Stocks Reverse Triple Digit Losses; Crude Paves the Way

Anywhere I go, I find myself looking at ceilings, examining water stains and cracks. Often times, I dream of water seeping through the ceiling, perhaps a paranoia of mine–one of many eccentricities that the readers of this site have to deal with. The alarm bells have been ringing for some time now, yet stocks have denied the bears their ‘fair share’ at every turn.

Once again, stocks have erased earlier losses, thanks to a sharp reversal in crude. Bear in mind, the OPEC womanizers will be departing from their harems shortly to discuss the important matter of crude oil soon. Everyone is on edge. You can almost cut the tension with a knife.

As for me, I’ve been, sort of, floating about the house, in my white robe and sandals. I’ve lit some incense and have been playing soundtracks on my vinyl record player, of a menacing genre, to no end. I’ve abandoned a 7 figure job for the pleasures of full time blogging, retweeting the articles of fucktards, and laughing at memes all day.

Life is wonderful. And then you have the nerve to ask me why I think markets will drop?

I have never…ever.

CNBC interviewed another person with an acute mental disorder today. This time, they brought out giggling Marc Faber, fresh out of the asylum. Amongst other things, Marc believes stocks will fall, gold will rise, Vietnam will flourish, and the dollar will collapse–but not necessarily against other currencies (whatever the fuck that means).

Much to my surprise, the batshit Faber has 25% of his assets in stocks. Not that it should surprise anyone, given that he’s a lunatic and all. He’s only been calling for the end of western finance for 20 years now. Why not go along for the ride, just for shits and giggles?

One last distressing fact, Marc is a resident on the ark, an ardent buyer and supporter of U.S. treasuries.

There’s lots of rumbling going on regarding the Chinese credit markets, into a Fed hike, and their prospects for growth. This can be viewed, granularly, through the price action of copper.

She’s at 3 month lows.

Major copper producer and poster child for everything commodity related, FCX, is getting hammered to pieces.

Separetly, it appears Exodus was right about the internet being overbought. Overall, the decline in markets would be considered somewhat benign if it weren’t for the fact that copper and oil were very weak, and bonds were very strong.

The next level to watch for copper is $2.00.

Sorry that was very corny. But that’s life when your only position is a fucking government bond. This month’s dividend for TLT reduced my cost basis to $119.37. Not bad for a boring bond that is supposed to tank because the Fed is hiking and stocks are so fucking awesome.

This is the easiest money I ever made.

Expect the tone to get bearish, as the Fed and BREXIT vote looms. I’m not trying to urinate on your parade. Truly, I’m not. I’m trying to soil on it.

Crude is the standout here, off by 2.3%.

Seriously, read the notes from the conference call below and tell me if you’d like to be in this business?

Believes the North American Retail environment remains highly promotional

Co will be actively decreasing its exposure to the wholesale channel by reducing inventory levels to focus on a higher level of full price sellthroughs and less markdowns

Total accessories grew in low double-digits globally

Weakness in wholesale

Growth in handbags

During 2017, co plans to open ~10 retail locations and 150 men’s shops

Expects results to be challenged in 2017 by difficult retail environment pressured by weak traffic and tourism trends

Results in Q4 include ~$34 mln of additional retail sales b/c of 53 week period

Gross margin declined 50 bps to 58.2%, which includes negative FX impact of 100 bps

inventory increased 5.2% for the quarter

Seeing acceleration of mall traffic softening in North America
FY 17 Guidance

Margins are softening. Everything hinges on discounts. An accleration of mall traffic softening is occurring in N. America aka the mall is dead. Overall weak trends in retail and tourism markets.

The stock is higher by 6% on this news? You people are nuts.

The NY Times ran an article this morning highlighting the turf battle between Mister Softee and New York Iced Cream trucks, something I never knew existed.

As a child, I viewed the iced cream truck guy as sanctimonious. Little did I know, there was a dark, sinister side to him, territorial, like an organized crime racket.

Mister Softee says he has been muscled out of Midtown.

New York Ice Cream, staffed by drivers who used to cover Midtown Manhattan for Mister Softee, has had the area locked down for at least a year, Mister Softee said. The renegade is enforcing its dominance with threats and intimidation that sometimes get physical.

“If one of my drivers goes to Midtown, they’ll bring their trucks in and surround them — a bunch of guys,” said Peter Bouziotis, who runs the Softee depot in the Bronx, which covers Manhattan. “They’ll start banging on the windows.”

