madhedgefundtrader's blog

The global resource frenzy has grown so heated that money has begun pouring into the marginal fringes of the universe. The Mongolian stock market has been one of the world’s best performers this year, spiking some 100%. A call the world’s largest undeveloped copper resource (IVN), (RTP)

Another nail in the coffin for residential real estate. Ben Bernanke can cut interest rates all he likes, but can’t raise personal credit scores, and that is a big problem. Some one third of Americans now have credit scores under 620 and are unable to obtain loans under any circumstances. This won’t change until banks return to risk accumulation mode, which is at least five years off.

If you bought every Friday close this year and sold the Monday close, your return so far would be 14.20%, versus a 0.42% return on the S&P 500. Apparently, the market is paying a huge premium for traders willing to run the weekend risk. The reasons why do not bode well for the market.

The current environment of negative real interest rates is the dream scenario for the yellow metal. While Republican promises to reduce the deficit are gold negative, the fact is that their tax cutting proposals are more likely to lead to bigger deficits, not smaller ones. Even if we eliminated all discretionary spending, the government would still be hugely in the red. A rise in capital gains taxes from 15% to 20% would trigger a stampede to take profits before the year end.

As hot as they’ve been, emerging markets are only just getting started. By 2018 the combined GDP of the BRIC’s, Brazil (EWZ), Russia (RSX), India (PIN), and China (FXI), will match that of the US. China to maintain a virile 8% annual growth rate for eight more years, while the US plods along at an arthritic 2% rate. How the “BRIC” almost became the “RIC”. Jim Chanos, you may be right about a China crash, but you’re early by a decade! (EWZ), (RSX), (PIN), (FXI)

Is it time to buy China? China believes that its workers are being exploited by American companies by keeping wages low. Any attempt to sell their massive US Treasury bond holdings might cause their value to collapse and freeze relations with the US.

The white metal has soared by 33% in the past two months as investors desperate for fiat currency alternatives pour into the marginal metals. Warning: moves like this by industrial commodities do not occur in the face of a collapsing economy. A long position in palladium gives you a free call on political instability in two less than perfectly run countries. (PALL)

Since the Great Ag Boom of 2010 started in May, the white staple has rocketed 38% to over $1/pound, a 15 year high, and only the second time since the Civil War that it has broken the buck. Get used to this story. Demand from Asia is soaring. “Double dippers” beware.

Demand from emerging markets is absolutely exploding. A major super cycle of buying from Asia is creating a long term structural shortage for the black stuff. A US dependence of 50% of its power generation from coal isn’t changing any time soon. If the Republicans win the November elections, a regulatory back off will deliver a sudden boost to profitability. (BTU), (MEE), (JOYG), (KOL).

Never was so much said by so few words. Party away like there’s no tomorrow, but keep an eye on the door as usual, and keep snugging up those stops on US equities. Financial stocks are not invited, nor is the US dollar.

These are heady inflows into such a small space. All of the gold mined in human history would only fill 2.5 Olympic sized swimming pools and be worth $6.3 trillion. Annual gold production would only rank it 17th as a Fortune 500 company. It is also only 16% of global public debt markets worth $39 trillion. Gold would have to rise to $7,800 an ounce just to bring the two to parity.

Has Obama ordered Fed governor Ben Bernanke to flood the system with $2 trillion of liquidity? A cynical ploy to give the economy a much needed shot in the arm that will enable the Democrats to retain control of both houses of Congress. Two more years of Obamanomics to follow. Never let the truth get in the way of a good story.

Yes, I really exist! I’m not an urban legend! Come to San Francisco for an up to date view on stocks, bonds, currencies commodities, precious metals, and real estate. And to keep you in suspense, I’ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $199.

Apparently the reach for yield knows no bounds. The junk bond market is returning to the bad old days that we saw the last time this market topped in 2007. Inferior credits are now flooding the market with dubious conditions, lax covenants, but premium terms. Banks may not be willing to lend, but investors of every stripe are more than happy to. Investors are once again paying Rolls Royce terms for jalopy credits. (JNK), (HYG), (PHB).

This time Gordon Gekko is John Paulson, the bad guy is Goldman Sachs, and Ace Greenberg throws himself in front of a train. Are there any lessons to be learned from this generation’s Wall Street?