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DougD

June 23, 2016

Diary, Newsletter, Summary

Global Market Comments
June 23, 2016
Fiat Lux

Featured Trade:
(JULY 9 FLORENCE, ITALY GLOBAL STRATEGY LUNCHEON),
(THE CHINA VIEW FROM 30,000 FEET),
(FXI), (DBC), (DYY), (DBA), (PHO),
(TRIBUTE TO A GIANT OF JOURNALISM, ROY ESSOYAN),
(TESTIMONIAL)

iShares China Large-Cap (FXI)
PowerShares DB Commodity Tracking ETF (DBC)
DB Commodity Double Long ETN (DYY)
PowerShares DB Agriculture ETF (DBA)
PowerShares Water Resources ETF (PHO)

 

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Mad Hedge Fund Trader

Tribute to a Giant of Journalism, Roy Essoyan

Diary, Evening VIP, Newsletter

I had been filled with great sadness when I had learned of the passing of an old friend and mentor, Roy Essoyan, the former Tokyo bureau chief for the Associated Press.

When I was a young, wet behind the ears financial journalist in Japan during the early seventies, Roy had the charity to take me under his wing and teach me a few tricks of the trade.

We often met for lunch at the Foreign Correspondents? Club of Japan, partaking in the excellent cheeseburgers there, and battling wits over a popular dice game called ?ballout?.

I gathered up what crumbs of wisdom Roy would graciously part with, he careful never to compromise a pending AP scoop. He gave me enough encouragement to give me hope of breaking into this unassailable profession.

The Club was then a hotbed of intrigue between transient writers, foreign intelligence agents, assorted soldiers of fortune, mercenaries, Japanese lobbyists, and opportunists from giant multinational corporations.

There I met Walter Cronkite, John Glen, Deng Xiaoping, Yasser Arafat, Ronald Reagan, Margaret Thatcher, Rupert Murdoch, and countless others. It was a great place for me to end up at the hardened age of 22.

Roy was born in a remote Japanese fishing village in 1919, his parents Armenian refugees from the Russian Revolution. That polyglot background enabled him to become fluent in Russian, Japanese, and finally English.

He was stateless until his early thirties. The outbreak of WWII trapped him in Shanghai. Somehow he survived by writing for an English language newspaper there while avoiding internment in a Japanese concentration camp.

After the war, he made his way to Tokyo, where his language skills landed him work for the Associated Press. Later assignments took him to Hawaii, Beirut, Cairo, Vietnam, Hong Kong, and then back to Tokyo. At press conferences he palled around with Nikita Khrushchev in his native Russian. His claim to fame came when he broke the story of the Soviet-Chinese rift in 1957, which earned him a deportation.

Roy retired to the North Share of Oahu in 1985, within earshot of the pounding giant waves of Waimea Bay and with a fabulous view of the Pacific.

Roy was a man who didn?t suffer fools gladly, but still maintained a dry sense of humor. His suspicion of governments knew no bounds, having witnessed many atrocities first hand.

Roy instilled in me a great instinct to enjoy and participate in history, as well as to survive it. I don?t think I?ve stopped moving since.

When I made the switch from journalism to trading, Roy used to chide me about me never actually producing anything, just poking away at a computer to generate numbers.

I responded that I didn?t see a future in a profession that paid peanuts and was dominated by chain smoking, philandering alcoholics who are now all dead. He knew all the people who I knew and he understood.

When I last visited him at his Hawaiian abode a couple years ago we paged through together scrapbooks of 70-year-old yellowing cuttings of his old stories. They spoke of the corruption, poverty, and inequities then rampant in lawless Shanghai, and the build up to war with Japan.

I?ll never forget how he described small children plucking silk cocoons out of boiling water with their calloused and senseless bare hands in Chinese sweat shops.

When I heard his golf handicap was rising, I knew the end was coming. Roy stayed sharp and irreverent almost to the end. When he died, I knew they wouldn?t make them like him anymore.

Roy EssoyanRoy Essoyan of the Associated Press

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Mad Hedge Fund Trader

June 23, 2016 - Quote of the Day

Diary, Newsletter, Quote of the Day

?Japan has gone from Paul Volcker to Ben Bernanke overnight,? said legendary hedge fund manager, Stan Druckenmiller.

Man Thinking

https://www.madhedgefundtrader.com/wp-content/uploads/2014/02/Man-Thinking.jpg 265 401 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2016-06-23 01:05:032016-06-23 01:05:03June 23, 2016 - Quote of the Day
DougD

June 22, 2106

Diary, Newsletter, Summary

Global Market Comments
June 22, 2016
Fiat Lux

Featured Trade:
(JULY 27 BASEL, SWITZERLAND GLOBAL STRATEGY LUNCHEON),
(NOTICE TO MILITARY SUBSCRIBERS),
(CHINA?S COMING DEMOGRAPHIC NIGHTMARE)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 DougD https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png DougD2016-06-22 01:09:572016-06-22 01:09:57June 22, 2106
Mad Hedge Fund Trader

China?s Coming Demographic Nightmare

Diary, Newsletter

Thanks to China's ?one child only? policy adopted 30 years ago, and a cultural preference for children who grow up to become family safety nets, there are now 32 million more boys under the age of 20 than girls.

