DB is going to raise a shitload of capital, in an egregious 30% dilutive share offering. This is some shit out of the 2008, panic and let’s burn the fucking house down, handbook, when banks were raping shareholders in an effort to paper over losses. The truth of the matter is: European banks are likely hiding massive losses, all to do with PIIGS. Now, I am not suggesting this will lead to an eventual and probable collapse of the world banking system as we know it. However, I an suggesting that you should expect these type of capital raises, especially from our European counterparts, indefinitely.
Truth be told, if American accounting regulations were not so corrupt, our banks would need to do massive cap raises too. However, thanks to the politicians on capitol hill, banks can hold bullshit deteriorating “assets” forever, without having to mark them down. The point remains: cap raises are bad for current shareholders, even though it shores up the balance sheets of said banks.
Having said that, I am long C and BAC, mainly because I am a firm believer in trickery and government deception. Go figure.
With 40% cash and another 20% withering away in VXX, “The Fly” is playing defense, even though he expects a pullback. The bottom line is this: despite chopping around here for months, the market has given no signs that the trend is lower. Therefore, it’s important to know when to bet big and when to simply wait it out. I am far more comfortable “surviving” pullbacks and profiting from upswings, then betting on a sharp move lower, especially in an election cycle.
In short, I expect a pullback but will not bet the house and kids on that coming to fruition. For now, with marked exception to my degenerate personal accounts, it’s all about defense for me.
UPDATE: I sold out of SCO, due to pipeline trickery and outright chicanery. There are better plays.
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First!
Sounds like someone watched Bleier’s explain his bank solution this morning on Tech Ticker
I missed it.
You do own some TZA do you not?
Only in personal accts. Managed accts never own inverse ETFs
Inverse or leveraged? Were all inverse ETF plays in private accounts only (I’m assuming no since you have VXX)?
All inverse/leveraged in personal, with VXX as the sole exception.
Fly, it sounds like an excuse ….
Still 75% TZA in the personal account?
Yes.
Fly,
If you wouldn’t bet the house or th ekids on a big drop in the market, why are you 75 percent TZA
in your personal account?
You have discussed the issue of managing risk with us pikers before,
but this seems especially risky.
get the fuck out of VXX while you still have some skin…
it is your money of course.. but WTF
Yeah, the VXX may pop from time to time but is destined to a slow, painful death.
Thedollarthedollarthedollarthedollar…
The dollar is going to Isengard… g-g-gard!
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So…… GET IN THE FUNNEL?
Long EDZ
If the dollar goes to Isengard, you need to borrow PanamaOrange’s “Deer Hunter/Russian Roulette” avatar if you are going to play w. EDZ.
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I don’t think I have ever heard you call for a pullback, since 2008.
I went bullish in the second half of February 2009. That was the hardest three weeks of my life, I think.
Then I sold half of my PM stocks in late November, early December of 2009, calling for a pullback.
I was early on that one too.
Don’t worry, I’ll let you know.
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I’m not very bullish at the moment. The bear trap caught some folks, but now the continual smoke and mirrors and low volume climb have gotten my attention.
>>…the market has given no signs that the trend is lower.<<
I disagree. I see a series of lower highs since the 4/26 peak, and expect an onslaught of earnings warnings over the next two weeks to finally put this market to bed. As of yesterday's open, I took my accounts up to being 125% short the SPX (via SPY shorts and SDS longs).
Good god man you’re going to dope slope yourself. Abort.
Thanks, but I don’t plan to abort unless I either see some real macro improvement or the market moves up on some real volume. I see the recent move up in the market on no volume as being technically incredibly bearish; i.e., I don’t think it’s telegraphing any kind of macro improvement.
You need to have a conversation with Huggie. Or in exigent circumstances, Timmah Knight.
