Global Market Comments
August 16, 2016
Fiat Lux
Featured Trade:
(AUGUST 17th GLOBAL STRATEGY WEBINAR),
(INTRODUCING ?STOCKS TO BUY FOR THE COMING ROARING TWENTIES?),
(A DIFFERENT VIEW OF THE US)
If you think the Dow Average has delivered a ballistic performance in recent months, you haven't seen anything yet!
Are you ready for Dow 338,550 by 2038?
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If I am wrong, I am understating the potential appreciation of stocks.
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In fact, you may never need to work another day in your life!
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Long-term readers of the Diary of a Mad Hedge Fund Trader will be familiar with its themes.
I outline the major trends that will drive the economy forward for the next twenty years including demographics, globalization, onshoring, and the return of inflation.
This is clearly going to be another American Century.
I then focus on technology, biotechnology, health care, solar, battery technology, cybersecurity, and many other industries that will lead the United States into a new Golden Age.
I provide an explanation of how a dozen hyper-accelerating technologies intertwine to deliver exponential economic growth. The trickle-down effect for the rest of the economy, and the world, will be enormous.
Potentially, the major stock indexes could rise by 18.3 times over the following 18 years, starting in 2020. That would take the Dow Average from the present 18,500 to 338,550 by 2038.
If you think this sounds fanciful, I have seen it all before.
From August 1982 until April 2000, the arrival of cheap microprocessors, Windows, and the Internet had a cross leveraged effect on each other which drove the Dow Average up exactly 18.3 times, from 600 to 11,000.
Remember all those Dow 10,000 by 2000 hats?
All I'm calling for is a repeat. That's if you can fit 338,550 on to a hat!
Except this time, we have not just three, but two dozen major trends and far more powerful demographic influences driving us forward.
The book can be purchased for $49 by clicking here. You can download it in a PDF file, print it out, or distribute it freely to your friends by email.
Read and enjoy.
My mother lives in Pakistan, my daughter in Greece, and I have a ski chalet in Peru.
What's more, I have had strategy luncheons in Australia, Thailand, and Turkey.
At least these would be my conclusions after looking at a map prepared by my esteemed former employer, The Economist magazine, of the United States, renaming each state with it's international equivalent in GDP.
There are other tongue-in-cheek comparisons to be made.
Texas is portrayed as Russia, which makes sense, as both are oil exporters. Ditto for Alaska, which is represented by Oman.
As for Hawaii? It is renamed Croatia. Now that would really give President Obama birth certificate problems!
I worked for this august publication for a decade during the seventies, and have been reading the best business magazine in the world for over four decades. They never cease to inform, entertain, and titillate.
An April 1 issue once did a full page survey on a fictitious country off the coast of India called San Serif.
It noted that if the West coast kept eroding, and the East coast continued silting up, the country would eventually run into the subcontinent, creating serious geopolitical problems.
It wasn't until someone figured out that the country, the prime minister, and every town on the map was named after a type font that the hoax was uncovered.
This was way back, in the pre-Microsoft Word era, when no one outside the London typesetter's union knew what ?Times Roman? meant.
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?Most of the ETFs today are your dad?s Oldsmobile.? said Lee Kranefuss of Source Advisors, about the outdated irrelevance for most equity indexes.
Global Market Comments
August 15, 2016
Fiat Lux
Featured Trade:
(MARKET OUTLOOK FOR THE COMING WEEK),
(INDU), (SPY), (QQQ), (TLT), (FXY), (YCS)
(THE MAD HEDGE CONCIERGE SERVICE HAS AN OPENING),
(THE POPULATION BOMB ECHOES),
?(POT), (MOS), (AGU), (WEAT), (CORN), (SOYB), (DBA),
(TESTIMONIAL)
Dow Jones Industrial Average (INDU)
SPDR S&P 500 ETF (SPY)
PowerShares QQQ ETF (QQQ)
iShares 20+ Year Treasury Bond (TLT)
CurrencyShares Japanese Yen ETF (FXY)
ProShares UltraShort Yen (YCS)
Potash Corporation of Saskatchewan Inc. (POT)
The Mosaic Company (MOS)
Agrium Inc. (AGU)
Teucrium Wheat ETF (WEAT)
Teucrium Corn ETF (CORN)
Teucrium Soybean ETF (SOYB)
PowerShares DB Agriculture ETF (DBA)
?
If the massive crowding of vacation destinations is any indicator of the health of the economy, business is booming.
Here at Incline Village, Nevada the state beaches on pristine Lake Tahoe are closing at 10:00 AM because the parking lots are full.
My readers in Colorado complain of becoming prisoners in their own homes. Any attempt to venture out snares them in hopeless traffic jams of RV?s, fifth wheel trailers, and camper vans.
It is a global trend. There is a two-hour line to get into the Uffizi Gallery, in Florence, Italy. The wait to get into the Louvre in Paris is worse. Venice is so packed you can barely move.
This is what happens when all of the world?s central banks are reading from the same sheet of music. For the first time in decades, they are all doing whatever they can to stimulate their economies at the same time.
Markets have taken note.
US stocks earned three gold medals on Thursday, with the Dow Average, the S&P 500, and NASDAQ all hitting new all time highs at the same time. This hasn?t happened since 1999.
Institutional and individual cash levels are at historic highs, owners having been scared out of positions earlier this year by a weak China, Brexit, and Donald Trump.
With the recent earnings reporting season producing a much better than expected result, the consensus forecast for the Dow Average one year out is now over 20,000.