Large scale interference with the natural male:female ratio has been tracked with some fascination by demographers for years, and is constantly generating unintended consequences.

Until early in the last century, starving rural mothers abandoned unwanted female newborns in the hills to be taken away by ?spirits.?? Today, pregnant women resort to the modern day equivalent by getting ultrasounds and undergoing abortions when they learn they are carrying girls.

Millions of children are ?little emperors,? spoiled male-only children who have been raised to expect the world to revolve around them.? The resulting shortage of women has led to an epidemic of ?bride kidnapping? in surrounding countries. Stealing of female children is widespread in Vietnam, Cambodia, Laos, and Mongolia.

The end result has been a barbell shaped demographic curve unlike that seen in any other country. The Beijing government says the program has succeeded in bringing the fertility rate from 3.0 down to 1.8, well below the 2.1 replacement rate.? As a result, the Middle Kingdom's population today is only 1.2 billion instead of the 1.6 billion it would have been.

Political scientists have long speculated that an excess of young men would lead to more bellicose foreign policies by the Middle Kingdom. But so far the choice has been for commerce, to the detriment of America's trade balance and internet security.

In practice, the one child policy has only been applied to those who live in cities or have government jobs. That is about two thirds of the population.

On my last trip to China I spent a weekend walking around Shenzhen city parks. The locals doted over their single children, while visitors from the countryside played games with their three, four, or five children. The contrast couldn?t have been more bizarre.

Economists now wonder if the practice will also understate China's long-term growth rate. Parents with boys tend to be bigger savers, so they can help sons with the initial big-ticket items in life, like an education, homes, and even cars.

The end game for this policy has to be the Japan disease; a huge population of senior citizens with insufficient numbers of young workers to support them. The markets won't ignore this.

In the latest round of reforms announced by the Chinese government was the demise of the one child policy. But no matter how hard you try, you can?t change the number of people born 30 years ago.

The boomerang effects of this policy could last for centuries.

emperor

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Mad Hedge Fund Trader

June 22, 2016 - Quote of the Day

Diary, Newsletter, Quote of the Day

?I?d much rather have the Wicked Witch of the East go away. We?d be way better off if we ended quantitative easing real fast so this scapegoat can get behind us,? said Ken Fisher of Fisher Investments.

Wicked Witch

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DougD

June 21, 2016

Diary, Newsletter, Summary

Global Market Comments
June 21, 2016
Fiat Lux

Featured Trade:
(JULY 7 DUBROVNIK, CROATIA GLOBAL STRATEGY LUNCHEON),
(AMERICA?S NATIVE INDIAN ECONOMY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 DougD https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png DougD2016-06-21 01:08:262016-06-21 01:08:26June 21, 2016
Mad Hedge Fund Trader

June 21, 2016 - Quote of the Day

Diary, Newsletter, Quote of the Day

?There?s a lot of performance anxiety out there right now. There?s nothing worse than sitting on cash watching a market go up double digits,? said Tom Lee, chief US equity strategist of JP Morgan.

Woman-Anxiety

https://www.madhedgefundtrader.com/wp-content/uploads/2013/04/Woman-Anxiety.jpg 170 168 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2016-06-21 01:05:082016-06-21 01:05:08June 21, 2016 - Quote of the Day
DougD

June 20, 2016

Diary, Newsletter, Summary

Global Market Comments
June 20, 2015
Fiat Lux

Featured Trade:
(JUNE 29 DUBLIN, IRELAND GLOBAL STRATEGY LUNCHEON)
(ARE JUNK BONDS PEAKING?),
?(JNK), (HYG),
(A TOUCHDOWN FOR USC)

SPDR Barclays High Yield Bond ETF (JNK)
iShares iBoxx $ High Yield Corporate Bd (HYG)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 DougD https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png DougD2016-06-20 01:09:592016-06-20 01:09:59June 20, 2016
Mad Hedge Fund Trader

Are Junk Bonds Peaking?

Diary, Newsletter

There is no happier corner of the fixed income universe than junk bonds (JNK), (HYG), which have been soaring like a bat out of hell recently.

Average yields for the bond class most sensitive to the economy have collapsed from 18% to near an all-time low of 6.68%, a scant 483 basis points over ten year Treasury bonds (TLT).

If you look at the chart for (JNK) it virtually tracks the S&P 500 one for one, with less volatility, and therein lies the problem. When bonds act like stocks, what happens to bonds when stocks go down?

That is a particularly pertinent question these days as stocks have more than doubled from the bottom, and are approaching grotesquely overbought levels. After a move in the S&P 500 Index?s average multiple from 9 to 19, with 20 a possible top, are junk bonds peaking out here as well?

?A 483 basis point premium does not sound like much compared to the historical range. It is pricing in the near absence of risk in this paper, as if they will live forever? When did I last see this movie? 2006? 2007? Alas, how short memories have become.

It might be worth taking some money off the table here, and taking the hit in the cash flow in your portfolio.

Lowering your beta is prudent, especially if we are about to move from a 'RISK ON' to a 'RISK OFF' world for more than a day.

Do you really want to wait for the music to stop playing before you grab a chair?

JNK
HYG

 

Childrens GameTime to Grab a Chair Before the Music Stops Playing?

 

Truck Antique

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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.

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