I want you to know, I am deeply troubled by the developments in Europe. The bailout of Greece, like Bear Sterns, may be the warning shot that brings the whole house of cards down. To think, as part of the IMF bailout, Portugal, Ireland and Spain will be forced to lend money. That is a joke.
Although Greece is a thorn in Europe’s side, Spain represents almost 10% of GDP—no laughing matter. CDO spreads are already suggesting fuckery is in the making. You know how this is going to play out, don’t you? The vultures will not stop until they eat flesh and drink blood, as was the case with Bear Sterns.
As you know, I was very cautious on the markets, busy doing the Hugh Hendry and trying to protect my longs with egregious [[VXX]] purchases. What I saw and still see coming down the pipe is an Exodus from the euro, which will funnel cash into dollars and treasuries. Like a domino effect, at some point, the dollar will fall too. But, for now, all eyes are on Europe, as the struggle with monetary cohesiveness intensifies. After all, what’s good for the Germans is not necessarily good for Spain, and vice versa.
Very recently, I reallocated money to the long side, only because I felt my assets were better fit in the jungle of stocks than [[TLT]] . Since my re-entry into stocks, I have not reduced my [[VXX]] position. As a matter of fact, I have averaged down on it. Most of my new purchases are related to the oil spill crisis and Goldman. Aside from Goldman Sachs Group, Inc. [[GS]] , my latest picks are nothing more than trades. With 25% cash and another 11% in [[VXX]] , I am positioned very defensively.
In summary, I believe the whole world will be doing “The Hugh Hendry” in no time at all. The question is: am I better off navigating the market, dealing with the daily ebbs and flows, rather than pussifying my book in [[TLT]] ? I believe the answer is, without a doubt: absolutely.
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Interesting theory… 😉
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you are Mr. Yang.
call me Dr. Ying
Who dis Yang?
I rill kick his ahhs fo’ him!
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Sorry Senator McCain, but Hugh Hendry won’t be helping any community banks.
Jake and I wrote the same shit at the same time, weird
http://ibankcoin.com/jakegint/2010/05/04/leaders-still-running/#comment-15072
Dr. Fly:
Spain has a much lower debt to GDP ratio than Greece. Last time I read it was around 55%. It’s high though not fuckery high. It’s maturity structure is also a bit longer than those fucking island dwellers.
Italy’s debt maturity structure is around 7.5 years.
I’ve been thinking and thinking about this… And I come to the conclusion that the only way out is for the ECB to print oodles of cash. So I see the fuckery coming from that side of things and not a deflationary pull.
I’m just thinking out loud here and your theory is pretty good too especially with the VIX trade.
Exactly. Trichet will see the light and print like there is no tomorrow.
I don’t see euro devaluation as occuring until the second half of the year. France and Germany have to agree, and they’re going to put up one hell of a fight.
Wake up. It’s already happening.
First of all, the ECB is not the US Fed. The ECB needs to answer to every member of the EU, and when you talk to a man on the street in Berlin, he says fuck everyone who is not an Aryan Deutchlander. You will get a similar feeling from a man on the street in Paris. They don’t give a shit about the people who speak a different language and live in fucking huts along the Mediterrainian. You will never get agreement between these people, and therefore, the EU and the Eurozone is fucked. Germany would rather go back to the Deutch Mark than to bail anyone out. They still want to rule all of Europe. The country that will bail out these nations is the USA, but it will only happen AFTER they get completely fucked. The US has so much debt and our fed doesn’t give a shit if we take on more debt, so hand it to us Greece, we like it. I am closing my positions in ES and NG and am waiting for a nice entry into VXX. The market has topped out and there is no reason to try and pick winners when no matter what you do, the market is going to dive.
Yeah, Germany would much rather return to the DM than bail out Greece. That’s why they just contributed 9 billion to the Greek bail out. Any more brilliant insight?
And Trichet is relatively independant from influence by the Politicians of the Euro nations. He has resisted calls for interest rate decreases in the past and cannot be removed from office until his term is up.
The one thing you actually did get right is the German desire to rule all of Europe. They can’t do it militarily so they are doing it through political and economical means. I.E. through the Euro. Which is why they are forking over the dough to a pissant little country like Greece in an attempt to keep the EuroUnion cohesive.
$9 billion dollars isn’t shit. And, it’s still likely to get the German incumbants fired.
Tell that to the German voters.
Hence, why I said all the German incumbants are getting fired.
Do you need your ears cleaned?
Oops, it appears one of my jokes has been spoiled.
I don’t think it matters one way or the other. You probably also thought Obama was really going to bring change too. Remove. Head. From. Arse.
If the German leaders think that the voters will toss them out if they contribute to the Greek bail-out then how exactly does that make their contribution insignificant? Sounds pretty significant from their perspective.
