Basic Material Distressed Debt Now Tops $245 Billion

This doesn’t entail all of the sheer fuckery that has taken place with private deals in the investment banking community, only publicly traded debt of companies whose share prices have sunken so far that their debt/eq levels exceed 5x.

When a publicly traded entity is unable to raise capital in the debt markets, due to deteriorating business conditions, often times they’ll use their equity to fill gaps. Back in the financial crisis, banks were mostly able to do super dilutive financings, using equity, to the chagrin of shareholders. If present conditions persist, you are going to see a slew of high profile oil and gas names head into bankruptcy or raise capital via dilutive secondaries.

The following screen is data provided by Exodus, highlighting the fact that there is more than $245 billion in distressed debt. Interestingly, there is an additional $400 billion in debt from companies with debt/eq levels, ranging from 2-4.99.

In other words, this can really get a lot worse if share prices don’t recover soon.

The next question to posit is who has exposure to this debt? Which banks will write it down in 2016?

Yesterday the market hated Draghi and the Fed; today the market loves them. The market allegedly rallied off good jobs numbers today, numbers that are sure to provide the Fed with the excuse they need to raise rates, something stocks have responded adversely to for the past 5 years. As sure as I’m sitting here, come Monday, everyone gets fucked. We remain in a trendless sea of shit, with just one oar to fight against the coriolis forces of the toilet bowl we find ourselves in.

I was stymied by SHAK and PAH today, placing me in the bottom quartile of all long investors in N. America, up just 0.95%. I had a few redeeming stocks today, namely CNC, AAPL, PANW, COST and JAZZ. But, for the most part, my day was uneventful.

Two thousand and fifteen is nearly done and I’ve made 15%, in a tape that can only be described as a “sordid affair of fuckery intermingled with the nefarious ongoings of asshats.”

Talking with clients all day, I can tell you that formulating a strategy for 2016 is hard. On one hand, commodity and retail stocks offer “potential” upside reversals, merely tradable events. On the other are solid companies, like PANW, SBUX and others trading at crazy premiums.

Do you chase the performance and buy the free cash flow, or do you buy what’s being thrown away here, heading into 2016?

Had you done the latter in 2014, you made a mint in the opening month’s of 2015. Either way, this is a hard tape to gauge and I’m gonna play it slow.

In addition to that, I’m working on my GARP stocks in Exodus, a portfolio of 15 stocks that I manage twice per year. The first half picks gained almost 15%. During the second half, my picks underperformed–putting 2015 at almost a wash. The index started the year at $132, got as high as $157, and now trades at $132. I’ll make a greater effort in 2016.

I bought more PAH, despite it sucking the money out from my portfolios today.

My faith in William Albert Ackman is unwavering.

Real delusional talk coming out from the mouth of Draghi this afternoon, while visiting NYC. Obviously, he needed to say something to soothe markets, after yesterday’s disappointment. So, he got his bestest yarn together and knitted up a nice comfy blanket for Wall Street to cover itself with.

“There cannot be any limit to how far we are willing to deploy our instruments, within our mandate,” Draghi said at an event in New York on Friday, a day after announcing a weaker-than-expected stimulus package that roiled global markets. “There is no doubt that if we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would.”

Following the old adage that if you tell as big enough lie often enough, people will begin to believe it, Draghi declared deflation to be dead in the EU.

“This will strengthen our forward guidance on interest rates and ensure that liquidity will remain very supportive in the long term,” Draghi said. “Thanks to our monetary-policy actions, the risk of deflation in the euro area is firmly off the table.”

Markets are eating this shit up, as I’m being proven wrong about the underlying weakness in the tape and will be forced to eat part of my dining room table, as penance for my great sins.

My sole consolation is that I am making money today.

These bozos just came out with a statement, saying no new illnesses found and how they were using science to stop the poison, once and for all!

And then this comes out.

