Global Market Comments
April 4, 2013
Fiat Lux
Featured Trade:
(JULY 8 LONDON STRATEGY LUNCHEON)
(ANOTHER DINNER WITH ROBERT REICH),
(TESTIMONIAL),
(CONNECTING UP AMERICA)
Come join me for lunch for the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in London on Monday, July 8, 2012. A three-course lunch will be followed by a PowerPoint presentation and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, currencies commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $249.
I?ll be arriving an hour early and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a private club on St. James Street, the details of which will be emailed to you with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
I never tire of listening to economics guru, Robert Reich, speak about the economy. He was former Labor Secretary under Bill Clinton, and ran against Mitt Romney for governor of Massachusetts (he lost). He has published 13 books. Oh, and he dated our recent Secretary of State, Hillary Rodham, when they were in law school together at Yale.
I got to know Bob well when I took two of his courses at UC Berkeley, on public policy and labor statistics. His insights into the long-term evolution of the US economy are nothing less than breathtaking. New students are ordered to the bookstore to buy 400 pages of photocopied jobs data, which they must commit to memory. And he is damn funny.
Not everything Bob has to say makes pleasant listening. The central challenges for the economy are jobs and wages, not deficits or inflation. A rush to trim spending too fast unnecessarily robs the economy of growth. Look no further than Europe, where ill advised and ideologically driven austerity policies have led to near economic collapse. If similar policies are implemented here, they will no doubt bring the same result.
Past economic recoveries brought far more dramatic snap backs. After the 1929 crash, the GDP fell a staggering 28% over the following three years. Then in 1934 it bounced back by 8%, in 1935, by 8%, and 1936 by 10%. The stock market recovered two thirds of its losses. That compares to today?s tepid 2% growth rate.
Then in 1937, a rush to end stimulus prematurely sent the country into the second leg of the Great Depression. That didn?t end until 1942. Stocks fell again by half. The big question for us today is whether 2014 will be a replay of 1937.
All middle class coping mechanisms to deal with falling incomes have been exhausted. First, women entered the workforce during the seventies to offset spouses? declining wages. Then both began working longer hours. Today, Americans work 300 hours a year longer than Europeans and Japanese.
Finally, they turned to the home ATM in desperation during the nineties and 2000?s to make ends meet. Those cash machines abruptly shut down in 2008. Today, families have no resources left to maintain standards of living. This is why there has been no growth in the American median wage for 30 years. The declining consumer spending these trends inevitably delivered produced our present slow growth economy.
There were two turbocharges that assured the downfall would be as dramatic as it has been. Globalization suddenly meant that the $75/ hour blue-collar worker was competing head to head against a $2/day Chinese wage slaves. The Internet made this face off practical.
Technology also created robots to replace workers on an enormous scale. Bob like to tell the story of an invitation he received to speak at a much-publicized factory reopening in the Midwest. When he took the tour, he found only 13 workers staring at computer screens running the place that had replaced 3,000 before them.
While we are seeing a weak recovery now, entry-level positions are paying a fraction of what they did a decade ago, not far above minimum wage. Those with only a high school education or less have taken the biggest hit, seeing unemployment rates soar to 15%. By contrast, college educated workers have an unemployment rate as low as 5%.
Of course the challenge for me has always been to translate Bob?s lofty, 30,000 foot views, steeped in millennia of history, into Trade Alerts tomorrow morning which make money for you, the reader, by Monday. That?s easier said than done. Give my 86% net trading profit since the service started 26 months ago, I?d say so far, so good.
I watched John Thomas for a year before jumping in, and I should have done it earlier when he phenomenally traded that awful year, 2011, that whipsawed so many investors including myself. He again outperformed the market in 2012, and in 2013 so far he has shown amazing skill once more in navigating treacherous markets with deep-in-the-money call and put spreads.
You can not exactly replicate his numbers 100% of the time for many different reasons, some of them strictly technical in nature. But you will get most of them, or you use his trade alerts just directionally to help you determine where you should put your money and how to allocate your dollars risk on vs. risk off.
I am up 20% trading with John since October 2012, an annualized performance of 40%.?I also like John's in-depth charts, market insights, and his educational webinars, that have become the cornerstone of my market evaluations. One should never put all eggs in the same basket, but subscribing to the Mad Hedge Fund Trader is a smart way to enhance the performance of your stock portfolio.
Christian
Austin, Texas
Until now, the country?s power grid has been divided into three unconnected, noncompetitive kingdoms (in the spirit of Game of Thrones), making transnational transmission impossible, leading to huge regional mispricing. While California and New York suffered from periodic brown outs and sky high prices, electricity was given away virtually for free in Texas.
A group of power companies is now proposing to build the $1 billion Tres Amigas superstation in Clovis, New Mexico that would connect all three grids. The plant would use advanced superconducting technology that will send five gigawatts of power down cables cooled at 300 degrees below zero. Construction is expected to reach completion in 2014.
The facility would solve a major headache of alternative energy planners, and will no doubt accelerate development. It would allow the enormous wind farms in the Lone Star State to ship energy to the power hungry coasts. Ditto for the mega solar projects proposed in the Southwest deserts, and the big geothermal plants being built in Nevada. With the Department of Energy having already sent tidal waves of government cash towards the sector, the timing couldn?t be better.
?Economic forecasting exists to make astrologers look good,? said for Secretary of Labor, Robert Reich.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
Global Market Comments
April 3, 2013
Fiat Lux
Featured Trade:
(APRIL 19 CHICAGO STRATEGY LUNCHEON),
(PULLING THE RIPCORD ON UNITED), (UAL),
(EASTER AT INCLINE VILLAGE)
United Continental Holdings, Inc. (UAL)
Come join me for lunch for the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Chicago on Friday, April 19. A three-course lunch will be followed by a PowerPoint presentation and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $199.
I?ll be arriving an hour early and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a downtown Chicago venue on Monroe Street that will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
Delta announces that revenues grew by only 2% in the last quarter, so of course, they trash United Continental Group (UAL), taking it down 11% from the recent high.? As a former pilot myself, I always allow an extra safety margin separating me from a catastrophic event. This time it came in handy, my deep out-of-the-money call spread limiting my losses to a handful of basis points.
Have no doubt this position will expire in the money. But the share price has crossed that line in the sand of the upper strike price on the call spread. Prudent risk control demands that I bail. I am still up 30% in 2013. There is no point in blowing it on a crappy airline that doesn?t even give you free peanuts back in coach anymore. Or so I heard.
The one mitigating factor here is that those who also strapped on the United Continental Holdings (UAL) April, 2013 $34-$36 bear put spread at $1.76 will now almost certainly take in 68 basis points in profit by running it to the maximum $2 value, cutting the loss on the call spread by half. Such is the value of the hedge. If I had gone with a full 10% weighting on the short side, I would have had the luxury of running both positions into expiration.
After sending you 30 consecutive winning trade alerts, it was just a matter of time before one of these bites you back. Notice that the higher prices go, the more often this will happen. Markets get dizzy, squirrely, and punch drunk at high altitude, no doubt from the shortage of oxygen in the form of fresh new cash flows. Let this be a shot across your bow, that we are entering dangerous, even uncharted territory.
Notice also that we lost money an individual name while the main market continued to ascend. That is the double-edged sword of picking a single sector or company. A one off news event can send your prices spilling while everyone else is laughing all their way to the bank. This happened to me last year with Apple (AAPL). You get double the profit with individual option spreads, but with double the risk. Live by the sword, die by the sword.
Crash and Burn With a United Call Spread
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