Global Market Comments
July 16, 2019
Fiat Lux
Featured Trade:
(THE BIGGEST TELL IN THE MARKET RIGHT NOW),
(GOOGL), (FRC), (PINS), (WORK), (UBER),
(ADSK), (WDAY), (SNE), (NVDA), (MSFT),
(POPULATION BOMB ECHOES),
(CORN), (WEAT), (SOYB), (DBA), (MOS)
Pack your portfolios with agricultural plays like Mosaic (MOS) if Dr. Paul Ehrlich is just partially right about the impending collapse of the world’s food supply.
You might even throw in long positions in wheat (WEAT), corn (CORN), soybeans (SOYB), and rice.
It says a lot that when I update a sector report like this and half the companies have disappeared from takeovers (Potash and Agrium), you should take notice.
The never dull and often controversial Stanford biology professor told me he expects that global warming is leading to significant changes in world weather patterns that will cause droughts in some of the largest food-producing areas, causing massive famines. Food prices will skyrocket, and billions could die.
At greatest risk are the big rice-producing areas in South Asia which depend on glacial run off from the Himalayas. If the glaciers melt, this crucial supply of fresh water will disappear.
California faces a similar problem if the Sierra snowpack fails to show up in sufficient quantities as it has done in five of the last six years.
Rising sea levels displacing 500 million people in low-lying coastal areas is another big problem.
One of the 83-year-old professor’s early books The Population Bomb was required reading for me in college in the 1960s, and I used to drive up from Los Angeles to Palo Alto just to hear his lectures (followed by the obligatory side trip to the Haight-Ashbury).
Other big risks to the economy are the threat of a third world nuclear war caused by population pressures, and global insect plagues facilitated by a widespread growth of intercontinental transportation and globalization.
And I won’t get into the threat of a giant solar flare frying our electrical grid. That is already well covered on the Internet.
“Super consumption” in the US needs to be reined in where the population is growing the fastest. If the world adopts an American standard of living, we need four more Earths to supply the needed natural resources.
We must raise the price of all forms of carbon, preferably through taxes, but cap and trade will work too. Population control is the answer to all of these problems which is best achieved by giving women educations, jobs, and rights, has already worked well in Europe and Japan, and is now unfolding in Latin America.
All sobering food for thought. I think I’ll skip that Big Mac for lunch.
Global Market Comments
July 15, 2019
Fiat Lux
Featured Trade:
(LAST CHANCE TO ATTEND THE FRIDAY, JULY 19 ZERMATT, SWITZERLAND STRATEGY SEMINAR)
(MARKET OUTLOOK FOR THE WEEK AHEAD, OR HERE COMES YOUR NEXT HEART ATTACK),
(INDU), (SPY), (TLT), (GLD), (FXA), (USO)
Come join me for the Mad Hedge Fund Trader’s Global Strategy Seminar, which I will be conducting high in the Alps in Zermatt, Switzerland. You can meet me at 2:00 PM on Friday, July 19, 2019.
An open discussion on the crucial issues facing investors today will take place. Coffee, tea, and schnapps will be made available, but no food. You are welcome to attend in your mountain climbing gear, if necessary. One year, a guest descended from the Matterhorn summit to attend.
I’ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, energy, and real estate. And to keep you in suspense, I’ll be throwing a few surprises out there too. Tickets are available for $241.
I’ll be arriving 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 event will be held at a central Zermatt hotel with a great Matterhorn view, the details of which will be emailed directly to you with your confirmation. Zermatt is 5,276 feet (1,608 meters) above sea level so make sure you’re in shape.
I look forward to meeting you and thank you for supporting my research. To purchase tickets for this seminar, please click here.
Sitting on a remote Alpine mountaintop this morning, this being Switzerland one with ample WIFI, I turned on my screen for the first time in four weeks and almost had a heart attack.
Risk markets everywhere have gone up almost every day since I left San Francisco in June, taking the major indexes up to new all time highs. They are doing this in the face of slowing global economies, falling earnings growth, and rising energy prices and inflation. Even the respected Atlanta Fed has a Q2 GDP growth forecast of a dismal 1.4%.
Did I mention that the US government is about to run out of money again in September, inviting another shut down?
