Global Market Comments
December 6, 2013
Fiat Lux
Featured Trade:
(THE BOND CRASH HAS ONLY JUST STARTED),
($TNX), (TLT), (TBT),
(INDIA VS CHINA),
(FXI), (PIN), (INP), (TTM)
10-Year Treasury Note ($TNX)
iShares Barclays 20+ Year Treas Bond (TLT)
ProShares UltraShort 20+ Year Treasury (TBT)
iShares China Large-Cap (FXI)
PowerShares India (PIN)
iPath MSCI India Index ETN (INP)
Tata Motors Limited (TTM)
When I first visited Calcutta in 1976, more than 800,000 people were sleeping on the sidewalks, I was hauled everywhere by a very lean, barefoot rickshaw driver, and drinking the water out of a tap was tantamount to committing suicide. Some 36 years later, and the subcontinent is poised to overtake China's white hot growth rate.
My friends at the International Monetary Fund just put out a report predicting that India will grow by 8.5% this year. While the country's total GDP is only a quarter of China's $5 trillion, its growth could exceed that in the Middle Kingdom as early as 2014.
Many hedge funds believe that India will be the top growing major emerging market for the next 25 years, and are positioning themselves accordingly. Investors are now taking a harder look at the country ETF?s, including India (INP) and China (FXI), which have recently suffered gut churning selloffs.
India certainly has a lot of catching up to do. According to the World Bank, its per capita income is $3,275, compared to $6,800 in China and $46,400 in the US. This is with the two populations close in size, at 1.3 billion for China and 1.2 billion for India.
But India has a number of advantages that China lacks. To paraphrase hockey great, Wayne Gretzky, you want to aim not where the puck is, but where it's going to be. The massive infrastructure projects that have powered much of Chinese growth for the past three decades, such as the Three Gorges Dam, are missing in India. But financing and construction for huge transportation, power generation, water, and pollution control projects are underway.
A large network of private schools is boosting education levels, enabling the country to capitalize on its English language advantage. When planning the expansion of my own business, I was presented with the choice of hiring a website designer here for $60,000 a year, or in India for $5,000. That's why booking a ticket on United Airlines or calling technical support at Dell Computer gets you someone in Bangalore.
India is also a huge winner on the demographic front, with one of the lowest ratios of social service demanding retirees in the world. China's 30 year old 'one child' policy is going to drive it into a wall in ten years, when the number of retirees starts to outnumber their children.
There is one more issue out there that few are talking about. The reform of the Chinese electoral process at the next People's Congress in 2013 could lead to posturing and political instability which the markets could find unsettling. India is the world's largest democracy, and much of its current prosperity can be traced to wide ranging deregulation and modernization than took place 20 years ago.
I have been a big fan of India for a long time, and not just because they constantly help me fix my computers. In the past, I recommended Tata Motors (TTM), which has since doubled, making it one of my best, all-time single stock picks (click here for ?Take Tata Motors Out for a Spin?). On the next decent dip take a look at the Indian ETF?s (INP), (PIN), and (EPI).
Better to Own This Pyramid
Than This Pyramid
Taxi! Taxi!
Global Market Comments
December 5, 2013
Fiat Lux
Featured Trade:
(THE POPULATION BOOM),
(WHY WATER WILL SOON BE WORTH MORE THAN OIL),
(CGW), (PHO), (FIW), (VE), (TTEK), (PNR),
(WHO EXPENSIVE OIL HURTS THE MOST), (USO),
(TESTIMONIAL)
Guggenheim S&P Global Water Index (CGW)
PowerShares Water Resources (PHO)
First Trust ISE Water Idx (FIW)
Veolia Environnement S.A. (VE)
Tetra Tech Inc. (TTEK)
Pentair Ltd. (PNR)
United States Oil (USO)
In their century long coverage of exotic places, cultures, and practices, National Geographic Magazine inadvertently sheds light on broad global trends that deeply affect the rest of us. Plus, the pictures are great. A recent issue celebrated the approach of the world's population to 7 billion, and the implications therein.
Long time readers of this letter know that demographic issues will be one of the most important drivers of all asset prices for the rest of our lives. The magazine expects that our planet?s population will reach 9 billion by 2045, the earliest date that I have seen so far. Can it take the strain? Early religious leaders often cast Armageddon and Revelations in terms of an exploding population exhausting all resources, leaving the living to envy the dead. They may not be far wrong.
