Yield Curve Collapses; High Yield Credit Gets Mauled: Banks Rally

What?

We’re not supposed to see BAC higher on a day when spreads are collapsing, but we are nonetheless.

US yield curve now 64 bps, the flattest in over a decade. Inversion is still a long way off, right? Not really – it has flattened 64 bps in less than a year. pic.twitter.com/SzWfwiuiKS

— Jamie McGeever (@ReutersJamie) November 15, 2017

Financials are strong on an otherwise weak day, in spite of high yield getting killed once again. More on that in a minute.

JNK and all of PIMCOs high yield bond funds are getting crushed, some down more than 5% over the past 2 weeks.

Juxtapose that against treasuries and you can clearly see not all bonds are created equal. TLT is rising and hasn’t been hit like JNK.

I know this is all very data-dumpish, but bear with me as I attempt to scare you. Volatility is busting loose.

The only thing missing from the puzzle is the sharp rise in the Yen to officially spark worries of a carry trade unwind. What do you think, yen about to break higher or not?

Personally, I’d like to see a rout in NVDA, which is pretty much the poster boy of high valuation tech now, in order to confirm a true break in the market. The fact that banks are strong today suggests there is a bid in this tape, which might lead to a late date rally. Nevertheless, there are still numerous factors to be worried about, especially the breakdown in high yield credit and oil.

The only position I’d consider buying today is long Yen, but I think it’s rather redundant for me, considering my other bearish positions.

Top picks: short NVDA, RUSS, DRIP, UVXY for the laughs.

Morning mates,

It sure does look grim out there today, eh? Ah, don’t worry — you bought BTC at 5 cents and have riches that stretch beyond the imagination. What this market needs is a good cleaning — sort of like a colon cleanser, but only for people. Right now, there are a lot of bad people in the market. All of these bad people are making Wall Street ugly and a truly disgusting place to hang out. After the coming extermination and the market is cleansed of these cretins, Wall Street will be great again — everyone will be happy and gay — the world as we know it better.

Nasdaq futures are -33. Over in Europe, a purge is underway, led lower by the MIB, off by 1.35%. The DAX is down 1.1% and the God damned Russians are off by 1.4%. Need I remind you, I am short the Russians via RUSS?

WTI is down 1% and the VIX is screaming higher by 11%.

All of the monies are fleeing stocks and into BTC, which is higher by ~500 to above $7,000 again, or +7%. What in the actual fuck?

Here are some other headlines to start your ridiculous day.

Baidu.com confirms that this year’s Singles’ Day advertising revenue +120% Y/Y
Target beats by $0.05, reports revs in-line; guides Q4 EPS towards the low end of expectations with comps +0-2%
Lam Research target raised to $225 at RBC Capital Mkts — Steps up capital returns
YY upgraded to Buy from Hold at Jefferies
Snap downgraded to Mkt Perform from Mkt Outperform at JMP Securities

The beatings will continue until morale improves.

Most of you don’t know it yet — but the Turkey Gods have been slain. Nasdaq futures are down 23, WTI -1.1%, and the NIKKEI is off by 200. The most ardent amongst you will acknowledge a spoiled rotten gait with the perma-bulls, men who truly believe stocks can only go higher. Why do these people think this?

That’s easy. Stocks mostly go higher and if you’re not talented trader or unable to see potential black swans, you’re predisposition to always believe stocks will go up. It’s the easiest way to make money in the market; it doesn’t require a high level of cognitive thinking, and it allows you to feel safe and comfortable with the pack.

“The Fly” is more of a shepherd, less of a fucking dumb animal being led down rolling hills to slaughter.

I truly believe stocks will splash against the pavement, revealing a bloody mess — brain matter festooned all over Wall Street — leading to a very Krampus Xmas — one that might cause Trump to tweet out the true JFK files. To play this is simple, bet against the leaders: NVDA, BAC, oils and biotech.

Also, I am betting against Russia, via RUSS — because MUH Mueller. When our armies march on Moscow, the MICEX will be zero. Lastly, I have a small pastiche of good momentum stocks that have very high beta. Should stocks continue the path of least resistance, they will serve me fine.

Truth is, everyone is bullish. All of the naysayers are cockless. Thanksgiving is around the bend and my oven broke and pipes busted a leak in my kitchen ceiling. I have 5 holes in my ceiling now, all of which need to be repaired tomorrow and then I have to go out and fetch another oven — else my Thanksgiving will, quite literally, be canceled.

