REMINDER: The Market is Going to Crash

The word ‘crash’ is a very strong word. It evokes all sorts of emotions in traders. Since we hear it so often by people clamoring for agony, we are programmed to dismiss it and laugh upon hearing it. However, it’s going to happen, one way or another. This market is destined to careen, mind you, through the floor boards and into the black abyss of nothingness — regaled by demons as a necessary evil to expunge the Orange Orangutan posing as our President.

The writing is all over the wall. You’d be wise to avoid trading during the month of September and early October.

Early going, losses are being evenly shared, with strength found in the most defensive sectors, such as REITs, gold and bonds. The FAANG trade continues to weaken, absorbing another 0.75% decline. This is a slow motion train wreck, being led lower by lack of enthusiasm and the fact that none of Trump’s glorious plans for the economy will come to fruition.

Theoretically, all of the gains shall be washed away, and more. A total and complete revocation is in order — with only bonds and gold to serve as a safe haven from the pangs of misery and absolution.

I so happen to be crash proof at the moment, 30% GLD/TLT and 20% cash. I welcome the aforementioned disaster and say this as a member of society who endeavors to live in peace and harmony. We’ve grown lazy these past 5 years, always preferring the short cuts — living in decadent and obscene nests adorned with items deserving of a popular revolt execution. While the people starve and scrounge around for scraps, poisoned by industrialists and robber barons, the investor class lives large and greedily takes more — in a manner that only a true caitiff and perfidious devil could appreciate.

“The Fly” stands ready for some old fashioned fire and brimstone, biblical austerity that will place the fear of God back into the hearts of cold men. Plus, I’m also interested to see how my new algorithms in Exodus perform.

So the dragon got killed, which was leaked online a few weeks ago by hacker fuckheads. How is that going to work? Will the dragon kill with fire or ice? I imagine it would be ice.

Also, what is Cersei’s end game? Clearly, she has no choice but to agree to fight the dead. But when will she betray the Mother of Dragons and try something diabolical?

From what I’ve gathered so far, and I do consider myself to be the absolute authority on teevee shows, having seen more shows and films than most of you combined, I do believe the final battle will be in King’s Landing, with the boss as fuck Night King descending upon the living like a scourge of nightmarish proportions.

Jon Snow and Mother of Dragons will hook up. That much is obvious. However, I do not see them living very long, since they’re both suicidal maniacs whose entire purpose in life is to make life better for others and not themselves. We see the writers are dropping hints already, such as Tyrion worried about who would be her successor in the event of an untimely death.

It would be fitting for Theon to somehow make his way to the Iron Throne, a bedraggled man who has known nothing but cowardice. But fans would be livid. Personally, I’d like The Hound to win it all, sit on the fucking throne, eating all the chickens — married to Arya. I don’t think Little Finger’s role on the show will last much longer, since he’s likely to attempt to convince Sansa that Arya should be killed. Arya is likely waiting for a plot like this to occur, which will backfire and incidentally cause the deaths of both Sansa and Little Finger.

I do pray that Arya will get to wear Sansa’s face, in order to kill Cersei.

Also, The Mountain is on Arya’s kill list. Wouldn’t it be cool if Arya could face and kill The Mountain in a ‘trial by combat’?

I’m pretty sure next episode will be a lovefest between former enemies, setting up for a momentous ending to this amazing show.

I PRESENT YOU
BLUE EYES WIGHT DRAGON #GameOfThrones pic.twitter.com/VVCzZaCzke

— New Life (@LordBalvin) August 21, 2017

BTW: What do you think will happen to Ellaria Sand (the woman chained to her daughter inside Cersei’s cellar)?

The former Politco shills didn’t word it that way. But that’s exactly what their sources are claiming they’re doing — protecting the American people from the very policies that got Trump elected.

The big question in the media today is why haven’t Rex Tillerson, Steve Mnuchin, Dina Powell, and others, not quit the White House yet, in bed and league with someone as awful as Trump.

