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Tag Archive for: (FXY)

april@madhedgefundtrader.com

August 2, 2024

Tech Letter

Mad Hedge Technology Letter
August 2, 2024
Fiat Lux

 

Featured Trade:

(BAD NEWS IS BAD NEWS FOR TECH)
($COMPQ), (FXY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-08-02 14:04:452024-08-02 14:25:37August 2, 2024
april@madhedgefundtrader.com

Bad News Is Bad News For Tech

Tech Letter

Tech stocks ($COMPQ) won’t be down for too long. It’s been a while since we were caught by a right hook to the jaw, but it still hurts nonetheless.

The myriad of weakness was triggered by weakening employment numbers suggesting the internals of the US economy are falling apart. 

Some of the big names are down, but that doesn’t mean they are down and out.

In fact, big tech didn’t fare that badly during earnings even though lots of little software companies were crushed.

It is true that forecasts have been substantially weak as enterprise spending is reigned in and belts tightened.

Then to really cap it off, the Japanese yen (FXY) strengthening via an unexpected interest rate hike by the Bank of Japan, sparked an unwind that really gutted tech stocks in the short-term.

Much of the liquid capital used to bid up tech stocks originated from Japanese banks who lent in Yen only for private funds to buy tech stocks in dollars.

That trade has gotten clobbered in the past few weeks.

There is a strong chance that the Bank of Japan could be out of bullets for now and this isn’t the death of tech.

We are just resting.

The unemployment rate cooling and tech stocks selling off finally means that bad news is bad news.

That translates into a manifestation of an upcoming recession or at least tech investors firmly believe so.

New signs of a cooling labor market are stoking fears that the Federal Reserve may have waited too long to start lowering interest rates.

We are in full-blown risk-off mode.

The US economy added 114,000 nonfarm payroll jobs in July, fewer than the 175,000 expected by economists. The unemployment rate rose to 4.3% — its highest level since October 2021.

Fed chair Jerome Powell said Wednesday that a cut in September was “on the table.”

Powell also said "the question really is one of are we worried about a sharper downturn in the labor market. The answer is we are watching carefully for that."

I still believe we will experience some sort of bounce back from tech stocks.

There is no way we go from soft landing to hard landing in a matter of three days.

What does this do for tech stocks?

With data points of this magnitude, it’s normal for a sharp rotation to occur.

The thing we have here is that we are at all-time highs so the profit-taking can become very vicious and hasty.

But if you want to ask me if the tech rally is over, no, it isn’t but we will need to go into consolidation mode to absorb poor revenue guidance.

The dip will be bigger than a mini-dip so as investors, we need to allow this underperformance to work itself through the system before we are off to the races again.

In the end, lower rates are the most advantageous for tech stocks, but conditions need to stabilize for tech stocks to reap those benefits.

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-08-02 14:02:462024-08-02 14:25:21Bad News Is Bad News For Tech
april@madhedgefundtrader.com

April 15, 2024

Diary, Newsletter, Summary

Global Market Comments
April 15, 2024
Fiat Lux

 

Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD, or VOLATILITY IS BACK!)
(REMEMBERING TRINITY)
(TLT), (TSLA), (NVDA), (FCX),
(XOM), (WPM), (GLD), (FXI), (FXY), (USO), (GOOGL)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-04-15 09:04:012024-04-15 14:03:36April 15, 2024
april@madhedgefundtrader.com

The Market Outlook for the Week Ahead, or Volatility is Back!

Diary, Newsletter

Those who expected markets to go up forever were given a rude awakening last week with a swift slap across the face with a wet kipper. The Volatility Index ($VIX) soared from $12 to $19 and higher highs will unfold this week. The Mad Hedge Market Timing Index dropped below 50 for the first time since October and lower lows beckon.

For those of us who earn our crust of bread off of volatility, its return is like a gift from the gods. The long desert has been crossed and the fresh mountain springs beckon just ahead.

What prompted this ($VIX) melt-up is that many traders and investors are finally throwing in the towel on ANY interest rate cuts in 2024. In a mere four months, we have gone from an expectation of six rate cuts to zero. Not helping matters is that the “May” thing, as in “Sell and Go away” is only two weeks away. After an overcooked Q1, we may be headed into a summer that is the next great Ice Age.

At least that is the assumption we have to make from a trading point of view for the short-term. While this represents a worst-case scenario, I don’t expect bonds to drop much from here, maybe a couple of points, as future interest rate cuts are a certainty. All that has happened is that our rate cuts have been moved out from two months to five months. The next move in interest rates is still down.

