March 11, 2010 – The Mad Hedge Fund Trader Interviews Charles Nenner on Hedge Fund Radio

charles-nenner-picture3.jpg picture by madhedge

A second deflationary tidal wave may hit the US early as April. The Dow is going to crash, possibly heading for a double bottom at 6,000, and bonds are going up for the rest of the year. Gold has had it for the foreseeable future. Crude futures are predicting war with Iran by 2013. First, deflation, then inflation. The greatest trade of your lifetime is setting up. This trend could start tomorrow, or in two years. Blow your entry point, and you'll get wiped out. Oh, and by the way, crude oil futures are discounting way with Iran by 2013!

After much pleading and cajoling I managed to get a no-holds-barred, no stone unturned, 40 minute interview with technical analyst to the stars, Charles Nenner of Charles Nenner research in Amsterdam, for Hedge Fund Radio. Bottom line: A second deflationary tidal wave may hit the US as early as April. The Dow could crash, possibly heading for a double bottom at 6,000, and bonds could go up for the rest of the year. Oh, and by the way, crude oil futures are discounting way with Iran by 2013!

Once this deflationary scare burns out, the greatest trade of your lifetime will set up, says Charles. This is the one where you pile on the leverage, take out a home equity loan to get a still bigger position, and max out your credit card to cover your living expenses. Get it right and you'll never work another day again, you can pay off your home mortgage, and get a building named after you at that college you can't stand. The bad news? This trend could start tomorrow, or in two years. Blow your entry point, and you'll get wiped out.

Since Charles has had a particularly hot hand lately, calling the top in the US stock market within four days, months in advance (click here for my December 12 interview with Charles), he has major hedge funds relentlessly banging on his door for his next call. I managed to track him down late last night at his home in Amsterdam, where I extracted an update on his global view.

Charles is talking about shorting the 30 year Treasury bond, a trade I've been yammering on about for the last several months, and seems to be on the verge of breaking a 29 year bull market trend line. The yield on this paper, now at 4.55%, will gyrate between 4.25% and 5.07% for the next year. Then sometime in 2011 we will break out to 7.5%, possibly very quickly. That would take the bond futures from 119 today to as low as 82.

But that's just the opening act. Once inflationary fears take hold, the 30 year yield could fly as high as the November, 1981 high of 13%, bringing the futures down to 53. The Armageddon scenarios you hear about today could take it lower still. And this is all in a contract with a margin requirement of only $3,240 for a $100,000 position, giving you 30:1 leverage. No wonder the big hedgies are salivating.

Keeping this interest rate scenario in mind, I then pinned the erudite Dutchman down to calls on every other major market. The S&P 500 may grind back up as high as 1145, and then the next big move is down. The dollar is over extended here, but he sees it eventually moving to $1.18 against the Euro. The yen is ready for a big move down after peaking around here, initially targeting ¥105. Traders should take profits in the Ausie/Euro cross at 68 by May. Crude will peak in the low eighties by the end of March, and then begin a one year decline. Copper could also peak then at $3.73. Gold has peaked already, with Charles bailing on his longs at $1,220/ounce, and we are now in a downtrend that will last for some time, until the above mentioned inflation fears kick in and take it to new highs. Natural Gas looks terrible, having just peaked at $6/MCF. It's headed downtown, first to $3.80 and then to $1.70. Gulp!

What is the one trade that Charles would put on today? Go long the Ausie/Yen cross, where you go long the Australian dollar and short equal value of Japanese yen at today' price of $AUS 0.80. Charles' calls were so hot, my hand was sizzling when I finally put the handset down.

Charles has a long career that includes stints at medical school, Merrill Lynch, Rabobank, and 12 years at Goldman Sachs. He has spent three decades developing his proprietary Cycle Analysis System, which generates calls of tops and bottoms for every major market in the world. Charles developed a huge following after 2007, when he accurately nailed the top in the Dow at 14,500 and urged his clients to put on short positions when everyone else was predicting that the market would keep grinding higher. I have been following Charles daily research reports myself for two years, and found them to be uncannily accurate. Today, Charles Nenner counts major hedge funds, banks, brokerage houses, and individuals among his clients. You can find out more about Charles' work at his website at

To catch my entire sizzling interview with Charles Nenner, please click on the "play" arrow below.

Hedge Fund Radiois a weekly program featuring one-on-one interviews with the titans of the hedge fund industry. The show is hosted by legendary hedge fund manager John Thomas, one of the most seasoned players in the industry. It is broadcast live on station KGOL 1180 AM in Houston, Texas as part of the BizRadio  network to 100,000 local listeners, and will be streamed online to a further 100,000 national and international listeners.The show is broadcast every Saturday morning at 12:00 pm Eastern time, 11:00 am Central time, 9:00 am Pacific Coast Time, and 5:00 pm Greenwich Mean Time. For pilots and the military, that is 17:00 Zulu time. For the online link to the show, please go to, and click on 'Houston 1110 AM KTEK.' For that added insight into the future of the markets tune in, or catch the show in my Hedge Fund Radio archives.