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Knight (from the little I’ve read) is purely a technician. I’m a fundamental investor who uses technicals for entry and exit points. If the technicals move strongly against me (as in “higher highs on big volume” I’ll abort; otherwise, I’ll just wait for the forthcoming 12x multiple on $73 in SPX earnings.
your 73 earnings assessment aside (i assume for the 2010 year?), what makes you think that 12x backward P/E will be the pricing point of the S&P? it could just as easily be 16+, it all has to do with investor attitudes, forward forecast earnings growth, availability of alternative investment vehicles etc. of which you cannot possibly predict. you might end up being right, but on a risk adjusted basis, using your criteria, what your doing is not sound.
No, of course the $73 isn’t for 2010 (not with the year half-over at a much higher run-rate). It’s for 12 months forward (Q3 & Q4 2010 + Q! & Q2 2011). Clearly, predicting forward multiples isn’t an exact science (lol, it’s embarrassing to even use the word “science” at all in that context), but considering that multiples almost always compress when earnings are declining and also considering that bear markets almost always bottom out with single-digit multiples and that it’s conceivable– thanks primarily to a collapse in earnings from the financials– that we could see $68 and get an 8x or 9x multiple on that, well, a 12x on $73 seems to be a fair compromise. I actually plan to eventually cover at around 890 (and don’t rule out trading in and out of the position before that), as a look at the chart tells me that at the very least the market will need to revisit the July 2009 lows. I’ve been sort-of swing-trading this SPX short position for quite a while now (you can see all the details trade-by-trade in my Seeking Alpha Instablog), because I finally realized a while ago that there are so many bears out there that the market isn’t going to cooperate by going straight down, but eventually, earnings (or the lack thereof) will conquer the contrarian positive of negative sentiment.
P/E compression and earnings estimate erosion is the way all secular bear markets end.
Try P/E’s in the 9 – 10 range and S&P earnings around $55 before we find the bottom to all this.
i.e.,….that would be about book value for the S&P.
alpha,
I think that’s entirely PLAUSIBLE, but not necessarily PROBABLE. Thus, I plan to cover my broad-market short much higher than that (high 800s), but wouldn’t get broadly long until I either saw a reason for macro optimism or we got down to the level you’re discussing. I just think it’s too dangerous to stay short on the ASSUMPTION that we’re gonna get down to that level. However, I’d sure have great admiration for someone who had the balls to do that and turned out to be right!
I agree on the macro side, but that doesn’t mean the recent August high on the S&P can’t be broken. I guess if you can hold on long enough….
it’s ok to disagree.. not ok to lose money because you disagree.
>>it’s ok to disagree.. not ok to lose money because you disagree.<<
lol… The plan is to "MAKE money because I disagree".
My DSW holding is doing well despite those soleless faggots at CROX and SKX getting thrown on power lines.
Those faggots have no fish??
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Another day that we got our 40 pts…just like March 2009.
ya I do recall that.. 40 pts here and 50 pts there.. Then BOOM the market tanked….
scuse me? Tanked? What market are you looking at? After a 90% move up, we’re down less than 10%???
I believe he’s referring to the Feb – Apr runup. That was marked by an incessant march upwards 40 points at a time. It did not end pretty when May came around.
Chinese inflation data pushed up to this weekend. Important to watch.
I’m out.
important for chinese… inflation is nothing more that an empty word these days in America
Material stocks will move big on that news…
“The data will include industrial output, fixed-asset investments, consumer prices, producer prices and other important indicators of China’s economy”
With there balance report….more import trading higher, could push inflation….tighter money supply….billets probably darn things gotta pop and the shanghai cargo ships are just full of coppr, just sitting there, really just copper and iron ore….should be interesting to see it pop as I been posting about it on my weekly column in the pg…..jim rogers and I are eating popcorn waiting for india iron ore to collapse…..in fact, i’m waring a bo tie right now…….i’m just being so damn bearish right now…..
