August 31, 2011 – The Greek Assist on My Swiss Franc Short

Featured Trades: (THE GREEK ASSIST ON MY SWISS FRANC SHORT), (FXF) 1) The Greek Assist on My Swiss Franc Short. Greece's Eurobank and Alpha Bank have agreed to merge to create the country's largest financial institution. The new entity will have assets of over $217 billion with 2,000 branches. Eurobank had been one of the Greek banks that failed the European … [Read more...]

August 31, 2011 – Sell Oil for a Stock Hedge

Featured Trades: (SELL OIL FOR A STOCK HEDGE), (USO) 2) Sell Oil for a Stock Hedge. Over the last month, asset classes everywhere have downshifted to new, lower trading ranges, reflecting the very rapid chopping of GDP growth forecasts for 2011 from 4% to 2%. Oil is no exception. I think the new range for Texas tea rises from the $75 low we put in on the August 8th … [Read more...]

August 31, 2011 – Rare Earths Are Heating Up Again

Featured Trades: (RARE EARTHS ARE HEATING UP AGAIN) 3) Rare Earths Are Heating Up Again. Long time readers remember fondly my 2010 play in the rare earth sector, where stocks like Molycorp (MCP), Avalon (AVARF), and Lynas Corp (LYSCF) clocked gains of over 400%, and the call options went ballistic (click here for 'Rare Earths Are About to Become a Lot More Rare'). … [Read more...]

August 29, 2011 – The Great Snore of 2011

Featured Trades: (THE GREAT SNORE OF 2011) 1) The Great Snore of 2011. As I expected, Ben Bernanke's long awaited Jackson Hole speech turned out to be a huge nonevent. He effectively put off any serious action to repair the sagging economy until the next Federal Open Market Committee (FOMC) meeting on September 20-21. He will look at the world then and decide if the … [Read more...]

August 29, 2011 – Time to Dump the Swiss Franc

Featured Trades: (TIME TO GO SHORT THE MATTERHORN), (FXF) 2) Time to Dump the Swiss Franc. This will be my first post Bernanke speech trade. The Swiss franc (FXF) has been driven up to absurd levels by a safe haven bid. It is about to suffer a fate similar to its safe haven cousin in the metals market, gold, which plunged an incredible 11% in two days. This is the next … [Read more...]

August 26, 2011 – My Home Run on Bank of America (BAC)

Featured Trades: (MY HOME RUN ON BANK OF AMERICA) 2) My Home Run on Bank of America (BAC). Yesterday, I recommended that followers of my Macro Millionaire program put 5% of their capital into Bank of America (BAC) shares at $6.85. My three month target was $9-$10. Not was that call a total home run, it was one with the bases loaded at the bottom of the ninth inning! … [Read more...]

August 26, 2011 – Time to Buy Some Fire Insurance

Featured Trades: (TIME TO BUY SOME FIRE INSURANCE) 3) Time to Buy Some Fire Insurance. I am looking at oil take a swan dive here, bonds pop a point, and even gold performing a rallyette off its $1,700 low. It all looks like 'RISK OFF' to me. So I'm thinking gee, maybe I should hedge some of my downside risk here. It's not like the positions are so … [Read more...]

August 25, 2011 – Macro Millionaires Post One Day Gain of 120% on Gold Shorts

Featured Trades: (THE BUBBLE HAS BURST IN GOLD), (GLD)   2) Macro Millionaires Post One Day Gain of 120% on Gold Shorts. It's déjà vu all over again. I spoke to a friend in Tokyo two nights ago who told me that local gold scrapage companies were seeing lines extending out the door. This is exactly what I saw in Johannesburg in 1979, when gold then made a … [Read more...]

August 25, 2011 – Time to Double Up on the (TBT)

Featured Trades: (THE BUBBLE HAS BURST IN BONDS TOO), (TBT), (TLT) 3) Time to Double Up on the (TBT). I have mentioned in recent days that the stock market is close to fully discounting a recession that isn't going to happen. The bond market is saying that recession is a certainty, that we are already well into it. I think the bond market has got it wrong this … [Read more...]

