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 Bill Davis, 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
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. 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 Bill Davis, 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
August 2, 2016
Fiat Lux
Featured Trade:
(AUGUST 3rd GLOBAL STRATEGY WEBINAR),
(ARE STOCKS NOW THE NEW BONDS?),
(SPY), (T), (SPG), (DUK), (TLT), (FXY), (GLD),
(HANGING OUT WITH THE WOZ),
(AAPL)
SPY SPDR S&P 500 ETF
T AT&T, Inc.
SPG Simon Property Group Inc.
DUK Duke Energy Corporation
TLT iShares 20+ Year Treasury Bond
FXY CurrencyShares Japanese Yen ETF
GLD SPDR Gold Shares
The Q2 GDP figure of 1.2% released by the Department of Commerce on Friday couldn?t have been more dismal.
What?s worse, Q1 GDP was revised down from 1.1% to a mere 0.8%.
In fact, these are only the latest in a series of subpar numbers stretching back a year that suggest the American economy is on the edge of falling into a recession.
That is, if the numbers are to be believed.
All asset classes behaved in a classic ?RISK OFF? fashion, as expected.
US Treasury bonds (TLT) brought in a banner day, gaining $1.17. Gold (GLD) tacked on $12. The Japanese yen (FXY) rocketed to ?102.18.
All asset classes, that is, except for one: Stocks.
The S&P 500 printed another new all time high of $217.54 intraday.
So are stocks now the new ?RISK OFF? asset class? Are equities really the new bonds?
Looking at stock sector performance, one would be forgiven for reaching such an iconoclastic and out of consensus conclusion.
High dividend yielders overwhelmingly dominated the scene.
Duke Energy (DUK) (4.0% yield) popped. AT&T (T) (4.40% yield) soared. Simon Property Group (SPG) (2.93% yield) continued on a tear.
What do all of these companies have in common? They are all decent quality credits that sport dividend yields a MULTIPLE of the current ten-year Treasury bond yield of 1.45%.
I hate to state the obvious, but if it looks like a duck, and quacks like a duck, it?s a bond.
Traveling around the world listening to guests at my Mad Hedge Fund Trader Global Strategy Luncheons, one concern rises above all others.
They want yield, income, and cash flow. The question is even more urgent in Europe and Japan, which suffer negative interest rates.
Even CaLPERS, the state of California?s public employee retirement system, is focused on the issue with a laser like intensity.
In 2015 the giant institution earned a scant 0.50% return on its sizeable $300 billion in assets, dragging its 20-year return down to 7%. The bad news is that CaLPERS has to earn at least 7.5% to meet all of its commitments.
Unless the agency can boost its investment performance, cuts in pension fund payouts are looming. Good luck pulling that off in this environment. Dozens of other states, like New York and Illinois, are in a similar fix.
There is another matter to consider here. The GDP data could be wrong, and wildly so.
I have argued for years that government data collection is unable to keep up with the hyper evolving American economy. The problem is getting worse.
There is no way that the economy of the San Francisco Bay Area is growing at a 1.2% annual rate. Some 5%-6% is more likely. And there are many other parts of the country that are doing well.
The Feds are missing large parts of US business activity because they aren?t aware that it exists. The methods of the green eyeshades are deeply lagging new technology.
And they certainly can?t measure the growing number of online services that are being given away FOR FREE.
So what if stocks really are now bonds?
That puts them on the deflationary bandwagon that has taken bond prices to new 60-year highs and yields to paltry lows. In other words, you can expect them to continue with bond like results.
What will stocks yielding an average 2.50% have to do to match the 1.45% ten-year Treasury yield?
THEY WILL HAVE TO RISE ANOTHER 72%!
Just thought you?d like to know.
I first spoke to Steve Wozniak via HAM radio when I was 12 and he was the 14-year-old president of the Homestead High School Radio Club in Cupertino, California.
With seven children, my dad was pretty stingy with allowance money. But when it came to electronic parts, I had an unlimited budget, as that is where he saw the future.
So while other kids collected baseball cards, I stocked up on tubes, resistors, capacitors, and rheostats. This was back when you could buy WWII surplus parts from Radio Shack for pennies a pound.
Then the transistor came out, and building projects, like simple computers programmed with basic '1's' and '0's' suddenly became possible.
By junior high school, I had gained my radio license, learning Morse code at the required five words per minute, and a path opened that eventually led me to Woz.
Whenever I had a design problem, Woz always had a solution. He seemed to know everything about electronics.
I planned to attend De Anza College in the San Francisco Bay Area to collaborate with Woz, but then the State of California dropped a big fat scholarship to the University of Southern California in my lap, and we parted ways.
That?s government for you. The state thought I was smarter than Woz. Ha!
The last thing he taught me was this really cool way to make long distance phone calls for free with something called a 'blue box.'
I later heard that Woz went to work for some kind of fruit company designing computers, which sounded stupid to me at the time, but Woz was always a guy who marched to a different drummer.
