Global Market Comments
April 4, 2019
Fiat Lux
Featured Trade:
(TEN REASONS WHY STOCKS CAN’T SELL OFF BIG TIME),
(SPY)
(SCAM OF THE MONTH CLUB)
Posts
Global Market Comments
March 25, 2019
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, OR GAME CHANGER)
(SPY), (TLT), (BIIB), (GOOG), (BA), (AAPL), (VIX), (USO)
“When the facts change, I change. What do you do sir?” is a famous quote from the great economist John Maynard Keynes which I keep taped to the top of my monitor and constantly refer to.
The facts certainly changed on Wednesday when the Federal Reserve announced a change in the facts for the ages. Not only did governor Jay Powell announce that there would be no further rate increases in 2019.
He also indicated that the Fed would end its balance sheet unwind much earlier than expected. That has the effect of injecting $2.7 trillion into the US financial system and is the equivalent of two surprise interest rate CUTS.
The shocking move opens the way for stocks to trade up to new all-time high, with or without a China trade deal. Only the resumption of all-out hostilities, like the imposition of new across the board 25% tariffs, would pee on this parade.
As if we didn’t have enough to discount into the market in one shot. I held publication of this letter until Sunday night when we could learn more about the conclusion of the Mueller Report. There was no collusion with Russia and there will be no obstruction of justice prosecution.
However, the report did not end the president’s legal woes as it opened up a dozen new lines of investigation that will go on for years. The market could care less.
At the beginning of the year, I listed my “Five Surprises for 2019”. They were:
*The government shutdown ended and the Fed makes no move to raise interest rates
*The Chinese trade war ends
*The US makes no moves to impeach the Trump, focusing on domestic issues instead
*Britain votes to rejoin Europe
*The Mueller investigation concludes that he has an unpaid parking ticket in
NY from 1974 and that’s it
Notice that three of five predictions listed in red have already come true and the remaining two could transpire in coming weeks or months. All of the above are HUGELY risk positive and have triggered a MONSTER Global STOCK RALLY
Make hay while the sun shines because what always follows a higher high? A lower low.
The Fed eased again by cutting short their balance sheet unwind and ending quantitative tightening early. It amounts to two surprise interest rate cuts and is hugely “RISK ON”. New highs in stocks beckon. This is a game changer.
Bonds soared and rates crashed taking ten-year US Treasury bond yields down to an eye-popping 2.42%, still reacting to the Wednesday Fed comments. This is the final nail in the bond bear market as global quantitative easing comes back with a vengeance. German ten years bonds turn negative for the first time since 2016.
Interest rates inverted with short term rates higher than long term ones for the first time since 2008. That means a recession starts in a year and the stock market starts discounting that in three months.
Interest rates are now the big driver and everything else like the economy, valuations, and earnings are meaningless. Foreign interest rates falling faster than ours making US assets the most attractive in the world. BUY EVERYTHING, including stocks AND bonds.
Biogen blew up canceling their phase three trials for the Alzheimer drug Aducanumab. This is the worst-case scenario for a biotech drug and the stock is down a staggering 30%. Some $12 billion in prospective income is down the toilet. Avoid (BIIB) until the dust settles.
Europe fined Google $1.7 billion, in the third major penalty in three years. Clearly, there’s a “not invented here” mentality going on. It's sofa change to the giant search company. Buy (GOOG) on the dip.
More headaches for Boeing came down the pike. What can go wrong with a company that has grounded its largest selling product? Answer: they get criminally prosecuted. That was the unhappy news that hit Boeing (BA), knocking another $7 off the shares. It can’t get any worse than this, can it? Buy this dip in (BA).
Indonesia canceled a massive 737 order for 49 planes, slapping the stock on the face for $9. Apparently, they are unwilling to wait for the software fix. Buy the dip in (BA).
Oil prices hit a new four-month high at $58 a barrel as OPEC production caps work and Venezuela melts down. At a certain point, high energy prices are going to hurt the economy. Buy (USO) on dips.
The CBOE suspended bitcoin futures due to low volume and weak demand. It could be a fatal blow for the troubled cryptocurrency. Avoid bitcoin and all other cryptos. They’re a Ponzi scheme.
Equity weightings hit a 2 ½ year low as professional institutional money managers sell into the rally. They are overweight long defensive REITs and short European stocks. Watch out for the reversal.
December stock sellers are now March buyers. Expect this to lead to a higher high, then a lower low. Volatility is coiling. Don’t forget to sit down when the music stops playing.
