• support@madhedgefundtrader.com
  • Member Login
Mad Hedge Fund Trader
  • Home
  • About
  • Store
  • Luncheons
  • Testimonials
  • Contact Us
  • Click to open the search input field Click to open the search input field Search
  • Menu Menu

Janet Lays an Egg

Diary, Newsletter

Financial markets often behave like demanding, spoiled, and fickle children. If they don?t get what they want RIGHT NOW they throw a temper tantrum.

That is exactly what bourses are doing around the world.? The Dow Average rallied 500 points this week in the hope that my former Berkeley economics professor, Federal Reserve governor Janet Yellen, would suddenly turn into an ultra dove.

It was thought that she would totally cave on any interest rate increases for the rest of 2016 at her Wednesday Humphrey-Hawkins testimony in front of a hostile congress.

Instead, Janet laid an egg. Risk markets everywhere suffered cardiac arrest.? The 500-point rally quickly turned into a 700-point loss. Blink, and you lost your last chance to get out.

The Japanese yen rocketed as hedge funds rushed to cover their shorts, which they had been using to fund their rapidly fading ?RISK ON? positions. Panic dumping long positions mean those yen shorts are no longer needed.

What is particularly gob smacking is to see a ten year Treasury yield crater to only 1.50%. As I outlined in last week?s Global Strategy Webinar, the (TLT) is clearly headed for its old all time high of $135, which equates to a parsimonious 1.36% yield.

If you refinanced your home last month to cash in on lower interest rates, better plan on doing it again next month!

Both the Treasury market and global bank shares are now discounting another Great Recession that is absolutely nowhere on the horizon.

It all vindicated my aggressive hedging of my trading book, which I put into place at the beginning of January.? Gotta love those (SPY) April $182 puts! They?re better than Ambien in helping me sleep at night.

February is shaping up to be a very big month for the Mad Hedge Fund Trader?s model trading portfolio.

In the meantime, more data came out this morning confirming the recession that isn?t.

The Thursday weekly jobless claims plunged by 16,000 to 261,000, within spitting distance of a new 14 year low.

This is on the heels on last week?s respectable +175,000 January nonfarm payroll. This compares to a monthly LOSS of -700,000 jobs we saw in 2009.

Sure, the 0.7% US Q4 GDP is nothing to run up the flagpole and salute. But it is still growth. Most industries are reporting record profits.

I have to admit, I have never seen the economy so bifurcated.

In my daily customer calls I hear of Armageddon in the oil patch. But you can?t find office space in the San Francisco Bay area to save your life. And there are several whales looking for a staggering 10,000-20,000 square feet EACH!

These are all operations that started out in a garage only a decade ago. Add up the market capitalization of Google (GOOGL), Apple (AAPL), Facebook (FB), Twitter (TWTR), and Uber and we have created $1 trillion of equity out of thin air in only ten years.

Eventually, all good corrections come to an end. The hot money gets sold out, the margin clerks have taken their pound of flesh, the newbies get wiped out, and we run out of traders willing to chase the move down.

Then the cash rich long-term funds suddenly realize that we have a market that is selling at a 15X multiple in an economy that is about to speed up again. In addition, there is nothing else to buy.

Then it is off to the races to new all time highs by year end.

I am sticking to my New Year forecast of a 15% selloff that takes the S&P 500 down to $1770, which then rallies 20% by the end of December.

INDU

SPY

TLT

Employment SituationRecession? What Recession?

 

JanetJanet Lays an Egg

Share this entry
  • Share on Facebook
  • Share on X
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share by Mail
https://www.madhedgefundtrader.com/wp-content/uploads/2016/02/Janet-e1455214542199.png 273 400 DougD https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png DougD2016-02-12 01:07:202016-02-12 01:07:20Janet Lays an Egg

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Mad Hedge Fund Trader (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

Copyright © 2025. Mad Hedge Fund Trader. All Rights Reserved. support@madhedgefundtrader.com
  • Privacy Policy
  • Disclaimer
  • FAQ
Link to: February 11, 2016 MDT Pro Tips A.M. Link to: February 11, 2016 MDT Pro Tips A.M. February 11, 2016 MDT Pro Tips A.M. Link to: February 12, 2016 Link to: February 12, 2016 February 12, 2016
Scroll to top