August 25, 2011 – The Dead Hand of the Baby Boomer on the Market

Featured Trades: (THE DEAD HAND OF THE BABY BOOMER ON THE MARKET)   4) The Dead Hand of the Baby Boomer on the Market. From this year, the nation's 80 million baby boomers have started retiring in large numbers, creating a major depressive effect on stock prices, virtually assuring that we will endure a second lost decade for the leading stock indexes. Assuming … [Read more...]

August 24, 2011 – My View of the Stock Market for the Rest of 2011

SPECIAL MODEL PORTFOLIO ISSUE   1) My View of the Stock Market for the Rest of 2011. Down, then up, then down again. How about that? I believe that the global risk markets will bottom sooner than people think, and that the time has come to compile a shopping list of investments to pick up on distressed days in the market. I think that at the most extreme, the … [Read more...]

August 24, 2011 – What to Buy at the Bottom

SPECIAL MODEL PORTFOLIO ISSUE FOR PAID SUBSCRIBERS ONLY To obtain this issue in full with Model Portfolio, please subscribe to The Diary of a Mad Hedge Fund Trader   2) What to Buy at the Bottom. … [Read more...]

August 24, 2011 – The Method to My Madness

SPECIAL MODEL PORTFOLIO ISSUE   3) The Method to My Madness. The portfolio that I have assembled here capitalizes of the major long term trends that will dominate the global economy for the next decade. Long term followers of this letter will know the names well, as these were the ones we rode up from the March, 2009 bottom, with spectacular results. Those trends … [Read more...]

August 23, 2011 – Those Damn Europeans!

Featured Trades: (THOSE DAMN EUROPEANS!), (AAPL) 1) Those Damn Europeans! I am tearing up my Eurail Pass, returning my espresso machine to Costco, and sending my gelato maker to the recycling center. Next year's summer vacation is going to be at Coney Island, not the Italian Rivera. Those damn Europeans are spoiling everything! The US stock markets made a … [Read more...]

August 23, 2011 – How to Play Jackson Hole

Featured Trades: (HOW TO PLAY JACKSON HOLE), (DBA), (FXE), (USO), (CU), (PALL), (UUP), (GLD), (SFS), (FXJ), (FXA), (FXC)   2) How to Play Jackson Hole. I remember when the meeting of economists at Jackson Hole was one of those boring, under the radar, non-stories that only those with an interest in the arcana of macroeconomic affairs bothered to take notice. In … [Read more...]

August 22, 2011 – Come Join Me for Lunch in Singapore on Tuesday, October 18

Featured Trades: (SINGAPORE STRATEGY LUNCHEON)   2) Come Join Me for Lunch in Singapore on Tuesday, October 18. Come join me for lunch at the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Singapore on Tuesday, October 18, 2011. A multicultural vegetarian meal will be followed by a wide ranging discussion and a 60 minute question and … [Read more...]

August 22, 2011 – Why This is Not 2008

Featured Trades: (WHY THIS IS NOT 2008), (SPX), (SPY) 3) Why This is Not 2008. Much of the investment community is now bracing for a repeat of the 2008 crash, when the S&P 500 plunged by a gut punching 52%. For proof, look no further than last week's dramatic selling, when traders could not unload equities fast enough. Unfortunately for those puking out … [Read more...]

August 18, 2011 – Come Join Me for Lunch in Seattle on Friday, September 16

Featured Trades: (SEATTLE STRATEGY LUNCHEON) 1) Come Join Me for Lunch in Seattle on Friday, September 16. Come join me for lunch for the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Seattle on Friday, September 16, 2011. A three course lunch will be followed by a 30 minute PowerPoint presentation and a one hour question-and-answer … [Read more...]