A decade later, I was an ambitious young vice president at Morgan Stanley, and ran into Woz again while escorting Steve Jobs around to big institutional investors hawking an Apple (AAPL) secondary share offering.
By then he had gained a lot of weight. He fascinated me with stories about how he had gone from scrounging around for a bootleg $12 chip, to making $100 million on the Apple IPO in just three years.
The phrase ?only in America? has to come to mind.
We bought our planes at the same time, me a Cessna 340 twin, and he a Beechcraft Bonanza. When I heard he totaled his in a crash in Santa Cruz a few years later, I sent flowers to his hospital room, even though he was in a coma and wasn't expected to live.
In later years we moved into the same philanthropic circles at the San Francisco Ballet, the Computer Museum, and local art museums. To me, Woz always stood out at the social events as the only one who was not an inveterate social climber.
That was vintage Woz. He just didn't care.
When I finally stumbled across his autobiography, iWoz, I grabbed it and devoured the pages in a couple of days.
The tome filled in the holes about what I knew about the man: the wives, the rock concerts, his universal remote control idea, and the early days at Apple.
You also learn a lot about electronics and basic computer hardware and software design.
While there are a lot of 5th grade science teachers who wish they were billionaires, there is only one billionaire who aspired to teach 5th grade science. That is what Woz did for ten years.
Despite the billions, Steve is still an all right guy. To buy the book of his engaging and entertaining story from Amazon, please click here.
While the Global Trading Dispatch focuses on investment over a one week to six-month time frame, Mad Options Trader, provided by Matt Buckley, will focus primarily on the weekly US equity options expirations, with the goal of making profits at all times. 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 Bill Davis, 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
August 1, 2016
Fiat Lux
Featured Trade:
(AUGUST 3 GLOBAL STRATEGY WEBINAR),
(JOIN THE MAD OPTIONS TRADER FREE PRODUCT LAUNCH),
(TESTIMONIAL)
I am pleased to announce the launch of a major new service from the Mad Hedge Fund Trader, THE MAD OPTIONS TRADER.
The service will focus primarily on the weekly US equity options expirations, with the goal of making profits at all times.
The trading will take place in the S&P 500 (SPX), major industry ETF?s like the Financials Select Sector (XLF), and large capitalized single names, such as Facebook (FB), JP Morgan Chase & Co. (JPM), and Apple (AAPL).
The service will be provided by my old friend and fellow comrade in arms, Matt Buckley, of Top Gun Options, one of the best performing trade mentoring outfits in the industry.
Matt knows what he is talking about. An independent audit shows that he has racked up an incredible 48.45% performance, net of commissions and fees, so far in 2016 which has been one of the most difficult years in trading history.
That works out to an average 6.92% a month, or an incredible 83.05% a year.
Matt, a native of New Jersey, joined the Navy straight out of college, and rose to become an F-18/A fighter pilot. He attended the famed Top Gun school in Coronado, California. During the second Iraq War, Matt flew 44 combat missions.
Matt left the service in 2006, and immediately entered the hedge fund industry. A rapid series of promotions eventually took him to Peak6 Investments, L.P., a prominent Chicago hedge fund.
There, he soaked up the most successful elements of technical market timing, fundamental name selection, risk control, and options trade execution.
These are the multiple skills that have enabled Matt to post such a blockbuster performance.
Matt, known to his friends by his old pilot handle of ?Whiz?, is an incredibly valuable addition to the Mad Hedge Fund Trader team. I have appointed him Head of Options Trading.
I have known for some time that fortunes were being made in the weekly options expirations, where stories of tenfold returns are not unheard of. It is a strategy that is perfectly suited to these highly volatile, uncertain times, with most options positions expiring within four days.
Matt allows us to fill that gap in our product offerings.
The Mad Options Trader provides essential support for the active trader, and will include:
1) Instant Trade Alerts sent out at key technical levels, an average of one a day. Alerts will be sent out on the opening and closing of every position.
2) Weekly Market Strategy Webinars held every Monday at 1:00 PM EST to give you a head?s up on the week ahead.
3) A weekly Live Trading Room held every Tuesday from 9:00 to 11:00 AM EST to give followers active real time trading experience.
What I love about Matt is that he eats his own cooking. Many of the Trade Alerts he recommends are executed in his own personal retirement account with real dollars.
To see how he has performed so far in 2016, please check out the daily chart below.
You will have an ample opportunity to measure The Mad Options Trader?s abilities starting August 1.
That?s when all current paid subscribers for any product of the Mad Hedge Fund Trader start receiving the service for FREE for 30 days.
From September 1, The Mad Options Trader will be available as a $1,500 per year upgrade to The Diary of the Mad Hedge Fund Trader or Global Trading Dispatch, the core research and trade mentoring service of the Mad Hedge Fund Trader.
The price for both services together will be $4,500 a year.
So, use this opportunity wisely, and watch how the Mad Options Trader performs over the coming month, FOR FREE.
Good Luck and Good Trading
John Thomas
Publisher and CEO of The Mad Hedge Fund Trader
