I never cease to be amazed by the intelligence provided me by the US Defense Department, which after the CIA, has the world?s most impressive and insightful economic research team. There are few places a global strategist like myself can go to get an intelligent, thoughtful forty year views, and this is one.

Of course, they are planning how to commit ever declining resources in future military conflicts. I am just looking for great trading ideas for my readers, which my assorted three star and four star friends have in abundance. I usually have to provide some extra analysis and tweak the data a bit to obtain the precise ticker symbols and entry points, but then that?s what you pay me to do.

An evening with General Douglas Fraser did not disappoint. He is an Air Force? four star who is the commander of US Southern Command (SOUTHCOM), one of nine unified Combatant Commands in the Department of Defense. Its area of responsibility encompasses Central America, South America, and the Caribbean. SOUTHCOM is a joint command comprised of more than 1,200 military and civilian personnel representing the Army, Navy, Air Force, Marine Corps, Coast Guard, and other federal agencies.

The United States is now the second largest Hispanic country in the world, and it will soon become the largest. These industrious people now account for 15% of US GDP, and that figure will grow to 35% by 2050. The Hispanic birthrate in many parts of the US is triple that of any other ethnic group. Because of this, any politicians that pursue anti-immigrant policies are doomed to failure.

Latin America?s GDP is growing at 4% a year, more than double the current US rate. American trade with the region grew by 72% last year, with imports surging an eye popping 112%. It is the source of one third of our foreign energy supplies. It has tremendous wealth in copper, iron ore, and food production that have yet to be exploited. In the last decade, 40 million have risen out of poverty. Yet 13% of the inhabitants earn less than $1 a day.

This poverty has made Latin America fertile ground for the international drug trade, which poses one of the greatest threats to America?s security today.? Profits from the cocaine trade reached $88 billion in 2011, which is more than the GDP of any single Central American country. Some $33 billion worth of this narcotic made it into the US last year. Brazil is the world?s second biggest consumer of cocaine, after the US, with the UK the largest per capita consumer. The farther you move this product from the source, the more expensive it gets. Cocaine costs $2,000 a kilo in Brazil, $40,000 in the US, $80,000 in Europe, and $150,000 in the Middle East.

Technology has made communications, organization and logistics tools once only found in the military available to anyone. This creates a level playing field for international crime organizations of all sorts. The drug business is so profitable that the cartels are now building submarines in the jungles of Columbia at a cost of $4 million each, and sending them under water to the US to make a $100 million profit per voyage.

This illicit wealth is financing the growth of other illegal activities, like money laundering, arms dealing, human trafficking, and even the transportation of exotic animals. This is corrupting the smaller and weaker governments. Key transit point Honduras bas become so violent, with the highest murder rates in the world that the US recently had to withdraw 150 Peace Corps volunteers.

As a result, Fraser has had to modify the mission of SOUTHCOM from a primarily military one to non-traditional crime fighting. His planes are intercepting smugglers at the favored Venezuela-Honduras-US air corridor, as well as craft making it up the Central American west coast.? He is providing military assistance, training, and joint operations where he can, but must balance this with the human rights record in each country.

In additional to his other responsibilities, General Fraser is also keeping close track of China?s rapidly expanding trade relations in the area. They have begun selling inexpensive, low end weapons and military equipment to some of these countries.

The investment opportunities I picked up from General Fraser were legion. It certainly made the ETF?s for Brazil (EWZ), Chile (ECH), and Columbia (GXG) no brainers for a long term portfolio. The Brazilian Real and the Chilean peso are screamers. Copper (CU) and the grains, (CORN), (SOYB), and (WEAT), are probably also good bets.

General Fraser graduated from the Air Force Academy in 1974 and is fluent in Spanish. He has commanded Air Force combat units in Japan, Korea, and Germany. He was later a senior officer in the Space Operations Command. General Fraser joined SOUTHCOM in 2009 after serving as deputy commander of the Pacific Command.