Actually no, since I didn’t vote for Obama, I’d say I didn’t think that.
And it makes $9 billion insignificant because, as I said, $9 billion isn’t shit. It’s the principle the Germans are going to hate. Hence, they’re leaders have both done very little and will succeed in getting crucified for it.
Right. So, unless you know something they don’t, why would they risk their jobs over something so insignificant?
Thank you FIG, for that astute assessment.
Times like these make me fear your time machine.
For those of us that trade more like Eric Clapton (slow hand) than Yngwie Malmsteen, what would you advise? Stay small/defensive if we aren’t fast?
If a European melt down ensues, and Hugh Hendry’s favorite song is played, what is your downside target in equities? Should the dip be bought?
I’m more than a little confused by the complicated macro dynamics at play.
I am conflicted, as the fundies point to higher prices. It’s the contagion that has me worried. Before you know it, we are talking California and NYS debt and default.
I think it makes sense to hold 20-25% cash and 10% in a downside fav, sans 3x fuckery. You can be long and have fun, just do it in moderation.
I’ve notice you get conflicted at inflection points. I believe this was the case before the bear started, no?
i am usually a few weeks late.
And this time, perhaps a few weeks early with the TLT trade?
I think the market will go up in the face of fuckery. I would be lying if I said I wasn’t confused. It is expected.
Moober, hope all is good in your hood.
Thanks, RC. While my home is fine, and I’m thankful for that, many friends have lost much.
You can see pics here http://www.tennessean.com
What the hezzy? I didn’t even know Nashville could flood and now they’re saying
the Grand Old Opry might be effed?
Past tense. Gone.
Dear Le Fly: I still think that your 10% correction call is valid and is upon us. Raising cash and looking to replace the spark plugs on the FAZmobile.
but yields are ripping higher. they smell blood.
Trust me, the vultures are out in force.
Fly I understand that you’re trading to protect against a fuckery. But if you were to bet heavily which side of the deflation/inflation play would you take?
I see your opinion as being one advising insurance basically
Again just thinking out aloud here. Europe is far more straitjacketed than the US in terms of market rigidities etc. I see them as having more of a chance to really up the ante in terms of creating inflation than the US on a relative basis.
The one that really frightens me the most that you didn’t mention is the biggest Debt/GDP whale of them all. If Japan’s bonds crack we’re all fucked as you then have to look at the flow of funds and you could actually first see the money pot being converted into yen before the place tanks to 200 yen which is where the currency is eventually heading anyway.
The Japan story would be catastrophic to Asia.
I see that playing out, after Europe. Then it will come back to the US, on the state level.
I still think the market could edge higher. But I am watching very closely.
Listen up you pukes,
Say g’bye to the EU. They’re fooking rioting in the streets in Greece. This is just the beginning. Where will it end? Exactly where it should….civil unrest and the breakup of the EU.
Gold priced in Euros pushing new highs. Do not claim you are clueless and don’t know what to do. This is the real deal.
T.H.M.
Edward Altman was pretty bearish on the PIIGS situation on Bloomberg TV Monday. In the FT Monday, Wolfgang Munchau said that even with the big rescue, Greece will still have to default, just maybe it gets put off for a year or two.
what is really amazing, is that RBA had the balls to increase rates tonight, which normally pops the OZ, global growth,etc and makes asia happy, yeah PBOC news, but market still weak even with an Australian Rate hike.
Nymph
The real estate market here is on fire and the RBA is raising rates to quell this sector.
If the aussie stays down and doesn’t get off the mat it may well mean they’ve gone too far. Also the government here has fucked up the mining sector in a real Laurel and Hardy fashion by imposing a super profits tax on mining firms.
and the losers are …. BHP, RTP & ABX?
Yep, you guys have such a USA 2007 housing bubble with your McMansions…but last time RBA held off even though 20 out of 20 economist said they would raise,lol. When I heard about the tax hike over the weekend I went OMG what the heck are they thinking???? BTW, with all the building for the Shanghai Expo being done (are you going to go?_ and China Govt not just talking like last year, but actually playing hard ball on Real Estate Speculators…why in the heck does Aussie Govt think that Commodities are such a golden goose that they can take the ax to? Could get a bit ugly…Crankie…lol…thank you for down under update.
OZZZZZZZZZ zzzzzzzzzzzzz ………………………….
With all these troubles in Europe, what do you guys believe is going to happen to the swiss franc?
I apreciate your input as I still have accounts out there….
You own the CHF…it’s stronger then euro but weaker to USD if we go to full unwinding of risk. So long USD/CHF and short EUR/CHF if you trade FX but I don’t think your trading FX? You just own them?
