Diary Entry for Monday, October 15, 2012
4:30 PM Sunday- Thought I’d check my Bloomberg to see how the Asian markets were opening. Wow! Chinese September exports were up 9.9%. That certainly makes the weak August numbers appear to be an anomaly. Could this be the bottom for China? I doubt it. Looks like it will be a good “RISK ON” day, which is great for my portfolio.
6:30 PM Sunday- Take kids to see the new DreamWorks animated blockbuster, “Madagascar 3”, 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 People’s Bank of China in Beijing. He wants to know if they have missed the top of the Treasury bond market (TLT) last summer, and if they should start unloading their $1 trillion worth of holdings. I said don’t worry. If we get a U.S. recession in 2013, I expect the “RISK OFF” trade to take the ten-year yield down 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 don’t 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 shut eye 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 strong this morning. Is it time to buy? I said not yet, not until the fat lady sings. We are miles (kilometers) away from a resolution of Europe’s woes. At the very least, they need a new treaty to create a ministry of finance to be run by the Germans. Expect that to take at least five years, if ever. Then, you can think about buying. I slammed the phone back on the hook and went back to sleep.
Spanish 10-Year Bond Yields
3:00 AM- Call from one of the top New York trading houses. There are rumors that Microsoft will announce its re-entry into the music business. Is it time to dump Apple (AAPL) and buy Mr. Softy? I said no, (MSFT) has yet to show that it understands a single note in the music business. Until then, I’m sticking with Steve Jobs’ creation, even if the story is getting long in the tooth. If you don’t believe me, then try buying an iPhone 5.
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. It’s the third one since Wednesday. Ah, the joys of living in California right on top of 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 U.S. presidential election. He needs to know if the U.S. is going to be a good buy or a bad guy for the next four years. I answered that the Romney win in the first debate gave him a bump in the national polls, but those are irrelevant. Obama is still winning in eight out of nine battle ground states. So he still looks like a shoe-in for November. Just take Ohio for example. A Romney improvement from a 10% deficit to 5% still means he is losing.
Without Ohio, Romney has to win Florida, plus all seven of the remaining battleground states to win. And he has to do this with many of these states demanding policies that are diametrically opposed to each other. Try blending Hispanic Florida, blue collar Pennsylvania, corn subsidy based Iowa, and vacation-dependent Nevada. It’s the same as pulling an inside royal flush on your fifth card. In other words, it’s almost a mathematical impossibility. Count on the U.S. to stay a good guy on the international stage
I said I owed him a fondue dinner 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 their puts (FXF). But to collect, he had to take the cog railway up to Zermatt and attend my strategy seminar next summer.
6:45 AM- I get flooded with 30 emails from Trade Alert Service followers asking if they should dump their gold holdings or buy more in the face of today’s $25 plunge. I told them to buy more of the barbarous relic on the dip. An Obama win means four more years of quantitative easing, which gold loves.
7:00 AM Another call from my website administrator. The website is down. My call to short oil 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 ten-fold increase in new business. Couldn’t 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 London’s 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. And tell the owner, Nigel, to put it on my running tab.
9:00 AM- Call from a large family office in Chicago. Should we use today’s weakness in gold to unwind more hedges against core longs? Absolutely. Grab the brass ring. The barbaric relic is going to $2,300 before the bull market is over, and will go higher if the ECB launches another LTRO, which is just a matter of time. Getting the U.S. election out of the way will also be positive.
10:00 AM- Better get to work on today’s letter. I’m already behind the eight ball. I’ve gotta lead the gold story, which is starting to emerge from its long hibernation and to exhibit some virile stirrings. Platinum (PPLT) looks even better, thanks to the recovery of the U.S. car industry. In fact, I better take another look at Ford (F).
12:00-Break for lunch. Isn’t it great the way enchiladas always taste better after they have been reheated for a third day?
1:00-PM- Market close with a decent gain. Gold and silver took it on the kisser. Looks like another day of “RISK ON” 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)? Five months ago, it was at $109, then he blinked, and it was $90. I told him that Israeli intelligence thinks there won’t be a war with Iran until the middle of next year at the earliest, if ever. Until then, weak demand from China was going to pull demand down. The term structure in the oil futures market says as much, with contangos going all the way out until the spring. He said thanks, and next time I was in town he would buy me a 24-ounce chicken-fried steak at Billy Bob’s that spilled over both sides of the plate. I can’t wait. I’ll let my doctor have the heart attack.
2:00 PM- Still haven’t 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. With my two-year return approaching an all-time high of 63%, new subscribers are pouring in.
2:30 PM- I unplug the phones and close the curtains to do a one-hour 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 I’m 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 “Defense Language Institute. We learn, so you don’t have to.” He says his son was stationed at Fort Hood in Texas and that he hasn’t heard from him in two months. I make a quick call to the Pentagon and find out that he has been transferred to Afghanistan as a translator. I tell him not to worry. It’s 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 Sam is going to call again. Who cares if I’m 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 $1.29 again. Where was I last week? Asleep? Still, I am going to avoid the Euro. It has recently been so trendless that it has killed more traders than a bad tin of caviar. There are better things to do.
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. That’s the price of living next door to Napa Valley.
12:00 AM- Time to do some early Christmas shopping. Bonham’s in London is holding their fine jewelry auction today, and lot no. 62 is a 5-carat diamond solitaire that is a real beaut.
12:10 AM- Damn! Outbid by the Chinese again, who are running up the price of luxury goods absolutely everywhere to insane levels. Maybe next time. Time to get some sleep. I’m obviously not working hard enough. I unplug my phones, as it’s the only way I can sleep. I check Bloomberg for the Dow futures in Asia and see they are up 58 points. It looks like tomorrow is going to be another busy day. Does anybody want my job?