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
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
June 3, 2015
Fiat Lux
Featured Trade:
(JUNE 22 WASHINGTON DC GLOBAL STRATEGY LUNCHEON)
(THE GLOBAL IMPACT OF THE NEW JAPANESE IRA?S),
(DXJ), (FXY), (YCS), (NMR), (SNE),
(A SPECIAL NOTE ON EXERCISED OPTIONS)
WisdomTree Japan Hedged Equity (DXJ)
CurrencyShares Japanese Yen ETF (FXY)
ProShares UltraShort Yen (YCS)
Nomura Holdings, Inc. (NMR)
Sony Corporation (SNE)
Nearly two years ago, the Japanese government introduced the Individual Retirement Account for individual investors in Japan for the first time.
The move was part of Prime Minister Shinzo Abe?s multifaceted efforts to revive Japan?s economy, and could unleash as much as $690 billion in net buying into Japanese equities by 2018.
The move was inspired by American IRA?s, which were first introduced in 1981. After that, the Dow average soared by 25 times. It is amazing to what lengths people will go to avoid the taxman.
Starting October 1, 2013 individuals have been permitted to contribute up to ?1 million a year into Nippon Individual Savings Accounts (NISA) or some $8,000, while married couples can chip in ?2 million.
These funds are exempt from capital gains and dividend taxes for five years. At the same time, capital gains taxes will rise from 10% to 20%.
Thanks to a 22-year long bear market, only 7.9% of personal assets in Japan are currently invested in stocks, compared to 34% in the US. Individuals account for only 28% of the daily trading volume in Tokyo, while foreigners take up 63%. Still, that?s up from only 21% a year earlier.
Over the past 10 years, individuals sold a net $214 billion in equities, keeping their eyes firmly on the rear view mirror. Almost all of the funds were deposited into bank accounts yielding near zero.
Even 10 year Japanese Government Bonds are yielding only 0.41% as of today. That doesn?t buy you much sushi in your retirement.
Over the past three years, Japan has enjoyed having the world?s fastest growing industrialized economy. The latest data show that it is expanding at a white hot 3.5%, versus a far more modest 2% rate in the US, and only 0.5% in Europe.
Early indications are that the NISA?s are hugely popular. Japanese brokers have launched a massive advertising effort to promote the program, which promises to substantially boost their own earnings. Firms have had to lay on extra customer support staff to assist with online applications, where clueless investors have spent two decades in hiding. That certainly makes Japanese brokers, like Nomura (NMR), a buy. Another of my favorites is Sony (SNE).
To get some idea of the potential, take a look at how Merrill Lynch?s stock performed after 1981, which rose by many multiples. The bear market has lasted for so long that many applicants confess to investing in equities for the first time in their lives.
Since Shinzo Abe announced his candidacy for prime minister and his revolutionary economic and monetary program nearly four years ago, the Japanese stock market (DXJ) has soared by an amazing 176% in US dollar terms. The short Japanese yen 2X ETF (YCS) has similarly rocketed by a huge 232%.
Regular readers of the Mad Hedge Fund Trader have been mercilessly pounded to buy Japanese stocks and sell short the Japanese yen for the best of three years. I can almost hear ?Oh no, here comes another yen bashing piece!?
The need to bolster Japan?s retirement finances is overwhelming. It has the world?s oldest population, with some 26% of their 127.6 million over the age of 65.
The average life span in Japan is 82.6 years. That is a lot of people to support for a $6 trillion GDP. Thanks to plummeting fertility rates, the population is expected to decline to 106 million by 2055.
By yanking $690 billion out of the banks and moving out the risk spectrum, Abe?s new IRA?s provide additional means through which the economy can permanently return to health.
Higher stock prices will provide cheap equity financing for public companies, which can then reinvest in the domestic economy and create jobs.
I have written endlessly on the fundamental case for a strong Japanese stock market this year (to read my previous articles on yen, please click the following links: ??Rumblings in Tokyo?, ?New BOJ Governor Craters Yen??and ?New BOJ Governor Crushes the Yen?).
So How Does This Order App Work?While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
June 2, 2015
Fiat Lux
Featured Trade:
(JUNE 25 NEW YORK STRATEGY LUNCHEON),
(HOW THE MARKET WILL PLAY OUT FOR THE REST OF 2015),
(AAPL), (IBB), (XLV), (XLK), (HACK), (VIX),
(T), (MO), (COP), (LINN),
(TESTIMONIAL),
(KISS THAT UNION JOB GOODBYE)
Apple Inc. (AAPL)
iShares Trust - iShares Nasdaq Biotechnology ETF (IBB)
Health Care Select Sector SPDR ETF (XLV)
The Select Sector SPDR Trust - The Technology Select Sector SPDR Fund (XLK)
PureFunds ISE Cyber Security ETF (HACK)
VOLATILITY S&P 500 (^VIX)
AT&T, Inc. (T)
Altria Group Inc. (MO)
ConocoPhillips (COP)
Linn Energy, LLC (LINE)
Sideways, then up. That is the short version.
Now for the long one.
Markets are caught in a vice right now. It is too late to buy and too soon to sell. So, institutions are sitting on their hands, index charts are doing their best to imitate the topography of Kansas, and the Volatility Index (VIX) is plumbing nine year lows.
The stock market has seen the narrowest range during the first five months this year in a century.
This is anything but an ideal environment for traders. No wonder they are fleeing to the markets for foreign exchange, oil, and even Shanghai!
All of the stock market action, and outperformance, is confined to a handful of names and sectors. Think Apple (AAPL), biotech (IBB), health care (XLV), technology (XLK), and cyber security (HACK).
If you are in these, this year is not so bad. If you aren?t, or are indexing, you better start looking for a new job on Craig?s List.
In the meantime, corporate earnings are continuing their relentless drive upward. Technology and productivity improvements are the main driver.
Zero interest rates and the hangover from the Federal Reserve?s aggressive policy of quantitative easing are willing co conspirators. Some $4 trillion in Treasury notes, bills, and bonds still sit on the Fed?s groaning balance sheet.
And while QE is gone and dead in the US, it continues full speed ahead in Europe, Japan, and China, which account for 35% of the planet?s GDP.
Therefore, the American stocks that look expensive now become fairly priced in three months and a bargain in six months. How far in advance do you want to front run the attractive valuations?
In addition, you have to consider the harsh reality that there is absolutely nothing else to buy. Low yielding bonds at a 30-year peak? Non-yielding gold or commodities? Oil after a ferocious 45% price increase in 11 weeks?
How about collectable French postage stamps? Beanie babies anyone?
The fact is that equities have become the high yield instruments of our day. You can get 2% for the S&P 500, and 4% plus for damaged names like AT&T (T), Altria Group (MO), and Conoco Phillips (COP).
Did I hear 11.40% for Linn Energy (LINN)?
The world is still on a giant paper chase, as it has been for the last six years. The only difference now is that we are shifting from fixed income to equity script.
This is all why I am running a hefty 80% cash position in my model trading portfolio. I would have 100%, but people aren?t paying me to do nothing.
Therefore, I don?t expect to see any more than a 5% mini correction in the markets this summer, or 110 points in the (SPX) and 1,000 points in the Dow Average (which, by the way, broke its 200 day moving average on Friday).
If, by the grace of God, we get an almost forgotten 10% correction, you should jump in and buy stocks with both hands.
Stocks are almost certainly flying to new all times highs going into the end of 2015. I?m looking for at least a $225 print, a gain of 6.6% from here. If you cash out now, you?ll be kicking yourself around the Christmas tree.
It All Become One Giant Paper ChaseAs 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
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more