The S&P Downgrade is a Non-Event

So let me get this straight, they made a FUCKINGTWOTRILLIONDOLLAR error in their calculations, yet said “fuck it, we’re going in anyway” with a credit downgrade of the United States? Their main reasoning is political instability? Well, fuck you very much S&P. Would you prefer we have a dictatorship or authoritarian regime like China or Venezuela?

While it’s true our Congressmen acted like fucking morons, they still got the job done by the deadline. This is the same company who rubber stamped all of the CDO’s AAA, leading up to and causing the credit crisis. An argument can be made that the ratings agencies were key actors in bringing down the U.S. economy. Don’t tell me they didn’t know what they were doing. Now, after they helped cause joblessness, fuckery and pain, they downgrade US.

Excuse me for sounding cynical, but they should be held accountable for their errors and for stripping us of our AAA rating.

While you might say “well, Fly, we’re spending too much and we borrow too much. We don’t deserve AAA.” We do, AND MORE.

Look you, we print our own money and owe nothing in other currencies. Theoretically, we could print a few trilly tomorrow, buy China’s treasury holdings from them, then tell them to fuck off. As long as we are the reserve currency of the world and have the ability to create more dollars, our credit rating cannot be negotiated. It is AAA, or whatever the fuck you want to label it. How about A1, like the steak sauce?

The ripple effects might spook people a little, as the cock-gobblers from S&P start downgrading U.S. munis and agencies who rely on the government.

All in all, in my opinion, it is a NON-EVENT.

The real story is still in Europe. Don’t let this downgrade shit distract you. The ECB needs to start monetizing their debt now, else world markets will continue to slide. Providing a deal is announced by Sunday, I expect a patriotic “fuck you S&P” rally on Monday.

It’s the American way.

The rally has been stymied and the volume is bone shattering. I am glad the week is over, as it marked nothing but brutality and carnage for me. If the ECB is going to start monetizing their debt, well, that’s bullish for gold. Silver is too fucking retarded.

The market crash we were all hoping to avoid may be off the table, if a deal is done. If not, we’re fucked.

The action in the Nasdaq is flat out dreadful, with horrifying declines in anything tech. At the moment, fundamentals do not matter. Best case scenario, ECB does a deal and QE3 is announced, leading to a “skull-fucking rally”, erasing the faces of the bears who pressed their luck. Worst case scenario, S&P downgrades America, ECB does nothing and Bernanke gives a speech about beards. Under that scenario, we drop 1,000 points next week.

I could not be more disappointed with my performance this week. I had the answers to the exam and forget to bring them when the test was given. I failed and feel terrible for those of you who bought stocks due to my commentary. My apologies.

Over the weekend, I am going for dinner and drinks and will be keeping a close eye on the news.

Top picks: EMN, WNR and DECK

I have no idea if this is “the” bottom, but it has all the hallmarks. Big volume, whoosh lower, even I got scared out of the market. Luckily, right after the Obama meeting, the market rallied for a good 10 minutes. I used that spike to sell. My losses were still horrendous, so I have nothing to brag about just yet. Shortly after, the ECB deal was announced. Now, I could be wrong, but this sounds like QE1 for Europe. In other words, there is a better than average chance we DO NOT collapse on Monday. That’s what we are all scared about, right?

Having said that, our economy is still rocky. Maybe we get a little QE3 next week?

Who knows?

I went from 20% cash to 70%, back down to 30%. I will stay at these levels for at least another day. How absurd!

My core positions are EMN, WNR and DECK. I still own CLF and GSVC, but feel strongly about the other three.

How am I holding up, you ponder?

BAD. I fucking gave back 16% over the past two weeks, most lost over the past two days. Luckily, I was at all-time highs right before this shit storm hit. Nevertheless, the carrousel must continue to turn and the game needs to be played.

Upside to relief rally is +500 points.

Downside to collapse is -5,000 points.

Trade accordingly.

I sold a plethora of stocks and will not look back. I’ve decided it’s too risky to wait and see if the Europeans can get their shit together over the weekend. Therefore, I went to a 70% cash position. The losses are in the millions, wiping out all of my gains year to date. But that’s okay.

With a clean slate and safe bank account, I intend to rally around three names: WNR, DECK and EMN. The story for WNR is alive and well and it makes no sense seeing the stock trade at such low valuations. I loved it at $19, I am fucking possessed with it at $14.

I am buying more and in size.

UPDATE: I bought size in EMN and WNR. Cash down to 40%.

UPDATE: I bought a shitload of DECK. Cash down to 30%.

I don’t like the tone, at all. I took the opportunity, post Obama speech to sell some stocks. I sold out of TEX, CVI, TDC, SWK and lightened up on a little CLF and FLS. I took my cash position from 20% to 55% with these sales. Actually, truth be told, by cash was higher than 20%, only because of the losses over the past two days.

I ate some peas

UPDATE: I sold out of FLS.

UPDATE: I am now 70% cash.

The market is moving so fast, I know you’re on edge. I know I am, having slept a whole hour last night. This market has everyone very nervous. But I am trying to avoid getting swept up in the emotion. The problem with that, will my complacency get me swept away?

Understand, the sentiment is so bearish right now, on a global scale, an notion of QE3 will send this market ripping higher. Again, the issues lie with the Europeans now and they seem unable or unwilling to deal with this crisis. My tell for today is EMN. Truth be told, most stocks are trading in tandem now, straight up or down. I don’t need to explain to you what is already known: uncertainty reigns supreme.