At some point, there will be a great bond trade out there, but definitely, not yet!

Watching the market action last week, it was especially impressive how well NVIDIA (NVDA) held up.

NVIDIA is so far ahead of the competition that no one will catch up for years. What the (NVDA) bears don’t get is that the company has a moat so wide it is impossible to cross. Their enormous lead in software is the result of crucial platform decisions made 20 years ago. The key staff are all locked up with ultra-cheap equity options with strike prices around $1-$2.

Virtually everyone has now raised their upside targets for the stock over $1,000/share and there are $1,400 figures out there. That’s because, with a price-earnings multiple of only 30X, it is still the cheapest Big Tech stock in the market. By comparison, its biggest customer, (META) is at 34X, AI Leader (MSFT) is at 38X, and (AMZN) is at a stratospheric 63X.

Efforts by Alphabet (GOOGL) to break into the AI chip business are feeble at best. This is a business that has a very long learning curve with very high capital costs.

Every 15% correction in (NVDA) over the last two years has been a strong “BUY”. It really owns the AI design business. It’s looking at $250-$500 BILLION in sales growth over the next several years.

Santa Clara-based NVIDIA designs and manufactures high-end, top-performing graphics cards or GPUs. There is probably one in your PC. They are essential in the artificial intelligence, automobile, PC, supercomputing, cybersecurity, and gaming industries. As a design company only company NVIDIA represents pure intellectual added value. Its chips are manufactured in Taiwan.

They are also crucial for national defense. The Biden administration recently banned NVIDIA from exporting high-end chips and their manufacturing equipment to China, which they were using to build sophisticated weapons to use against us. Last week China banned NVIDIA chips in a typical tit-for-tat gesture.

We have had a spectacular week here at Mad Hedge Fund Trader.

So far in April, we are up +5.20%. My 2024 year-to-date performance is at +14.47%. The S&P 500 (SPY) is up +7.22% so far in 2024. My trailing one-year return reached +46.01% versus +36.12% for the S&P 500.

That brings my 16-year total return to +691.20%. My average annualized return has recovered to +51.84%.

Some 63 of my 70 round trips were profitable in 2023. Some 20 of 26 trades have been profitable so far in 2024.

We got a rare dip last week, which I used to rush into four new May positions, double positions in (NVDA) and additional ones in (FCX) and (TLT). I will let my existing April longs expire at a max profit in four days on April 19 in Freeport McMoRan (FCX), Occidental Petroleum (OXY), ExxonMobile (XOM), Wheaton Precious Metals (WPM), Tesla (TSLA), and Gold (GLD).

I am in a rare 100% invested position with no cash given the massive upside breakout in commodity, precious metals, and energy we have witnessed. This is going to be a great month.

Consumer Price Index Comes in Hot at 0.4% for March, the same rate as in February according to the Bureau of Labor Statistics, knocking stocks down 500 points. Housing and transportation were the big badges. Hopes of a June interest rate cut have been dashed. September is now the earliest. Avoid (TLT).

Producer Price Index Comes in Cold at 0.2% for March.  On a 12-month basis, the PPI rose 2.1%, the biggest gain since April 2023, indicating pipeline pressures that could keep inflation elevated. Stocks rallied 200 points.

US Dollar Rockets on Hot CPI, hitting a new 34-year high against the Japanese yen at ¥151.55. Bank of Japan's intervention to support the yen is expected. Yen shorts in the futures market hit a five-month high. Avoid (FXY).

China Continues Record Gold Buying, soaking up record amounts. Central banks bought a record 1,082 metric tonnes of gold in 2023. The Bank of China bought a record 735 tonnes of gold in 2023, two-thirds of which were purchased through covert third-party middlemen. An additional 1,411 tonnes, likely to bypass a collapsing Yuan, and a whopping 228 tonnes in January 2024 alone. This is what delivered the barbarous relic’s decisive upside breakout from a three-year trading range. This dwarf’s the record 1,082 metric tonnes of gold global central banks bought in 2023. The world gold market has been taken short and prices will continue to rise.

Gold Derivatives are Now Wagging the Dog. There are 187,000 metric tonnes of gold above ground worth a mere $14.4 billion which price is 50 times that figure in paper derivatives, like ETFs, futures contracts, and options. A metric tonne of gold today is worth $77 million. That increases the barbarous relic’s volatility once it breaks out of long-term trading ranges, which it has just done. With new volatility eventually, some bodies have to float to the surface. The bad news is that this may also be a signal that China will invade Taiwan. Buy (GLD) on dips.