In the old days the Federal Reserve used to be the sober chaperone at the party, making sure things didn’t get out of hand. Today, they are the devilish frat boy surreptitiously pouring 200 proof ethanol into the punch bowel, much as I used to do at Chemistry Department parties at UCLA during the early 1970s. The problem was that everyone else was doing the same thing, leading to some prodigious hangovers.
Another pint made it into the heady brew on Wednesday when Fed governor Jay Powell erred dovishly in his Humphrey Hawkins testimony in from of congress. It was enough to ignite the latest 500-point rally in the Dow (INDU).
The bullishness was confirmed by my own algorithmically driven Mad Hedge Market Timing Index, which reached a three-month high at 65. We have rallied an awesome 45 points from the 20 level in only six weeks and are now a mere 10 points away from solid “SELL” territory.
The end result of all this has been to bring forward my yearend target for the S&P 500 (SPY) of the low 3,000s to, like well, now. And if H1 has been one giant love best, how does that bode for H2?
A frightening convergence of events is setting up. Just when the Fed announces its interest rate decision on July 31, companies will be announcing earnings disappointments AND my Market Timing Index will be hitting the high seventies.
It all sets up what we traders call “an asymmetric risk/reward.” Good news will bring small incremental gain while even a small disappointment will serve up a horrendous sell off. Fed funds futures are now indicating a 100% of a 25-basis point rate cut on the 31st, and see overnight rates plunging to only 1.75% by yearend end. Hence the heart problems mentioned above.
So as much as you may despise, loathe, and hurl epitaphs at me, I am not going to tell you to buy the stock market today. Your last chance to do that was the final week of May.
The quality trade these days is clearly in other asset classes, like bonds (TLT), foreign exchange (FXA), gold (GLD), and energy (USO). My only exceptions will be “BUYS” in any bombed out high-quality single names I can find.
As I have been out of the market, my Global Trading Dispatch has been flat ling at up 15.38% year-to-date and has earned precisely 0% so far in July. My trailing one-year declined to +14.2%.
My ten-year profit fell back to +32.92%. With the markets now in the process of peaking out for the short term I am now 100% in cash with Global Trading Dispatch and 100% cash in the Mad Hedge Tech Letter.
The coming week will be a fairly sedentary one on the data front after last week’s fireworks.
On Monday, July 15 at 9:30 AM EST, New York’s Empire State Manufacturing Index is released.
On Tuesday, July 16 8:30 AM EST, the June US Retail Sales are out.
On Wednesday, July 17 at 8:30 AM EST, June Housing Starts are published.
On Thursday, July 18 at 8:30 AM EST, the Weekly Jobless Claims are printed. We also get the Philadelphia Fed Manufacturing Index.
On Friday, July 19 at 8:30 AM EST, we get the University of Michigan Consumer Sentiment Index. The Baker Hughes Rig Count follows at 2:00 PM.
As for me, I am how on my usual summer schedule. I’ll be getting up early every morning to climb an Alpine peak. Then I’ll be riveted to my screen by 3:30 PM when the US markets open, scouring the world for good Trade Alerts.
Good luck and good trading.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
Global Market Comments
July 12, 2019
Fiat Lux
Featured Trade:
(THE QUANTUM COMPUTER IN YOUR FUTURE),
(AMZN), (GOOG),
(THE WORST TRADE IN HISTORY), (AAPL)
Global Market Comments
July 11, 2019
Fiat Lux
Featured Trade:
(THE INSIDER’S VIEW ON THE FUTURE OF TECHNOLOGY),
(AMZN), (GOOG), (DELL), (MSFT), (EBAY),
(MY DATE WITH HITLER’S GIRLFRIEND)
How would you like to learn the latest, most important technology trends hitting the global economy today, prepared by one of the most knowledgeable and experienced people in the industry?
It's very simple. Just click on the link below for a wrist-breaking .pdf file packed with 360 slides. It was prepared by my old friend and former Morgan Stanley colleague, Mary Meeker.
Meeker gained fame as the legendary investment banker for technology issues during the Dotcom Boom. She brought to market such blockbusters as Netscape. She also piled investors very early into Amazon (AMZN), Google (GOOG), Dell Computer (DELL), Microsoft (MSFT), and eBay (EBAY) when many of these stocks were trading at single-digit prices. You can understand why she is so popular.
Since 2010, Mary has been with the leading Silicon Valley venture capital firm Kleiner, Perkins, Caufield & Byers. She initially prepared Internet Trends 2018 as a broad ranging 50,000-foot view of technology for her firm. It has since been presented at a number of conferences.