I still have accounts in CHF that I am planning on changing into dollars in the near future. I missed the 1-1 entry point, which is killing me, but according to Swiss bancs, we should see another drawback in the short-term. Looking for another 1-1.05 entry point.
Any thoughts?
It’s funny how much this is playing out like the breaking of the US. Housing Bubble. Remember how so many would say that sub-prime were only a “small fraction” of all mortgages, and that the problem was contained? Now the DAX is heading down sharply on fears that the Greek Bailout won’t be enough. Sound familiar. I’m happy doing the Hugh Hendry right now.
@ Moobs – I also trade much slower than most here. The problem (fear) for me is getting stuck in a macro position that I can’t get out of and having the market collapse around me. I’d rather play defense and give up some upside, while being positioned for the change in trend. I wish I were more nimble, but I’m not, so now I look like a stoopid Blue Blazered Bearshitter (TM) waiting for Armageddon.
I see my current drawdown is more like an insurance premium. If I’m proven wrong so be it. I don’t expect to make a ton on the downside. I just want to be ready when the next buying opportunity presents itself.
Nice call.
Look I’m a little more optimistic in a pessimistic sorta way, if you know what I mean. The ECB will simply print more Euro and do what they said they would do yesterday. They will take Greek bonds as collateral. That basically means more inflation down the road.
I’m with Fly. I’m long TLT plus a recent addition of GLD; good chunk of cash and for some fucking reason, ETFC. People are going to get freaky, and as people go, go the markets.
Bidding long PCX premarket @ $19.30. Also mulling a bid at HK long, earnings report before the bell tomorrow sketches me out a bit, but $21.50 ish feels like a decent entry. Reloading JASO at $6.60 ish if it gets there.
So now you come running back into my arms when you are done with the cheap floozies? You sleeping around with these whore equities has me worried about “contagion” and the need for protection. But *sigh*, I can never say no to your charms. Welcome back, mon cheri.
This is a case of wanton fuckery – nothing more, nothing less….
The shitstorm is building. Spain is a disaster, 20% unemployment, huge debt to GDP, etc. Wha to do? Portugal is bad also. Let the fuckers drop into the sea, they are not too big to fail , they are too small to succeed. Germany pulls out of the EU and it’s into the roundhouse Nellie…. Gold baby, gold. Pray for the Midas touch. Taqiyya is gazing fondly at his grandpere’s solid gold pocket watch. Gold baby, gold.
Long FXE at 130.30
The euro might be going to zero, but its bouncing between here and friday.
tole ya the shit winds are coming
100pt days everyday…
topping action
plus its snowing out
I think an additional and possibly more “interesting” component of the Greek thing is going to be the societal reaction to the austerity measures that are sure to be imposed. The country obviously cannot continue to function with its current level of “overhead” expense via unions and all the socialistic goodies that are provided to its people. So that brings up the question, “what happens when the candy store closes down”? Will the kids just hunker down and make do? Will they throw a tantrum and revolt? If they revolt, who are they actually taking up arms against? Their own government or the IMF and other EU countries?
As this all plays out you can bet your blue blazer that the other countries who may be frying in the same pan will be watching the results with at least a mildly heightened sense of interest. If Greece turns into a seething cauldron of unrest and carnage how for example do you think the governments of Spain and Italy will view the same bailout structures for their countries? Hmmmm,,,, maybe not so good. ……just sayin.
And the tourist industry will be affected I suppose. Greece is looking at major deflation. Has there been a run on the banks yet?
Fly wrote: “What I saw and still see coming down the pipe is an exodus from the euro, which will funnel cash into dollars and treasuries. Like a domino effect, at some point, the dollar will fall too”
What are your sources of information, or are you just pulling rabbits out of your ass?
The goal seems to be the increase in value of the Chinese yuan, without a revaluation. The only way that is possible is to devalue the other major currencies through manufactured crisis. China is, afterall, the model for the rest of the world — if you at all pay attention to what the people who run the UN and its financial arms (the World Bank and IMF) would like happen.
“The only way that is possible is to devalue the other major currencies…”
Wrong.
“China is, afterall, the model for the rest of the world-…”
Until we can’t buy their shit.
This is not a manufactured crisis, dumb ass. If the euro is facing serious devaluation, it’s obvious Europeans are going to flee to safe havens. Comparatively, the U.S. dollar is one of those.
The question is, then, do they demand treasuries and notes, or equities? The first causes the market to go down fast. The second causes the market to go up fast.
Shitstorm alert. That is all.
This is the sell off you were looking for Fly. It started on Friday.
The Euros should just slice off Greece and be done with it. Let Greece get their own house in order. If they are too proud to pull their own weight, let them go. It would be a good example to the other PIIGS.
PIIGS then becomes PIIS. That’s just not right.