Volatility hits a six-month low with the $12 handle revisited once again down from $30. (VIX) could get back to $9 before this is all over. Avoid (VIX) as the time decay will kill you.
Weak factory orders crush the market, down 450 points at the low. Terrible economic data is not new these days. But it ain’t over yet. Buy the dip.
The Mad Hedge Fund Trader was up slightly on the week. That’s fine, given the horrific 450 point meltdown the market suffered on Friday. We might have closed unchanged on the day but for rumors that the Mueller Report would be imminently released.
March is still negative, down -1.54%. My 2019 year to date return retreated to +11.74%, boosting my trailing one-year return back up to +24.86%.
My nine-year return recovered to +311.88%. The average annualized return appreciated to +33.71%. I am now 40% in cash, 40% long and 20% short, and my entire portfolio expires at the April 18 option expiration day in 14 trading days.
The Mad Hedge Technology Letter used the weakness to scale back into positions in Microsoft (MSFT), Alphabet (GOOGL), and PayPal (PYPL), which are clearly going to new highs.
The coming week will be a big one for data from the real estate industry.
On Monday, March 25, Apple will take another great leap into services, probably announcing a new video streaming service to compete with Netflix and Walt Disney.
On Tuesday, March 26, 9:00 AM EST, we get a new Case Shiller CoreLogic National Home Price index which will almost certainly show a decline.
On Wednesday, March 27 at 8:30 AM, we get new Trade Deficit figures for January which have lately become a big deal.
Thursday, March 28 at 8:30 AM EST, the Weekly Jobless Claims are announced. We also then get another revision for Q4 GDP which will likely come down.
On Friday, March 29 at 10:00 AM, we get February New Home Sales. The Baker-Hughes Rig Count follows at 1:00 PM.
As for me, I’m praying that it stops snowing in the High Sierras long enough for me to get over Donner Pass and spend the spring at Lake Tahoe. We are at 50 feet for the season, the second highest on record.
Good luck and good trading.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Global Market Comments
March 18, 2019
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE WEEK AHEAD, OR A STIFF DOSE OF HUMILITY),
(FCX), (AAPL), (IWM), (SPY), (BA), (FXI), (FXB)
Sometimes markets have to give you a solid dose of humility, blindside you with a sucker punch, and slap you across the face with a wet kipper. Last week was definitely one of those weeks for me.
It was only just a matter of time before this happened. We posted new record gains for the first ten weeks of 2019. It was just a matter of time before the reality check kicked in.
I believed that we have seen the sharpest rally in stocks since the 2009 bottom, we were overdue for a respite. That respite came and only lasted a week. It has been an especially frustrating week for those few of us who watch economic data because it has been unremittingly awful while stocks rose daily.
There were really no reasons for shares to rise that week. There were also no reasons to sell, other than a dozen or so complete disasters that are looming just over the horizon. Still, to quote an old friend of mine, “Markets can remain irrational longer than you can remain liquid.”
The bull market reached ten years old last week, and if you read this letter you caught every dollar of the move up since then, plus some. But how much longer will it last? The technicals say it’s already in its death throes.
China trade negotiations (FXI) endlessly continued as they have for a year, but now the Chinese have thrown up a roadblock. They want everything in writing. In the wake of the North Korean disaster, can you blame them? This will weigh heavily on stocks until it's done.
Another day, another Brexit vote failed again. The pound (FXB) is doing the Watusi. Avoid all UK plays until the issue is decided.
The share buyback blackout started on Friday for many companies which are not allowed to repurchase their own shares up to 30 days ahead of the Q1 earnings reports. If you take the largest buyers of shares out of the market, what is left? Look to play the short side for the market.
Boeing (BA) hit bottom as the US became the last country to ban the 737 Max 8. Imagine being 35,000 feet in the air and you find out your plane is grounded for safety reasons, as 6,000 people did last week. Buy more (BA) on the dip. The next move is from $360 to $450.
Weekly Jobless Claims jumped, by 6,000 to a seasonally adjusted 229,000. Notice claims aren’t falling anymore. Another sign the tax cut stimulus is shrinking? Or that there is no one left to hire with any skills whatsoever?
Tesla (TSLA) released its Model Y SUV, but the cheaper $39,000 version won’t be available until 2021 and the stock dove. We are approaching the make or break level for the stock, the bottom of a two-year range. Get ready to buy on the meltdown. This is a ten bagger in a decade. Buy (TSLA).
The Mad Hedge Fund Trader lost ground last week. The tenth rally in 11 weeks made my short positions lose money faster than my long positions could make it back.