Their answer, according to Axios: to protect America from the ‘crazy’ things that Trump wants to do.

Source: Axios

So why do the others stay? We talked to a half dozen senior administration officials, who range from dismayed but certain to stay, to disgusted and likely soon to leave. They all work closely with Trump and his senior team so, of course, wouldn’t talk on the record. Instead, they agreed to let us distill their thinking/rationale:

“You have no idea how much crazy stuff we kill”: The most common response centers on the urgent importance of having smart, sane people around Trump to fight his worst impulses. If they weren’t there, they say, we would have a trade war with China, massive deportations, and a government shutdown to force construction of a Southern wall.

“General Mattis needs us”: Many talk about their reluctance to bolt on their friends and colleagues who are fighting the good fight to force better Trump behavior/decisions. They rightly point out that together, they have learned how to ignore Trump’s rhetoric and, at times, collectively steer him to more conventional policy responses.

“Trump’s not as evil as portrayed”: All of them talk up the president as more reasonable off Twitter and TV than on it. This gives them hope (though almost all increasingly say it’s fleeting hope) he will listen to his better angels, or at least the pleas of Ivanka.

“We like the power”: Well, no one comes out and say it this blatantly. But working in the White House, even this one, is intoxicating and ego-stroking. They have enormous say over regulations and rules, invites and implementation, government jobs and access to the Oval. They also know they are one step away from an even bigger job in government, so it’s hard to just walk away.

In short, this is Trump’s fault, not his cabinet’s. I hear too many people blaming Trump’s cabinet for messing with his agenda. A true executive delegates and isn’t led around by the nose from underlings. Enough of victimizing poor Trump, surrounded by deep state shills. He fired the one guy who created his populist agenda, Bannon.

Like I said before, if it looks like a duck and quacks like a duck…

Sneakerheads have been destroyed, finally.

Last year I discussed a generational short surrounding around the idea that demographic trends do not correlate with $200 sneakers. Companies like $FL and $NKE have been stealing from people, more so than ever, for the better part of the past 30 years — retailing cheaply made sneakers for hundreds of dollars to an client base that car scarcely afford it.

This was the crux of my idea — short FL.

This company caters to an urban audience, whose median incomes have gone nowhere over the past decade. However, the price for their ridiculous, made in a Vietnamese Thai sweatshop, sneakers have soared. Some of these rubber shits sell for upwards of $200 now. It doesn’t take a genius to figure out this dichotomy between price point and target customer is unsustainable.

Since 2012, the market has assigned a very premium valuation to FL, more than 40% higher than historical averages. Yet, looking at today’s earnings, growth is slowing.

These chickens came home to roost on Friday, with a disastrous 28% decline in the shares of FL.

Foot Locker (FL -27%) is getting crushed after reporting a dismal quarter and guidance for the rest of the year. Adjusted earnings fell 34% to $0.62/share as comps fell 6% during the second quarter versus guidance for a low-single digit increase. May comps fell in the low-single digit range and June and July comps fell in the mid-to-high single digits. This was the first negative comparable store sales from the company since 2009.

After claiming a niche with ‘sneaker heads’ and posting impressive same-store growth for many years, reduced traffic at malls has finally caught up to the company.

“While we believe our position in the market for premium sneakers remains very strong and our customers continue to look to us for compelling new athletic footwear and apparel styles,” said Richard Johnson, Chairman and Chief Executive Officer, “sales of some recent top styles fell well short of our expectations and impacted this quarter’s results. At the same time, we were affected by the limited availability of innovative new products in the market.”
Management said that it is still well positioned as the market leader in premium footwear and probably still gaining market share. The company does not believe vendors selling ‘lower priced’, ‘un-differentiated’ shoes on Amazon (AMZN) are a big threat because FL is at the high end of the market. Exclusive releases are an important competitive advantage.