Oil (USO) Spikes on New Iran War Threats, sending Brent to $92, a new 2024 high. Gold (GOLD) and silver (WPM) have gone ballistic as well. Hang on for higher highs.

JP Morgan Misses on Earnings, tanking the shares by $10. The firm earned $23.1 billion in net interest income in the first three months of 2024, up 11% from a year earlier. The bank’s NII haul ended a streak of seven quarters where it posted record levels of the metric. The bank cited deposit margin compression — tightening of profits between what the bank earns on loans and pays out on deposits — and lower deposit balances in the consumer business for the sequential decline. Buy (JPM) on dips.

China’s International Trade Collapses. Exports from China slumped 7.5% year-on-year last month by value, the biggest fall since August last year. They had risen 7.1% in the January-February period.

Hong Kong's major indexes extended losses to more than 2%.

Chinese exporters are continuing to slash prices to maintain sales amid stubbornly weak domestic demand. Avoid (FXI).

Tesla Cancels Model 2, a key part of the bull story for (TSLA). Elon Musk says “Not so fast” and instead highlights the company’s move into robotic self-driving cars. Don’t be so dismissive, as Waymo completed an eye-popping 100,000 robotic taxi rides in San Francisco in December, many with thrilled first-time users. The stock held up incredibly well on awful news indicating that it believes Elon and not the media. Buy (TSLA) on dips.

My Ten-Year View

When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age or the next Roaring Twenties. The economy decarbonizing and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.

Dow 240,000 here we come!

On Monday, April 15, at 7:00 AM EST, the US Retail Sales are announced.

On Tuesday, April 16 at 8:30 AM, US Housing Starts are released.

On Wednesday, April 17 at 2:00 PM, the Beige Book notes from the previous Fed meeting are published

On Thursday, April 18 at 8:30 AM, the Weekly Jobless Claims are announced. At 10:00 AM, Existing Home Sales are out.

On Friday, April 19 at 2:00 PM, the Baker Hughes Rig Count is printed.

As for me, with the spectacular popularity of the Oppenheimer movie, I thought I’d review my own nuclear past. When the Cold War ended in 1992, the United States judiciously stepped in and bought the collapsing Soviet Union’s entire uranium and plutonium supply.

For good measure, my client George Soros provided a $50 million grant to hire every Soviet nuclear engineer. The fear then was that starving homeless scientists would go to work for Libya, North Korea, or Pakistan, which all had active nuclear programs at the time.

They ended up here instead. I just might be that the guy standing next to you in line at Safeway with a foreign accent who knows how to design a state-of-the-art nuclear bomb.

That provided the fuel to run all US nuclear power plants and warships for 20 years. That fuel has now run out and chances of a resupply from Russia are zero. The Department of Defense attempted to reopen our last plutonium factory in Amarillo, Texas, a legacy of the Johnson administration.

But the facilities were deemed too old and out of date, and it is cheaper to build a new factory from scratch anyway. What better place to do so than Los Alamos, which has the greatest concentration of nuclear expertise in the world?

Los Alamos is a funny sort of place. It sits at 7,320 feet on a mesa on the edge of an ancient volcano so if things go wrong, they won’t blow up the rest of the state. The homes are mid-century modern built when defense budgets were essentially unlimited. As a prime target in a nuclear war, there are said to be miles of secret underground tunnels hacked out of solid rock.

You need to bring a Geiger counter to garage sales because sometimes interesting items are work castaways. A friend almost bought a cool coffee table which turned out to be a radioactive part of an old cyclotron. And for a town designing the instruments to bring on the possible end of the world, it seems to have an abnormal number of churches. They’re everywhere.

I have hundreds of stories from the old nuclear days passed down from those who worked for J. Robert Oppenheimer and General Leslie Groves, who ran the Manhattan Project in the early 1940s. They were young mathematicians, physicists, and engineers at the time, in their 20s and 30s, who later became my university professors. The A-bomb was the most important event of their lives.

Unfortunately, I couldn’t relay this precious unwritten history to anyone without a security clearance. So, it stayed buried with me for a half century, until now.

Some 1,200 engineers will be hired for the first phase of the new plutonium plant, which I got a chance to see. That will create challenges for a town of 13,000 where existing housing shortages already force interns and graduate students to live in tents. It gets cold at night and dropped to 13 degrees F when I was there.

I actually started in the nuclear biz during the early 1970s when my math professor recommended me for a job there. In those days, mathematicians had only two choices. Teach or work for the Defense Department. As I was sick of school, I chose the latter.

