Following the splendid news of a Spaniard bailout (no gladiator), “The Fly” did what any normal, mid-30′s, man of importance and seriousness would do: he took to Twitter to besmirch and denigrate the asshats who are short equities, long doom. I poked and prodded and called for a 1,000 point melt up on Monday morning, even though I know it’s impossible. What’s important for you to remember, when analyzing my thoughts here or on Twitter, is that I enjoy instigating trouble more than offering sage advice.
Here are my true thoughts.
I believe the bailout was necessary for the status quo to remain in place. Whether or not the status quo deserves to stay in place is another story. The only way the power elite will abdicate power is through armed revolt. They gave Spain double the amount that was needed.
What does it mean?
Well, by giving them money with ZERO conditions, it means they are open to the idea of printing money. They cannot keep “lending” money like this and expect to be taken seriously. The only way the market will believe them is when they print money and issue euro-bonds. That is the end game. The ramifications of suchness is another story. Let’s take it one step at a time, shall we?
By ring-fencing Greece and Spain, they are hoping Italy will just go away. Frankly, Italy doesn’t need a bailout. Despite what the cognoscenti on Twitter believes, Italy is an immensely rich country. They are able to finance themselves. However, they need rates to come down and fast. The only way that happens: euro-bonds.
I think it’s fair to say, through this surprise action, the central banks are not going to let anyone fail, no matter what. This is reflationary and should bode well for stocks. Remember how well stocks did during POMO? Well, get ready for more of that, then some more.
I know you want things to be different this time; you want it all to end. But it’s never different and it will never end.
The first step of the rally was gold and silver. Money always flows to precious metals at the height of panic to the initial reflation trade. After people realize stocks are going up, they rotate out of precious into tech, industrials and retail. I like tech names, but only a select few. I want to be long names that beat numbers and were dragged in the mud only because of the poor market conditions, which is why I am long NXPI and TDC. Former high fliers like RAX should be avoided until they report a good quarter.
Should this market view the bailout as reflationary, commodities will go bonkers to the upside and heavily shorted names will offer outrageous returns. If we sell off on this news, I will be disappointed, but not surprised. The logical trade is to be long this news; but when was the last time this fucking market made any sense?