Just wait till it becomes PENIS (Portugal, England, Netherlands, Ireland, and Spain). Then everyone in the VAGINA states are fucked (Vermont, Arkansas, Georgia, Indiana, New Jersey, and Alabama).
Chart and volume analysis on $FXE ( $EURUSD ) and $SLX (steel sector) http://tiny.cc/9t356
This oil disaster has killed the US. People are just still in denial. Anyone fleeing to US dollars is failing to realize the long term implications. All new offshore drilling, anywhere on any of our coasts, will now be blocked.
This benefits britain, canada, and australian dollars. But, for some reason, no one is seeing it yet.
This oil disaster has killed the US
It’s official. You are fucking nuts. Will it have a negative impact on stuff… sure. But to say one fucking blowout has killed the US is beyond retarded.
I bet he’s posting from his fortified bunker in Idaho.
Beyond retarded is simple, yet hilarious.
You cant give me 1 chart, or 1 fundamental reason to be long the dollar here. Not one. Admit it.
Europe burns, and European money flocks to the safest place; Treasuries & US Dollars
eh?
EEEEEH???
What, they’re going to buy Chinese money? FRUCK NO
You’re going to get craw to the face
America is the most oil dependent country on earth. Our public transportation systems are an absolute joke. In a global oil crisis, we’ll get hit 3 times harder than nearly everyone else..
Get real. Once we decide it’s important we’ll deal with it. I don’t see people literally dying to get into China, or anywhere else for that matter. They’re not trying to get in to get on the dole, they’re trying to better their lives. When the flow of immigrants stops, that when I’d worry. BTW, that won’t happen in my lifetime or my young kid’s lifetime either.
Banking crisis > Oil crisis
Oil crisis is self regulating (supply/demand). Banking crisis is not, and safe money is in the process of piling onto the last mang standing (us). I piss on your oil crisis like I piss on lettuce.
You piss on lettuce!?
[very strange]
We all do. When you gotta go, you gotta go. Just wash your produce.
Whether or not one should be long dollars has nothing to do with your stupid comment that this oil spill has killed the US. We are not one oil spill. How this effects energy policy is still to be seen.
I concede wholeheartedly . You should immediately go and purchase UUP in large quantities, because you’re angry at my use of hyperbole.
See you at the finish line.
http://www.youtube.com/watch?v=TPKJZJITZHw
Well at least you can admit when you are wrong. Thanks on the investment advice, but I’ll pass. Your recent offerings have been underwhelming, to say the least.
When shit hits the fan the dollar goes up.
Always.
Is that reason enough?
panamaorange says:
May 4, 2010 at 11:47 am
“Chart and volume analysis on $FXE ( $EURUSD ) and $SLX (steel sector) http://tiny.cc/9t356”
Granted, I’m not as gifted as the FLY with those charty thingys.
However, seems to me those chart thingys of yours say the trend is for the EURO is down.
Of course, this is a layman’s opinion from looking at the chart and seeing the line is falling on the right hand side.
Fly after doing a little homework, Sandridge looks like it may be a good buy here. The price action and the recent insider buying I like. I also like the fact that it’s exsposed to oil as well as natural gas. I held it earlier but wasn’t patience enough, I hope this time will be better.
I just fazzed all over myself.
Who the hell had even heard of Hugh Hendry. Brilliant stuff:
http://paul.kedrosky.com/archives/2010/02/hugh_hendry_vs.html8
This is why iBC is the only place for serious stock traders.
follow the yellow brick road
and don’t pick fruit when its raining
my days done, off to go get drunk
I has many gold chains, and I pick fruit in the rain. You know naaaating!
67 comments. When the shit hits the fan, we come to Fly for guidance.
So, will i be receiving my 40 points today? Can someone tell me?
always
Fuck all of you Euro trash girls. Give me my fucken’ American 40 points!
I vote for MrKCBill for blogger…
Beside my portfolio seeing all time highs much more important is bench press is seeing them as well. You all might care about DOW 12,000 but The V.King cares about King Press 400lbs…i’ll keep you all posted.
Still holding your BML.H from the 12’s?
http://tiny.cc/ida6k
Ok I am a convert; the FLY really is GOD.
Forgive me, oh highness.
Ultimately, France and Germany are going to tell us where we’re going. If they resist devaluation and bailing out the other PIIGS, then the problem hits Europe hard, but I think we get spared from a lot of the mess. Plus, those two will need U.S. treasury and municipality debt to diversify away from European debt, so it might actually help our financing situation here at home.
If they cave, though, look out.
“Clearly, with world mkts so skittish, the last thing that the gov’t should do is to further shake confidence by continuing to investigate Goldman.”
Script for Goldman lobbyist as they seek a quicky civil settlement and the dropping of any criminal investigations?
Obsess much?
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