That led me to drive down a bumpy dirt road in Mercury, Nevada to the Nuclear Test Site where underground testing was still underway. There were no signs. You could only find the road marked by four trailers occupied by hookers who did a brisk business with the nearly all-male staff. My fondest memory was the skinny dipping that took place after midnight in a small pool when the MPs were on break.

I was recently allowed to visit the Trinity site at the White Sands Missile Test Range, the first outsider to do so in many years. This is where the first atomic bomb was exploded on July 16, 1945. The 20-kiloton explosion set off burglar alarms for 200 miles and was double to ten times the expected yield.

Enormous steel targets hundreds of yards away were thrown about like toys (they are still there). Half the scientists thought the bomb might ignite the atmosphere and destroy the world but they went ahead anyway because so much money had been spent, 3% of US GDP for four years. Of the original 100-foot tower, only a tiny stump of concrete is left (picture below).

With the other visitors, there was a carnival atmosphere as people worked so hard to get there. My Army escort never left me out of their sight. Some 79 years after the explosion, the background radiation was ten times normal, so I couldn’t stay more than an hour.

Needless to say, that makes uranium plays like Cameco (CCJ), NextGen Energy (NXE), Uranium Energy (UEC), and Energy Fuels (UUUU) great long-term plays, as prices will almost certainly rise and all of which look cheap. US government demand for uranium and yellow cake, its commercial byproduct, is going to be huge. Uranium is also being touted as a carbon-free energy source needed to replace oil.

 

At Ground Zero in 1945

 

What’s Left of a Trinity Target 200 Yards Out

 

Playing With My Geiger Counter

 

Atomic Bomb No.3 Which was Never Used

 

What’s Left from the Original Test

 

Good Luck and Good Trading,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

 

 

 

 

 

 

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2024/03/ground-zero.png 758 584 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-04-15 09:02:482024-04-15 14:04:39The Market Outlook for the Week Ahead, or Volatility is Back!
april@madhedgefundtrader.com

March 25, 2024

Diary, Newsletter, Summary

Global Market Comments
March 25, 2024
Fiat Lux

 

 Featured Trade:

(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE BEST WEEK OF THE YEAR),
(PANW), (NVDA), (LNG), (UNG), (FCX), (TLT), (XOM), (AAPL), (GOOG), (MSTR), (BA), (FXY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-03-25 09:04:312024-03-25 12:50:55March 25, 2024
april@madhedgefundtrader.com

The Market Outlook for the Week Ahead, or The Best Week of the Year

Diary, Newsletter

You need to have a sense of humor and a strong dose of humility to work in this market. After predicting last week that the market would NOT crash but grind sideways, it then posted the next week of the year. Stocks are actually accelerating their move to the upside.

Of course, we got a big assist from Fed Governor Jay Powell who practically wrote in his own blood a promise that interest rates would be cut at least three times by the end of the year. That is quite a gesture, and all risk assets loved it, even the ones that have been asleep for a year, like gold (GLD) and silver (SLV).

Miraculously, this does happen and there has been a big one over the last two years that nobody knows about.

Cheniere Energy (LNG) shipped 640 tankers full of natural gas (UNG) to Europe last year and 630 in 2022. One tanker provides enough gas to heat one million homes for a month. You can do the math. In total, it has sent out 3,400 tankers since 2016, mostly to China.

When Russia invaded Ukraine in 2022, Europe was totally dependent on Vladimir Putin for gas. Any doubt about the Russian supply was ended when the Nordstream undersea pipeline was mysteriously blown up. A total cut-off would have been an economic disaster and caused the collapse of NATO.

Two years ago, it was believed that even if we could get the gas to Europe, there were no facilities to liquefy natural gas as it is shipped back into natural gas. Then 16 floating de-liquefaction plants showed up out of nowhere.

Natural gas demand has been soaring in the US as well. Over the past 20 years, coal has dropped from generating 50% of the US electric power supply to only 19% (the unused American share of the coal was sold to China). That has eliminated 500 million tons of carbon dioxide from entering the atmosphere.

If you noticed that the skies over American cities are getting clearer, this is the reason.

Much has been made over Biden’s “pause” of permitting for new natural gas facilities. The reality is that it will take four years to build the 16 new gas export facilities that have already been approved. By then, we’ll have a new president. All Biden did was throw a bone at the environmental wing of his party. Such are the ways of Washington.