Depending on your interest in technology, you may want to just quickly scroll through the report or analyze each and every single slide. Each slide is a gold mine of information for geeks such as myself. I list a few sample ones below.
The report also gives you some indication of the deep research in which the Diary of a Mad Hedge Fund Trader and the Mad Hedge Technology Letter engage to get you winning Trade Alerts.
To download the report in full please click here.
Enjoy.
With the shocking re-emergence of Nazis on America's political scene, memories are flooding back to me of some of the most amazing experiences in my life.
I have been warning my long-term readers for years now that this story was coming. The right time is now here to write it.
I know the Nazis well.
During the civil rights movement of the 1960s, I frequently hitchhiked through the Deep South to learn what was happening.
It was not usual for me to catch a nighttime ride with a neo-Nazi on his way to a cross burning at a nearby Ku Klux Klan meeting, always with an uneducated blue-collar worker.
In fact, being a card-carrying white kid, I was often invited to come along.
I had a stock answer: "No thanks, I'm going to another Klan meeting further down the road."
That opened my driver up to expound at length on his movement's philosophy.
What I heard was chilling.
During 1968 and 1969, I worked in West Berlin at the Sarotti Chocolate factory in order to perfect my German. On the first day at work, they let you eat all you want for free. After that, you get so sick that you never wanted to touch the stuff again. Some 50 years later and I still can’t eat their chocolate.
Answering an ad, I found myself living with a Nazi family near the company's Tempelhof factory.
There was one thing about Nazis during the 60s: They loved Americans.
After all, it was we who saved them from certain annihilation by the teeming Bolshevik hoards from the east.
The American postwar occupation, while unpopular, was gentle by comparison. It turned out that everyone loved Hershey bars.
As a result, I got free room and board for two summers at the expense of having to listen to some very bizarre theories about race. I remember the hot homemade apple strudel like it was yesterday.
Let me tell you another thing about Nazis. Once a Nazi, always a Nazi. Just because they lost the war didn't mean they dropped their extreme beliefs.
Fast-forward 30 years, and I was a wealthy hedge fund manager with money to burn, looking for adventure with a history bent during the 1990s.
I was mountain climbing in the Bavarian Alps with a friend, not far from Garmisch-Partenkirchen, when I learned that Leni Riefenstahl lived nearby, then in her 90s.
Attending the USC film school with a young kid named Steven Spielberg decades earlier, I knew that Riefenstahl was a legend in the filmmaking community.
She produced such icons as Olympia, about the 1932 Berlin Olympics, and The Triumph of the Will, about the Nuremburg Nazi rallies. It is said that Donald Trump borrowed many of these techniques during his successful 2016 presidential run.
It was rumored that Riefenstahl was also the onetime girlfriend of Adolph Hitler.
I needed a ruse to meet her since surviving members of the Third Reich tend to be very private people, so I tracked down one of her black and white photos of Nubian warriors, which she took during her rehabilitation period in the 1960s.
It was my goal to get her to sign it.
Some well-placed intermediaries managed to pull off a meeting with the notoriously reclusive Riefenstahl, and I managed to score a half-hour tea.
I presented the African photograph and she seemed grateful that I was interested in her work. She signed it quickly with a flourish.
I then gently grilled her on what it was like to live in Germany in the 1930s. What I learned was fascinating.
But when I asked about her relationship with The Fuhrer, she flashed, "That is nothing but Zionist propaganda."
Spoken like a true Nazi.
The meeting was at an end.
I took my signed photograph home, framed it, hung it on my office wall for a few years. Then I donated it to a silent auction at my kids' high school.
Nobody bid on it.
The photo ended up in storage at my home, and when it was time to make space, it went to Goodwill.
I obtained a nice high appraisal for the work of art and then took a generous tax deduction for the donation, of course.
It is now more than a half-century since my first contact with the Nazis.
By the way, the torchlight parade we saw in Charlottesville, VA was obviously lifted from The Triumph of the Will, except that they didn't use tiki poolside torches in Germany in the 1930s.
"Though the preachers of pessimism prattle endlessly about America's problems, I've never seen one who wishes to emigrate (though I can think of a few for whom I would happily buy a one-way ticket)," said Oracle of Omaha Warren Buffett.