MARKETS PLUNGE

What have I been saying all along? Give recession a chance.

Markets are scalping longs by the dozen here. I hope some of my former clients, who are now reading this post, have been heeding my dire warnings and have cash reserves.

My next trade will be my best. According to the laws dictated by Exodus, we aren’t done going lower yet. Incidentally, VXX flagged oversold yesterday and sports a great track record.

I will buy SPY when it’s time for a little mean reversion.

Meanwhile, back on the ark, the food is good and the drink is even better. I believe we’re eating some saber tooth tiger tonight, with a little red wine, dating back 30,000 years. I hope the cork held out all of these years.

In all seriousness, don’t believe the government data. We’ve become liars and thieves, just like the Chinese. Listen to the conference calls of some of the retailers who reported this week. Escape your little bullshit enclave and go see the real world, where real people live. The economy is oppressive for the middle and upper middle class.

We’re playing out the Karl Marx dream.

It’s raining outside and I don’t expect the storm to break until the dams do.

In an especially glum note on the state of retail, specifically DECK, BB&T is defying the government’s assessment of retail sales and downgrading DECK, citing a bleak retail outlook. Moreover, they believe the company is going to guide down, so this downgrade is an attempt to get ahead of that.

Via Briefing

BB&T Capital Mkts downgrades DECK to Underweight from Hold given bleak wholesale channel commentary from footwear, apparel, and accessories companies, coupled with Macy’s (M) and Nordstrom’s (JWN) dismal Q1’16 reports and outlooks. Wholesale sell-ins remain tough, with many accounts opting instead to chase in-season demand, and as such, firm continues to believe consensus expectations for FY’17 remain too bullish. They expect co to guide below current consensus numbers and they proactively lowered ests in early April. YTD, shares of DECK have risen ~13%, outperforming the overall footwear manufacturing sector, which they believe has been due partly to the possibility of M&A activity.

Sanofi is done playing games with the fuckheads over at Medivation. Effective immediately, their $52.50 bid for the company, which is about $8 below the present market value of the shares, means they could replace the entire board of 8 useless morons with their own morons.

Medivation has a few Merck people, one Jazz Pharmaceutical retired exec, and several other medical wastrels doing nothing all– but getting in the way of Sanofi acquiring the company whole, in an all cash deal, for $9.3 billion.

Lastly, they’ve hired Goldman Sachs to advise them on how to proceed going forward. Ooh, scary!

Shares of MDVN are higher by 1% this morning.

I would like you to inform the lads at Macy’s, Nordstrom, Apple, Dillard’s, and a sundry of others, that the we’re not fooled by their fraudulent earnings reports. The government retails sales numbers are proof that they’re hiding wanton profits somewhere, perhaps behind a wall or under the floor boards or something. I don’t know.

But what I do know is that retail sales jumped by 1.3% in April, the most in a year or so. Purchases climbed 1.3%–the biggest and bestest gain since March of 2015 (wow, that’s a long time!).

Clearly and without exception, these numbers are factual truths that the economy is, in fact, over-heating. We can only hope for the firemen, Fed’s Mester and others, to come to our rescue at once– and douse the fires of inflation with their interest rate hiking bazookas.

See, the term structure made him do it. The self-proclaimed ‘King of Commodities’, Dennis Gartman, has announced this morning that he has no choice but to become ‘constructive’ and boolish on crude oil, in light of the fantastic ‘term structure’ and contango mumbo-jumbo that presently exists in the market. Moreover, Nigerian rebels, dubbed ‘The Avengers’, are blowing the fuck out of pipelines, something the King likens to be of the bullish varietal of news, in terms of supply v demand dynamics in the crude oil markets.

Note: Up until last week, D. Gartman was super bearish, growling like a mad-man, about oil, suggesting it might be worth nothing at all in a decade or so. About two month’s ago, he said we’d never see crude trade to $44 in his lifetime.

Indeud.

NOTE II: Check out the shit Dennis does with his hands, forming the Illuminati pyramid. It’s like he’s a super-demonic being offering up bad advice on purpose to an unsuspecting plebian public.

The storm troopers at the EPA, under the directive of the Obama administration, have set their sites on the oil and gas sector, under the guise of fighting global warming.

The new regulations will add $530 million in costs per annum, by 2025–which is 25% higher than estimates released in August.

Obama and friends are attempting to control emissions from oil and gas wells, in order to save the planet. They are, essentially, super heroes.

But don’t worry. Obama estimates the additional costs that will be absorbed by an already beleaguered energy sector will partially be offset by the savings that will be ‘enjoyed’ by a marked reduction in storms, floods and other natural disasters that are a byproduct of climate change. The dreamers in the administration have released an opiate induced study that suggests cost savings, by reducing NATURAL FUCKING DISASTERS, will be in the magnitude of $690 million, per annum, by 2025.

