Come join me for afternoon tea at the Mad Hedge Fund Trader's Global Strategy Seminar, which I will be conducting high in the Alps in Zermatt, Switzerland at 2:00 PM on Friday, July 27, 2018.
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 $220.
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 purchase confirmation.
I look forward to meeting you and thank you for supporting my research.
How would you like to win a free one-year subscription to the Diary of a Mad Hedge Fund Trader?
We are looking for video testimonials from subscribers who have had a blowout success with our service. A duration of one or two minutes is fine. The more specifics you mention the better, such as outlining the individual stock or asset class you bought and how much money you made from it.
You can simply do this with the video camera on your computer or smart phone. Just keep a steady hand so viewers won't get seasick.
First prize is a one-year extension of your existing subscription to a Mad Hedge Fund Trader service, second prize is six months, and third prize is three months. The winners will be posted on my website at a future date.
The deadline is June 15, 2018. To email a video you will need to use a large file transfer app, such as Drobox or Hightail, or send them via Google Docs. Just put "Video Testimonial Contest" in the subject line.
I can't wait to see what comes back.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
https://www.madhedgefundtrader.com/wp-content/uploads/2018/05/John-Thomas-story-2-e1527113845670.jpg452300MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2018-05-24 01:07:412018-05-24 01:07:41Announcing the Mad Hedge Testimonial Contest
Featured Trade:
(MONDAY, JULY 16, 2018, PARIS, FRANCE, GLOBAL STRATEGY LUNCHEON), (WHY I'M SELLING SHORT THE STOCK MARKET),
(SPY), (TLT),
(TESTING TESLA'S SELF-DRIVING TECHNOLOGY),
(TSLA)
Come join me for lunch at the Mad Hedge Fund Trader's Global Strategy Luncheon, which I will be conducting in Paris, France, on Monday, July 16, 2018. A three-course lunch will be followed by an extended question-and-answer period.
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. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $259.
I'll be arriving early and leaving late in case anyone wants to have a one-on-one discussion, or just sit around and discuss the financial markets.
The lunch will be held at a restaurant in a four-star hotel in the City of Light's central Opera district that was a favorite of Ernest Hemingway's, the details of which will be emailed to you with your purchase confirmation.
I look forward to meeting you and thank you for supporting my research.
To purchase tickets for the luncheon, please click here.
https://www.madhedgefundtrader.com/wp-content/uploads/2018/05/Paris-story-1-e1527027447975.jpg233350MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2018-05-23 01:08:102018-05-23 01:08:10Monday, July 16, 2018, Paris, France, Global Strategy Luncheon
All good things must come to an end, and I think the latest rally in stocks has just about run out of steam.
Up 12 out of 14 days, and the stock market is starting to reach a point of exhaustion. The S&P 500 (SPY) is now at the top end of a four-month trading range.
In addition, we are now well into a seasonally negative period for stocks, the six months when the total return on indexes is zero. The summer slowdown is upon us, and the declining trading volume is screaming at us loud and clear.
Please note that for the past months, stocks have been rising on small volume and falling on big volume. That is classic late cycle market action and is increasingly making me afraid of my own shadow.
We have just had an onslaught of surprise good news that took us up this high, thus giving us a fabulous short side entry point.
That would include a China trade war temporarily going on hold, the administration's free pass for Iran sanctions busting for the multinational Chinese telecom company ZTE, and Micron Technology's (MU) announcement of a $10 billion share buyback. Good news tends to happen in three's, and on the third one you sell.
So, a shot on the short side is reasonable here. However, doing ANY trade with the Volatility Index (VIX) down here at the $12 handle is a bit of a stretch. But I have only sent out one Trade Alert so far in May, and my traders are starving for fresh red meat.
I am not turning bearish, nor do I expect a recession to strike imminently. That will take place in late 2019 at the earliest. I'm just executing a short-term trade here to keep from being bored to death.
It is all just a matter of numbers. The American labor force is currently growing at 0.5% a year, while productivity is expanding by 1.5%. Add them together and that gives you 2% annual trend growth. Add in a 2% inflation rate and you get a 4% nominal GDP growth rate.
That growth rate means the Fed funds overnight interest rate should be 2.5%, a full 1% above the present 1.5%, so four more 25 basis point Fed rate hikes are a sure thing. It will get to 2.5% in a year.
Similarly, a 4% nominal growth rate historically brings you a 4% 10-year U.S. Treasury bond yield versus the current 3.07%, so we have another year to get to 4% as well.
