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?
59 Responses to You Don’t Stand a Chance
Explains a lot and these are the kind of posts I really learn from. Great stuff on a late Saturday night.
I raise my glass to you Fly.
Amen! More insight and intelligent analysis in 2 paragraphs then in 8 hours of watching the moronic cheerleaders on CNBC…
You still watch those clowns? You know better.
I always stand a chance
I was not the best ballplayer but I talked a good game. Now I just fuck with golfers getting in their domes.
Fly, any call option recommendations for Monday morning?
-THE SLEEKEST BUTTHOLE OF THEM ALL
I bought TNA calls Friday. I still like them.
Gracias, mystery trader
Almost like you can see the future…
Now, we’re talking.
“The logical trade is to be long this news; but when was the last time this fucking market made any sense?”
Very True. Everyone is calling for a short covering rally…but us Bears (yes we are still here), have the Greek Elections and Iran Talks coming. so why cover?We haven’t yet…..plus Ireland is super pissed off with the Spain Deal…So it may be one crazy day on Monday.
Seconded. Since when does the obvious, sensible trade become a gimme? Maybe a gap up opening that gets faded into red…
Being a spaintard by bloodlines I admit it sounds very ‘running with fucking bulls for no reason’ to assume this is a good thing. But the anceint ones(greatgrandpa-ma) just made bootleg booze for the priests anyway.
You’re a fake Amish Spaniard, LOL. Great.
Silver to $15?
If silver prints 15 risk assets across the board are screwed. Could happen.
Could being not likely. The presses are rolling albiet at a eurotard pace of incompetence only seen in sergio leone movies. a stare down that leads to the most anti-climatic bullshit. fucking europeans.
You would need to witness credit dry up to instigate a move in silver like that.
I have no idea what you’re saying and didn’t learn anything from this post
That’s why we will take all of the money in your trading account and make you go back to work.
“Spaniard bailout (no gladiator)”
Ha! Pure genius.
Was it tech, industrials, and retail that led us up last summer? Tech I certainly remember… so emphasize the early to mid-cycle sectors (sans financials)
thinking out loud .. not questioning the potential rally.
I just figured something out that worries me about the Spanish bailout. The EU, through various funds etc is going to loan or potentially loan Spain E100 billion to recap its struggling banks.. these are government owned by the way.. Now this new debt will rank above the regular Spanish bonds thereby making Spanish bonds more junior to the potential new debt. Spanish debt is around $800 billion. By the way and slightly off topic a good portion of that money was used to fund green schemes.
Anyways back to topic.. if regular Spanish bonds become more junior in the debt ladder in terms of who gets paid what first. Wouldn’t that impact the price of regular Spanish Bonds and would so adversely- something Spain can ill afford?
We’ll get a rally of course but I reckon this shit isn’t over even by s stretch unless of course the ECB does more QE and substantially more.
J, I’m also thinking out loud:
The chosen financing mechanism of the bailout has increased credit risk of the Spanish sovereign bonds, and I think it was a relatively low price to pay for averting the main component of the risk premium which is the default. Probably what we will see is that the yields will go down on Monday, but not as much as what would have been the case if the bailout had been financed by a more junior debt. The question is of the relative size of cost of credit risk in the total risk premium. I am not a specialist, but on my Twitter stream I saw estimates of around 5, maximum 10 pts.
Surprisingly, Zerohedge have dug smth. interesting (see the last couple of paragraphs where DB talk about the “subordination risk”):
Nice summary Fly.
The play here is to let suckers buy this market up Monday-Wednesday, then short the hell out of it the latter part of the week.
Yes all but, I understand the euro masters are saying that Spain will have to repay their loans. Now WTF kind of counter-culture is that?
Of course they are. They cannot say the money is unconditional and free to keep.
The bottom of the Intermediate cycle printed a low on 6/4. It runs 80 to 100 days trough to trough. the daily cycle printed a low on 6/4 also. It runs 35 to 45 days trough to trough. So we go up for approximately 1/2 of the daily cycle then down into its low and then up again into the next daily cycle to complete the peak of the intermediate cycle say 50 days. Also, notice that cycles foreshadow the action and then the news comes out to justify it.
I am currently at 82 % of my port in miners and precious metals and of course I have a full, i.e., 10% position in YELP.
OEW Weekend Update (No BearShit) ….
“After the October 2011 Primary wave II low, in all four major indices, we had an uptrend into late October, a downtrend into November, then an extended uptrend into early April. These trends are the significant waves of the market unfolding. When the market hit the early April 2012 high the DOW reversed and confirmed a downtrend, while the other three indices, SPX/NAZ/NDX, did not. Then the DOW reversed again confirming an uptrend which ended in early May. In the meantime the other three majors not only failed to display these trends but also failed to make a new high in early May. This series of relative divergences preceded the recent 10.2% decline in the SPX.”
“This type of intra-market divergence has not occurred since 2004. Then the DOW was the underperformer, making a new correction low during a downtrend, while the other three majors did not. The DOW then underperformed the other three indices for more than 18 months. This time around the DOW is the outperformer, as it made a higher high during an uptrend while the other three majors did not. This suggests the DOW is likely to outperform the SPX/NAZ/NDX for the remainder of the bull market.”