That’s great. Sounds familiar.
looking foward to civil unrest shortly….
http://www.chinadaily.com.cn/business/2010-09/10/content_11284447.htm
China’s property prices rise 9.3% in August
(Xinhua)
Now thats inflation…
Home sales stood at 68.86 million square meters in August, down 10.1 percent from a year earlier, with sales volume topping 353.3 billion yuan ($51.96 billion), down 8.6 percent year on year.
Investment in property sector soared 34.1 percent to 449 billion yuan in August.
Sounds like a bubble to me… cant go on forever.. Next we will be hearing about world banks that have exposure to Chinese banks..
FIG
TZA down
SCO down
VXX down
Double FIG!
sold my position in TZA @ 32.40 jumped back in @ 31.70..
should the market roll over I will unload TZA and jump into UCO…
Pain in the ass to make money this way but its has to be.
Even if these motherfuckers are down Dr Fly is up .. I guess…
Moved half of my 401k back into cash today….picked up 7% buying at the bottom like 8 days ago….going to sit on this until the market breaks decisively higher or gets low again.
The most entertaining thing about the china property collapse, will be to watch peter schiff deny it all the way down. Just like he sat short TLT all the way up.
Jake
My point is the market goes up and down, sometimes down a lot. Since 2009, you have yet to trade a down cycle. Lets leave the mkt timing to me and i will let you worry about lt macro trends.
I am leaving the market timing to you, apparently.
Best of luck, as always.
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2 steps foward and 3 steps back
Stay in the game and keep dancing.
Schiff is useless. He belongs in the senate.
Certainly moreso than the asshat dinosaur Connecticut AG running for the Dems, who is actually suing the rating agencies for underestimating his crappy state’s municipalities’ ability to pay off their bonds.
Mama Mia!
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How can anyone vote for a guy who lied about his service in Vietnam? That stuff is sacred.
People have to know about that stuff first. Don’t expect the sympathetic press to spend much time on it.
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The secret laws of mathematics and fractal jumps can not be ignored, they must obeyed like all laws of physics and nature, just because you see Blane levitate his ass up and down Times Square dose it mean gravity dose not exists? What we have here is a Blane rally… IMHO
The V.King sold over the last few days half of his BML.H up 3.5 dollars …oh and 2 dividend payments…
I will be letting all the Gentlemen of the PPT what my next move is…
10….10….10
Fertilizer?
Chinese August data to be released on Saturday… is that Saturday for China or Saturday in the US? Wouldn’t that be tonight? Any time zone experts?
Flyaway
It is an experient of mine, using highly aggressive strategy using ppt ob/os signals. Up250% ytd
im playing offense, and like a well seasoned running back i will be pounding my pads into the chest of the bears …but not right away mind you but maybe at dow 10700 next week..thought you would like to know …waterboy
OK, I’d be the first to admit The Fly’s a funny guy, even if he’s probably a vegetarian, but is the premium stuff worth it? From a quick look it sounds like tons of research stuff with a few supposedly proprietary algos here and there.
In my opinion, its worth more then the buck a day it costs.
Besides Fly, there are some top top traders posting in there. Some are simply amazing. You can learn a lot from obviously successful traders.
The strategies available will make you rich if you are smart enough to implement them. The results from the OB/OS cycle are so good they should be illegal. Its like printing money.
I have been following this blog off and on since it was the fly on wall street. I have never paid for any premium site. I jumped right in with a distinguished gentleman status because the value is undeniable.
I am not trying to kiss ass but I think the fly is being charitable by allowing us to profit from his time spent learning this shit. The other tabbed bloggers are gold too.
Thanks, AJ, I appreciate your taking the time. Sounds like it’s worth checking out.
Fly a vegan? Eating the soy rib eyes, for sure!
fuck you fly. you’re always too early. now is the time to get 10000x levered up for a crash. asshole, your system is shit.
The Fly eats 2.5 inch ribeyes!
The PPT is worth it. You can utilize it in many ways. Its no free lunch though… You gotta do learn how to make it work for you.