That means our short strategy in the (TLT) is alive and well, we're just waiting for a better entry point. A 4% Treasury bond targets $98 on the downside in the (TLT), or down another $19 from today's close.
With a price earnings multiple 17X and an assumed earnings per share of $155, that puts the fair value for the S&P 500 of $2,720, or exactly where it is right now.
So the stock market isn't expensive, rich, or euphoric. Nor is it at bargain basement throwing the baby out with the bathwater cheap. It is dead in the middle.
And bull markets never end with fair valuation; they end with valuation upside blowouts. We dallied there at the end of January, but only for a few days. We may not see those high numbers again until the end of 2018.
And here's the bad news. Trading conditions could remain like this for another five months, until the November midterm congressional elections.
Just thought you'd like to know.
https://www.madhedgefundtrader.com/wp-content/uploads/2018/05/Joh-n-in-suit-story-2-image-3-e1527027062176.jpg277300MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2018-05-23 01:07:392018-05-23 01:07:39Why I'm Selling Short the Stock Market
"If a cop follows you for 500 miles, you're going to get a ticket," said Oracle of Omaha Warren Buffett, in reference to Bank of America's many legal problems.
https://www.madhedgefundtrader.com/wp-content/uploads/2018/05/woman-getting-ticket-quote-of-the-day-e1527026497371.jpg256300MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2018-05-23 01:05:352018-05-23 01:05:35May 23, 2018 - Quote of the Day
Featured Trade:
(DON'T MISS THE MAY 23 GLOBAL STRATEGY WEBINAR),
(CHINA'S BIG TRADE WIN),
(SPY), (TLT), (UUP), (USO), (GLD), (SOYB),
(HOW TO USE YOUR CELL PHONE ABROAD)
My next global strategy webinar will be held live from Silicon Valley on Wednesday, May 23, at 12:00 PM EST.
Co-hosting the show will be Mad Day Trader Bill Davis.
I'll be giving you my updated outlook on stocks, bonds, commodities, currencies, precious metals, and real estate.
The goal is to find the cheapest assets in the world to buy, the most expensive to sell short, and the appropriate securities with which to take these positions.
I will also be opining on recent political events around the world and the investment implications therein.
I usually include some charts to highlight the most interesting new developments in the capital markets. There will be a live chat window with which you can pose your own questions.
The webinar will last 45 minutes to an hour. International readers who are unable to participate in the webinar live will find it posted on my website within a few hours.
I look forward to hearing from you.
To log into the webinar, please click on the link we emailed you entitled, "Next Bi-Weekly Webinar - May 23, 2018" or click here.
https://www.madhedgefundtrader.com/wp-content/uploads/2018/05/John-image-story-1-e1526941262131.jpg293300MHFTRhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMHFTR2018-05-22 01:08:592018-05-22 01:08:59Don't Miss the May 23 Global Strategy Webinar
My phone started ringing on Sunday afternoon as soon as the futures markets opened in Asia. The U.S. had reached agreement with China on trade and the Dow futures were up 200 points.
Had the next leg of the bull market begun? ?Was it time to buy?
I asked what were the specifics of the deal. There weren't any. I asked about generalities. Those were absent as well.
All they knew was that the U.S. was suspending threatened tariff increases in exchange for a vague Chinese promise to buy more U.S. exports over the long term.
It was in effect a big Chinese win. The development allows the Middle Kingdom to do nothing but stall for time until the next U.S. administration comes to power regardless of which party wins. The Chinese think in terms of centuries, so waiting three more years for a better negotiating backdrop is no big deal.
It vindicates my own call on how the Chinese trade war would play out. After a lot of threats and saber rattling, the administration would achieve nothing, declare victory, and go home.
Traders should NOT be buying this pop in stock prices on pain of death. All that will happen is that stocks will trade back up to the top of the recent range, and then stall out once again as we slide back into slow summer trading. In fact, all we have accomplished is to revisit last week's high in stocks.
Stocks (SPY) weren't buying this trade agreement for two seconds, nor were bonds (TLT), foreign exchange (UUP), gold (GLD), or energy (USO). Not even the agricultural markets were believing it. Soybeans (SOYB), the commodity most affected by the China trade, were up a measly 2.45%. If markets really believed something substantial was afoot they would be limit up three days in a row. I've seen this happen.
It was obvious that little was accomplished when you saw the endless parade of administration officials praising the deals merits. My half century of trading experience has taught me when someone is working so hard to sell you a bridge, you look the other way.