Still, investors have reason to be concerned because Foot Locker’s biggest vendors: Nike (NKE), Adidas (ADDYY) and Under Armour (UAA) are all ramping efforts to sell direct to consumers (DTC) on their own websites.
Foot Locker said the Jordan brand slowed considerably during the quarter. That was the first time we can recall anything negative uttered by FL about the Jordan brand, which has been a cash cow for Nike.

Foot Locker guided EPS for the second half of the year down 20-30% year-over-year with comps down 3-4%. Estimates had called for EPS growth in the low to mid-teens and comp growth north of 3%.

Footlocker just found out the fact that ‘sneaker heads’ do not have unlimited resources and can barely afford their opulently priced footwear, especially with wages going nowhere for middle class normies.

The stock was downgraded across the board. Well Fargo lowered the estimate to $37.

Here’s more details on the quarter.

Foot Locker On Call sees second half EPS -20-30% vs prior expectations of +13% (47.70)
Sees Q3 gross margin down 230-250 bps to 31.4-31.6% vs. 33.8% consensus; Q4 down 150-170 bps to 32.0-32.2 vs. 33.8% consensus

In North America, Sell- thrus of Jordan models ‘slowed considerably’ compared to historical rates
The co had planned for Adidas superstar and Stan Smiths sales to be down ‘substantially’ in Europe, but says this market declined even more than expected

Doesn’t feel like they are losing market share in athletic apparel

Expects some of the trends in Q2 to persist through the remainder of the year

Cites store events, customer experience/interaction w/ retail associates, and ad placement/notification as reasons it does not believe its vendors selling product directly on Amazon is an imminent threat.

Says for lower priced, largely undifferentiated product’, amazon (AMZN) and other retailers are taking market share

Foot Locker on call

Jordan (NKE -4%) slowed considerably in North America

Valuation wise, the company isn’t too overpriced anymore, compared to historical trends. A 50% drop over the past year, with flat sales, tends to have a corrective affect on overvaluation. Currently, the company is valued at 0.81 on a price to sales basis, slightly above the 0.70 historical median. When I penned my short idea last year, the price to sales ratio was 1.30.

Other sneaker retailers, more affordably priced, include GCO (0.18), FINL (0.26) and SCVL (0.29).

This was the last bastion of retail unfazed by the depression sweeping across the retail landscape in America. In 20 years from now, it looks like all of these stores will be Amazon depots, or repair shops for Amazon delivery drones. There is absolutely nowhere to hide in retail, a fact that has yet to affect the market and the economy.

Back in July, Fox News columnist, Steve Kurtz, asked the question regarding the 25th amendment: Constitution or Coup? But that wasn’t the first time the 25th amendment was mentioned by democrats. They’ve been pining to use it to remove Trump from the day he took office.

Since the events in Charlottesville, this narrative has exploded inside the media, with one story after the next calling for the removal of the President under the terms of the 25th amendment.

Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Here is a collogue of media headlines, asking whether America should remove its President in less than 1 year from being elected. This is just a sample. I could’ve posted dozens of headlines if I wanted to.

Defenders of Trump will point out that his behavior has been consistent over decades and what you’re seeing now is merely a continuation of his eccentric demeanor. In a CNN program this morning, CNN’s Brian Stelter, joined by WaPo’s Carl Bernstein and two other Never Trumpers, asked whether the President should be removed from office using the 25th amendment. Bernstein said it should be the primary goal of the media to get republicans on the record calling for his removal, emphatically believing the President was mentally ill.

Stelter posed the question to his audience: “Is the President of the United States a racist? Is he suffering from some kind of illness? Is he fit for office? (feigns fake concern) And if he’s unfit, then what?”