The Mad Hedge Technology Letter was stopped pit of a short position in Apple (AAPL) for a small loss a heartbreaking three days before its options expiration.
February came in at a hot +4.16% for the Mad Hedge Fund Trader. March started negative, down -2.18%.
My 2019 year to date return retreated to +11.46%, a new all-time high and boosting my trailing one-year return back up to +23.72%.
My nine-year return pared back to +311.60%. The average annualized return appreciated to +33.69%.
I am now 60% in cash, 20% long Freeport McMoRan (GLD), 10% short the S&P 500, and 10% short the Russell 2000. My short bond position (TLT) expired at its maximum profit point of $1,140.
As for the Mad Hedge Technology Letter, it covered its short in Apple (AAPL) for a small loss.
Q4 earnings reports are pretty much done, so the coming week will be pretty boring on the data front after last week's fireworks.
On Monday, March 18, at 10:00 AM EST, the March Homebuilders Index is out.
On Tuesday, March 19, 8:30 AM EST, February Housing Starts is published.
On Wednesday, March 20 is the first official day of Spring, at last!
Thursday, March 21 at 8:30 AM EST, the Weekly Jobless Claims are announced. At 10:00 AM, we get a new number for Leading Economic Indicators.
On Friday, March 22 we get a delayed number for Existing Home Sales.
The Baker-Hughes Rig Count follows at 1:00 PM.
As for me, it’s fundraising time here in the San Francisco Bay Area for local schools and gala balls are now a weekly event. I, who have pursued a lifelong pursuit of low prices and great deals, ended up paying $1,000 for a homemade coffee cake, $7,000 for tickets to the Golden State Warriors, and $10,000 for the best table in the house. Hey, what’s the value of money if you can’t spend it? You can’t take it with you.
Good luck and good trading.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Global Market Comments
March 8, 2019
Fiat Lux
Featured Trade:
(MARCH 6 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (SDS), (TLT), (TBT), (GE), (IYM),
(MSFT), (IWM), (AAPL), (ITB), (FCX), (FXE)
Well, that was some week!
After moving up in a straight line for ten weeks, markets are now doing their best impression of a Q4 repeat.
The transports Index (XTN), the most important leading indicator for markets, has been down for 11 straight days, the worst run in 40 years.
And now for the bad news.
Look at a long term chart for the S&P 500 (SPY) and the head and shoulder top practically leaps at you and grabs you by the lapels (that is, if you are one of the few who still wears a suit).
It makes you want to slit your wrist, jump off the nearest bridge, or binge watch all nine seasons of The Walking Dead. It neatly has the next bear market starting around say May 10 at 4:00 PM EST, a rollover point I put out two years ago.
However, hold that move! As long as we have a free Fed put under the market in the form of Jay Powell’s “patience’ policy, we are not going to have a major crash any time soon. That is 2021 business.
It's more likely we trade in a long sideways range until the economy finally rolls over and dies. So when we hit my first (SPY) downside target at the 50-day moving average at $269, which is a very convenient 5% down from the recent top, could well bounce hard and I might add some longs in the best quality names. It all sets of my dreaded flatline of death scenario for the rest of 2019.
Last week saw an unremitting onslaught of bad news from the economy.
The February Nonfarm Payroll report came in at a horrific 200,000 when 210,000 was expected, sending traders to man the lifeboats. The headline Unemployment Rate dropped 0.2% to 3.8%. Average Hourly Earnings spiked 11 cents to $27.66, a 3.4% YOY gain and the biggest pop since 2009.
Construction lost 31,000 jobs, while leisure and Hospitality added no jobs at all. The stunner is that the U6 long term structural “discouraged worker” unemployment rate dropped an amazing 0.8% to 7.4%, the sharpest drop on record. Fewer jobs, but at higher wages is the takeaway here, the exact opposite of what markets want to hear.
US Construction Spending fell off a cliff, down 0.6% in December. It seems that nobody wants to invest ahead of a recession.
The dollar soared (UUP), and gold (GLD) got hammered. You can blame the slightly stronger GDP print on Thursday the week before, which came in at 2.2% instead of 1.8%. As long as Jay doesn’t raise interest rates this is just a brief short covering rally for the buck.
China cut its growth forecast from 6.5% to 6.0% GDP growth for 2019. The trade war with the US and the stimulus hasn’t kicked in yet. The last time they did this, the market fell 1,000 points. Buy (FXI) on the dip.
