madhedgefundtrader's blog

With the world’s weakest major economy, Japan is certain to be the last country to raise interest rates. This is inciting big hedge funds to short yen to finance longs in every other corner of the financial markets. The world’s worst demographic outlook assures problems will only get worse. They’re not making Japanese any more. The sovereign debt crisis in Europe is prompting investors to scan the horizon for the next troubled country. Japan is at the top of the list. The Japanese long bond market, with a yield of 1.4%, is a disaster waiting to happen. (YCS).

It’s really all about a few big car companies pandering to growing numbers of “green” consumers. The low hanging fruit for investors in the fuel efficiency race can be found by pushing forward existing, simpler, and cheaper technologies. A look at European “stop/start” technology. (XIDE), (JCI)

Guess what the top performing asset of 2010 has been? Decades of production downsizing, huge Chinese buying, and waning competition from Canada because of a strong loonie, conspire to take lumber up a blistering 39.9% YTD. (WY), (LPX), (CUT).

The “tough guy” approach to Iran. Taking on the “America Bashers”. The spectacular growth of China and India is largely the result of open American trade policies. The biggest threats to American dominance are runaway borrowing and entitlements. “Even our power has its limits.” An exclusive interview with former Secretary of State and Secretary of the Treasury, James Baker III.

A US debt downgrade could trigger a stampede into the debt of healthier countries. Emerging market debt has a much rosier future of credit upgrades to look forward to than US bonds. A 6.44% yield on an appreciating asset. These days, many emerging markets have little or no debt. The sovereign debt crisis is sending bonds issues by financial responsible countries to decent premiums, while punishing the bad boys with huge discounts. Time to trade in Marilyn Monroe for Carmen Miranda? (PCY), (LQD).

A home run begging to get smashed out of the park. Support is falling away like a dress off a prom date. Puts are still ridiculously cheap. The global carry trade is back on. The Japanese government absolutely hates the yen at this level. Exporters are getting killed. Moving Mount Fuji to get what it wants. The world’s credit sharks are looking for a new victim. Final target: ¥150. (YCS)

The velocity of money is collapsing. The end of a 50 year super cycle in lending. The government might as well be pushing on a wet noodle. The gold bugs have got it all wrong. The chances of the Fed being able to head off an inflationary burst are close to nil. But the bond vigilantes may have to wait a couple of years. Tax hikes of 3% of GDP next year will strangle the recovery in the crib. A wide ranging, in depth interview with John Mauldin on Hedge Fund Radio.

An internationally known authority on Ponzi schemes gets cleaned out by Bernie. Believable modest returns and feigned exclusivity did the trick. Lessons for us all from Carlo. Better hire the "private dick"

A meltdown of Biblical proportions hits the vacation home market. A market plagued by giant snow drifts and burst pipes. Cash out refi’s have come back to haunt. Sales on the county court house steps at prices down 60%-70% from the 2006 peak. Jumbo financing is now an extinct species. A shortened school year has killed the rental market. A “bear” market of a different sort. Care to join Fredo Corleone?

The outlook for natural gas is terrible. Will this be the ETF that kills the goose that laid the golden egg? Torpedoed by contango. Sarah Palin’s pet project bites the dust. Sweating bullets in Qatar. Moral of the story: read the damn prospectus first. A new 100 year supply of natural gas will be a dead weight on prices for decades. Gas companies are racing to out-produce each other in the hope of offsetting falling prices with increased volumes. It’s sad to see such a great molecule fall on such hard times. Pitiful, really. (UNG), (CHK), (DVN), (XTO).

After a decade in the penalty box, is the son of the Dotcom Bubble returning? The industry represents the last, best hope that America has for competing globally. Tech companies are among the few that make things foreigners want to buy. Foreign stocks wearing cowboy hats and pearl snap buttoned shirts There will be product shortages and much higher prices in any recovery. (CSCO), (JNPR), (JDSU), (SNDK), (MU), (ASML).

The world is desperately need a second green revolution. Rising emerging market standards of living are consuming increasing amounts of food. Reserves are now at 20 year lows. The world population has doubled from 3.5 to 7 billion since the sixties, eating up surpluses, and is expected to rise to 9 billion by 2050. An impending global famine has not escaped the notice of major hedge funds. (POT), (AGU), (MON), (DBA).

A second deflationary tidal wave may hit the US early as April. The Dow is going to crash, possibly heading for a double bottom at 6,000, and bonds are going up for the rest of the year. Gold has had it for the foreseeable future. First, deflation, then inflation. The greatest trade of your lifetime is setting up. This trend could start tomorrow, or in two years. Blow your entry point, and you’ll get wiped out. Oh, and by the way, crude oil futures are discounting war with Iran by 2013!

The financial crisis compressed 30 years of change into two, taking us from libertarian Ayn Rand to pay czar Ken Feinberg in one giant leap. The “white collarization” of organized crime has been a secular trend since the sixties. AIG getting 100 cents on the dollar was the greatest scam in history. Maybe a pathological need to be in front of the spotlight? No luck with the infamous black book.

Investing in Russia is a double edged sword. Shareholder rights are virtually unknown. Cross the government, and they’ll through you in jail. But the land of Lenin and Red Square has the cash to finance a serious growth spurt. GDP is flipping from a -7.9% rate in 2009 to an expected 3.2% this year. Russians have no credit card debt, no home mortgages, and terrible housing, but the resource wealth to buy what they need. Just watch out for the knock on the door in the middle of the night.(RSX)