The Single Best Barometer of China’s Economy Just Crushed

The savage Chinese are undergoing a transition, one that America underwent 100 years ago, from a manufacturing powerhouse to a bunch of consumers prancing around in $300 underwears, buying shit like gluttonous beasts.

Alibaba beats by $0.03, beats on revs; SEC inquiry has concluded with no action
Reports Q2 (Sep) earnings of $0.57 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.54; rev +32% to $3.49 bln vs. $3.39 bln consensus.
GMV transacted on our China retail marketplaces was RMB713 billion (US$112 billion), an increase of 28% year-over-year
Mobile GMV accounted for 62% of total GMV transacted on our China retail marketplaces; mobile revenue was RMB10,520 million (US$1,655 million), representing a year-on-year increase of 183%;
“Growth of our cloud computing and Internet infrastructure business accelerated, with revenue increasing 128% year-over-year to RMB649 million (US$102 million).”
“Our ecosystem continues to thrive. By the end of the September quarter, our annual active buyers grew to 386 million, and mobile MAUs grew to 346.”
Blended monetization rate to 2.42% in the current quarter from 2.30% in the same quarter of 2014.
As previously announced, we received an inquiry from the U.S. Securities and Exchange Commission in February seeking information regarding our interaction with one of our Chinese regulators, the State Administration for Industry and Commerce, and related matters. We voluntarily cooperated with the SEC’s inquiry. The SEC has notified us that it has concluded its inquiry and, based on the information it has received, it does not intend to recommend an enforcement action against us.

Jack Ma and his Alibaba family of websites are providing the Chinese with an easy to use portal, whereby he is able to extract all of the people’s savings–something that has been nearly impossible to do until now.

Unlike their American counterparts, the Chinese don’t usually spend a lot of money, opting to save it for the next 100 years instead. Thanks to technology and the infiltration of American culture, they too will succumb to our corporate hegemony, effectively opening a grand avenue for our corporations to exploit.

In other words, the Chinese economy can’t be all that bad with these sort of numbers out of BABA.

Bears will certainly feel some pressure now, as Bill Ackman doubles down and defends his $3 billion position in VRX. If there’s one thing, above all, that Bill does best, it’s tooting his own horn and talking his book.

Well, now the stage is his and the whole world will be listening.

Valeant Pharma: Bill Ackman and Pershing Square will host an investor conference call on October 30 at 9 AM ET to discuss their investment in VRX

VRX is up 4% in pre-market. For the record, I believe Ackman wins in this PR Battle Royale.

WWF styled shit, soap opera world.

The commodity unwind continues, in earnest, as oil, iron ore, copper, natty spiral into the black death created by the maniacs in Beijing. You have to look at this in perspective. This isn’t a normal unwind, mind you. The Chinese were seeking out raw commodities with an unbelievable appetite, until their party ended.

Ore with 62 percent content delivered to Qingdao lost 1.1 percent to $51.03 a dry ton on Monday, the lowest since July 16, according to Metal Bulletin Ltd. The raw material — which bottomed at $44.59 on July 8, a record in daily price data dating back to May 2009 — is headed for the first monthly loss since July.

The renewed decline shows that the global market has yet to reach a balance as the biggest miners boost cheap output while steel consumption contracts in China. Rio Tinto Group and Vale SA reported increases in quarterly supply this month as data from China showed slowing economic growth and a further drop in steel production. With many mills in China losing money as steel prices languish, Shanghai Baosteel Group Corp. Chairman Xu Lejiang has forecast nationwide output may eventually slump 20 percent.

Basically, Chinese demand caused incompetent and greedy execs to ramp up and leverage out their businesses in order to profit from this new, magical, customer. We all posited that somewhere in China was a warehouse with all of that fucking copper they had been buying. There was no way anyone could be so crazy, as to stockpile raw materials at the rate they were a few years ago.

Well, now that the magical customer ran out of dough, all that’s left is a bunch of  retarded Aussies with their dicks in their hands, wondering where to store all the excess supply.

Like the current oil glut, this gets resolved one way, and one way alone: BANKRUPTCIES.

There are people who believe the normal business cycle cannot commence until the Fed raises rates. The theory is that once money isn’t free anymore, lots of losers will be flushed out and the winners will eat the weak, paving the way for a healthier economic environment. Admittedly, this is an appealing scenario, one where 70% of the idiot oil, copper and iron ore companies dissolve, correcting the over-supply situation, effectively establishing a firm bottom in the commodity sector.

Thoughts?

First, let me preface this article with a few facts.

David has had a rich career investing for others. So rich, in fact, he’s a billionaire. Also, he’s probably one of the most down to earth guys you’ll ever talk to, considering his net worth and personal achievements. So I am not posting his losses in order to feel better about myself or point fingers and laugh “look at that guy.” Please. We’ve all been there, myself included. You get in a rut and it just seems like the world is working against you, every step of the way.

According to recent filings, here is Greenlight’s top 3 holdings.

I actually own 2 of those 3 stocks and completely understand why he bought them. He’s a value guy, with a large amount of money to manage, which makes his selection process limited to a small group of stocks. My only question is, how did he permit these stocks to trade down over 50%?

Answer: passive investing.

