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.
https://www.madhedgefundtrader.com/wp-content/uploads/2016/07/John-at-the-Adriatic-e1467664118960.jpg400356DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-08-15 01:09:322016-08-15 01:09:32Market Outlook for the Coming Week
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 allMad 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 TraderExecutive Concierge Service, you should possess the following:
1) Be an existing subscriber to the Mad Hedge Fund TraderPRO 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.
https://www.madhedgefundtrader.com/wp-content/uploads/2016/06/John-with-Beware-of-Bull-Sign.jpg465462DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-08-15 01:08:102016-08-15 01:08:10The Mad Hedge Concierge Service Has an Opening
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.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/12/Fruit-Market.jpg311370Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2016-08-15 01:07:072016-08-15 01:07:07Population Bomb Echoes
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
https://www.madhedgefundtrader.com/wp-content/uploads/2014/02/John-Thomas1-e1443529881467.jpg400329Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2016-08-15 01:06:262016-08-15 01:06:26Testimonial
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)
My former employer, The Economist, once the ever tolerant editor of my flabby, disjointed, and juvenile prose (Thanks Peter and Marjorie), has released its new ?Big Mac? index of international currency valuations.
Although initially launched as a joke three decades ago, I have followed it religiously and found it an amazingly accurate predictor of future economic success.
The index counts the cost of McDonald?s (MCD) premium sandwich around the world.
I can personal confirm the top end of the index in Switzerland at $6.59 for a Big Mac. This is the price of the sandwich only, not of the full meal including cholesterol loaded French fries and a sugar and caffeine laden drink.
In Basel, Zermatt, and Geneva I dashed into shops to check prices, but didn?t buy anything. The staff there must have thought I was ?MAD,? while my traveling companions were deeply annoyed.
In fact, my doctors banned me from this heart attack on a plate years ago.
The bottom end of the Index can be found in Malaysia, where the median annual salary of only $4,500 can justify a price no higher than $1.99. There is also a cultural preference for chicken products in this Islamic country.
What are the Index's conclusions today?
The Swiss franc (FXF), the Norwegian krone, the Swedish krona, and, and the Euro (FXE) are overvalued, while the Hong Kong dollar, the Chinese Yuan (CYB), and the Thai Baht are cheap.
The US dollar (UUP) is now at the highish end of the range.
I couldn?t agree more with many of these conclusions. It?s as if the august weekly publication was tapping The Diary of the Mad Hedge Fund Trader for ideas.
I only learned last week that McDonald?s is removing high fructose corn syrup from its hamburgers. I never knew it was in there!
Still, it points to the company?s determination to move forward with healthier alternatives, as is the rest of the entire food industry.
That may partially explain the outsized performance of the shares over the past year, up 40.52%.
I am no longer the frequent consumer of Big Macs that I once was, as at my advanced age, my metabolism has slowed to such an extent that in eating one, I might as well tape it to my ass.
Price rises also haven?t helped. When my mom took her seven kids to the Golden Arches during the 1950?s, the hamburgers were ten cents apiece.
Better to use it as an economic forecasting tool than a speedy lunch.
The Big Mac in Yen is Definitely Not a Buy
https://www.madhedgefundtrader.com/wp-content/uploads/2014/06/McDonalds-China-e1470951249636.jpg300400DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-08-12 01:06:402016-08-12 01:06:40An Update to The Economist ?Big Mac? Foreign Exchange Index
?My experience in business helps me as an investor, and my investment experience makes me a better businessman,? said Oracle of Omaha, Warren Buffett.
https://www.madhedgefundtrader.com/wp-content/uploads/2015/04/Roller-Coaster-e1429621869250.jpg166300Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2016-08-12 01:05:352016-08-12 01:05:35August 12, 2016 - Quote of the Day
Featured Trade: (OCTOBER 7th INCLINE VILLAGE, NEVADA GLOBAL STRATEGY LUNCHEON), (TIME TO ROTATE FROM DEFENSIVES TO CYCLICALS), (T), (DUK), (SPG), (CAT), (X), (GE), (BAC), (TLT), (A VERY BRIGHT SPOT IN REAL ESTATE), (A SHORT HISTORY OF HEDGE FUNDS)
AT&T, Inc. (T) Duke Energy Corporation (DUK) Simon Property Group Inc. (SPG) Caterpillar Inc. (CAT) United States Steel Corp. (X) General Electric Company (GE) Bank of America Corporation (BAC) iShares 20+ Year Treasury Bond (TLT)
As difficult as this may be to believe, we have had a defensive, ?RISK OFF? stock market for most of 2016.
It is even more incredulous, given that we tickled new all time highs for the major stock indexes only a couple of days ago.
However, after reviewing hundreds of charts, it is increasingly becoming clear that we may be seeing a sea change in sector preferences by investment advisors and money managers.
Get this one right and you will dominate the performance league tables and get more than a subscription to the ?Jelly of the Month? club from your clients at Christmas.
Miss it, and you will soon find yourself washing windshields at the nearest intersection, competing with the homeless.
To paraphrase ?Game of Thrones?, ?Winter is Going.?
It looks like the parting of the ways started in July when I was lost somewhere on the Italian railway system.
After being shunned all year, cyclicals have suddenly become the flavor of the day.
These would include major old line industrial companies like General Electric (GE) (2.94% yield), US Steel (X), (0.77% yield), and Caterpillar (CAT) (3.69% yield).
They also include financials (BAC) (1.98% yield), which have been beaten like a red headed stepchild because of the deleterious effect falling interest rates have on their P&L?s.
There are many possible reasons for the switch.
The defensive sectors that have led the market all year, like telecoms, utilities, and REIT?s, have been pursued in a relentless reach for yield. The driver here was a global collapse in interest rates across the yield curve.
A 1.33% yield on the ten-year Treasury (TLT), the low seen so far this year, covers a multitude of sins.
On this bandwagon were shares like AT&T (T) (4.47% yield), Duke Energy (DUK) (4.04% yield), and Simon Growth Properties (SPG) (3.00% yield).
The logic employed by many fund managers is to simply sell your winners and rotate into the losers.
If you are early, just let the dividends pay you some cash flow. If you aren?t, just keep scaling into rising prices.
As these sectors have lagged the market for some time, the downside risk is limited. This is no small consideration for a market that is at a seven year, all time high.
There is a growing belief that the second half will generate stronger US economic growth than the first half.
Massive and expanding quantitative easing in Europe and Asia is working it's magic, and will reduce the drag these economies have had on ours at home. Britain?s ten-year gilts just plunged to a record low 0.52% yield today.
Finally, there is that damn election. The outcome is no longer an unknown. Clinton leads by up to 15 points in the national polls and 90:10 in the betting pools.
No candidate in history has made up such a deficit with less than three months until Election Day.
The only unknown here is whether the Democrats grab the House of Representatives in addition to the Senate. The House is so gerrymandered; it is impossible to make a definitive call.
Clinton needs a minimum of 57% of the vote to pull off the trifecta. With Trump digging himself into a deeper hole daily, she may pull it off.
The financial markets are cheering this outcome. This is why we ran up to new highs ahead of my own schedule.
It?s hard to believe, but it has happened.
Cyclical Stocks Are Suddenly Attractive
https://www.madhedgefundtrader.com/wp-content/uploads/2016/08/Charlie-Chaplin-e1479171394321.jpg186400DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-08-11 01:08:472016-08-11 01:08:47Time to Rotate from Defensives to Cyclicals
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.