And here is the problem. Beyond cutting-edge technology, there's nothing that China HAS to buy from the U.S. China's largest imports are in energy and foodstuffs, both globally traded commodities.
The oil and gas coming out of America looks pretty much like the Saudi Arabian and Russian kind. U.S. energy infrastructure is already groaning at the seams as it approaches 11 million barrels a day.
To double that from current levels just to fill the trade gap with China would require a multi-decade effort financed with trillions of dollars in private capital just to produce more oil with prices at a three-year high. In other words, it isn't going to happen.
The same is true with agriculture. I doubt there is a single farmer in the country willing to risk his own money to increase production on the back of the China deal. Rainfall is a much bigger concern.
In the end, stocks will eventually rise to new highs by the end of the year, just not right now. And they will do so on the back of the prodigious earnings growth of U.S. companies, which has been expanding at a breakneck pace for nearly a decade.
It is notable that the only major index that hit new highs today was the small cap Russell 2000 (IWM) where the constituent companies essentially do NO trade with China.
To believe otherwise would be giving the cock the credit for the sun rising, which happens every morning like clockwork.
It Worked Again!
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I constantly receive emails from readers around the world inquiring how I accomplish this or that in my far-reaching travels around the globe.
After all, I have visited 125 countries over the past 50 years. What's more, I have run the Mad Hedge Fund Trader Global Empire for the past 10 years, on the fly, from a laptop and a cell phone.
Given that Europe is now 20% cheaper than last year, and 40% less expensive than four years ago, an increasing number of you are going to cross the pond for your summer vacation.
That certainly was the case this year, when I saw a substantially larger number of American families traveling with children.
For the first time in decades, I am finding gaggles of American students in train stations backpacking their way around the continent with a Eurail Pass, much like I did in the 1960s.
With the right information, your cell phone can make your trip vastly more enjoyable, while preventing it from becoming wildly expensive. In fact, it is hard to imagine how we got along without them. So here goes:
1) Hardware
U.S. issued phones only work abroad if you have an international SIM card, as do most iPhones. Before you leave, call your cell phone provider and ask if you have an international SIM card in your phone.
Each company has exactly one person who knows how this works. If you don't have one, get one. The person at Verizon is named Maria.
Upon arriving abroad, the truly adventurous remove their American SIM cards and install a local one, signing up for a local plan. This can cut your international bill to as little as $10 a month.
You just reinstall your U.S. SIM card when you return home. However, as SIM cards are too small for me to see, I have yet to attempt this bit of technological acrobatics.
If you keep your U.S. SIM card, to make a call when abroad you have to assume you are still in the United States, since you have a U.S. number.
To call another country in Europe just hold down the "0" in your phone number pad until a + sign appears. Then dial 011 for the international exchange, and the numbers for the local country and city codes.
To call the U.S. from abroad, hold the "0" until a + sign appears, then dial 1, then the area code and number.
2) Roaming
International roaming can cost a fortune. Before I figured out the game, I was spending $500 a week downloading email, newspapers, and research reports. TED talks are the worst, costing at least $25 each to watch over foreign air.
So it is crucial to turn off the roaming feature on your phone. On an iPhone you do this by going into settings, then cellular data, and then turning the cellular data function off. Do this, and you will still be able to receive voice calls, such as from a lost traveling companion in distress.
Here is the key rule: Only access the Internet through the free Wi-Fi at your hotel. Download all your big files, news, email here. This saves you a ton of money.
You will need to turn on you cellular roaming to get your apps to work. But if you have already downloaded the big files, the additional cost to check your stock prices, weather forecast, or the way to a sought-after restaurant will be minimal.
Another tactic is to de spam your email accounts. Find all of those useless, unsolicited marketing emails promising get rich quick schemes, dating opportunities, or male enhancements. Then mark them as spam (unless they are from me). When you do use your cellular roaming, they won't eat up all of your data budget.
Warning: Start doing this every day a month before you leave. That's how much spam is out there. You can always unmark email as spam from senders you like, such as the local public library, when you return home.
American companies finally now offer international plans. This year Verizon is offering 250 MB of data, 250 emails and text messages, and 250 minutes of talk time for $80 a month. This is nowhere near enough, but it is a start.
Every time you cross a border, the local cell phone company will text you with usage and overage rates, which is usually $25 per 100 MB of data, or 10 cents a minute for voice or messaging.
You can find the Americans on a train when their phones all ping at once, often when you cross a bridge, or come out of a tunnel, or land at an airport.
3) Apps
Google Maps can provide perfect, detailed directions on how to reach the most remote destinations, whether you are in the Istanbul Bazaar, the Marrakech Medina, or the back alleys of Rome.