In summary, Trump could not win the election — because he was a joke. Trump ended up winning, but only thanks to Russian hackers. Since Trump was helped by Russian hackers, he must’ve colluded with them. If Trump colluded with them, he should be impeached (cue Muller). Since the Mueller investigation is taking forever, let’s remove him for daring to suggest that ANTIFA thugs, who regularly beat up people for exercising free speech, were bad actors.

Notice how Stelter posed his multi-tiered question, leading with ‘Is Trump a racist?’ Get the audience to first agree to something they’ve been programmed to believe, and then the rest will fall into place — sales 101.

In short…

The deep state is winning.

— Bill Kristol (@BillKristol) August 19, 2017

Ann Coulter, the conservative firebrand who predicted Trump would win, much to the cackling laughter of the Bill Maher audience and panel, railed against Trump in an interview with Mark Simone.

Sounding despondent and admittedly ‘depressed’ over the recent firing of Steve Bannon, Coulter lashed out at the President, saying ‘it’s not a good idea to let the media know to manipulate him as President.’ Coulter was referencing Trump’s defensive posture and annoyance that Bannon had been credited with Trump’s election win. Over the past half year, the media, including comedy outlets, had lampooned Trump and Bannon — painting Bannon as the true, yet sinister, mastermind behind Trump’s success.

Coulter almost pined for the campaign era days of Trump, reflectively saying ‘finally, after 30 years, we’re gonna get a President not controlled by Goldman Sachs,’ making reference to the Goldman alumni stacking Trump’s cabinet.

Coulter threw down the gauntlet to Trump, saying,  “if you really want to prove to us that Bannon had nothing to do with winning the nomination and then winning the Presidency, what you really want to do now is pedal to the metal on raising taxes on Wall Street (carried interest loophole), start deporting illegals, end NAFTA, bring the jobs back and build the wall.”

Ann furthered, “and if he does all those things, okay, I’ll say ‘My gosh Mr. President you’re right. Steve Bannon had nothing to do with your success.'”

The reason why she’s depressed over Bannon’s departure likely stems from the fact that all loyalists from inside the campaign, save Conway and Miller, have been purged from the White House.

“People like us should be a little depressed today because there’s no one on the President’s side in the White House anymore. “

She summed up Trump’s isolation succinctly, ‘it’s just you in the White House surrounded by the people you hired from Goldman Sachs. Don’t you want to have one guy in the White House on your side?’

Ann then ripped Trump to shreds for calling out ‘fake news media’ and then giving them exclusive access to him, saying ‘he’s calling Maggie Haberman (NY Times) everyday.’

“Why isn’t he giving all his interviews to Breitbart, Daily Caller? Why isn’t he directing his communications director, or press secretary, to call on the conservative media. No, the conservative media is totally dissed in the press briefing room.”

In short…

“He’s surrounded himself with the ruling class.” — Ann Coulter

If it acts like a duck, and quacks like a duck…

I am sure this is just another case of 400DD inter-galactical chess. Before we delve into today’s alt-right embarrassment in Boston, it’s important to note that Trump’s White House is, quite literally, staffed with Democrats — people who would be comfortable in a Clinton White House.

He has Mnuchin, Cohn and Powell leading the charge, all democrats. His daughter and son in law, Jared, also democrats. The generals really don’t give a shit about politics. And then you have AG Sessions who Trump regularly demeans in public.

Today, the weak alt-right formed a rally to express ‘free speech.’ Little did they know, free speech is limited to those who can rally the most people. Since the alt-right are a fringe group with zero coordination, they were quickly dispatched and humiliated today.

Have a look.

A handful of petrified alt-right activists showed up to Boston today.

An army of 15,000 counter protesters showed up to shut them down.

And here is a pastiche of pictures from today’s momentus event. America will not tolerate speech that is hateful.

A whimsical kill list is displayed.

Free speech at its finest.

Both racism and capitalism should end.

Here are some videos of the patriots in Boston, displaying their constitutional rights to shut down free speech and assembly.