A number of developments have postponed the final day of reckoning, including the development of antibiotics, the green revolution, DDT, and birth control pills. Since 1952, life expectancy in India has expanded from 38 years to 64. In China, it has ratcheted up from 41 years to 73. These miracles of modern science explain how our population has soared from 3 billion in a mere 40 years.
The education of the masses may be our only salvation. Leave a married woman at home, and she has eight kids, as our great grandparents did, half of which died. Educate her, and she goes out and gets a job to raise her family's standard of living, limiting her child bearing to one or two. This is known as the ?demographic transition.?
While it occurred over four generations in the developed world, it is happening today in a single generation in much of Asia and Latin America. As a result, fertility around the world is crashing. The US is hovering at just below the replacement rate of 2.1 children per family, thanks to immigration. But China has plummeted to 1.5, Europe is at 1.4, and South Korea has plunged as low as 1.15.
Population pressures are expected to lead to increasing civil strife and resource wars. Some attribute the genocide in Rwanda in 1999, which killed 800,000, as the bloody result of overpopulation.
If you think that an energy shortage is bad, it will pale in comparison to the next water crisis. So investment in fresh water infrastructure is going to be a great recurring long-term investment theme. One theory about the endless wars in the Middle East since 1918 is that they have really been over water rights.
Although Earth is often referred to as the water planet, only 2.5% is fresh, and three quarters of that is locked up in ice at the North and South poles. In places like China, with a quarter of the world's population, up to 90% of the fresh water is already polluted, some irretrievably so. Some 18% of the world population lacks access to potable water, and demand is expected to rise by 40% in the next 20 years.
Aquifers in the US, which took nature a millennia to create, are approaching exhaustion. While membrane osmosis technologies exist to convert seawater into fresh, they use ten times more energy than current treatment processes, a real problem if you don't have any, and will easily double the end cost of water to consumers. While it may take 16 pounds of grain to produce a pound of beef, it takes a staggering 2,416 gallons of water to do the same. Beef exports are really a way of shipping water abroad in concentrated form.
The UN says that $11 billion a year is needed for water infrastructure investment, and $15 billion of the 2008 US stimulus package was similarly spent. It says a lot that when I went to the University of California at Berkeley School of Engineering to research this piece, most of the experts in the field had already been retained by major hedge funds!
At the top of the shopping list to participate here should be the Claymore S&P Global Water Index ETF (CGW), which has appreciated by 14% since the October low. You can also visit the PowerShares Water Resource Portfolio (PHO), the First Trust ISE Water Index Fund (FIW), or the individual stocks Veolia Environment (VE), Tetra-Tech (TTEK), and Pentair (PNR). Who has the world's greatest per capita water resources? Siberia, which could become a major exporter of H2O to China in the decades to come.
Every time the price of oil spikes, we learn vast amounts of information about the global reach of this indispensable commodity. It's like taking a non-core elective in geology at college. So I was fascinated when I found the chart of relative sector winners and losers below.
No surprise that energy does best from sky-high crude prices. It is followed by telecommunications and health care. You would also expect consumer discretionary stocks to take it on the nose, as high energy prices almost always lead to a cyclical downturn in the economy.
Who is the worst performer of all? Europe, which makes the recent weakness even more understandable.
Europe Will be the Biggest Loser from High Oil Prices
Global Market Comments
December 4, 2013
Fiat Lux
Featured Trade:
(ARE YOU READY FOR PRESIDENT HILLARY?),
(TESTIMONIAL)
Global Market Comments
December 3, 2013
Fiat Lux
Featured Trade:
(THAT OTHER ?GREAT REALLOCATION? OUT OF THE YEN),
(FXY), (YCS), ($NIKK), (DXJ), (TLT),
(BUY FLOOD INSRANCE WITH THE VIX), (VIX), (VXX),
(TESTIMONIAL)
CurrencyShares Japanese Yen Trust (FXY)
ProShares UltraShort Yen (YCS)
Tokyo Nikkei Average Indx ($NIKK)
WisdomTree Japan Hedged Equity (DXJ)
iShares 20+ Year Treasury Bond (TLT)
VOLATILITY S&P 500 (^VIX)
iPath S&P 500 VIX (VXX)
Global Market Comments
December 2, 2013
Fiat Lux
Featured Trade:
(MAD DAY TRADER BRINGS IN 292% RETURN IN 2013),
(GOOG), (IBM), (SOYB), (AAPL), (TLT),
?(TBT), (FXY), (YCS), (FXE), (EUO),
(BEWARE THE COMING EQUITY FAMINE),
(TESTIMONIAL)
Google Inc. (GOOG)
International Business Machines Corporation (IBM)
Teucrium Soybean (SOYB)
Apple Inc. (AAPL)
iShares 20+ Year Treasury Bond (TLT)
ProShares UltraShort 20+ Year Treasury (TBT)
CurrencyShares Japanese Yen Trust (FXY)
ProShares UltraShort Yen (YCS)
CurrencyShares Euro Trust (FXE)
ProShares UltraShort Euro (EUO)
When Mad Day Trader, Jim Parker, told me he was up 292% over the past seven months, I didn?t believe him.