At the corner of 40th Street and Seventh Avenue in Times Square, a New York Ice Cream man in the window of his purple-trimmed white truck was unapologetic.

“From 34th to 60th Street, river to river, that’s ours,” he said on a recent afternoon, moments after handing a chocolate cone to a delighted-looking little boy. The vendor would not allow his name to be published for fear of losing his job.

“You will never see a Mister Softee truck in Midtown,” he continued. “If you do, there will be problems, and you won’t see him there very long.”

Boxing in a Softee truck so the driver cannot do business. Getting up in his face. Grabbing his collar and delivering some unsolicited advice.

“Happens all the time,” the New York Ice Cream man said.

New York Ice Cream’s founder, Dimitrios Tsirkos, did not respond to repeated requests for comment.

Mister Softee’s vice president, Jim Conway, said the company had urged its drivers to retake the heart of the city, to no avail.

“Corporately, we would love to see people go in there; we consider it wide open territory, and anyone would do great selling there,” Mr. Conway said. “The issue is that people just fear for their safety.”

Every truck has a baseball bat inside of it. The human species is a plague.

In addition to the cuts made in trading, Goldman is said to be in the process of culling its investment banking division, from New York to Hong Kong. It’s funny, I was just talking to a friend of mine who does a lot of deals at Citi and he lamented to me about how horrible things were. Not only deal flow was horrible, but the quality of deals and new restrictions are making it impossible to make a living.

The investment-banking cuts represent a reversal from 2015 for a unit that was the top-ranked merger adviser during that near-record year and produced the most profit among Goldman Sachs’s four operating segments. Completed mergers worldwide have plunged more than 80 percent so far this year, while equity offerings have dropped about 65 percent

That 65% drop in offerings is pretty much a 65% pay cut for many guys and gals in investment banking. The bond desks aren’t doing much better. Interestingly, Bank of America is expanding their wealth advisor platform, as a way to grow revenues. Essentially, this is a 180 reversal from what we’ve seen happen at the investment banks over the past 20 years. Instead of eschewing advisors like the plague, due to their limited upside and slow growth business models, banks have no choice but to embrace them now, since the debt and deal departments are scorched earth.

This is the second software deal in as many days, both taking place in the mid cap sector. Salesforce must really want Demandware, buying them out at a massive premium for $2.8 billion.

The negotiations probably went something like this.

‘We like your company. We’ll buy it at the all time high, all cash.,

‘Okay.’

Here are some other mid cal software names, courtesy of Exodus, which might catch a bid today, given the merger mania in the space.

Correct me if I’m wrong, but if there was ever an institution that should base its pay hikes off inflation, shouldn’t it be the Fed? Their jobs are to do nothing, basically. Yet, the tax payers are paying these Fed President’s a King’s ransom, to traverse the country, giving speeches at elaborate events.

The Fed’s salaries rose by 4% last year, following a gangbuster +6.6% in 2014. Albeit, that’s coming off a pay freeze from 2011 thru 2013. But still, these fuckers are greatly outpacing the national pay increase (2.6%) and inflation, which is saddled at around 2%.

Bill Dudley makes the most out of the lot, at $466,500 per annum, followed by John Williams at $422,900, who also enjoyed a 12% wage hike in 2015. Perhaps his pay is tethered to San Francisco real estate?

Fed’s Bullard is the piker of the group at just $339,700.

God bless Bullard’s family for enduring his meagerly living.

The S&P was higher by more than 1.5% for the month of May, yet Greenlight managed to lose money. Einhorn had been outperforming the broader indices and was one of the few funds to escape the January collapse, through a combination of shorts (bubble basket) and his long bets on gold, M and KORS–all of which surged early on.

Since then, however, things have soured. I’m actually surprised the fund managed to contain the losses to only 1.9%.

Over the past month, some of David’s positions did very poorly.

gold was lower by 5.9%
KORS was lower by 17%
DDS was lower by 16%
CNXC was lower by 10%

And his largest position was higher by 7%, which was Apple.

If you take all of his reported positions, the median loss is just 0.87%. If we throw gold in there, perhaps we get to -1.2%. The rest must be due to his ‘Bubble Basket’. Lucky for you, I’ve actually recreated it in Exodus, basing it off some of the things he imparted to me in private emails.

His churn is a lot more than my static basket. His basket underperformed mine through mid-February, by 5%. Over the past month, my Bubble Basket is up 6%. Ergo, having a basket of 100 stocks short, up 6%, is, indelibly, a bad thing for one’s performance.