"If you can get a dividend higher than the yield on ten-year debt, it's an opportunity we haven't seen in our lifetime. On a five-year horizon, investing in large multinationals with high dividends will have a large payday," said Lawrence Fink, CEO of BlackRock.
“I think that technology is the best thing that ever happened to mankind.” – Said CEO of JP Morgan Jamie Dimon
Mad Hedge Hot Tips
January 16, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Brexit Goes Down in Flames, with a crushing 432 to 202 loss, the worst in 100 years. The opposition has tabled a vote of no confidence, so a general election is imminent. Next to come is a new vote on Brexit itself which will go down in flames. Buy the British pound (FXB). Click here.
2) What Does the End of Brexit Mean for the Global Economy? It strengthens Europe, prevents Italy, Greece, Portugal, and France from leaving the European Community, preserves NATO, and stops the Russian hordes from overrunning Western Europe. Croissants will be cheaper in London too. That’s all.
3) JP Morgan Disappoints, But the Stock Rallies Anyway. Maybe at a discount to book value, this sector really is sold out. Buy (JPM), the class act in American banking. Click here.
4) Who Sold 19,000 Naked (SPY) Puts Yesterday, taking in $176 million in premium income. That’s what the options market would love to know. It sounds gutsy, but the $2,100 strike 20% out-of-the-money would have been hit only four times in the last 100 years. Warren Buffet?
5) The Chinese Government Warns Citizens Not to Visit the US, or its allies, citing the danger of arrest. It seems the neighborhood is going downhill. Does this mean the trade talks are getting better….or worse? Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(HAVE BONDS PEAKED?)
(TLT), (TBT),
(IS USA, INC. A SHORT?)
(3D PRINTING GETS A SECOND WIND),
(SSYS), (ETSY), (MSFT), (BA), (NFLX), (GE), (LMT)
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief 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. Read more
Global Market Comments
January 16, 2019
Fiat Lux
Featured Trade:
(HAVE BONDS PEAKED?)
(TLT), (TBT),
(IS USA, INC. A SHORT?)
Selling short the US Treasury bond market (TLT) has been one of my core trades for the last 2 ½ years when rates hit a century low at 1.34%.
I call it my “Rich Uncle” trade. Every time bonds rallied five points, I unloaded government debt. If they rallied more, I doubled up. And my new “uncle” reliably wrote me a check every few weeks. As a result, I made money on 22 out of 23 consecutive Trade Alerts on this one asset class.
However, the gravy train may be coming to an end. Over the last week, two eminent authorities on bonds, my once Berkeley economics professor and former Federal Reserve governor Janet Yellen, and Golden Sachs (GS), one of the largest bond traders, have both opined that the yield on the ten-year US Treasury bond peaked last October at 3.25%.
My arguments against them are looking increasingly hollow, peaked, and facile. If bonds don’t resume their downtrend soon, I may have to surrender, run up the white flag, and toss my own 4.0% peak forecast in interest rates into the dustbin of history.
The data is undeniably starting to pile up in favor of Yellen and (GS). After a decade of economic expansion, inflation has absolutely failed to show. Sitting here in Silicon Valley which plans to use new technology to destroy 50 million jobs over the next 20 years, it was always obvious to me that wage gains in this recovery would be nil. Wages don’t rise in that circumstance.
So far, so good.
The China trade war continues to extract its pound of flesh from American business, trashing growth prospects everywhere. The government shutdown is also paring US growth by 0.10% a week. Hardly a day goes by now when another research house doesn’t predict a 2020 recession.
Current Fed governor Jay Powell has acknowledged as much, postponing any further interest rate hikes for the first half of this year.
If we peaked at 3.25% then where is the downside? How about zero, or better yet, negative -0.40%, the yield lows seen in Japan and Germany three years ago? That’s when my pal, hedge fund legend Paul Tudor Jones, started betting the ranch on the short side with European bonds making yet another fortune.
That’s when you’ll be able to refi your home with a 30-year conventional fixed rate loan of 2.0%. This is where home loans were available in Europe at the last lows.
After the traumatic move in yields from 3.25% down to 2.64% and (TLT) prices up from $111 to $124, you’d expect the market to give back half of its gains. That’s where we reassess. If the government shutdown is still on at that point, all bets are off.
Mad Hedge Technology Letter
January 16, 2019
Fiat Lux
Featured Trade:
(3D PRINTING GETS A SECOND WIND),
(SSYS), (ETSY), (MSFT), (BA), (NFLX), (GE), (LMT)
Mad Hedge Hot Tips
January 15, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Apple’s Asian Suppliers Report Terrible Numbers. iPhone prices in China are cut. It looks like I’ll be able to keep my short position into expiration after all. Click here.
2) Citigroup Stock Rallies off of Decent Earnings. That’s more important for the main market than it is for (C). Last quarter, the stock tanked on good earnings. But I won’t touch this buggy whip sector anyway. Buy (EBAY) and (SQ) instead. Click here.
3) PG&E Goes Bankrupt, in order to keep the lights on in the face of $30 billion in wildfire liabilities. It’s the second time in 20 years. Thank goodness for my solar panels. Power prices are about to spike up big time. Click here.
4) Don’t Get Too Bullish Now. A ton of bad economic news will hit the market in February. China slowdown, European crash, Brexit, what’s not to hate? Click here.
5) Netflix Raises Prices and the Stock Soars. Their monthly take is jumping by 13%-18%. (NFLX) shares are now up by 50% since the Christmas Eve Massacre. The Walking Dead and House of Cards just got more expensive. Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
SPECIAL ARMAGEDDON ISSUE
(HERE’S THE WORST-CASE SCENARIO),
($INDU), (SPY), (SDS), (TLT), (TBT), (FXE), (FXY),
(UUP), (DDP), (USO), (SCO), (GLD), (DGZ), (ITB)
(THE TECH DARLING OF 2019),
(TWLO), (MSFT)
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief 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. Read more
Global Market Comments
January 15, 2019
Fiat Lux
SPECIAL ARMAGEDDON ISSUE
Featured Trade:
(HERE’S THE WORST-CASE SCENARIO),
($INDU), (SPY), (SDS), (TLT), (TBT), (FXE), (FXY),
(UUP), (DDP), (USO), (SCO), (GLD), (DGZ), (ITB)
