the mad hedge fund trader “the endless summer” san francisco, ca september 11, 2013
TRANSCRIPT
The Mad Hedge Fund Trader“The Endless Summer”
San Francisco, CA September 11, 2013
www.madhedgefundtrader.com
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San FranciscoNovember 1
TradeMonster San Francisco ConferenceOctober 25-26
San FranciscoMarriot Marquis Hotel
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Trade Alert PerformanceStaying On Top
*2013 YTD +42.03%, compared to 16%for the Dow, beating it by 26%
*September +4.45%
*First 126 weeks of Trading +97.1%
*Versus +23% for the Dow AverageA 74% outperformance of the index138 out of 195 closed trades profitable
70.8% success rate on closed trades
Portfolio Review-Building a larger long“RISK ON” Returns
Mad Hedge Fund TraderTrading BookAsset Class BreakdownRisk Adjusted Basis
current capital at risk
Risk On
(FXY) 9/$103-$106 put Spread 10.00%(FXY) 10/$103-$106 put Spread 10.00%(FXY) 10/$102-$105 put Spread 10.00%(FCX) 10/$28-$30 call spread 10.00%
Risk Off
none
total net position 40.00%
Expiration P&L+45.3% YTD
Strategy Outlook*The money won’t wait
*We never got the 12% correction, only 7.1%
*Taper is priced in
*So is Syria, the Bernanke replacement and the coming debt ceiling crisis
*It’s off to the races once more with risk assets
*Stocks could gain 10% by year end
*Bottom fishing begins in commodities and emerging markets
*another leg down in the yen is imminent
The Jim Parker ViewThe Mad Day Trader-On sale for a $1,000 upgrade
Summer market still prevails
Technical Set Up of the week
*Buy
Europe good value (EWG), (EWP)Emerging Markets moving (GXG)Short play over in emerging currencies(SPY) trying to break out(IWM) Small caps
*Sell Short
Yen big time, risk is limited
The Economy-Picking Up*August nonfarm payroll 169,000, unemployment rate drops to 7.3%, new recovery low, labor participation rate at 35 year low
*August HSBC Services PMI 51.3 to 52.8
*August Eurozone PMI 50.5 to 51.5, two year high, Q2 GDP 0.3%
*UK August Business Activities Index 60.2 to 60.5, 6.5 year high
*GM August sales +14.7%, industry +16 million units 2013
*August ISM manufacturing index 55.4 to 55.7, 26 month high
*Japan Q2 GDP revised up from 2.7% to 3.8%
Bonds-Bonds rally…or They Rally*Taper is priced in. If you don’t get it bonds rally
*If we do get taper it will be “taper light” , $5-$10 billion a month cutback,$75-80 billion a month in Fed bond buying continues. Bonds rally
*Real taper killed off by Syria and the August nonfarm payroll
*Bonds are only 13 months into a 20 year bear market, so rallies will be brief
*Only fixed income value is in MLP’s,where the cash flow is huge
Stocks
*Traders are adding risk, moving from low beta to high beta stocks
*Expecting a big post Syria, post taper rally
*(SPX) could add a full earnings multiple point by year end, from 15X to 16X, or from 1,630 to 1,780
*Bottom fishing starting in emerging markets and commodities
*Major institutions and individuals are still generationally underweight equities
*are we only half way through an 8year bull market?
Dollar-The Fall Rally has begun
*BOJ unanimously votes to maintain ultra easy monetary policy, maintaining targets of doubling money supply and 2% inflation in two years
*Yen losing flight to safety bid as Syria war dissipates, breaking down on all crosses, US $ is next
*Conclusion: Yen down
*2020 Olympic win crushes the yen
*Euro rallies again
*Ausie rallies on conservative election win and improving China data
Japanese yen positionsRunning a triple position-strong conviction
*Long the 9/$103-106 bear put spread
*Long the 10/$103-$106 bear put spread
*Long the 10/$102-$105 bear put spread
Energy-Waiting for the Missiles
*Oil has been over $100/barrel since July 4
*Wall Street is long 1.9 million contracts in wake of Egypt and Syria Crisis,about a 4 month refinery supply, vastly overextended
*This long has pushed cruse to to a $20 premium to actual supply and demand
*Risk of a $20 gap down is high
*Strongest driving season in 31 years ending
*Only Syria is levitating these prices
*Obama will move slowly in response
Precious Metals-Stalling again as peace breaks out
* Russian peace offer kills the flight to safety trade
*Gold miners (GDX) outperforming metal for the first time in 8 years
*Big hedge funds switching out of gold and into gold miners
*Industry hedging at all time low
*A BUY setting up at the 50 daymoving average
Agriculture-Break Down to New Lows
*Quality of crop is declining, but still aiming at record
*Corn at 13.7 billion bushels, soybeans at 3.2 billion bushels
*Next USDA crop forecast September 12
Real Estate-the boom continues(BAC), (HD)
*July construction spending +0.6%
*Price rising, but at a slower rate
*Refinaning activity falls off a cliff, triggering bank layoffs
Trade Sheet-No Change“RISK ON” Good Until Proven Guilty
*Stocks- buy the small dips, running to a new yearend high*Bonds- a trading buy setting up at 3%*Commodities-start scaling in*Currencies- sell yen on any rallies*Precious Metals –stand aside, buy bigger dip*Volatility-stand aside, will bounce along bottom*The Ags –stay away*Real estate- no trade
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Good Luck and Good Trading!