Diary Entry for Monday, June 18, 2012
4:30 PM Sunday- Looks like my Monday is going to start early this week.
One of my Athens readers e-mailed me that New Democracy was a slam dunk to win the election and would form a right of center, pro bailout, pro Euro (FXE) coalition government. Looks like it is going to mean a ďRISK ONĒ week. US Treasuries nosedive in the overnight market. Looks like we are going to get a shot at selling short the Euro (EUO) one more time.
6:30 PM Sunday-Take kids to see the new DreamWorks animated blockbuster, ďMadagascar 3Ē, with voiceovers by Ben Stiller, Chris Rock, Jada Pinkett Smith and David Schwimmer. Notice how the kid movies are better than the adult movies these days. There are ample double entendres and innuendos to keep the grownups laughing all the way. I loved the penguins, fowl after my own heart.
9:00 PM-Call from a friend at the Peopleís Bank of China in Beijing. He wants to know if they have missed the top of the Treasury bond market, and if they should start unloading their $1 trillion worth of holdings. I said donít worry. I expect the ďRISK OFFĒ trade to take the ten year yield up to 1.25% on a spike at some point, and then levitate, possibly for years. The world is suffering from a savings glut and a bond shortage. Plus, you will get a double kicker with a strong dollar. But please donít try and sell ahead of a three day weekend, like you did last time. And thanks for the Peking Duck dinner in Shenzhen last year.
9:30 PM- Hit the rack and try and catch some shuteye before the next call.
2:00 AM-One of my former staff members at Morgan Stanley calls me from a Private Bank in Geneva to tell me that the Spanish bond market was in free fall, with yields piecing 7%. Is it time to buy? I said not yet, not until the fat lady sings, and slammed the phone back on the hook to go to sleep.
Spanish 10 Year Bond Yields
3:00 AM- Call from one of the top New York trading houses. There are rumors that the Oracle (ORCL) would announce blowout earnings in a few hours. Did I want to buy anymore stock? I said no thanks, that I already had 50% of my portfolio in high tech names like Apple (AAPL) and Hewlett Packard (HPQ). Can he please come up with any new top performing industries? People are getting tired of hearing the Apple story for the umpteenth time.
5:00 AM-Woken up by an earthquake that sounds like a truck just hit the house. I turn on the TV and learn that I am directly above the epicenter. Itís the third one since Wednesday. Ah, the joys of living in California next door to the San Andreas Fault.
6:00 AM-My website administrator calls me in a panic. The store is down. A hacker attack prompted PayPal to suspend my account. Since I am one of their largest customers, I call my account rep and get it reopened.
6:15 AM-An old friend from the Swiss National Bank called asking my read on the Fed meeting this week. I said that things werenít dire enough for a QE3, but he could count on a ďtwistĒ extension to include home mortgage securities. The board was most frustrated my its inability to revive the real estate market with the lowest interest rates in history, and such a move could take 30 years fixed rates loans from 3.75% to 2.75% in weeks. I said I owed him a fondue diner with a bottle of Schnapps for giving me the heads up on the Swiss franc devaluation last year where my followers earned a 400% profit on the puts (FXF). But to collect, he had to take the cog railway up to Zermatt and attend my strategy seminar on July 27.
6:45 AM-I get flooded with 30 emails from Trade Alert Service followers asking if they should take profits on their long Apple calls spreads. I ignore them. Donít bother me with the small change. I canít hold everyoneís hand.
7:00 AM- Another call from my website administrator. The website is down. The Greek election brought a traffic spike that is causing the servers to melt. I am burning up the Internet.
7:30 AM- Conference call with support team. We agree to build in new infrastructure to accommodate a tenfold increase in new business. Couldnít I be wrong a little more often to bring the growth down to a more manageable level? Pass.
8:00 AM- I get a call from a leading hedge fund in Londonís Mayfair district. Europe is closing. Should we run the Euro short overnight? You betcha! And go have a pint of bitter for me at the Pig & Whistle next door, will you.
9:00 AM-Call from a large family office in Chicago. Should we use todayís weakness in gold to unwind out more hedges against core longs? Absolutely. Grab the brass ring. The barbaric relic is going to $2,300 before the fat lady sings, and will go higher if the ECB launches another LTRO, which is just a matter of time.