Passive investing has worked wonders for lots of smart people for a long, long time. One could argue that the law of averages caught up to David and now he is enduring what so many have before him, while he was basking in his green light. As a student of the market, I am much more interested how great investors fall off track. We all know the great success stories and how Warren Buffett became a billionaire from the confines of his tub, while drinking cherried coke. But we don’t really pay attention to the failures, since we’re more interested in mocking them–pretending that it could never happen to us.

His most recent filing declared a position in KORS, another dog, down big for the year. It will be interesting to see if he could dig himself out from the 17% hole he’s in right now.

Timothy Cook, CEO of the largest corporation to have ever graced the planet (or since the anunaki mining conglomerates 400,000 years ago), wants to remind you that he is still very much gay, single, and looking. I am sure he will elaborate on his sexual status during tomorrow’s conference call, one which will be more decisive for market sentiment than the Federal Reserve, led by Ms. Yellen.

Markets traded down today and natural gas plunged by fucking 9%, decapitating my CNX position. To think I made a good entry at $11, being that Einhorn bought it 65% higher. WRONG. It appears everything David touches turns to dust. All of the legacy “hot shot” fund managers are having their comeuppance this year. It should be noted that this market is hard, even for Wall Street’s finest. Those finest, as you well know, never touch upon the confines of iBankCoin, a destination whose founder is up more than 17% this year–a year when most are being placed inside of the shredder and fucking disintegrated into thin air.

My largest positions are COST, TWTR and SHAK. I pared down my GILD position towards the end of the day, after another big Señor Tropicana win.

Indeud.

My natural inclination is to find stocks that haven’t been discovered by everyone. My gene pool must derive from some gold mining fool, who traveled to the end of the earth to find treasure. Instead of treasure, he was likely eaten by a jaguar and never heard from again.

I bought COST.

I bought it because the valuation is the most expensive in a decade, on a p/s, p/b and p/e basis. Also, it’s a widely held stock near its 52 week highs. Worst case scenario, I waste a little time inside of one of America’s premier retailers.

It should be noted, I was somewhat attracted to its November seasonality statistics, so perhaps this trade is tainted and not entirely the opposite of what I wanted.

Fuck. What a conundrum.

I am sure some stocks will trade higher tomorrow. I’m just having a difficult time bargaining with myself about buying one. I don’t know about you, but each and every time I’ve found it hard to buy stocks, the market fucked me and I was crying in the corner a few short weeks later.

That’s why I am going to implement the Costanza trade on this one.

What is the Costanza trade?

First watch this video.

My inclination is to go for growth, maybe even biotech, which is why I am going to do the complete opposite.

My Costanza trade ideas will be forthcoming before the end of the day. I’ll be eating some potato salad with some fucking tea while I’m doing it.

Don’t worry, it’s not cocaine, but cold hard cash.

I sold out from my largest holding BIDU, thanks to today’s gorilla raping romp higher. The reason why I sold the stock was because it was up alot from my basis and this market is a fucking asshole.

This sale pushes my cash position upwards of 15%, something that makes me happy, since this market looks like it wants lower.

My largest equity holding is now GILD, followed by TWTR.

I have a few ideas for long positions to replace some of the BIDU proceeds, which was a no brainer. The only issue I am having now is the totally lack of “no brainer” material in these so called “new ideas.”

DEVLOPING…

Deutsche Bank is out with a super bullish note on America’s spending proclivities during the holiday season and surmises that everyone should just shut the fuck up about how awful everything is.

Combined with consumer confidence for lower income groups near the highest levels ever, the message for investors is clear: U.S. consumers don’t worry about the things we worry about in financial markets. Put differently, U.S. consumers don’t seem to worry about the risk of a hard landing in China, the widening of high yield credit spreads, a potential government shutdown, Brazilian corporate debt levels or low bond market liquidity. In other words, next time someone tells you “X is really worrying” you should ask yourself if this is worrying for investors holding assets impacted by X or if X is truly worrying for U.S. consumers, who make up 70 percent of US GDP.

 

It’s also worth noting that, according to recent surveys, we, as a people, are 2007 boolish on holiday spending. How joyous.

During the iBankCoin Annual Investors conference, Jeff Macke suggested that outlet shopping was where the smart money should be and that JWN was “killing it” with Nordstrom Rack. He was also bullish on TGT and LULU, constructive on WMT down here, and positive on COST.

The stock has recovered much of this monring’s lost ground, now off by 4%.

During this morning’s conference call, the fuckers from VRX had a few points worth touching on.

Strategy working with specialty pharmacies is sound
There have been no issues with regards to the accounting or revenue recognition of the business
To date, we have found no evidence of illegal activity at Philidor
We have created an ad-hoc committee of independent directors to review allegations related to the company’s business relationship with Philidor and related matters
The company has been working with outside counsel on these issues
Future options to be considered include: — Exercise our option and acquire Philidor — Sever ties and move to 1 or more new 3rd party specialty pharmacies.
We will continue to pursue tuck-in acquisitions; opportunistic share repurchases and/or debt paydown; large deals are opportunistic.
Reaffirm Q4 guidance and 2016 EBITDA of $7.5B except for one time expenses associated with recent events — Q4 off to a strong start; not anticipating any impact, but it is hard to predict how recent events will impact the business in the short term

(via Briefing.com)

In other words, everything is chill. Relax and quit reading bearshitter sites. Let’s see how public opinion ends up ruling today.

UPDATE: Evercore’s notes