By the way, the Republican Party now has an environmental wing too. Who knew? It’s all proof that if you live long enough, you see everything.

One of the reasons I have been in love with cybersecurity stocks like Palo Alto Networks (PANW) for the past decade is that hacking is the ultimate growth industry. It never goes out of style, is recession-proof, and is growing at an exponential rate.

It is also getting more sophisticated. The big hackers are franchising their business models, inviting in criminals with minimal computer knowledge, vastly increasing their numbers. They are attacking small vendors to large companies to get access to the big ones. They are also picking targets too poor to afford the big cybersecurity companies. The City of Oakland is a classic example, which was prevented from paying its teachers for six months. And now they have AI.

Spending on cybersecurity is expected to grow from $188 billion in 2023 to $215 billion this year, a gain of 14.36%. The number of data breaches has rocketed by 78% over the past two years. Buy (PANW) on dips, which we are seeing right now.

“We’re going to need a bigger GPU” to borrow a famous line from Stephen Spielberg’s blockbuster Jaws.

If you want a peak at the future, both of our own and NVIDIA stock, check out the company’s latest entry into the chip wars, the $50,000 Blackwell GPU, available in a few months. In layman’s terms, it offers four times the computing ability but requires only one-quarter of the electric power, which is increasingly becoming an AI issue. It also uses deep learning to write its own software.

The chip was introduced by CEO Jensen Huang at the Developers conference in San Jose, which I attended in a venue normally occupied by rock stars. Huang started the conference by warning he was not there to sing. But perform he did, accompanied by a group of dancing robots powered by AI.

And while NVIDIA’s sales have tripled over the past year, you ain’t seen anything yet. When I recommended (NVDA) for the millionth time at $400 a share last October, my long-term target was $1,000. It recently hit $975, now stands at $943, and shows no sign of abating. NVIDIA could well keep powering on until the actual release of the Blackwell chip.

As in Jaws, I sense a feeding frenzy coming and (NVDA) shorts are the bait.

In February we closed up +7.42%. So far in March, we are up +3.53%. My 2024 year-to-date performance is at +6.67%. The S&P 500 (SPY) is up +9.22% so far in 2024. My trailing one-year return reached +56.98% versus +52% for the S&P 500.

That brings my 16-year total return to +683.30%. My average annualized return has recovered to +51.57%.

Some 63 of my 70 round trips were profitable in 2023. Some 11 of 19 trades have been profitable so far in 2024.

I miniated no new longs last week, content to let my existing longs run in Freeport McMoRan (FCX), bonds (TLT), and ExxonMobile (XOM). I am 70% in cash given the elevated state of the market and am looking for new commodity and energy plays to pile into.

Fed Chair Jay Powell Promises Three Interest Rate Cuts of 25 basis points each, at his press conference on Wednesday. Powell said he did not see "cracks" in the labor market, which he described as "in good shape," noting that "the extreme imbalances that we saw in the early parts of the pandemic recovery have mostly been resolved." These are very pro-risk statements. Buy the dips in everything.

Fed to Dial Back Quantitative Tightening, or QT from the current $120 billion a month. It’s a huge plus for risk assets and explains why the most liquidity-driven ones like gold and silver had such a great day. Buy (GLD) and (SLV) on dips.

The Dept of Justice Goes After Apple on Antitrust, on its 61.3% share of the US smartphone market. It accused the iPhone maker of blocking rivals from accessing hardware and software features on its popular devices. Google’s (GOOG) Android actually has a bigger global market share at 70.3% with Apple at only 24%. This is another waste of time that will last ten years and go nowhere.

 

 

Bank of Japan to Cut Interest Rates as Early as April, bringing to an end a 34-year stimulus program that was a dismal failure. The Japanese yen (FXY) should rocket, but Japanese stocks not so much.

MicroStrategy (MSTR) Dives 18%, the largest owner of Bitcoin, on a crypto correction. MicroStrategy is the largest corporate owner of Bitcoin. (MSTR) just completed a massive borrowing to buy more crypto at the top. After SEC approval of ETFs and the imminent halving, what is left to drive crypto? Avoid (MSTR) which was blindsided by the last 90% crypto correction.

Existing Homes Sales Soar 9.7% in February to 4.38 million units, on a seasonally adjusted annualized basis. Inventory rose 5.9% year over year to 1.07 million homes for sale at the end of February. That represents a still low 2.9-month supply at the current sales pace. Higher demand continued to push the median price higher, up 5.7% from the year before to $384,500.