You can choose instructions whether you are on foot or driving. As soon as you arrive at your hotel, type in the address so you can always find home. The really great thing about Google Maps is that, unlike paper maps, it tells you where you are.
Just be careful not to bump into another traveler who is similarly staring at his cell phone to find his way (I walked straight into a concrete lamppost once in Tokyo and almost knocked myself out).
Be sure to download a free flashlight app before you leave home. These are great for navigating your way down dark streets, reading a menu in an ill lit restaurant, or finding the keyhole in your door.
The weather app is indispensable. It will allow you to fine-tune your travel plans up to a week in advance.
Being an ex-Boy Scout, I find a compass app particularly useful. Knowing where magnetic north is comes in handy when using those free tourist maps.
Stock market apps will bring you the assurance that the Mad Hedge Fund Trader Alerts are working well and paying for the entire trip. Remember that the New York Stock Exchange opens at 3:30 PM on the European continent because of the time change.
Travel in Europe is made much easier when you speak seven languages, although it's hard to find a living Roman centurion to practice your Latin. Limited to the King's English?
No problem! Get free language apps for the countries of your destination. Sometimes, the translation of a single word can mean the difference between life and death.
It's better to pay a couple of bucks and get the expanded vocabulary apps so you never come up short. That is how I found out yesterday that "sardi" is a type of Italian pasta unique to Northern Italy, and not a sardine.
You may have your own special apps you use. I like to visit my Tesla occasionally, verifying that it is still in my garage and fully charged. I also like to check the daily output of my solar panels to prove that my house is still standing.
Coming from California, I can never be sure. Google Earth is useless here because the pictures can be up to six months old. They are obviously lacking on satellite time.
4) Security
Identity theft is exploding in Europe, thanks to the close proximity of a hacker's paradise in unpoliced Eastern Europe. Never access your financial accounts through a free public network that is not password protected. It's like leaving your wallet in the middle of Saint Mark's Square in Venice and expecting to find it there an hour later.
Don't even attempt an innocent checking of balances. And I don't mean a password like 123456789. You can count on your accounts getting cleaned out. There is no greater bummer than being told by a hotel clerk that you can't check out because all of your credit cards have been canceled.
If you do need to check your balance on the run, do it only through your cell phone, and only over a cell network (no Wi-Fi), where an extra level of security is provided. The same is true with inter-account transfers. This can be expensive, but it is worth it.
Please note, that in China, the security situation is becoming so severe that many multinationals will not permit employees to bring their laptops. They have adopted "cell phone only" policies in the Middle Kingdom, where the security is so much better.
Too many western visitors were getting their entire hard drives copied by these crooks searching for western intellectual property, in addition to the easy pickings among bank accounts.
5)Entertainment
OK, so watching Wheel of Fortune in German, French, or Italian is not your cup of tea. Before you leave home and still have reasonable broadband, download a batch of old movies from iTunes, Netflix, or Amazon to your laptop.
That way, you have something to do in the middle of the night waiting for your jet lag to adjust. Bring a 6-foot HDMI cable and you can change the input channel on your hotel TV, plug in, and watch your flick there.
6) Bandwidth
European bandwidth can vary all over the map, from lightning fast (the Ritz Carlton in Barcelona) to painfully slow (Agadir, Morocco). Europeans just don't seem to grasp how fast apps are growing, and bandwidth demand is accelerating.
More than a few times, I have had to crawl under front desks and reboot routers to get systems working again.
Suffice it to say, the more you pay, the faster your Wi-Fi. If you check into your hotel and see half the residents sitting in the lobby checking their email, it is not a good sign.
Wi-Fi was invented in the U.S., where 2-by-4 wooden studs and 1-inch sheetrock used in construction is common.
Two-foot thick stonewalls typical in historic European city centers (where you will want to stay) are terrible for Wi-Fi range, and it is not unusual to have no access from your room.
If Apple or Microsoft want to upgrade your operating system on the road, wait until you get home. Otherwise, you might crash your system and not be able to use your device until you return home.
7) Tickets
It is now possible to do a search of your next foreign city for coming events while you are on a train, buy tickets online, and show the ticket on your phone to gain admission.
I also have settled a couple of checkout disputes proving that I prepaid hotel stays by displaying proof of payment from my PayPal or bank account.
Incredible, but true.
I will be following this piece up with another on general travel tips in a couple of weeks entitled Travel Tips from a Pro, which I am now working on.
In the meantime, enjoy your trip.
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