Per the CDC’s update:

Seven more ill people have been reported from California (1), Illinois (1), Maryland (1), Ohio (2), Pennsylvania (1), and Washington (1) since the last update. Two of these illnesses started in October, and five started in November 2015.

Illinois, Maryland, and Pennsylvania have been added to the list of states reporting illnesses, bringing the total to nine states.

Of the three most recent illnesses reported in November, only one ill person, whose illness started on November 10, reported eating at Chipotle Mexican Grill in the week before their illness began.

The investigation is still ongoing to determine what specific food is linked to illness.

Shares of CMG just fell off a cliff, down 14, but up 14 from the lows of the day.

Oh, wasn’t this is work related incident? Is it possible that these peaceful “living the American dream”, married couple with a 6 month old daughter could have links to the psychopathic head cutters in ISIS?

U.S. investigators are evaluating evidence that Malik, a Pakistani native who had been living in Saudi Arabia when she married Farook, had pledged allegiance to Islamic State leader Abu Bakr al-Baghdadi, two U.S. officials told Reuters. They said the finding, if confirmed, could be a “game changer” in the investigation.

CNN reported on Friday that one U.S. official said Malik had pledged allegiance to al-Baghdadi in a posting on Facebook made on Wednesday, the day of the attack, under an account that used a different name.

This is such a blow to the dick handlers in the media, who wanted to use this as an excuse to decry the 2nd amendment to be evil.

Naturally, two or more people conducting military styled raids on civilians is a fucking terrorist plot. The fact that the media couldn’t deduce this within 5 minutes speaks volumes about how stupid they truly are.

Listen

The new Philly Fed asshole just came out with emphatic remarks about how the Fed needs to hike rates now, else lose credibility.

The market is up 200; but market breadth is at a paltry and pathetic 62%. In other words, 38% of stocks are lower today, including many of my stocks, like PAH and SHAK.

There is no way, whatsoever, this rally holds with just 60% breadth. Moreover, being that oil is in the dumps and so many stocks are getting hammered into fucking pieces today, I don’t see any cause for joy right now. As a matter of fact, I’d be much happier if the market was down 200. At least then I could bitch and moan about stocks declining.

With this shit, I just look like a super asshole for having bad stocks in an up tape. We are in a very selective bull run.

Once again, I’ll be shocked if by 4pm this market is still up 200 points. I’ll even eat a piece of lumber if it were to occur.

After nearly ruining their brand and becoming the MCD of burritos, Chipotle is turning to science to safeguard their food supply. In my opinion, this is good news and if the company can market this the right way, their brand will be restored to its former glory.

The company, working with Seattle-based IEH Laboratories and Consulting Group, unveiled a new safety program that includes improving its supply chain and doing DNA testing of produce. Chipotle also is retooling its training to help employees handle food more carefully.

“While it is never possible to completely eliminate all risk, this program eliminates or mitigates risk to a level near zero, and will establish Chipotle as the industry leader in this area,” Mansour Samadpour, head of IEH Laboratories, said in the statement.

The stock has been one giant heaping pile of shit this year, alongside most restaurant stocks. Looking ahead, this is likely an excellent extry point for long term investors.

This is one heck of a knee slapper.

OPEC raised their production ceiling to 31.5 mill barrels from 30 mill, due to Indonesia reentering the cartel.

This is just plain retarded. These clowns are all in the same car and they’re all going off the cliff–no questions asked. The very basic human instinct, self-preservation, is devoid in these monstrous people. Like the gluttons in Haiti, who tore down the forests for short term gain in exchange for long term flooding, the member of OPEC will remember 2015 as the pivotal time when they fixed themselves a course for disaster.

Crude is below $40 now.

Due to the better than expected jobs report, futures reversed a 100 point gain and are now lower, thanks to a fuckhead Fed hell bent on plunging us into recession.

Nov unemployment at 5%. Expectations were for an add of 196k.

SPY futs up 10. The fucking Fed is definitely going HAM on us soon.

Enjoy any and all respites, for in 2016 we dine in hell.