Home Prices Have Risen by 2.4 Times the Inflation Rate Since 1960. The cost of a typical house in the U.S. is nearly half a million dollars: the median price for a home in the U.S. is $412,778, according to Redfin data. That’s what successful demographic tailwinds leading to a chronic housing shortage get you.

Boeing is Leasing 36 Airbuses, to meet its own unfilled orders caused by production delays. Another panel fell off an airborne plane last week in Medford, OR. Looking for missing parts has become a regular part of every Boeing landing. This is an act of desperation. Avoid (BA)

My Ten-Year View

When we come out the other side of the recession, we will be perfectly poised to launch into my new American Golden Age or the next Roaring Twenties. The economy decarbonizing and technology hyper accelerating, creating enormous investment opportunities. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The new America will be far more efficient and profitable than the old.

Dow 240,000 here we come!

On Monday, March 25, at 7:00 AM EDT, the US Building Permits are announced.

On Tuesday, March 26 at 8:30 AM, S&P Case Shiller for February is released.

On Wednesday, March 27 at 11:00 AM, the MBA Mortgage Data is published

On Thursday, March 28 at 8:30 AM, the Weekly Jobless Claims are announced. The final read of the Q2 US GDP is also out.

On Friday, March 29 at 2:00 PM, Personal Income and Spending is out. The Baker Hughes Rig Count is printed.

As for me, as I am about to take off for Cuba to visit Finca Vigia (Lookout Farm), the home of Earnest Hemingway and Martha Gellhorn I thought I’d review my long history with this storied family. This is where he finished For Whom the Bells Toll, his epic novel about the Spanish Civil War.

My grandfather drove for the Italian Red Cross on the Alpine front during WWI, where Hemingway got his start, so we had a connection right there going back over 100 years.

Since I read Hemingway’s books in my mid-teens, I decided I wanted to be him and became a war correspondent. In those days, you traveled by ship a lot, leaving ample time to finish off his complete work.

I visited his homes in Key West and Ketchum Idaho. In 2023, he stayed at his Hotel Poste room in Cortina, Italy where he lived for five months during the 1950s. His Cuban residence was high on my list, now that Castro is gone.

I used to stay in the Hemingway Suite at the Ritz Hotel on Place Vendome in Paris where he lived during WWII. I had drinks at the Hemingway Bar downstairs where war correspondent Ernest shot a German colonel in the face at point-blank range. I still have the ashtrays.

Harry’s Bar in Venice, a Hemingway favorite, was a regular stopping-off point for me. I have those ashtrays too.

I even dated his granddaughter from his first wife, Hadley, the movie star Mariel Hemingway, before she got married, and when she was still being pursued by Robert de Niro and Woody Allen. Some genes skip generations and she was a dead ringer for her grandfather. She was the only Playboy centerfold I ever went out with. We still keep in touch.

So, I’ll spend the weekend watching Farewell to Arms….again, after I finish this newsletter.

Oh, and if you visit the Ritz Hotel today, you’ll find the ashtrays are now glued to the tables.

 

Hemingway in 1917

 

At Work on Hemingway’s Typewriter

 

 

 

Good Luck and Good Trading,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

 

 

 

 

 

 

 

 

 

 

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april@madhedgefundtrader.com

March 22, 2024

Diary, Newsletter, Summary

Global Market Comments
March 22, 2024
Fiat Lux

 

 Featured Trade:

(MARCH 20 BIWEEKLY STRATEGY WEBINAR Q&A),
(DIS), (GLD), (BITB), (UUP), (FXY), (F), (TSLA), (NVDA), (FCX), (UNG), (TLT), (MCD)

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april@madhedgefundtrader.com

March 20 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the March 20 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Silicon Valley.

Q: Do you recommend a form of dollar-cost averaging, and what is it?

A: Absolutely, yes. It is impossible for anybody to get an absolute bottom when you're buying, so the best thing to do is time average. If you have a position you like, go in there every day and buy a little piece. I bought Nvidia (NVDA) practically every day for months and boy did that work! (NVDA) had already gone up a lot, but I just kept buying it and buying it, averaging up and up. So that is the way I dollar-cost average. It's really more of a time averaging than a price averaging. No one knows where tops and bottoms are, even if they promise you that they do.

Q: Are you still long the Yen (FXY) and shorting the Dollar (UUP) given current conditions?

A: I actually don’t have any positions in the currencies, because the volatility is so low compared to stocks. Suffice to say that over time when US interest rates go down, currencies should go up, especially the Yen, which has been depressed for such a long time.

Q: Can gold (GLD) and Bitcoin (BITB) go up at the same time?