August 18, 2011 – German GDP is Another Nail in the Coffin for the Global Economy

Featured Trades: (GERMAN GDP IS ANOTHER NAIL IN THE COFFIN FOR THE GLOBAL ECONOMY), (FXE), (EUO) 2) German GDP is Another Nail in the Coffin for the Global Economy. Major hedge fund strategists were stunned by German's Q2 GDP, which came in at a feeble seasonally adjusted 0.1%. This is a mere shadow of the more virile 1.5% growth seen in Q1. In one shot, economic … [Read more...]

August 18, 2011 – The Hardest Job in the World

Featured Trades: (THE HARDEST JOB IN THE WORLD), (FXI), (TLT) 3) The Hardest Job in the World. US Vice President, Joe Biden, currently has the toughest job in the world. He has gone to China, hat in hand, to convince the country's leaders to buy even more US Treasury bonds than they already have. This he must do with ten year yields approaching 2.0%, delivering … [Read more...]

August 17, 2011 – Come Join Me for Lunch in Las Vegas on Friday, September 23

Featured Trades: (LAS VEGAS STRATEGY LUNCH) 1) Come Join Me for Lunch in Las Vegas on Friday, September 23.  Come join me for lunch at the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Las Vegas at 12:00 noon on Friday, September 23, 2011. A three course lunch will be followed by a 30 minute PowerPoint presentation and a one hour … [Read more...]

August 17, 2011 – Lessons From the Crash of 2011

Featured Trades: (LESSON OF THE CRASH OF 2011), (SPX), (OIL), (COPPER), (GLD), (PALL) 2) Lessons From the Crash of 2011. The Dow only moved double digits today, down 78 points, finally delivering the sort of quiet, somnolescent, low volume day one would normally expect during the dog days of August. Last week was one of the most violent in market history and traders … [Read more...]

August 17, 2011 – Quote of the Day

'The next time we have a global economic crisis it will be much worse than in 2008. There will be money printing and war. The whole system will collapse. You don't want to own government bonds and cash. Equities don't do well, but at least you still have the ownership of companies. Precious metals do well in that environment, and so does oil,' said Mark Faber, … [Read more...]

August 16, 2011 – Brace Yourself. The US is Turning into Japan

Featured Trades: (THE US IS TURNING INTO JAPAN) 1) Brace Yourself. The US is Turning into Japan. (SPX) As a silver tsunami of 80 million baby boomers retires, they will be followed by only 65 million from generation 'X'. The intractable problems that unhappy Japan is facing will soon arrive at our shores. Boomers, therefore, better not count on the next generation to buy … [Read more...]

August 16, 2011 – A Visit to the Insane Asylum

Featured Trades: (A VISIT TO THE INSANE ASYLUM) 2) A Visit to the Insane Asylum. Watching the ten year Treasury bond tickle a 2.00% yield yesterday, I thought it would be propitious to revisit the insanity that is going on in this market. Historically, ten year bond yields matched the nominal GDP growth rate. So an average 3.5% GDP growth for the past decade added … [Read more...]

August 15, 2011 – The Euro is Ready to Turn

Featured Trades: (THE EURO IS READY TO TURN) 1) The Euro is Ready to Turn. I believe that we may be about to witness a sea change in the value of the Euro versus the US dollar. Since January, the Euro has been beating the daylights out of Uncle Buck, as European interest rates have been rising, while those for Uncle Buck have been falling. Trading 101 dictates that … [Read more...]

August 15, 2011 – Use the Melt Down to Load Up on India

Featured Trades: (USE THE MELT DOWN TO LOAD UP ON INDIA), (EEM), (PIN), (INDY), (EPI) 2) Use the Melt Down to Load Up on India. Take a look at the chart for the emerging market ETF (EEM) below and you will be surprised to see how well it has held up in the recent collapse. This is in sharp contrast to its performance during the 2008 crash, when emerging markets … [Read more...]