US Trade Deficit hit ten-year high at $59.8 billion for December, and a staggering $419 billion for the year. It’s funny how foreigners stop buying your goods when you declare war on them. Even Teslas (TSLA) are being stopped at the border in China. Who knew?
New trade tariffs hit US consumers the hardest adding $69 billion to their annual bill. Falling real earnings and rising costs is hardly a sustainable model. Will someone please tell the president?
US growth is fading, says the Fed Beige Book, slowing to a “slight to moderate rate”. The government shutdown is the cause. With Europe already in recession, I’ll be using rallies to increase my shorts. Sell (SPY) and (IWM).
The European Central Bank axed its growth forecast sharply, from 1.7% to 1.1%. Stimulus to renew on all front, including more quantitative easing. It’s just a matter of time before their recession pulls the US down. Sell the Euro (FXE).
You lost $3.7 trillion in Q4, or so says the Fed about the decline of national personal net worth during the stock market crash, the sharpest decline in a decade. You’re now only worth $104.3 trillion.
The Mad Hedge Fund Trader actually gained ground last week, thanks to profits on our short positions rising more than our offsetting losses on our longs.
I have doubled up my overall positions, finally taking advantage of the rollover in all risk assets from a historic ten-week run to the upside. I added shorts in the S&P 500 (SPY) and the Russell 2000 (IWM) against a very deep in-the-money long in Freeport McMoRan (FCX) the world’s largest copper producer.
The thinking here is that with China the only economy in the world that is stimulating its economy and the planet’s largest copper consumer, copper makes a nice long side hedge against my short positions.
The Mad Hedge Technology Letter is happily running a short position is Apple (AAPL) which is now almost at its maximum profit point. We only have four days to run to expiration when the position we bought for $4.60 will be worth $5.00.
February came in at a hot +4.16% for the Mad Hedge Fund Trader. March started out negative, down -0.84%, thanks to a wicked stop loss on Gold (GLD). We had 80% of the maximum potential profit at one point but left the money on the table at the highs.
My 2019 year to date return ratcheted up to +12.84%, a new all-time high and boosting my trailing one-year return back up to +29.92%.
My nine-year return clawed its way up to +312.94%, another new high. The average annualized return appreciated to +33.83%.
I am now 50% in cash, 20% long Freeport McMoRan (FCX), and 10% short bonds (TLT), 10% short the S&P 500, and 10% short the Russell 2000.
We have managed to catch every major market trend this year, loading the boat with technology stocks at the beginning of January, selling short bonds, and buying gold (GLD). I am trying to avoid stocks until the China situation resolves itself one way or the other.
As for the Mad Hedge Technology Letter, it is short Apple (AAPL).
Q4 earnings reports are pretty much done, so the coming week will be pretty boring on the data front after last week's fireworks.
On Monday, March 11, at 8:30 AM EST, January Retail Sales is ut.
On Tuesday, March 12, 8:30 AM EST, the February Consumer Price Index is published.
On Wednesday, March 13 at 8:30 AM EST, the February Durable Goods is updated.
On Thursday, March 14 at 8:30 AM EST, we get Weekly Jobless Claims. These are followed by January New Home Sales.
On Friday, March 15 at 9:15 AM EST, February Industrial Production comes out. The Baker-Hughes Rig Count follows at 1:00 PM.
As for me, I’ll be headed to the De Young Museum of fine art in San Francisco to catch the twin exhibitions for Monet and Gaugin. When it rains every day of the week, there isn’t much to do but go cultural.
Good luck and good trading.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Good Trades are Getting Harder to Find
Global Market Comments
March 8, 2019
Fiat Lux
Featured Trade:
(MARCH 6 BIWEEKLY STRATEGY WEBINAR Q&A),
(SPY), (SDS), (TLT), (TBT), (GE), (IYM),
(MSFT), (IWM), (AAPL), (ITB), (FCX), (FXE)
Below please find subscribers’ Q&A for the Mad Hedge Fund Trader March 3 Global Strategy Webinar with my guest and co-host Bill Davis of the Mad Day Trader. Keep those questions coming!
Q: Are you sticking to your market top (SPY), (SDS) by mid-May?
A: Yes, at the rate that economic data is deteriorating, and earnings are falling, there’s no prospect of more economic stimulation here, my May top in the market is looking better than ever. Europe going into recession will be the gasoline on the fire.
Q: Where do you see interest rates (TLT) in 1-2 years?
A: Interest rates in 2 years could be at zero. If interest rates peaked at 3.25% last year, then the next move could be to zero, or negative numbers. The world is awash in cash, and without any economic growth to support that, you could have massive cuts in interest rates.