That is a gain of 7.5%, and 10% with dividends. That beats the daylights out of a cash return of zero.
The planet wants to buy on a dip. As a result, the dips aren?t happening.
I was hoping for a 4% correction in August, but those dreams appear dashed. It looks like only a 2% dip will have to do.
It all reminds me of the Tokyo stock market in 1987. Stocks were then expensive and over extended. But you know what? They rose for three more years. Premature bears got crushed.
It really is a ?close your eyes and buy? market. The slow grind up in share prices could continue for the rest of the year.
Notice also that the bond market (TLT) seems to be struggling here, repeatedly failing to break to new highs.
A stronger economy means weaker bond prices, interest rate rises sooner, and therefore a stronger dollar.
That?s why I am running a double short in the Japanese yen (FXY), (YCS).
Everyone expects the US to be the first to raise rates, and the Japanese the last, if ever. Therefore, a yen short should be one of the big trades for the rest of 2016.
There isn?t much on the calendar for this week, and we still have another five days of volume destroying Olympic coverage. So volatility (VIX) will continue to probe new lows.
We have two Fed speakers in coming days, a moderate, Dennis Lockhart, on Tuesday and a hawk, James Bullard, on Wednesday. So the drift here may hint towards a September rate rise.
On Monday, August 15 at 8:30 AM EST the Empire State Manufacturing Survey should see some improvement.
On Wednesday at 2:00 PM we get FOMC Minutes, which could give us a clue on coming policy changes.
On Thursday 8:30 AM EST the Weekly Jobless Claims should confirm that employment remains at decade highs.
The week closes with a whimper with the Baker Hughes rig count on Friday at 1:00 PM EST. Worryingly, the trend has been up for the past two months, driving oil prices lower.
The next potentially market moving event will be the Jackson Hole meeting of global central bankers, economists, bankers and policy makers which takes place on August 27-29.
That?s when what the Fed REALLY thinks could leak out.
I?m taking off now to score a prime spot on the beach. Maybe I?ll run into you there.
I am pleased to announce that I have an opening for the Mad Hedge Fund Trader Executive Concierge Service, a program that is aimed at our most valued clients.
This is the first time an opening has become available since the service was initiated in November.
The goal is to provide high net worth individuals with the extra degree of assistance they may require in managing diversified portfolios. Tax, political, and economic issues will all be covered.
It is also the ideal service for the small and medium sized hedge fund that lacks the resources to support their own in-house global strategist full time.
The service includes the following:
1) A risk analysis of your personal portfolio with the goal of focusing your investment in the highest return sectors for the long term.
2) A monthly phone call with John Thomas to update you on the current state of play in the global financial markets.
3) A personal meeting with John Thomas anywhere in the world once a year to continue our in depth discussions.
4) A subscription to all Mad Hedge Fund Trader products and services.
5) Think of it as an investment 911. If you require an instant read on the markets or a possible business venture, you will always have my personal cell phone number.
The cost for this highly personalized, bespoke service is $10,000 a year.
To best take advantage of the Mad Hedge Fund Trader Executive Concierge Service, you should possess the following:
1) Be an existing subscriber to the Mad Hedge Fund Trader PRO who is already well aware of our strengths and limitations.
2) Have a liquid net worth of over $5 million.
3) Possess a degree of knowledge and sophistication of financial markets. This is NOT for beginners.
It is my intention to limit the number of subscribers to ten. When a black swan comes out of the blue, I have to be able to call all of you within the hour and tell you the immediate impact on your portfolio.
That?s what I did from a mountaintop in Western Ireland when Brexit hit.
You know all those John Deere (DE) and Caterpillar (CAT) hats I saw American tourists wearing in Venice, Italy five years ago?
This year, I didn?t see one!
With the entire agricultural space one of the preeminent investment disasters this year, you?d be hard pressed to find a long-term bullish argument for the troubled sector.
That is, of course, unless you read this newsletter.
Pack your portfolios with agricultural plays like Potash (POT), Mosaic (MOS) and Agrium (AGU) 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.
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 for the past five years.
Rising sea levels displacing 500 million people in low-lying coastal areas is another big problem.
One of the 81-year-old professor?s early books The Population Bomb was required reading for me in college in the 1960?s, 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 the 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, and has already worked well in Europe and Japan.
Yes, I know we all have been hearing these Armageddon type predictions for decades. What will be the first place we will actually see it? In the prices of commodities the charts for which I have included below.
Ignore them at your peril!
All sobering food for thought.
A short note to thank John for great information and insight. Listening to John?s ideas is awesome and I have committed to myself to keep following his research and trade ideas because the performance has been outstanding.
Regards,
Dallas
Melbourne, Australia
Global Market Comments
August 12, 2016
Fiat Lux
Featured Trade:
(AUGUST 17th GLOBAL STRATEGY WEBINAR),
( OCTOBER 21st SAN FRANCISCO, CA GLOBAL STRATEGY LUNCHEON),
(AN UPDATE TO THE ECONOMIST ?BIG MAC? FOREIGN EXCHANGE INDEX),
(FXY), (FXF), (FXE), (FXA), (CYB)
CurrencyShares Japanese Yen ETF (FXY)
CurrencyShares Swiss Franc ETF (FXF)
CurrencyShares Euro ETF (FXE)
CurrencyShares Australian Dollar ETF (FXA)
WisdomTree Chinese Yuan Strategy ETF (CYB)