The value of a nominal $1,000 investment would have to have increased to $3,124. ?It?s too good to be true,? I thought. Nobody will believe it. Even my own customer support people said it was a crazy number.
But after carefully analyzing Jim?s trade history, I saw that he was right on the money. So to confirm that the proof was in the pudding, I checked with a specialist to verify the numbers from Stonegate International Administration LLC of Chicago.
Sure enough, Stonegate came in bang on the 292% number. To review the full report, which I have posted on our website, please click ??Mad Day Trader All Trades Report?.
The report shows that Jim?s best month was in May, when he earned an eye popping 88% profit. He piled on longs in IBM (IBM), Google (GOOG), soybeans (SOYB), and Brazil (EWZ). He went aggressively short the Japanese yen (FXY), (YCS) and the Euro (FXE), (EUO). He also took advantage of the volatility in the Treasury bond market (TLT), (TBT), playing it from both the long and short side.
Hmmmm. Looks like Jim has been reading my research.
I realize that many of you are not inclined to attempt day trading, where most individuals lose money, and justifiably so. But Jim?s Mad Day Trader Service offers an incredibly valuable tool for medium and long-term investors as well.
I can?t tell you how many times I have been tormented over whether to pull the trigger on a Trade Alert, and then Jim comes along with the little morsel of information that tips me over to one side or the other. His intelligence can be worth millions. These he picks up from his four-decade accumulation of relationships in the Chicago pits, big hedge fund clients, and his own proprietary models and native instincts.
You may have noticed that since we started offering the Mad Day Trader service, my own performance has rocketed from 37% to nearly 60% for 2013, in no small part due to Jim?s assistance. I basically had one great year going into June, worked in Europe for two months, and then piled on a second great year after I returned in August. Subscribers of both our services are laughing all the way to the bank.
While the Diary of a Mad Hedge Fund Trader and Global Trading Dispatch focus on investment over a one week to six-month time frame, Mad Day Trader will exploit moneymaking opportunities over a 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. During normal trading conditions, you should receive two to five market updates and Trade Alerts a day.
As with our existing service, you will receive ticker symbols, entry and exit points, targets, stop losses, and regular real time updates. At the end of each day, a separate short-term model portfolio will be posted on the website.
Jim is a 40-year veteran of the financial markets and has long made a living as an independent trader in the pits at the Chicago Mercantile Exchange. He has worked his way up from a junior floor runner, to advisor to some of the world?s largest hedge funds. We are lucky to have him on our team and gain access to his experience, knowledge, and expertise.
I have been following his alerts for the past five years, and his market timing has become an important part of the ?unfair advantage? that I provide readers.
A trading service with this degree of success and sophistication normally costs $20,000 a year. As a client of The Mad Hedge Fund Trader, you can purchase Mad Day Trader alone for $699 a quarter, or $2,000 a year. Or you can buy it as a package together with Global Trading Dispatch, which we call Mad Hedge Fund Trader PRO, for $4,000 a year, a 20% discount to the full retail price...
To learn more about The Mad Day Trader, please visit my website at http://madhedgefundradio.com/mad-day-trader-service/. To subscribe, please click here at http://madhedgefundradio.com/subscribe-to-mad-day-trader-service/ .
If you want to get a pro rata upgrade from your existing Newsletter or Global Trading Dispatch subscription to Mad Hedge Fund Trader PRO, which includes Mad Day Trader, just email Nancy in customer support at nmilne@madhedgefundtrader.com, or call her at 888-716-1115.