No matter how many different ways you try to pretend that you have more natural talents at trading than Le Fly — deep down you’ll know that someone like me is out there. Ergo, you might as well kill yourself.

For the balance of the day, I was reading short stories, Hemingway if you must insist. Markets closed in the red, dripping with acrimony. A truly talented trader can make money in any tape, not just on the long side. For the sake of sport, I will show you how this is done — from now until the end of the year. Consider it the ride to Krampus — the place and time when the space alien magician (SAM) on the internets made all of the money while leaving hardly any for everyone else.

Here are my positions.

short BAC -0.57%
short NVDA +0.78%

Long VERI +38%
UVXY +2.2%
RUSS +5.5%
LABD +6.1%
DRIP +10.2%
UCTT 1.2%
HMNY -4%
FIZZ +2.6%

Before I picked up my book, I added to RUSS and VERI — because I am betting on the destruction of the oil rich Russian markets and because I made a commitment to own VERI when it got back in the 20s. I’m up nearly 7 points in VERI — like the fucker just caught a takeover bid.

Indeud. You’re now in the kill zone — prepare to be murdered.

With regards to the overall market, as long as this is heading down — I’m still bearish.

My VIX trade is more or less an avocation, something that I enjoy doing in my spare time. Where I really enjoy placing my money is betting against oil and biotech. These are two industries on opposite sides of the spectrum, one representing industry and grit, the other faggotry, science and scam artists.

I endeavor to profit from the destruction of both industries via DRIP and LABD. I was in these trades early and I told the gents in Exodus we were early — but the payoff would be grande.

Pray tell me, was I lying?

The oil sector is up 15% over the past 3 months. I am merely looking for all of those gains to be revoked. The market can do what it likes, trade up, down, sideways — who cares? Oil is going down.

“The Fly” is back, major dick swinging here. I have one or two more trades that I want to execute. Stay tuned.

About 5 years ago, I came to the conclusion that the VIX index is not something that was designed to actually work. Nevertheless, every so often, like catching a firefly in a jar, a vix trade can go right and it can be very rewarding. The trick is to get out before the darn thing dies and then fucks up your p n l. Take your dicks out of the blockchain for a moment and examine this technical analysis. I will have you know that I am a graduate of the School of Technical Analysis and have seventeen degrees in the arts of chart painting.

Upside on the VIX is probably limited here, unless we’re due for a direct sea change which will cause a major disruption in the matrix. Hopefully, we could get that and enjoy it over the Thanksgiving holiday’s. However, in the event we do not get a major crash and subsequent crisis, we might want to sashay the fuck out of our VIX trades very soon. With the proceeds, I strongly recommend moving your beady eyeballs to DRIP or LABD. They’re ripe to surge.

It appears I was right, yet again. Give me some time and it won’t be long before I am energetically bowling on you fools again. The bull market was fun while it lasted and I’m sure you faggots had a great deal of fun inside of it; but now it’s over, so get used to the beatings — for they will happen with regularity and with great tenacity.

There are so many different ways I want to sell short the market, most of which is in the oil space via DRIP. For good measure, I am short NVDA, BAC and long LABD and UVXY just to ensure all of my bases are covered. If this is the beginning of a squall, I am bearshitter Jesus.

Not only is “The Fly” going to make a great deal of money in the coming days ahead — but you are going to lose even more — which makes this situation sublime and delightful for me. It’s not enough for me to just win and go about my days happy and joyous — you must lose.

Good day.

Good morning lads, it looks like AG Sessions is going to appoint another special prosecutor, this time to go after the real crooks. That’s the rumor, which was cryptically supported by this tweet by Trump.

I will be making a major statement from the @WhiteHouse upon my return to D.C. Time and date to be set.

— Donald J. Trump (@realDonaldTrump) November 14, 2017

As far as I am concerned, the more Muellers the better. Everyone gets a turn and no one is denied an opportunity to go directly to jail. This is America, after all — land of the free and the brave.

European stocks had been rallying earlier today, but now their mired in mud. The Eurostoxx 50 is lower by 0.36%.

WTI -0.5%
Copper -0.4%
Eur/Usd +0.5%
BTC -1.95%
US yield curve 70bps

Nasdaq futures are -4.