Bottom line, assholes: spend an extra $530 million per annum for our filters and other ‘green remedies’, and you will net a profit of $130 million per annum, thanks to sunny and dry weather.

I am not making this up. These people actually released this proposal and want you to believe it.

“The commonsense steps we’re rolling out today will help combat climate change and reduce air pollution that immediately harms public health,” EPA Administrator Gina McCarthy told reporters on a conference call. The mandates, applying immediately to new and modified wells, are a “critical first step in tackling methane emissions from existing oil and gas sources.”

To fall in line with the green mafia, companies will be forced to reoutfit with environmentally friendly pumps and compressors. The ‘green completion’ initiative has afflicted the natural gas industry since 2015 and today’s rule change will apply such draconian measures to the oil industry too.

There are 9 million Americans employed in the energy sector, an industry that is now, for the first time in Obama’s long reign, under direct attack by his environmental goon squads.

The House of Saud lobby is rumored to be celebrating this environmental victory tonight inside of their harems filled with freshly stocked females and catamites.

Prepare for your trading after-life now, for the next sell off will knock the fucking smile clean off your smug face. I understand that you’re programmed to believe markets will always get bid higher. After all, the Fed and virtually every central bank in the world are working towards asset price inflation. The only problem with this scheme is that it’s contingent upon corporate earnings remaining benign.

Nothing could be further from that reality.

Look no further than Apple, Nordstrom, Macy’s and any number of energy stocks as evidence that the economy isn’t nearly as robust as you’ve been brainwashed to believe.

Futures are lower by 52 right now. Asian markets are down about 1%. Today’s rally off the lows was born in the degeneracy of the ‘oil pits.’ January through May are, traditionally, exceedingly strong months for energy stocks. As we head into the summer and the warmer climes wane on the feverish perversion taking place in ‘the pits’, prices will falter, the rally will end, and the merriment you’ve enjoyed since February will be revoked–sending the lot of you retrogrades to wallow in your misery–a 5 time loser of the very first magnitude.

In this clip, Chanos discusses his rationale for being short oil stocks, specifically, Royal Dutch Shell and Chevron. Moreover, he believes you can be long oil, but short oil stocks. The default risk is exceptionally high, thanks to the mountain of debt on balance sheets.

Buying energy stocks with crude at $45 is not economical. It’s important to note that he’s taking a closer look at multiple e&p names here, as potential shorts–due to the recent rally.

Naturally, I agree with his assessment. Any novice can view the wall of maturities set to assault Wall Street in 2017 and surmise that liquidity will soon become an issue with many of these companies. Although crude has rallied off the lows and has resulted in feverish rallies in the space, the balance sheet for many of these companies aren’t built for $45 crude, or even $60 crude. They need oil to head back to $100.

It’s not a smart idea to bet against Jim Chanos. At first, I was a skeptic, painting him in the same corner as other, nefarious, bears. But, over the years, Jim has proven to be a firewall between reality and perceived reality in the companies he shorts.

He’s probably the best in the business in identifying actionable short bets. At a minimum, he is worth your attention when he discusses a position.

Listen to his take on LNG.

One thing to note, Jim did this entire interview with his eyes closed.

Fuck Dillard’s. Raise of hands for those of you who’ve been to a Dillard’s over the past decade. I don’t think I’ve ever frequented this store.

They missed by 40 cents and everything was bad. Shareholders are in the streets, blah, blah, blah. Markets climbed up from the pits of hell today, because of oil.

In short, earnings mean nothing. The economy is solely reliant upon the men in 10 gallon hats and The House of Saud. As such, whatever happens to them will happen to you.

• Reports Q1 (Apr) earnings of $2.17 per share, $0.40 worse than the Capital IQ Consensus of $2.57; revenues fell 4.5% year/year to $1.5 bln vs the $1.55 bln Capital IQ Consensus.
• Total merchandise sales decreased 5% for the 13-week period ended April 30, 2016. Sales in comparable stores for the period also decreased 5%.
• Gross margin from retail operations (which excludes CDI) declined 145 basis points of sales for the 13 weeks ended April 30, 2016 compared to the prior year first quarter. The decline in gross margin was attributed primarily to higher markdowns during the period. Consolidated gross margin for the 13 weeks ended April 30, 2016 declined 140 basis points of sales compared to the prior year first quarter. Inventory remained unchanged on a percentage basis at April 30, 2016 compared to May 2, 2015.
• 2016 Guidance: Co continues to see CapEx of $150-166 mln

DDS is off by 6% in the after-hours.