A: Absolutely. They almost always go up at the same time, because they are liquidity-driven assets, and when liquidity is as rich as it is now, all liquidity-driven assets go up at the same time which includes gold, silver, and Bitcoin and other cryptos. The only difference this time is that the source of liquidity is not the Federal Reserve—in fact, the Fed is quite restrictive right now with their high-interest rate policy—the new source of liquidity is corporate profits, especially from technology stocks, and that is unlimited and not subject to political whims. It’s always there and it’s always growing; it's a much better form of liquidity than the old form from the US government.

Q: What are your thoughts on the Disney (DIS) and Peltz fight, and how should that affect the stock price?

A: Whenever Nelson Peltz gets involved in a company, it's almost always positive for the stock even if he makes boards uncomfortable. That's why he's going in—to force better management. He usually succeeds and then gets out at a higher price. And if it means forcing some things on management they don't like (and I'm not really sure in the case of Disney what it is he's pressuring them for), he gets his profit and he leaves, and that's what corporate raiders do.

Q: Should I buy the dip in the EV narrative?

A: Not yet. You need a global economic recovery for that to happen, especially in Europe and China. We forget how prosperous we are here, and how weak things are in pretty much the rest of the world—and that is where the EV sales have really collapsed. So let the burden of proof be on the EV companies to report better sales and better technology, and then I'll be back in. Tesla periodically has 80% corrections: we’re right at the tail end of one of those. We may have another 10% to go and that's it. I'm a fair-weather friend, I only like to be long stocks when they're going up. How about that?

Q: I am understanding correctly that you believe the transition from technology and semiconductors to commodities and elsewhere is actually showing long-term strength growth for the tech stocks since they are mostly going sideways from here and not crashing with the rotation.

A: What I see is a time correction in technology where after tremendous moves they go sideways for a period, and new money switches over to other sectors like commodities and energy. And then you'll have a rotation back into technology after they've had a rest, probably before the end of the year. This back-and-forth kind of action could go on for many years—I've seen this happen before. So that's what I'm trying to position for now. And you know, I'm not alone in saying I don't like buying stocks after they tripled in a year. It's almost a no-win trade if you're a professional manager.

Q: Are we heading towards $90 a barrel in oil (USO), and will we pass $100?

A: Yes, we’re definitely headed to $90. But I think the new range is sort of like $65 to $95 because when you get up to the high prices, all of a sudden supply starts coming out of the woodwork, especially from the United States, which is already the world's largest oil producer at 13 million barrels a day. As soon as you get a high price, money just starts pouring in to start new drilling, setting up the next price collapse. The United States is the cap on global oil prices and China is the floor. They come in as the buyer of last resort as the world's largest consumer whenever prices get super cheap, and that actually is a best-case scenario—not only for us but for OPEC. Because their investments do well in the US when oil is in a $65 to $95 range. Any higher than that, the stock market crashes, wiping out the value of their savings. And that is how the modern world has evolved.

Q: Will today's Fed meeting be a non-event?

A: Yes, no interest rate changes until June, maybe even later. And the market is basically telling us that—dead in the water as it is. Dow is nowhere, and there are no big moves. Everyone is just treading water here.

Q: Would you take profits on NVIDIA (NVDA)?

A: Yes, some profits. I structured my own personal portfolio so I have expiring front month short put positions, which are ringing the cash register every month, but my long-term LEAPS I'm keeping. Because I think you could have another 50% move up in a year in (NVDA) stock given their dominant position in the market, and the fact that the new Blackwell chip, the $40,000 Blackwell chip is taking over the world. It's essentially a computer on its own, and it writes its own software. Nobody else is close to that, nor will they be. So keep the long-term positions to LEAPS, and keep taking profits every month. And you have to keep in mind also that (NVDA) is almost every portfolio manager's larger single position through capital appreciation, or they're not in it at all, and they're looking for a job or driving an Uber cab somewhere.

Q: Should I buy Ford (F) or Tesla (TSLA) or both?

A: Wait for the market to start discounting the Tesla Model 2 when it comes out next year. Maybe you start buying the stock in 6 months or a year. Probably the better question is not Ford or Tesla, but Tesla or Rivian (RIVN), which seems to be making progress in their mass production. I just don't see any future for the legacy car companies at all. They're just so far behind in technology. I spent most of my life trying to tell them what to do, and if they had followed my advice, they would be much better off than now.

Q: How long can an employment number stay strong? I feel like we have been waiting for a recession for almost 5 years now.