August 15, 2011 – Treasury 30 Year Auction Bombs

Featured Trades: (TREASURY 30 YEAR AUCTION BOMBS) 3) Treasury 30 Year Auction Bombs. If you want to see what a failed Treasury bond auction looks like, take a look at the intraday chart for Thursday's sale of 30 year paper, which was a miserable failure. Prices dove and yields soared, from a near 40 low at 3.57% all the way back up to 3.81%. It looks like … [Read more...]

August 12, 2011 – Jobless Claims Send Bears Fleeing

Featured Trades: (JOBLESS CLAIMS SEND BEARS FLEEING)   1) Jobless Claims Send Bears Fleeing. The single most important coincident indicator you can follow, the weekly jobless claims, showed a modest improvement, sending bears fleeing. The figures released at 8:30 am EST every Thursday had claims fall by 7,000 to 395,000. This is the third consecutive week that … [Read more...]

August 12, 2011 – The True Cost of Oil

Featured Trades: (THE TRUE COST OF OIL) 2) The True Cost of Oil. I received some questions last week on my recent solar pieces as to whether I minded paying more money for 'green' power. My answer is 'hell no,' and I'll tell you why. My annual electric bill comes to $1,500 a year. Since the California power authorities have set a goal of 33% alternative energy sources … [Read more...]

August 12, 2011 – The World’s Largest Solar Plant

Featured Trades: (THE WORLD'S LARGEST SOLAR PLANT)   4) The World's Largest Solar Plant. Unfortunately, I know Blythe, California too well. This natural blast furnace is in a God forsaken corner of the state where I hunted jack rabbits as a kid, the Indians survived on Gila monsters for protein, and it regularly reaches 130 degrees in the shade. It is also where … [Read more...]

August 11, 2011 – Join Me For Lunch in Sydney, Australia on Tuesday, October 11

Featured Trades: (SYDNEY, AUSTRALIA STRATEGY LUNCH) 1) Join Me For Lunch in Sydney, Australia on Tuesday, October 11. Come join me for lunch at the Mad Hedge Fund Trader's Global Strategy Update, which I will be conducting in Sydney, Australia on Tuesday, October 11, 2011. An excellent meal will be followed by a wide ranging discussion and a question-and-answer … [Read more...]

August 11, 2011 – Bernanke Says Buy Stocks, Or Else!

Featured Trades: (BERNANKE SAYS BUY STOCKS, OR ELSE!) 2) Bernanke Says Buy Stocks, Or Else! I believe that the risk markets are discounting a recession that isn't going to happen. Not yet, anyway. So I am going to start adding some small, limited risk call options here. After analyzing the statement from the Federal Reserve yesterday, it is clear that Ben … [Read more...]

August 11, 2011 – Quote of the Day

If you can get a dividend higher than the yield on ten year debt, it's an opportunity we haven't seen in our lifetime. On a five year horizon, investing in large multinationals with high dividends will have a large payday,' said Lawrence Fink, CEO of BlackRock. … [Read more...]

August 10, 2011 – Is QE3 Back From the Dead?

Featured Trades: (IS QE3 BACK FROM THE DEAD?)   2) Is QE3 Back From the Dead? When I went to bed late last night, the (SPX) was trading down 30 points, and I was thinking 'here we go again'. When I woke up, the market was up 30 points, and I had to blink hard. The overnight range was an unprecedented 60 points, or 560 Dow points. From the July high to the … [Read more...]

August 10, 2011 – The Worst Case Scenario

Featured Trades: (THE WORST CASE SCENARIO)   3) The Worst Case Scenario. 'There is oversold, and there is OVERSOLD'. That was a comment made by my friend, technical analyst Arthur Hill, in the wake of the Dow's breathtaking 634 point crash. Some indicators were showing the most oversold levels in 12 years. I think that there is a better than 50/50 … [Read more...]

