CLOWN TIME: S&P Cuts Credit Ratings of U.S. Banks

I love the rationale behind the credit cuts of our biggest banks. Get this. S&P cut them because they feel the U.S. government will not bail them out, should they find themselves on the verge of collapse.

Oh, really?

S&P lowered its long-term issuer credit, senior unsecured, and nondeferrable subordinated debt ratings, after placing the companies on negative credit watch last month, according to a statement Wednesday. Firms affected also include Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley, Bank of New York Mellon Corp. and State Street Corp.

“We now consider the likelihood that the U.S. government would provide extraordinary support to its banking system to be ‘uncertain’ and are removing the uplift based on government support from our ratings,” S&P said in the statement.

What sort of horseshit is this? Does anyone else believe the banks are no longer too big to fail?

For the year, utilities are down 13%, commodity stocks -30% and industrials down about 5%. Aside from the occasional blow up, most stocks outside of the commodity and utility sectors are little changed for the year.

The broader indices are unch. Imagine if the S&P was down 20% this year?

My point, this is merely child’s play. The difficulty you’re having now, dealing with badly trending stocks, will pale in comparison to the devastation you will face in 2016.

Oh, that’s right, “The Fly” is calling for complete and total cataclysm in 2016, led by a strong dollar, higher rates, and a toppling of the ponzi scheme that has played out in the energy debt markets since 2009.

With over $100 billion in distrssed oil and gas debt, I am looking forward to the bankruptcies of many of our finest oil and gas plays, like CHK.

Winding down 2015, I am heavily long CNC, PAH, VRX and SHAK.

Today’s decline is a mere appetizer of fabulous things to come. The Fed wants to clear the market of bad actors, expediting their liquidation. Be careful not to get mixed up in this insidious ordeal.

Reminder: Jeff Macke is now on iBankCoin. Here’s his take on Yellen’s speech.

On the back of a strong dollar, waning demand from China, and worsening debt/eq situation, commodity related stocks were pummeled today.

Shares of CLR, CXO, FCX, WLL and many others fell by 5% of more.

According to data provided by Exodus, the median drop in the basic material space was upwards of 2% today. Over the past month, stocks are down 7%. For the year, Jim Rogers’ bow tied has been bojangled to the tune of -29%

I went long FCX after Icahn stepped in. The stock surged to $13, shortly thereafter, and has almost been cut in half since.

Breaking news out that 2-3 males in camo have opened fire on at least 20 people. Reports are that 12 people have been killed. The shooting has taken place at the inland regional centre that handles social services and mental health.

Fucking shit. People have lost their collective minds. This is occurring all too often.

UPDATE: A bomb squad is on the scene trying to disable explosive device.

You people are truly retarded for doing this.

This really happened today.

Why? Because of a reverse spit, naturally

The new ADS to ordinary share ratio of 1 for 10 will be effective prior to the commencement of trading on the NYSE on Monday, December 14, 2015. The change in exchange ratio for the ADSs will have the same effect as a 1-for-10 reverse stock split of the ADSs, reducing the number of outstanding ADSs, as of close of business on December 1, 2015, from 1,228,635 to approximately 122,863 ADSs.

In all of my years, I’ve never seen something as ridiculous as this. Back in the dot com days, stock splits were met with buying frenzies. But, even then, reverse splits were frowned upon because it usually meant the stock was a piece of shit.

Shares of BSI are now halted after Simple Jacks ran it up 900%.

It sucks to be King. Although, it might be nice to visit Europe this summer and enjoy the grandeur of our King Dollars over their stupid euros. However, that plot has been largely foiled by the specter of middle eastern men blowing themselves up in cafes.

The dollar is rising on Yellen’s insistance that rates should be jacked higher. This, of course, has a debilitating affect on US multi nationals. In the first qt alone, it cost N. American companies $28 billion in earnings. Each and every earnings release is paired with FX losses that boggle the mind. Don’t these people hedge?

Purely from a consumer standpoint, a strong dollar crushes import prices, making them cheaper for us to hoard. Theoretically, this should increase volume at WMT and permit inflation to remain fucked, in the process saving Americans billions in expenses. But for some reason, retailers can’t figure this stuff out.

Too tricky, I suppose.

What the fuck did I just read? Did our Federal Reserve chair just suggest that NOT tightening into a weakening economy WILL cause a recession? The truth is, these bastard recessions are almost always brought on by Fed rate hikes.

