madhedgefundtrader's blog

The US economy is in the midst of an epochal transition from a long term GDP growth rate from the 3.9% rate we saw during the last decade, to maybe 2%-2.5% this decade. The “V” is rapidly turning into a “square root.” The screaming great weakness in the global capital markets has long been that it is totally dependent on voluntary private capital. Market makers are now on a hair trigger to whip their capital right out of the market. Not answering the phones at Morgan Stanley. Sharing a single bed in a cheap motel with a gaggle of snoring regulators.

European finance ministers must be depressed that their $140 billion bailout of Greece only bought them only 24 hours of grace in the eyes of investors. The global nature of the sell off across all asset classes came as no surprise. The withdrawal of the Fed at the beginning of the quarter as the sole purchaser of real estate debt in the market, led not to a crash in bond prices, but a huge six point rally. Where am I going to buy the dip first? Shanghai.

Regulations are going to get tougher, inspections more rigorous, and taxes higher. Raising the production cost of what is already the world’s most expensive oil. Watch out for the new $10 billion liability cap. The offshore industry’s dirty little secret. Cap & Trade, once DOA, has been reborn. The only certainty is more expensive gas at the pump.

These once obscure elements have suddenly become the focus of several converging trends in the global economy. It turns out you can’t build a Prius or fight a modern war without rare earths. After shutting down competition, China now controls 97% of the market. A looming Chinese export ban. Time for a rare earths strategic stockpile? (AVARF.PK), (GWMGF.PK), (RAREF.PK), (LYSCF)

With populations soaring at the bottom end of the economic spectrum, the demand for new apartment buildings is going to be huge. Immigrants joining impoverished gen Xer’s and Millennials aren’t going to live in cardboard boxes under freeway overpasses. Institutions combing the landscape for low volatility cash flows and limited risk are starting to pour money in.

All assets are going up, period. Fundamental research has become an irrelevance. Is Obama a moderate in liberal clothing? The Fed’s need to inflate new bubbles to rescue us from the old ones. Listen to the wakeup call, and adjust your risk controls accordingly. Keep a hair trigger on your mouse for when the dreaded “Risk Off” trade hits.

Iraq will soon become the world’s largest oil exporter. The success of the recent oil auctions in Iraq is creating a windfall for American oil services companies. It will bring the most significant change to world trade patterns this century. Who knew it would take so long? There are major implications for the rest of us. (SLB), (BHI), (WFT), (HAL)

Improving California state finances make its municipal bonds a “buy.” With California in the heat of primary elections, this is good news no one seems to want to talk about. Inconvenient ties to the “vampire squid.” With taxes about to skyrocket everywhere, tax free municipal bonds are about to become more valuable. What’s this movie, "Fight Club", all about, anyway? (VCV), (NCP), (NVX).

Demographics Auger Poorly for the Real Estate Market. Desperate homeowners counting on a "V" shaped recovery in residential real estate prices to bail them out better first take a close look at global demographic data, which tells us there will be no recovery at all. The Demographic Nightmare in Japan. The demographic paradise in Vietnam. (EEM), (VNM).

sia is on its way back up to an historical weighting of 50% of world GDP/ that means china’s economy triples from here. Another $500 billion stimulus package is sitting on the shelf. Don’t count on China bailing out our $14.4 trillion economy. (FXI), (DBC), (DYY), (DBA), (PHO).

The Japanese currency is falling in a choppy, volatile fashion that has become a day trader’s paradise. One of the largest short positions in the futures in history has appeared practically overnight. Has the central bank yen unwind only just begun?

This decision will rank only second after his selection of the new Supreme Court justice in importance for the country, the economy, and your portfolio. The betting is that he will pick three monetary doves who will keep interest rates lower for longer, continuing the steroid injections of free money for the economy. The ghost of libertarian Ayn Rand will no longer be welcome on this board. Setting up a layup for the 2012 election.

Let the economy do the heavy lifting, Some 60% will be achieved through tax hikes, and 40% via spending cuts. But the plan assumes that interest rates remain unchanged, the economy grows at 3%, and the war on terror ends in four years. What if the terrorists don’t cooperate? Houston, we have a problem….

Stocks are still in a secular bear market. Bernanke is attempting to cure the current economic collapse with new printing press financed bubbles . We could be in for another downdraft as severe as the debacle that ensued in 2008-2009. Every asset class will get hammered, except gold. The barbaric relic is going to the old inflation adjusted high of $2,000. An exclusive Hedge Fund Radio interview with the publisher of the popular blog, The Mess Greenspan Made

Meet the Mad Hedge Fund Trader in person and debate the investment issues of the day. See you in San Francisco on April 23 and New York on May 7.