A: Actually the last real recession was the pandemic in 2020, which only lasted a couple of quarters. We may not have another real recession for 5 or 10 years. Why? Because we're in the roaring twenties and we have 6 more years to go. We also are in the new American Golden Age, and who's been predicting that for the last 10 years? I have! It's all about demographics. We happen to have peak spenders, i.e. people in their thirties and forties, at all-time highs, and that is what drives the economy—that is what makes the golden ages predictable as they have been for hundreds of years.

Q: How are the stem cell injections working?

A: Fantastic. After I got shot in the hip last year in Ukraine, I got one and I literally was walking around in weeks and eliminated the pain completely. I went from talking about hip replacement to climbing Kilimanjaro in literally a matter of weeks. So yes, they work for me. I know they don't work for everyone, but I've used them on both my knees, my back, and my hip, and they've been wildly successful. I won't need any more stem cell injections until I go back to Ukraine and get shot again.

Q: Where are you traveling to this time?

A: I’ll be working out of Florida during April, and probably take the quickie trip to Cuba. After that, it's Ecuador and the Galapagos Islands where I want to challenge Darwin’s Theory of Evolution. It turns out that it is in the same time zone as New York, so it'll be easy to work there from a time zone point of view. The Space X Starlink has provided great Internet everywhere, the Galapagos and Ukraine.

Q: Our real estate commission is about to disappear. Will that benefit housing prices?

A: You get what you pay for. If you have commissions drop from 6% to 1%, you'll get 1% worth of the service out of your agent. So if you want your house sold and sold well, you’d better keep paying the commission. Otherwise, your agent will not work for it. You get what you pay for. However, I always thought real estate commissions were too high for too long, and that may be about to change. And if you don't believe me, try selling your house on the internet someday. It doesn't work.

Q: Does the US have the infrastructure for electrification?

A: No, it does not. That means it has to be built out, and that is why we own Freeport McMoRan (FCX) and you should too! Anything involving electrification involves a lot of copper. The grid has to double in size to accommodate the needs of AI.

Q: Should I continue with natural gas (UNG)?

A: If you have a long-term position I would hang on because you're only one cold snap away from a major rally, and at some point, China will come back on stream as a major buyer. So long term I would hold it. Short term positions I would get rid of it before accelerated time decay wipes out your position.

Q: Will the US 10-year Treasury bond (TLT) go below 4% again?

A: Yes, when you get the Fed on an interest rate cutting cycle, 4% is easy; and by the way, home mortgages will be much cheaper in a year, so it's probably not a bad idea if you're buying a home now to take an adjustable-rate mortgage (ARM) then refinance after the Fed finishing cutting rates.

Q: Should I buy the dip in McDonald's (MCD)?

A: Probably not. The concern there is that the weight loss drugs are destroying American appetites and reducing their need for fast food. Eventually, some 100 million Americans could end up taking weight loss drugs. So that's why the stock is sold off. Fundamentally, (MCD) is a low-margin retail play so it's never interested me. The good news is that they're cutting jobs with computers. So that is the only reason to buy it, is the computerization effort. Walk into a new McDonald’s and you can only order by computer. The people there don’t even know how to take a verbal order. This is even more widespread in Europe where labor costs are higher.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Stay Healthy,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

 

 

 

 

 

 

Home Sweet Home

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april@madhedgefundtrader.com

March 7, 2024

Diary, Newsletter, Summary

Global Market Comments
March 7, 2024
Fiat Lux

 

Featured Trade:
(REMEMBERING THE OLD DAYS AT MORGAN STANLEY),
(MS), (GS), (GLD), (FCX), (FXE), (FXY), (CCJ)

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april@madhedgefundtrader.com

January 3, 2024

Diary, Newsletter, Summary

Global Market Comments
January 3, 2024
Fiat Lux

2024 Annual Asset Class Review
A Global Vision

FOR PAID SUBSCRIBERS ONLY

Featured Trades:

(SPX), (QQQ), (IWM) (AAPL), (XLF), (BAC) (JPM), (BAC), (C), (MS), (GS), 

(X), (CAT), (DE),(TLT), (TBT), (JNK), (PHB), (HYG), (MUB), (LQD), (FXE), (EUO), 

(FXC), (FXA), (YCS), (FXY), (CYB), (DIG), (RIG), (USO), (DUG), (UNG), (USO), 

(XLE), (AMLP),(GLD), (DGP), (SLV), (PPTL), (PALL), (ITB), (LEN), (KBH), (PHM)


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