Q: Will (TLT) be going higher when a market panic sets in?
A: It will, which is why I’m being cautious on my short positions and why I’m only using tops to sell. You can be wrong in this market but still make money on every put spread, as long as you’re going far enough in the money. That said, when the stock market starts to roll over big time, you want to go long bonds, not short, and we may do that someday.
Q: Do you see a selloff to stocks similar to last December?
A: As long as the Fed does not raise interest rates, I don’t expect to get a selloff of more than 5% or 6% initially. If we do get a dramatic worsening of economic data and it looks like we’re headed in that direction, the Fed will start cutting interest rates, the recession signal will be on and only then will we drop to the December lows—and possibly as low as 18,000 in the Dow.
Q: General Electric has gone from $6 to $10; what would you do now?
A: Short term, sell with a 66% gain in a stock. Long term, you probably want to hold on. However, their problems are massive and will take years to sort out, probably not until the other side of the next recession.
Q: Microsoft (MSFT): long term hold or sell?
A: Absolutely long-term hold; look for another double in this company over the next 3 years. This is the gold standard in technology stocks today. Short term, you’re looking at no more than $15 of downside to the December low.
Q: Would you short banks (IYF) here since interest rates have failed to push them higher?
A: I would not; they’ve been one of the worst performing sectors of the market and they’re all very low, historically. You want to short highs like I’m doing now in the (SPY), the (IWM), and Apple (AAPL), not lows.
Q: Is the China trade deal (FXI) a ‘sell the news’ event?
A: Absolutely; there’s not a hedge fund out there that isn’t waiting to go short on a China trade deal. The weakness this week is them front-running that news.
Q: Do you see emerging markets (EEM) pushing higher from the 42 level, or will a global recession bring it back to earth?
A: First of all, (EEM) will go higher as long as interest rates in the U.S. are flatlining, so I expect a rally to last until the spring; however, when a real recession does become apparent, that sector will roll over along with everything else.
Q: Would you buy homebuilders (ITB) if this lower interest rate environment persists?
A: I wouldn’t. First of all, they’ve already had a big 28% run since the beginning of the year— like everything else—and second, low-interest rates don’t help if you can’t afford the house in the first place.
Q: Would you short corporate bonds if you think there’s going to be a recession next year?
A: I’m glad you asked. Absolutely not, not even on pain of death. I would buy bonds because interest rates going to zero takes bond prices up hugely.
Q: Should you buy stocks in front of a blackout period on corporate buybacks?
A: Absolutely not. Corporate buybacks are the number one buyers of shares this year, possibly exceeding $1 trillion. Companies are not allowed to buy their own stocks anywhere from a couple of weeks to a month ahead of their earnings release. By removing the principal buyer of a share, you want to sell, not buy.
Q: What are the chances the China trade deal (FXI) breaks down this month and no signing takes place?
A: I have a feeling Trump is desperate to sign anything these days, and I think the Chinese know that as well, especially in the wake of the North Korean diplomatic disaster. He has to sign the deal or we’ll go to recession, and that would be tough to run on for reelection.
Q: Which stock or ETF would you short on real estate?
A: If you short the iShares US Home Construction ETF (ITB), you short the basket. Shorting individual stocks is always risky—you really have to know what’s going on there.
Q: What’s the best commodity play out there?
A: Copper. If China is the only country that’s stimulating its economy right now, and China is the largest consumer of copper, then you want to buy copper. The electric car boom feeds into copper because every new vehicle needs 20 pounds of copper for wiring and rotors. Copper is also cheap as it is coming off of a seven-year bear market. What do you buy at market tops? Only cheap stuff.
Q: Why did you go so far in the money in the Freeport-McMoRan (FCX) call spread with only a 10% profit on the trade in five weeks?
A: In this kind of market, I’ll take 10% in 5 weeks all day long. But additionally, when prices are this high, I want to be as conservative as possible. Going deep in the money on that is a very low-risk trade. It’s a bet that copper doesn’t go back to the December lows in five weeks, and that’s a bet I’m willing to make.
Q: Will a new round of QE in Europe affect our stock market?
A: Yes, it’s terrible news. It will weaken the Euro (FXE), strengthen the dollar (UUP), and force US companies to lower earnings guidance even further. That is bad for the market and is a reason why I have been selling short.
Sending You Trade Alerts from Africa
I hate to be the one to fart in church here, but the long-feared recession has already started.