If you are short this market, I think you’re crazy. Going to cash is understandable, but being short here, with the rubberbands pulled back this far, is absolute madness and borderline irresponsible. You can argue with me, until you are blue in the face, about how the house of cards is going to fall and the current path is unsustainable, but it’s still a low probability trade. Taking into account the amount of full fledged market routs, compared to false panics, the edge lies with the bulls here.

On the other hand, buying ahead of the weekend is also dangerous. No one knows what the Europeans will do. Those fuckers are on vacation and seem to have no reservations about letting their countries fall into sinkholes.

Pardon the cliche, but cash is king. If I wasn’t so stubborn, I probably would have raised more this morning. At the present, my 20% reserves will collect dust.

With the 20% cash I have left, it is reserved for “buying the blood” only. Although I believe there are absurd values out there right now, like WLT, WNR, FLS, I need reserves for the “holy shit, dude, did you see that”? moment. Having 80% long is enough to participate in today’s reflex, better than expected, jobs report rally.

I am sure the numbers were fudged; but who gives a fuck? We need a little respite, in order to give the incompetents in Europe time to fix their mess over the weekend.

I do not believe we will sell off into strength today. However, I’ve seen crazier shit happen.

One thing is for certain: I am addicted to bailouts. Some of you fuckers were correct in chastising me yesterday for asking for government help. But I hope you understand I am not looking for private sector bailouts. I want those idiots to fix their own sovereign issues. In other words, I want government to bail out government, plus throw in a little QE3 on the side for us for the novelty.

Why do I want QE3?

Because it makes the market go up.

Are you surprised? Don’t be.

I’m not gonna judge this tape until 11am.

Hell, now that I had time to think about it, all sorts of horrific scenarios came to mind. I just haven’t had any blow ups like this in a long, long time. Check my archives. I covered my shorts when the market bottomed in 2009 and went long.

I had some real old fashioned blow ups in 1997, 1998, and 2000, the type of shit that makes you seek God for protection. I recall seeing accounts heavily margined going “negative equity” and oversized positions down 50% in a day. My CEO was running back and forth to the trading desk, clearing out margin calls at 10am. Did I ever tell you about the time I got RAMP’d?

Back in 2000, one of my biggest clients came to my office to visit. When I walked into my office, much to my surprise he was there, looking at stocks—all 6’7 of him. Unfortunately, his largest position with me, as well as many other clients, was RAMP, down 50% for the day— from $20 to $10— on an earnings miss. We discussed the catastrophe in great detail and agreed to cut our losses. RAMP came back, eventually, just prior to going bankrupt. But I needed to clear my books of it, mainly to regain a psychological edge.

The one thing that comforts me on days like today is knowing I will make it all back. I’ve done it so many times, it’s ridiculous. There’s a reason why they call me SAM (Space Alien Magician). Whatever the market has to offer tomorrow and Monday, fucking bring it. Do your worst and make it stick.

I live for days like this, back up against the wall, fighting for survival. Thank God, Santa Claus and the Tooth Fairy I was near all time highs, going into today’s trade. I had this trade nailed, then Congress distracted me with their idiotic debt ceiling manufactured crisis. And I got lured back into equities, YESTERDAY, by allocating 30% of my cash to my current positions. There is no sense wallowing in my own feces over this shit. It happens and you fuckers need to man up.

I don’t want to read any pussy shit on this here blog. Keep that shit for other blogs.

With the 20% cash I have on the sidelines, I will perform great feats of magic.

At the end of the day, it’s only paper with hideous faces on it.

I’m the guy who said “take cover lads.”

The stupidity of you Tea Party people is astounding. You say we shouldn’t depend on the Fed and how we never needed to bail out the banks. With your ugly mugs, you tell people we should let things fail and just reset. Well, fuck you very much, that doesn’t do it for me. I am only interested in what will help the markets go higher, not destroy civilization and start a anew just because you failed at this one.

It’s gonna be interesting to watch these moron Congressmen try to balance the budget as tax receipts spiral lower. Don’t you understand the budget CANNOT be balanced when the economy is depressed? Go ahead, clamor for upheaval and deal with the consequences. A great man once said “be careful for what you ask for because you might get it.”

In a world without banks or solvent ones, you will be forced into local tribes or clans, warring with rival tribes for resources. I will head up an armed clan invasion into your bullshit neighborhoods and use your house for firewood (there will be no heat due to utilities gone bust).

This is a midsummer nightmare for me, as I am crashing lower, down almost 10% for the day, even with a 20% cash position. I have given away most of my annual gains in just one day. Some of you will take this opportunity to praise yourselves by besmirching me, so be it. I will have my revenge on you, one way or another.

Margin liquidations are pushing the indices to new lows. I anticipate some hedge funds will blow up and lead to an unmitigated disaster in the equities markets. You might find pleasure in the destruction of society; I spit on you and would like to scalp you Indian style. The issue at hand is ineptitude, from the Europeans and here in the US. We have a President who wants to raise taxes in the midst of a fucking disaster and the other party obsessed with balancing a budget. This is a recipe that can only be concocted and designed by the devil himself. It’s only money and there are other things in life that are more important. But if you believe our biggest problem is balancing a fucking budget, friend, you are nothing more than a blue collared jackass and well deserving of the future section 8 checks that you will be sustained on in the future.

This was the worst trading day of my career.
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