At times, patriots will disagree with one another. Here is one gent who disgracefully would not condemn all white people. He was rightfully knocked out. Hopefully he lost a few teeth and his jaw was dislocated for not using it when asked to demean racist white nazis.

In response to these images and videos, our President praised the protesters and their anti-bigotry message.

Miss Bannon yet?

Well, that was a fun filled week. I had the pleasure of driving to and fro the ends of the earth, all for the sake of some scenic rocks and shrubs. I did, however, get to meet some good friends up in Newport, RI, where we cavorted amongst fellow racist white people — who seem to hog all of the money in that part of town.

My vacation, more or less, was chauffeuring around the family, eating lobster rolls. I had an opportunity to frequent several antique shops and add to my ancient book collection. It is one of my favorite past times, that and collecting old newspapers.

Did you know back in the early civil war days soldiers were ‘paroled’ instead of imprisoned when captured? The way it worked was, if you got caught your info was taken and you abided by an honor system to go home and wait to be exchanged for someone of similar rank, and then go back into the war to fight and die. When the north finally started to realize this was prolonging the war, this practice was suspended and then horrible things happened as total war descended upon the south — including the atrocities by the south at Andersonville.

While some out there carelessly discuss civil war and how it is needed to ‘fix things,’ I don’t think you realize what you’re asking for. Extremes on both sides are stupid and get in the way of progress. Sometimes I just feel like walking away from it all, running freely, naked, in the green fields of Ireland — amidst my ancient brethren.

America sucks, truth be told. The culture is a hamburger and milkshake and its people are boring and violent. Because we’re all so greedy, the country is constantly trying to fuck everyone over, including its own people. The money supply is a laughing stock and the financial system, as a whole, is built to collapse. I suppose it’s the best worst system, aside form Switzerland. But they won’t let any of you losers there, unless you have something to offer.

For now, enjoy your polarized nation, bereft of healthcare and dignity, warring across the globe for the benefit of people you’ll never meet or see in your entire lives.

For my current market analysis, read this post.

Ciao and yes I’m still a vegetarian, with an occasional feast of lobster.

NOTE: The singer of this song, Bea Wain, is still alive at the tender age of 100.

UPDATE: Now the CEO of the ADL is thanking Polgreen for changing the offensive ‘Goy Bye’ headline (sigh).

Glad you changed the headline.Not sure your intent, but strikes me as poor taste at best, very offensive at worst.

— Jonathan Greenblatt (@JGreenblattADL) August 18, 2017

UPDATE: John Podhoretz calls out Polgreen for publishing the headline.

Hey @lpolgreen you do realize that Bannon headline is a) witless, b) stupid and c) offensive, right?

— John Podhoretz (@jpodhoretz) August 18, 2017

Is it possible that I am dreaming or did Sam Levine from Huffpost really post this?

It looks like he felt a little bad about being so insulting to us goys and changed it to a much more appropriate headline.

Ah, there, feel better now?

Correction: I originally reported Sam was the villain for posting that derogatory headline, when in fact he merely posted the White one. The author of the title was Chloe Angyal. Let’s keep the cycle of hate going, folks. Good stuff.

GOY, BYE

— Chloe Angyal (@ChloeAngyal) August 18, 2017

Here’s the editor of Huffpost, Lydia Polgreen (I have no idea what gender that is) proudly displaying the headline.

GOY, BYE! pic.twitter.com/yYlxh1jkJw

— Lydia Polgreen (@lpolgreen) August 18, 2017

Wall Street is trying to paint this in a positive light for stocks, suggesting that Bannon out means Cohn gains power. Truth is, the White House is a god damned mess.

Here are the cocaine addled losers from the NYSE cheering in a drunken rage upon hearing Steve Bannon had resigned two weeks ago.

The top story on CNBC is the market jumping off the Bannon news, but it has faded since and now looking like it wants to give it back.

Today’s top performing sector is the utilities, not exactly a shining example of virile spirits.