August 9, 2011 – The Second Shoe Falls in the Downgrade Crisis

Featured Trades:  (THE SECOND SHOE FALLS IN THE DOWNGRADE CRISIS) 1) The Second Shoe Falls in the Downgrade Crisis. Today, Standard and Poor's fired the second barrel of its shotgun at the credit worthiness of the US with its downgrade of Fannie Mae debt from triple 'A' to AA+. Other government-backed securities are soon expected to suffer a similar fate. The move … [Read more...]

August 9, 2011 – Japan Recovery Starts Early

Featured Trades: (JAPAN'S RECOVERY STARTS EARLY), (EWJ)   2) Japan Recovery Starts Early. It looks like the second half of the 'V' shaped recovery of the Japanese economy, the leg up, is starting sooner than expected. Long time readers of this letter already know that in the wake of the March tsunami that hit Japan there would be an immediate collapse of the … [Read more...]

August 9, 2011 – Why I’ve Been Wrong About the Market

Featured Trades: (WHY I'VE BEEN WRONG ON THE MARKET), (SPX) 3) Why I've Been Wrong About the Market. On Friday I was fairly convinced that we are close to a bottom in the market at 1,166. As I write this the next day, I am staring at the (SPX) futures ticking down to 1,114.60. I have been following global financial markets since the late sixties, and at my current … [Read more...]

August 8, 2011 – Buy the Sun Hats When It's Raining

Featured Trades: (BUY THE SUNHATS WHEN IT'S RAINING), (SPX) 1) Buy the Sun Hats When It's Raining. I don't think that we are going into recession immediately. I believe that we can eke out a few more quarters of 2% ish type growth before we put in the final top of the great bull market of 2009-2012. I think a real crash of the 50% variety will be a 2012 … [Read more...]

August 8, 2011 – RIP for America's Triple A Rating

Featured Trades: (RIP FOR AMERICA'S TRIPPLE A RATING), (TLT), (TBT) 2) RIP for America's Triple A Rating. At long last, after months of warnings, leaks, hand wringing, and speculation, Standard and Poor's has at last downgraded US Treasury bonds a notch to AA+. The change was the most telegraphed ratings change in history. You can bet this weekend saw … [Read more...]

August 8, 2011 – The July Nonfarm Payroll: Rocketing Back Up to Zero

Featured Trades: (THE JULY NONFARM PAYROLL: ROCKETING BACK UP TO ZERO) 3) The July Nonfarm Payroll: Rocketing Back Up to Zero. The monthly nonfarm payroll report finally surprised to the upside, the much watched figure coming in at +117,000, well above a consensus of +90,000. The headline unemployment rate is back down 0.1% to 9.1%. May and June saw healthy revisions … [Read more...]

August 5, 2011 – Come to the September 16 Seattle Strategy Luncheon

Come to the September 16 Seattle Strategy Luncheon. Come join me for lunch for the Mad Hedge Fund Trader's. Global Strategy Update, which I will be conducting in Seattle on Friday, September 16, 2011. A three course lunch will be followed by a 30 minute PowerPoint presentation and a one hour question and answer period. I'll be giving you my up-to-date view on stocks, bonds, … [Read more...]

August 5, 2011 – Here is Where to Watch for the Turn

Featured Trades: (HERE'S WHERE TO WATCH FOR THE TURN), (GLD), (FXF), (FXY), (TLT) 1) Here is Where to Watch for the Turn. What to say about Thursday's market? The 'RISK OFF' trade had its finest hour. The Dow average WAS down 512 points, NASDAQ (QQQ) cratered by 135 points, oil (USO) was off $6, and copper (CU) got smacked for 34 cents. Emerging markets (EEM) quickly … [Read more...]

August 5, 2011 – Report From Europe, Part V

Featured Trades: (REPORT FROM EUROPE, PART V) 2) Report From Europe, Part V. My first morning in the Swiss mountain hamlet of Zermatt, home to the Matterhorn, I was awoken by an army platoon outside my door, fully armed with fixed bayonets. No, I was not being arrested for past indiscretions in the idyllic Alpine paradise. My often inflammatory opinions had not … [Read more...]