Nutfucker
Why must you bite the hand that feeds you?
You’re banned
Truthfully, the content of some of these negative posts is so rudimentary and rote that I’m beginning to wonder if they are not sent periodically — like binary pulses — from the heart of the Goldman ‘bot hive-mind.
_________________
Once a nutfucker, always a nutfucker.
GM new IPO filing plus PBR’s new IPO filing plus this dilutive shit means the private companies are doing everything they can to sell to the pubic before shit goes bad and the banks are happy to issue the shares to get the little money that’s left before the little D (deflation) comes along and threatens big D (depression).
This is an interesting post, I hadn’t thought of that but now I am very intrigued, keep them coming!
How can PBR have an IPO when they are already public?
++++++++++
Why shouldn’t DB raise capital at these low rates?
the unfortunate treuth
They aren’t borrowing the money, they are selling shares and diluting current holders. Not quite the same.
He meant why not borrow equity and lever it at these rates. DB is a bank, remember.
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Mr. Fly is a genius wordsmith. The English language is his weapon. Do try to understand.
Db is diluting via share offering
They are only diluting if there consequent actions are not accretive.
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I think nutfucker had some feelings about this post. Retarded ones.
there you bears go again waking me up in the middle of the night by cursing me ,calling me all kinds of shit…
it can be said that the quatrains of archadamus did warn you of your pending pain ..in other words your pretty well fucked.. and i am not…
i am being summoned by the 9th dimension i will be tending to my herb garden and meditating the rest of the day…i will be well tuned for the movement into the dow 11000s i assure you
Archimedes? The “Eureka!” soccer player?
________
I just read an interesting article.
As the nation collapses, some cities are using stimulus funds to put RFID tracking chips in recycle bins and garbage cans for $100-$500 fines for recycling violations by the UN Agenda 21 green police.
thats ok im going to be recycling my 20s into 100s this week
This one is even better. Airport body scanners puts your package on display and saves the images for the record.
http://images.smh.com.au/2009/10/14/787923/scanner-420×0.jpg
That guy has a bad right knee
Maybe he played football.
Fly, were you in NYC during the 9/11 attack? What was the experience like?
Long USO and TZA for larfs
I too have seen how companies abuse their shareholders by deluting their shares down to almost nothing. Makes you never want to invest in those losers again. I would call it stealing from the shareholder.
I was right in front of the buildings when the first plane hit. It was some day.
I take it you high tailed it out of there without a second thought.
All of the politicians involved with the rebuilding of the memorial and towers should be ashamed of themselves that the structures are not complete a full ten years later. This isn’t exclusive to public servants but also social parties who control and manipulate cement contracts and other union deals. We’re the best country in the world and our prosperity is constantly stymied by certain influential people who misuse power.
Of course a 30% offering is dilutive to eps. You don’t seriously think they will make a large acquisition do you?
The balance sheet requires more capital, no diff than citi in 2008
I don’t understand why we don’t just rebuild the twin towers… Bigger and better. Show those fuckers that knocked them down what we are made of.
God bless America
You could always write a letter to the guy who collected 7.3 billion on the collapses and subsequent demolitions, Larry Silverstein. If he doesn’t write back, try his best friends in the Israeli government, they may have some idea.
They are too expensive to maintain
Simple economics.
Dear President Obama,
My people are most grateful for your government’s decision to shut down the pipeline that provides 8% of your country’s oil imports from a friendly source. Combined with your previous decision to goat fuck your best source of local oil production we could not ask for more. But we will. Isn’t there something you can do to cut off the Mexican supply of oil?
Once you complete that action, be assured your campaign coffers will be topped up to the max. I assume you are utilizing the same Swiss bank account as before? I am feeling generous so expect a little “extra” in the next installment. Buy Michelle a nice dress on my behalf.
Truly yours,
The Sheikh
Ditto.
Nice!