As of now, it looks like the bounce you’ve been looking for has been delayed. Here are some other headlines.

Stratasys beats by $0.04, misses on revs; raises FY17 EPS above consensus, narrows rev midpoint below consensus
Loxo Oncology enters into global collaboration with Bayer (BAYRY) to develop and commercialize larotrectinib and LOXO-195; Loxo will receive a $400 mln upfront payment (shares halted
Kulicke & Soffa beats by $0.14, beats on revs; guides Q1 revs above consensus
Transocean target raised to $13 at RBC Capital Mkts — Number Revisions and Floater Market Update
Qualcomm target raised to $77 at RBC Capital Mkts — Tgt upped as RBC sees potential for higher bid
WisdomTree upgraded to Mkt Perform from Underperform at Keefe Bruyette
Delek US Holdings upgraded to Outperform from Market Perform at Wells Fargo
JD.com downgraded to Equal-Weight from Overweight at Morgan Stanley
Deutsche Bank upgraded to Buy from Hold at HSBC Securities
Home Depot beats by $0.02, beats on revs; guides FY18 EPS above consensus, revs above consensus
Softbank and Uber UBER) have come to a basic agreement on a process for the SoftBank Group to make a future investment in Uber

No matter what Jeff Macke says, you should know and understand the shopping mall is, inexorably, dead. The inescapable dread of a market that’s way ahead of itself commingled with fundamentals that aren’t worth a premium multiple stands before you like a fire breathing dragon, fixing to roast your balls into hell.

Last year today, this was the exact time to go long and be joyful, yet many people missed the initial move, myself included. This year, mostly everyone I know is levered up and bullish as fuck, which means a great fade is just beyond the horizon.

Now if a garden variety sell off was in order, I wouldn’t bother with the warning. As a matter of fact, I’d sit back and just watch you twist in the wind, enjoying the specter of it all. But the potential for a massive repudiation of this market is more than possible, but increasingly likely. We are talking scorched earth, motherfucker — the type of pullback that makes you seek God and maybe a sex change.

It’s also entirely possible that none of that shit happens and we gently drift into the New Year’s, like so many year’s before, and then collapse in early 2018. All I am saying is, there is a small window for the apocalypse to both form and strike deadly daggers at you, and all of your stupid fucking friends.

I’ve been doing this shit for nearly 30 years, since I was 10. You might think you know something — but the truth is, you’re dumb money with dumb luck and I will prove it out over the course of time — you dumb little fuckers.

Anyone else remember when Jared Cook found a fucking chicken head in his basket of chicken, whilst eating at the piece of shit chicken joint dubbed Buffalo Wild Wings?

Apparently, Roark Capital likes what they see. Aside from BWLD, their portfolio includes Anytime Fitness, Arby’s, Aunt Anne’s, Carvel, Cinnabon, Carl’s Jr., Corner Bakery, Moe’s, Orange Theory — just to name a few.

Via WSJ:

Buffalo Wild Wings Inc. BWLD -1.35% has received a takeover bid valued at more than $2.3 billion from private-equity firm Roark Capital Group, according to people familiar with the matter.

Roark made an offer of more than $150 a share in recent weeks, one of the people said. Buffalo Wild Wings shares closed Monday at $117.25, giving it a market value of $1.84 billion. The stock jumped 28% to $150 after hours following The Wall Street Journal’s report of the bid.

Investment bankers at Barclays BCS -0.85% PLC are working with Roark, while Goldman Sachs Group Inc. is advising Buffalo Wild Wings, the people said.

Minneapolis-based Buffalo Wild Wings is a purveyor of chicken wings, beer and other bar snacks at more than 1,200 locations world-wide. The company was founded in 1982 and went public in 2003.

Buffalo Wild Wings has been hurt by rising chicken prices and slumping traffic in its restaurants and had been under attack from Marcato Capital Management LP. The activist investor had pushed the company to franchise more stores, boost profit margins, increase sales and replace its chief executive.

In June, Buffalo Wild Wings shareholders voted in Marcato’s founder and two of its nominees to the company’s board. Chief Executive Sally Smith announced she would retire by the end of the year.

Here are the managing directors of Roark, quite literally cookie cutter carveouts of how corporate America should look — minus the fucking bald guy. He looks cool.

According to Exodus, these are the only other companies above $500 million in market cap with positive revenue growth. Pretty grim.