August 4, 2011 – The Head and Shoulders Is In

Featured Trades: (THE HEAD AND SHOULDERS IS IN), (SPX), (VIX), 1) The Head and Shoulders Is In. Much of the selling that took the Dow down 265 points on Tuesday was generated by a clear 'head and shoulders top' pattern setting up on the charts. This occurs when you see three consecutive peaks on a chart, with the middle 'head' higher than the two … [Read more...]

August 4, 2011 – Do You Remember When’..?

Featured Trades: (DO YOU REMEMBER WHEN'..?), (GLD), (INDU), (USO), (FXF) 3) Do You Remember When'¦.? The stock market managed to eke out a modest 29 point gain today, the first time in nine trading days. If it had closed down a ninth day, it would have been the first time since 1978. I remember those days well. The Dow average then was trading at 700. Gold (GLD) was at … [Read more...]

August 3, 2011 – What the Markets Are Telling Us

Featured Trades: (WHAT THE MARKETS ARE TELLING US), (SPX), (TLT), (TBT) 1) What the Markets Are Telling Us. I spent the morning doing a round robin with hedge fund trader friends of mine trying to figure how we all got this so horribly wrong. I did this as the (SPX) was ticking down to 1249 and bond yields cratered to a one year lows at 2.62%. The uproar of the debt … [Read more...]

August 2, 2011 – Be Careful What You Wish For

Featured Trades: (BE CAREFUL WHAT YOU WISH FOR) 1) Be Careful What You Wish For. Politicians are popping champagne bottles and celebrating the end of cantankerous negotiations over the debt ceiling. I say be careful what you wish for. Let me give you my quickie, back of the envelope analysis of the debt ceiling deal in Washington. The compromise calls for $2.4 … [Read more...]

August 2, 2011 – The Death of the Bond Vigilantes

Featured Trades: (THE DEATH OF THE BOND VIGILANTES) 2) The Death of the Bond Vigilantes. Back in the seventies and eighties, when inflation was soaring well into double digits, the markets were regularly punished by a band of gun slinging traders known as the 'bond vigilantes.' Hard asset prices were running amuck, and there was a laser like focus on the growth … [Read more...]

August 2, 2011 – How to Get a Free Trip to Europe

Featured Trades: (HOW TO GET A FREE TRIP TO EUROPE)   3) How to Get a Free Trip to Europe. During my recent trip to Europe, I made another startling discovery about the woeful state of America's 19th century health care system. I needed to get refills on my prescription drugs when I was in Zermatt, so I stopped by the local pharmacy and placed an order. This was for … [Read more...]

August 1, 2011 – GDP is Another Bucket of Cold Water

Featured Trades: (GDP IS ANOTHER BUCKET OF COLD WATER) 1) GDP is Another Bucket of Cold Water. Another bucket of cold water was thrown on financial markets on Friday with the shocking release of Q2 GDP of 1.3%. The whisper number prior to the release was at 1.9%, and even this figure is far short of the Federal Reserve's GDP forecast for 2011 of 3.0%. Keep in mind … [Read more...]

August 1, 2011 – An Update on Rhodium

Featured Trades: (AN UPDATE ON RHODIUM)   2) An Update on Rhodium. I was recently interviewed by Daniela Cambone of Kitco News, a boutique firm specializing in the online research and trading of metals. I have known the Kitco people for a long time and they are one of the class acts in the hard asset arena. To summarize, I think that rhodium (symbol XRHO in London), … [Read more...]

August 1, 2011 – What the Tea Party Doesn't Know About the Bond Market

Featured Trades: (WHAT THE TEA PARTY DOESN'T KNOW ABOUT THE BOND MARKET)   3) What the Tea Party Doesn't Know About the Bond Market. I have spoken to several Tea Party leaders since the movement sprung up a year ago, and have come to several conclusions. This is a genuine, grass roots movement composed of people who are unhappy about the changes that have … [Read more...]