madhedgefundtrader's blog

Markets will do whatever they have to do to screw the most people. In every election since 1950, markets rallied for six months after the midterms, setting up for a nice yearend rally. One more flush in the indexes, and a 950 SPX gives you a PE multiple of 10, the lowest it has been for years. After firing people to boost productivity and profitability, the end September earnings reports should be pretty good. (SPX), (ECH), (TF), (IDX), (EPOL).

Cherry picking the best money management techniques that have evolved over the last 30 years, and discarding the dross. Sophisticated hedge fund management for the little guy.Benchmarking performance to an arbitrary index, such as the S&P 500, has been consigned to the dustbin of history. Buy and hold is dead. Security in the wake of the Madoff affair. No more black boxes, homemade account statements, or a “need to know” basis. Scouring the world for only the cream of investment opportunities. An exclusive interview with Lee O’Dwyer of 5T Wealth Management on Hedge Fund Radio. (CU), (DBA), (CORN), (PHO), (GLD), (SLV), (FXC), (FXA), (IDX), (TUR), (ECH), (EPOL), (TBT), (YCS).

An historically hard currency culture suddenly has money to spend. To get China’s gold investment up to American levels on a GDP basis, it needs to buy 25 million ounces worth $31 billion. That amounts to 34% of the 2009 global annual production of $110 billion. The Chinese aren’t going to provide the next spike in gold prices, but they are building a floor higher than anyone expects.

An autopsy on the Failures of the Obama administration. A major error by devoting one third of its massive $870 billion stimulus program to tax cuts, which in this environment, will get saved, not spent. Easy money is creating new bubbles around the world, especially in China (FXI) and commodities, that will only end in tears.

A Chat With Steve Forbes. The crash was a failure of government. We have the most hard left president and congress in history. The Fed should pursue a strong dollar policy. The rating agencies are a cartel we should get rid of. George Bush betrayed the Republican party by abandoning its principles.

Despite lackluster market conditions, Molycorp managed to raise $394 million through its July IPO at $14/share. The company will use the funds to reopen the first rare earths production in the US since 1992, making it the largest such producer in the world outside of China. The hard asset crowd has been pouring in, making it one of the best equity launches of the year. An alternative energy, national defense, commodity, inflation play is a win-win-win-win. (MCP), (LYSCF).

Counter cyclical Keynesian spending financed out of savings, instead of debt. Too bad they didn’t think about that here! Keynesian economists unable to gain a hearing in the US sell their wares in Latin America. (ECH), (CU).

The 3 1/2 point sell off in the futures for the 30 year Treasury bond (TBT), at the end of last week was the sharpest drop in 18 months. All it took to set was for Q2 GDP to come in at 1.6%, and for Ben Bernanke to remain silent about any plans to flood the markets with more liquidity. After yields bottomed in 1956, bonds suffered negative returns for 30 years! Here come the 18% mortgages. One more equity puke out in September could easily give us the real thing. (TBT), (TMV), (TIPS).

Buried in the recently passed Dodd-Frank financial reform bill are massive financial rewards for turning in your boss. Turning in Goldman Sachs could have earned you a reward of $500 million. Wall Street firms are bracing themselves for an onslaught of claims, legitimate and otherwise, by droves of hungry gold diggers looking for an early retirement.

In the brave new world of behavioral targeting, your PC may know more about you than you want. Sharing your personal data with a few “buddies” like Facebook, Google, and MySpace. Worried about privacy? Privacy, shmivacy. I bet the IRS would like to know.

Today, “bond funds” ranked with “Miss Universe” and “Lindsey Lohan” among Yahoo’s top ten search terms. Outflows from equity mutual funds over the last two years totaled $232 billion, while inflows into bond funds soared to a staggering $559 billion. The last time yields were this low in 1955, ten year bonds brought in an annual return of only 1.9% for the following decade. Are the Chinese calling the top in the market? (TBT), (TMV), (TIPS)

There really is no corner of the financial markets that was not well represented by market makers, analysts, technology providers, and investors-- thousands of them. A big splash in hard assets.

Who knew we financial types were so unpopular on Main Street?

POT is the world’s largest fertilizer producer, and with the global population expected to grow from 7 billion to 9 billion over the next 40 years, a takeover seems like a no brainer. Why not buy another product that the Chinese are voracious consumers for? It’s cheaper to take over someone than to hire people. The recent doubling of the price of wheat in a mere eight weeks has been a shot across the bow of investors everywhere that it is time to get on the train before it leaves the station. Suddenly the entire sector is in play. (POT), (MOS), (AGU), (MOO), (DBA).

Hedge fund honcho, Kyle Bass, says that time has run out for Japan. This year, the Ministry of Finance will see ¥40 trillion in receivables against ¥97 trillion in spending. The tipping point is close, and when it hits, Japan will have to borrow from abroad in size. Foreign investors subject to tougher investing criteria than domestic institutions, won’t take it. Both the JGB market and the yen can only collapse in the face of these developments.