It’s not a conventional recession defined by two back to back quarters of negative GDP growth, although you have a tough time convincing anyone in the besieged auto, real estate, or agricultural sectors of that.
No, this is more of a growth recession. US GDP growth peaked at a 4.4% annualized rate during the second quarter of 2018. The third quarter came in at 3.4% and the four quarter at only 2.6%. Consensus forecasts for Q1 2019 are well below 1%, thanks to the government shutdown.
That means the growth rate has fallen by an eye-popping 76% in nine months! By the way, the government has told us that economic growth has been rising this entire time. But want the stimulus from the 2017 tax bill were spent, there were no more bullets left.
If it were just the GDP data that was falling off a cliff, I wouldn’t be so worried. However, the weakness is confirmed by a raft of other data. The ten year US Treasury bond (TLT) remains stuck around 2.75%, an incredibly low figure given that we are ten years into an economic recovery.
Corporate earnings growth forecasts going forward are now at zero. To see a market multiple of 18X for stocks with no growth and prices that are just short of all-time highs defies belief. This will all lead us to a REAL recession sometime in the near future.
What we are left with is a market of very low return, high-risk trades, not the kind you want to pursue, let alone bet the ranch on.
I believe that when the BIG ONE finally arrives, it won’t be all that bad. I’m looking for a short, sharp recession of maybe six months in duration. There really isn’t that much leverage in the system that can blow up. It might even not be worth selling out all your stocks to avoid it, especially if it results in a giant tax bill.
You would also be selling in front of my coming Golden Age for the United States when a huge demographic tailwind brings a new era of prosperity. If you are smart enough to get out at the top now, will you also be clever enough to get back in at the bottom? Or will you sell more instead, like you did in December?
Merger fever hit the gold industry with Barrick Gold (GOLD) taking a run at Newmont Mining (NEM), the world’s first and second largest producers. It’s all about efficiencies of scale. Take this as a long-term bottom in gold prices.
The China tariff hike was postponed indefinitely, and Chinese stocks love it. Import duties will stay at 10%, instead of rising by 25% starting last Friday. We knew it was never going to happen.
Some 95% of the China trade deal is now already priced into the market. If a deal DOESN’T get done and goes the way of the North Korean negotiations, the market will very quickly back out that 95%.
Poor economic data was to be found everywhere you looked. Wholesale Inventories rose sharply, up 1.1% in another recession indicator. US Factory Orders came in incredibly weak at 0.1% in December when 0.6% was expected. Recession indicator number one million. Limit your risk.
Our friend Jay stayed dovish again, but markets yawned this time. How much mileage can you get from the same vague assertion? Shorts are about to swarm the market. Take profits on all longs.
The US Dollar hit a three-week low. The Fed’s dovish leanings are hammering the buck. Keep loading the boat with weak dollar plays, like emerging markets (EEM).
Bonds got crushed delivering their worst week in five months, down three points as the great “crowding out” begins. Massive corporate borrowing can’t compete with government borrowing, so rates are rising sharply. This is the beginning of the end. Sell short the (TLT).
February came in at a hot +4.16% for the Mad Hedge Fund Trader. My 2019 year-to-date return ratcheted up to +13.64%, a new all-time high and boosting my trailing one-year return back up to +31.90%.
My nine-year return clawed its way up to +313.78%, another new high. The average annualized return appreciated to +33.94%.
I am now 80% in cash, 10% long gold (GLD), and 10% short bonds (TLT). We have managed to catch every major market trend this year, loading the boat with technology stocks at the beginning of January, selling short bonds, and buying gold (GLD). I am trying to avoid stocks until the China situation resolves itself one way or the other.
As for the Mad Hedge Technology Letter, it is short Apple (AAPL).
Q4 earnings reports are pretty much done, so the coming week will be all about jobs, jobs, jobs.
On Monday, March 4, at 10:00 AM EST, December Construction Spending is published.
On Tuesday, March 5, 10:00 AM EST, December New Home Sales are out.
On Wednesday, March 6 at 10:00 AM EST, the February ADP Employment Report is out, a measure of private sector hiring.
Thursday, March 7 at 8:30 AM EST, we get Weekly Jobless Claims.
On Friday, March 8 at 8:30 AM EST, we get the February Nonfarm Payroll Report is released. The Baker-Hughes Rig Count follows at 1:00 PM.
As for me, I’m taking the kids to see Hello Dolly in San Francisco. This was one of my parents’ favorite Broadway musicals, and they used to sing the songs around the house all day long. However, it won’t be the same without the late Carol Channing.
Good luck and good trading.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