Yellen posited that if we don’t hike now, and all of that looming inflation that doesn’t exist takes hold, we’ll be forced to hike like mad later on.

Fucking delusional.

“On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market,” Yellen told the Economic Club of Washington on Wednesday, according to a text of her prepared remarks. “And, as I have noted, continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term.”

“We have seen a welcome pickup in the growth rate of average hourly earnings for all employees and of compensation per hour in the business sector,” she said. “While it is too soon to conclude whether these more rapid rates of increase will continue, a sustained pickup would likely signal a diminution of labor market slack.”

“It appears that the underlying rate of inflation in the United States has been running in the vicinity of 1-1/2 to 1-3/4 percent,” Yellen said, once the core data are adjusted for downward pressure from low oil prices and a stronger dollar. She noted that policy makers are paying close attention to indicators of inflation expectations, some of which have shown deterioration recently.

“The Committee anticipates that even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run,” Yellen said Wednesday.

Were the FOMC to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals,” and that pace would risk disrupting financial markets and pushing the economy into a recession, Yellen said. “Holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability.”

What are we moronic children? So, if we don’t hike now, when things are tenuous and getting worse, we’ll be forced to really really raise rates later, when a hypothetically strong economy takes hold? This strikes me as juvenile and pollyanna type thinking. Instead of dealing with certain realities, the Fed appears to, once again, be in an academic bubble of their own making, thrusting their opinions upon us as if they were fact.

Yellen makes a strong case for abolishing the Fed altogether and forgoing this nonsensical rabble once and for all.

Ever get the feeling of impending doom? This market has all of the classic traits of risk aversion. Nothing lasts. Scouring over the Exodus momentum screen, I am entreated with comedic relief, for I know none of these stocks will be up tomorrow.

What is our momentum screen? An algo that produces stocks that appear to be careening higher. The great thing about running these algos is that is forces you to separate emotons from trading. Right now, I am incredibly cynical about the market; but the algos say differently.

I am doing all right, all things considered. VRX is lower, but PAH and CNC are higher. I really want to get super bullish, excited about a position, and kill it on a big trade.

Don’t we all?

At this moment, I am leaning towards VRX being that killer trade idea for 2016. It possesses all of the qualities of a stock that can climb a wall of worry and defy reason. There is a distinct possibility that the stock can be the single best performing large cap name over the next 12 mos.

Anyone recall NFLX at $60? I do, since I was long down there. Zerohedge ran stories of liquidity issues, alluding to the possibility that NFLX would run aground. Naturally, I sold out too soon and Carl “fuck you, give me 3 seats on your board” Icahn ended up making $3 billion on the trade.

VRX has that sort of crazy upside potential, a double or triple from current levels.

Aside from that, we are on a rudderless, sinking ship, heading towards a sea of fire that is filled with carnivorous sea monsters.

Happy trading!

 After Russia proved the blood sucking Turks buy oil from ISIS, earlier today, the Turks responded with threats to, err, freeze their own people.

Russia imposed sanctions on some Turkish goods after Turkey shot down a Russian military jet on Nov. 24, saying it had violated its airspace. Russia refutes that, saying the plane was in Syrian air space.
“Turkish firms are not simply worried about a reduction in LPG deliveries from Russia because of the current (political) situation they are already preparing for this,” one trader who works in the LPG market told Reuters.
“It may be more expensive, but the process of how to ensure future deliveries from elsewhere is being worked out. We are not just talking about deliveries from Algeria, but from the United States as well.”

Apparently, Turkey will find natural gas somewhere else in the world. No word on exactly where they will find it. Nevertheless, for the sake of their famed bathouses, I wish them good luck.

Potentionally bullish for shares of LNG.

Headlines  out now saying a majority of OPEC members agree that output should be cut.

You don’t say?

The only issue here is our oil overlords at the House of Saud are too busy in their royal harems to give two shits about any of this. All they care about is stocking their harems with a fresh supply of western women.

All the while, every single nation who produces oil is dying a slow, painful, death.

UPDATE: As I write this, one of the oil ministers at House Saud must’ve texted a message from his harem saying they DO NOT support an oil output cut. Basically, Iran is rogue and no one listens to them.

EIA inventory data is out and it’s fucked up.

A build of 1.77 mill barrels vs a draw of 1 mill.

LOLz: oil is so fucked.