the sunshine), you would be in error. I should point out that the Japanese government is already pursuing QE to this extent, at least in terms of equity type investments.
And, as the history buff that I am, I can tell you that it has been done in the US as well, with tremendous results.
If you thought that president Obama had it rough when he came into office in 2009, it was nothing compared to what Franklin Delano Roosevelt inherited.
The country was in its fourth year of the Great Depression. US GDP had cratered by 43%, consumer prices crashed by 24%, the unemployment rate was 25%, and stock prices vaporized by 90%. Mass starvation loomed.
Drastic measures were called for.
FDR issued Executive Order 6102 banning private ownership of gold, ordering the public to sell their holding to the US Treasury at a lowly $20.67 an ounce.
He then urged Congress to pass the Gold Reserve Act of 1934, which instantly revalued the government?s holdings at $35.00, an increase of 69.32%. These and other measures caused the value of America?s gold holdings to leap from $4 to $12 billion.
Since the US was still on the gold standard back then, this triggered an instant dollar devaluation of more than 50%. The high gold price sucked in massive amounts of the yellow metal from abroad creating, you guessed it, inflation.
The government then borrowed massively against this artificially created wealth to fund the landscape altering infrastructure projects of the New Deal.
It worked.
During the following three years, the GDP skyrocketed by 48%, inflation eked out a 2% gain, the unemployment rate dropped to 18%, and stocks jumped by 80%. Happy days were here again.
Monetary conditions are remarkably similar today to the those that prevailed during the last government gold buying binge.
There has been a de facto currency war underway since 2009. The Fed started it when it launched QE, and Japan, Europe, and China have followed. Blue-collar unemployment and underpayment is at a decades high. The need for a national infrastructure program is overwhelming.
However, in the 21st century version of such a gold policy, it is highly unlikely that we would see another gold ownership ban.
Instead, the Fed?s would most likely move into the physical gold market, sitting on the bid for years, much like it recently did in the Treasury bond market for five years. Gold prices would increase by a multiple of current levels.
It would then borrow against its new gold holdings, plus the 4,176 metric tonnes worth $200 billion at today?s market prices already sitting in Fort Knox, to fund a multi trillion dollar infrastructure-spending program.
Heaven knows we need it. Millions of blue-collar jobs would be created and inflation would come back from the dead.
Yes, this all sounds like a fantasy. But negative interest rates were considered an impossibility only two years ago.
The Fed?s move on gold would be only one aspect of a multi faceted package of desperate last ditch measures to resuscitate the economy which I outlined in a previous research piece (click here for ?What Happens When QE Fails? ).
That?s assuming the gold is still there. The door to the vault at Fort Knox has not been opened since September 23, 1974. Persistent urban legends and internet rumors claim that the vault is actually empty, or filled with fake steel bars painted gold.
We?ll never know for sure. Visitors are not allowed.
The Next Economic Stimulus Program?
While winging my way across the South Pacific a few months ago, I spotted an unusual job offer:
WANTED: Social worker, tax free salary of $60,000 with free accommodation and transportation, no experience necessary, must be flexible and self-sufficient.
With the unemployment rate at 5.3%, and running as high as 45% for recent college grads, I was amazed that they were even advertising for such a job. Usually such plum positions get farmed out to a close relative of the hiring officials involved.
Intrigued, I read on.
To apply you first had to fly to Auckland, New Zealand, and then catch a flight to Tahiti. After that you must endure another long flight to the remote Gambler Island, and then charter a boat for a 36-hour voyage.
Once there, you had to row ashore to a hidden cove on the island, as there was no dock, or even a beach.
It turns out that the job of a lifetime is on remote Pitcairn Island, some 2,700 miles ENE of New Zealand, home to the modern decedents of the mutineers of the HMS Bounty.
History buffs will recall that in 1790, Fletcher Christian led a rebellion against the tyrannical Captain William Bligh, casting him adrift in a lifeboat.
He then kidnapped several Tahitian women and disappeared off the face of the earth. When he stumbled across Pitcairn, which was absent from contemporary charts, he burned the ship to avoid detection.
An off course British ship didn?t find the island until some 40 years later, only to find that Christian had been killed for his involvement in a love triangle decades earlier.
The job is not without its challenges. There is one doctor, and electric power is switched on only 10 hours a day. Supply ships visit every three months. The local language is a blend of 18th century English and Tahitian called Pitkern, for which there is no dictionary.
Previous workers have a history of going native. Oh, and 10% of the island?s 54 residents are registered sex offenders, due to its long history of incest.
The next time someone you know complains about being unable to find a job, just tell them they are not looking hard enough, and to brush up on their Pitkern.
For more on the jobs situation, please visit my website at www.madhedgefundtrader.com.
I've been reading your blog for a while and found it a helpful beacon in a sea of confusing and contradictory information as I try and make sense of the world (and try and make money from sense!).
Kind regards,
Toby
London, England
Global Market Comments
May 11, 2016
Fiat Lux
Featured Trade:
(MINISTRY COMMENTS DEMOLISH THE YEN),
(FXY), (YCS),
(THE COST OF AN AGING WORLD),
(EWJ), (EWI), (EWG), (EWQ), (EWL), (EWU), (PIN)
CurrencyShares Japanese Yen ETF (FXY)
ProShares UltraShort Yen (YCS)
iShares MSCI Japan (EWJ)
iShares MSCI Italy Capped (EWI)
iShares MSCI Germany (EWG)
iShares MSCI France (EWQ)
iShares MSCI Switzerland Capped (EWL)
iShares MSCI United Kingdom (EWU)
PowerShares India ETF (PIN)
We are pretty much home free on our short position in the Japanese yen.
At this morning?s mark of $2.92 we had captured 73.33% of the maximum potential profit, earning a tidy 8.15% in only eight trading days.
As soon as this position expires on May 20, I?ll be rolling out to the June options.
Better than a poke in the eye with a sharp stick, as they say.
Rather than pay the commissions to come out here at $2.92, I am going to hang on to the May 20 expiration in eight trading days.
Yesterday, Japanese Minister of Finance, Mr. Taro Aso, said that he was ?prepared to undertake intervention? to weaken the Japanese yen.
Of course, it was a big help that someone in the ministry called me last Wednesday to give me a heads up that something like this was in the pipeline, and would be made public as soon as everyone came back to work from Japan?s Golden Week holidays.
Knowing the Finance Minister?s father back in the 1970?s when I covered Japan for The Economist magazine probably had something to do with it.
Did I mention that I was the first foreigner ever to have an office in the Japanese Ministry of Finance, just down the hall from the head guy? I remember the lack of heating and those cold, ill lit marble hallways with creaking wooden parquet floors like it was yesterday.
The news was more than enough to crush the yen and send all of the short term longs packing.
There never was a fundamental argument to own the yen whatsoever. It was technical and high frequency day traders all the way.
What else would you expect with the beleaguered country?s negative interest rates, dying economy, the worlds worst demographic outlook, and a business philosophy firmly rooted in the last century.
Did you know that 20% of the Nikkei Average listed companies are zombies with a negative net worth kept alive so they won?t default on their debt? It?s not an accounting system I have any great faith in.
Look for the move down to be just as ferocious as it was on the way up. My bet is that the yen has put in its high for the year.
Another round of aggressive quantitative easing has to be just around the corner.
If you own the ProShares Ultra Short Yen -2X ETF (YCS), keep it. We have much lower to go for the yen, and much higher to go for the (YCS).