After his briefing, the readers of the Diary of a Mad Hedge Fund Trader who came at my invitation that evening were given the opportunity to ask questions of one of America?s most senior military officers on a one on one basis. In a lighthearted moment, I mentioned to the General that his career total of 2,800 flight hours exceeding my own by only 600 hours. But his rides were vastly more exciting than mine, with most of his time spent in F-16?s and F-15-s, some of the most lethal weapons ever developed.? My log contains an assortment of aircraft that include a lot of more sedentary Cessna?s, a few C-130 Hercules, a P51 Mustang, a De Havilland Tiger Moth, and a few precious hours in a Russian Mig-25 and Mig-29.

 

 

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Due to a number of technical difficulties, many potential new subscribers were denied the opportunity to buy my award winning Trade Alert Service at the old price of $1,997 before the price increase. Among other things, the site crashed a few times because of the sheer volume of people attempting to sign up at once.

Since I highly value loyalty, I am therefore offering this price one last time, this weekend only, to give people a chance to get in. On Monday, the price jumps 50%, right back to the now standard price of $3,000, where it will remain for the rest of this year.

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It is looking like 2012 will be just as hot. Check out the returns of my the last few trades that went out over the past three weeks:

Short natural gas - +75%
Short Yen - +64%
Short Bank of America - +30%

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I arrived early for a meeting in Salt Lake City the other day. I noticed a cluster of tents near the ice skating rink and thought I would catch an update on the Occupy Wall Street movement.

Two guys emerged from a jerry built, homemade structure and braved the frigid 20 degree temperatures to find out what I was all about. I said I was a card carrying member of the 1% and wanted hear their side of the story. They replied that the local movement had dwindled from 100?s to a couple of dozen hard cores, due to the inclement weather. Indeed, there were mounds of fresh snow piled around the edges of the square. But they fully expected their numbers to rebuild after the spring though. The police were being cool and leaving them alone. As we spoke, I noticed an occupier head off to work.

I am following this movement closely because it has the potential to turn the election upside down this year. This could be the Tea Party of 2012, with a similarly large impact on the election results. President Obama has recently expressed sympathies with Occupy aims, while safely keeping his distance from the actual movement. If he can frame this election in terms of the 99% versus the 1%, and paint Romney in a corner as representing the 1%, then he has a winner. He poll numbers have recently been rising sharply, and have been tracking nearly 1:1 with the S&P 500 Index.

I asked them what they wanted and what I got was a minestrone soup of accurate facts, urban legends, and folk tales. I corrected them at every turn. Yes, their interpretation of the repeal of Glass Steagle was correct, but the imposition of the Volker Rule will effectively bring its return. That?s what Bank of America (BAC) shares at $5 was telling us. No, there is no law barring ownership of more than 5 pounds of gold. In fact, you can purchase 100 ounce bars on the Internet. I have several friends who have done so. And the bars in Fort Knox in Kentucky aren?t really lead ones painted gold. I had someone check.

The Chinese don?t shoot its citizens for gold ownership. They stopped that a few years ago. Now they are trying to encourage individual gold ownership, and coin dealers selling once ounce gold and silver pandas are popping up everywhere. No, the Chinese economy is not going to crash, forcing them to sell all their Treasury bonds and crash our economy too.? Yes, the US dollar will remain the reserve currency for the rest of my life, but maybe not the rest of theirs. There just is no other alternative currency with the breadth and depth of the greenback. Alternatives proposed in the past, like the yen and the Euro, have proven to have far more problems than Uncle Buck.

I asked how they were fixed for food. They said that local bakeries were given them their old bread and pastries, and other supporters regularly dropped off dented canned food. I pulled a $100 out of my wallet and suggested they order in pizzas for lunch for everyone. They said that was really cool, but would I mind if it was vegetarian?

 

 

?Your Future May Be In Their Hands