“From an OEW perspective this recent series of trend reversals by the DOW created a new set of possibilities. However, the DOW has proven to this analyst, time and time again, it is the important index to track. We believe the DOW is displaying to us an important pattern that the others are not. From the October 2011 low we can count five waves up into the DOW’s May 2012 high. This looks like the completion of Major wave 1, of Primary III.’
Tea: If we have witnessed the end of Major Wave2 of Primary III then we are in the early stages of Major Wave3 of Primary III …. See Tony’s comment (bold highlight) below.
Tony: “The wave count from the March 2009 bear market low at SPX 667 continues to progress in a bullish fashion. We have been expecting this bull market to take about four years to unfold, and to complete five Primary waves. Primary waves I and II completed in Apr11 and Oct11 at SPX 1371 and 1075 respectively. Primary wave III has been under since then. Overall we have been expecting a bull market high between SPX 1545 and 1586 some time in 2013. With the recent high SPX 1422, this certainly looks achievable.”
“This week the market generated its first WROC buy signal in seven months. These signals ( there have been 27 of them since 2008 ) have a 90% accuracy rate. When they occur they almost always precede an uptrend confirmation by OEW, suggesting a new uptrend is underway. This would imply, under our preferred count, Major wave 3 of Primary wave III is underway. Our target for Major wave 3, based on the current wave structure, would suggest the SPX should reach the 1499 pivot in the next few months. In order to get there the market is likely going to need some sort of catalyst. We believe this will be QE 3. Based upon what we have been able to gather: a $200 bln – $400 bln program may be initiated at the June FOMC meeting on the 19th and 20th. This is not a given, just rumors at this point.”
Short Term Wave Count:
Tony: “Short term the market made a low at SPX 1267 on monday and then had its best rally in several months. On thursday the SPX hit 1329, for a 62 point gain without any significant pullbacks along the way. On friday the SPX hit 1308, its first significant pullback since the rally began. After that low, quite early in the day, the SPX rallied to a 1326 close. We are labeling this first rally and pullback as Minor waves 1 and 2, of Intermediate wave i, of the uptrend [in] Major wave 3.”
“Short term support is at the OEW 1313 and 1303 pivots, with resistance at SPX 1328/35 and then 1342/47. Once these two levels are cleared resistance would occur at the 1363, 1372 and 1386 pivots. Short term momentum is only slightly overbought, and the market would appear to have an opportunity for further gains before any significant pullback. It would also appear the OEW 1363 pivot would be a good target for the potential Minor wave 3.”
“Gold also had a volatile week after last Friday’s $60 gain. It looks like it may have bottomed at the May $1527 low, and the recent activity was a 1-2 coming off that low. Gold lost 1.7% on the week.”
“The USD declined 0.5% this week after hitting an uptrend high of DXY 83.54 last Friday. A negative divergence at extremely overbought levels suggests the uptrend may have ended.”
Tea: A gift for the bearshitters looking to stay short ….
Tony: “China looks like it has been in a bear market since 2007.It has been declining every year since the spurt in 2009.Will likely retest the 1660?s before long.”
“Awaiting Moderation” … Too long?
thank you for the Analysis ! had some great calls on gold last year beofre the run !
looking foward to seeing more of it here at i bank
FLY just got sober long enough to realize that he drunk-twittered a 1000 point call over night that ain’t happening. Egg on his face and all, but this is a “sell the news” moment if ever there was one…
I was not drunk you fucking moron and I do not have egg on my face, you little piece of shit.
whats wrong with drunk tweeting?
one of my favorite things to do…
Bears better pray…. hard …
last week was best since December, this week will be even better…
Printing press is on.
Disagree. You guys all sound like Perma Bulls. This is is going to be volatile, but definitely not straight up. Shows some fucking common sense.
you are dead already, you just don’t know it that…
Mr.Fly, we should meet and have a baby. Since you are more of a TNA (Tits and Ass), I think my FAZ (Fat Ass Zits) would mesh well for a child that would be considered the pinnacle of human achievement.
CRUS should continue higher, it has beat expectations 11 out of last 12 quarters, enjoy your blog MR. Fly
Euro spiking 1% vs dollar.
PREPARE TO HAVE YOUR FACES EATEN.
Milkshakes will be drunk next week.
Common sense means stocks trade lower?
Pretty cool. Now the other EU degenerates like Ireland and Greece are going to want a sweetheart deal like Spain. Maybe this gets Bernanke out of having to do politically toxic QE3 for awhile?
Pretty interesting the pain we are presenting future generations so we can keep our riches today. Drink and be merry today for tomorrow your heads will be splayed on a pike by the generations you chose to screw.
We will print for a long, long time and yes Greece and Ireland will get the same deal and … everyone also will…
Inflation is not a problem and this will be revisited once it is, but deflation is much scarier so for not bailing out countries, banks etc is the only way.
All of you rocket scientists are caught holding my nuts.
Why are countries good at soccer always in financial trouble?
which country is not in financial trouble?
by the way Germany is pretty good at soccer, so is England…
Could you at least let my theory have a few minutes of fame?
ok to some degree you are right.. argentina was in a deep shit years back lol but on another side there is Brazil, which I normally cheer for
are you watching games now?
Yep, I am watching. I will rephrase my theory: Countries that are only good at soccer, tennis, or street carnivals, have a history of financial instability.
And Fly, a little cherry on top…
SyFy Channel is showing “Devil’s Advocate” at 9 PM, lol.
Man, I love this shit here.