10:00 AM-Better get to work on todayís letter. Iím already behind the eight ball. Iíve gotta lead the gold story, which is starting to emerge from its long hibernation and exhibit some virile stirrings. Platinum (PPLT) looks even better.
12:00 PM-Break for lunch. Isnít it great the way enchiladas always taste better after they have been reheated for a third day?
1:00PM- Market close with a small loss. Looks like another day of ďRISK OFFĒ for Tuesday.
1:15 PM-My friend, JR, a senior exec at an oil major, calls from Houston. What the hell was going on with the price of oil (USO)? Three months ago, it was at $109, then he blinked, and it was $80. I told him that the oil companies lost control of the price of Texas tea last year and the high frequency traders were now in the saddle. Better get used to the new frontier. He said thanks, and next time I was in town he would buy me a 24-ounce chicken fried steak at Billy Bobís that spilled over both sides of the plate. I canít wait. Iíll let my doctor have the heart attack.
1:20 PM- Itís official. Oracle earns $3.45 billion, or 69 cents a share, for the three months ended in May, compared with $3.2 billion, or 62 cents, a year earlier. The stock pops 5% in the aftermarket. Damn! I bought Hewlett Packard instead.
2:00 PM-Still havenít started on the letter yet. I have been answering 200 email requests for information about the Trade Alert Service. This always happens whenever I have a hot trade on. The watchers want to become players. A 20.5% May and an 11% June month to date brings them in the droves.
2:30 PM- I unplug the phones and close the curtains to do a one our live show on the recent market volatility as a guest on a local radio station.
4:45 PM- Well, I got the letter done, but Iím too late. The web editor has gone to the DMV to register her new Prius, and the backup has gone to the yoga studio. Ouch! 10% sales tax for new cars in Washington state! They must be as broke as California.
4:30 PM-The traffic stats for the site have gone down. I called the webmaster, but she has gone off to a line dancing lesson in Dallas.
5:00 PM-Ooops. Forgot to take the trash out.† My garbage man, an Afghan immigrant, must wonder what goes on here. Every week, I recycle a giant bin of newspapers, magazines, and assorted broker research, but only throw out a tiny bag of actual trash. Am I green, or what? He notices that my T-shirt reads in Pashto script ďDefense Language Institute. We learn, so you donít have to.Ē He says his son was stationed at Fort Hood in Texas and that he hasnít heard from him in two months. I make a quick call Washington and find out that he has been transferred to Afghanistan as a translator. I tell him not to worry. Itís the other guys who usually die, not ours.
5:30 PM-I put on a 60-pound pack and my heavy climbing boots and head out the back door on a three hour hike to climb Grizzly Peak as I do every evening. Gotta stay boot camp ready. You never know when Uncle San is going to call again. Who cares if Iím 60? During Desert Storm, my flight commander was drafted at 65, and I heard of another guy they took who was 85. Turns out there was no one left in the Navy who knew how to run a coal fired steamship.
9:00 PM-Back to my screens. The Euro has broken $1.27. The Greek stock market is up 25% in days. Where was I last week? Asleep? If you turned off your TV, the centrist win was a no brainer.
10:00 PM-Time to call it a night and break out a bottle of Duckhorn merlot. How many wine clubs do I belong to now? 12? As of now I am committed to buy more wine this year than I can possibly drink or give away. Thatís the price of living next door to Napa Valley. Iím shipping a case to my suite on the Queen Mary II so I can give away to fellow diners en route from New York to Southampton in a few weeks. The captain always likes a bottle too.
12:00 AM- Time to do some early Christmas shopping. Bonhamís in London is holding their fine jewelry auction today, and lot no. 62 is a 5 carat diamond solitaire that is a real beat.
12:10 AM-Damn! Outbid by the Chinese again, who are running up the price of luxury goods absolutely everywhere to insane levels. Time to get some sleep. Maybe next time. Iím obviously not working hard enough. I unplug my phones, as itís the only way I can sleep. It looks like tomorrow is going to be another busy day. Does anybody want my job?
Note to Greece: Please Quit Waking Me Up!