Cryptos Run Higher — Let’s Be Honest It’s Dead, Dead, Dead

Crypto market cap is $462 billion and the SEC is dipping their long fucking beaks into the ICO world. Something tells me they will not like what the find.

Via Tech Crunch:

Citing sources, the Wall Street Journal is reporting that the commission has “issued dozens of subpoenas and information requests” to tech companies that have held token sales and a number of advisors associated with them.

More specifically, it appears that the SEC is requesting details of sale structures and the pre-sale elements to them, which often include deep discounts for those investing large sums or committing to an ICO early on.

More than $6 billion was raised via ICOs, which are also known as token sales, in 2017, and a further $1 billion has been added to that tally in 2018 to date.

Bitcoin and crypto have traditionally been backed by libertarians, but there’s plenty of sensible arguments as to why regulating the space would be beneficial to all. Beyond helping those who invest, mechanisms to prevent scams or pyramid schemes such as BitConnect could lend credibility to token sale projects. Currently, the space is a wild west that allows anyone to raise money against a proposed project simply by publishing a whitepaper on the internet.

Meanwhile, Bitcoin is above $11,000 — but no one really gives a shit. Am I right? Of course I am. “The Fly” is the pulse of the market; he knows all — both omnipresent and black hearted malevolent evil. I stopped trading my shitcoins after they stopped heading higher. Now I’m just HODLing like an avocado toast eating faggot. By the way, I do enjoy an avocado toast, especially with a little lemon and a few sprigs of arugula.

The point is, the crypto world is fucking dead. All of you retards who left real jobs to pursue some digital money fantasy have been inexorably beat the fuck out. You might as well kill yourselves now and get it over with.

As for me, I have a Reisling on ice, a few dozen clams steaming in sherry, and some fish on the frying pan.

FUCK OFF.

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The only reason why I am not unwinding my SQQQ and DRV positions is to retain license to claim to be apart of The Era of the Short — led by Orcs from middle earth. In a just world, all of this will end, under a barrage of North Korean ICBMs — errantly and comically, striking cities indiscriminately.

Stocks have McPlunged by 400 and Americans are racing towards their local McDonald’s to find solace in a large Coca-Cola beverage and Big Mac cheeseburger with fries.

LISTEN TO ME NOW: “The Fly” is immune to the pangs of market misery. Look, I can prove it.

Now that we’ve established my genetic superiority over you, I want you to now lament over your portfolios and how they pale in comparison to mine, whilst listening to the lovely and haunting melodies of the Dunkirk soundtrack below.

You may stop listening to it, after your surrender.

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Mark my words, there will be some of you reading this who will be physically upset that I said the word ‘plunge’. You’ll want to rebut with phrases like “plunge, MUH -0.6%”; but go fuck yourself. This is broken elevator trading action and if you don’t have hedges in place, I have no pity for you.

It’s as clear as the day is long, the market HATES Chairman Powell. Moreover, they love steel tariffs. This sordid and exotic blend of good and evil has resulted in a harmonious utopia in my tactical account — with big dicked gains in CLF, FTK, ECR and modest returns in SQQQ.

pic.twitter.com/te83Os7e5A

— The_Real_Fly (@The_Real_Fly) March 1, 2018

I am on standby waiting for an Exodus OS signal with 20% cash to be deployed in SPY. Unlike previous signals, I will not share them here with the unwashed, unclean masses — out of resect for paying members. However, I will warn you, once again of very dark times ahead.

BEWARE OF THE IDES OF MARCH!!!

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We were down more than a hundred and then up more than a hundred. Now we’re up ~30 — but that will likely change a great deal by the end of this post. I find it nearly impossible to trade volatility like this. It’s best to pick a damn bias and stick with it.

Due to Trump’s retarded White House, the steel tariffs have been delayed. As such, gains in the steel sector have been tempered.

Meanwhile, Greenspan is once again warning of a bond bubble.

So a 2% rise in rates equals ~$400b extra in interest payments for US govt. Here's Greenspan saying we're in a bond market bubble, insisting rates will go higher. If CPI is benign, can someone tell me why would be self inflict a wound like this? Fuck the Fed. pic.twitter.com/hYfMQeTsVh

— The_Real_Fly (@The_Real_Fly) March 1, 2018

“We are in a bond market bubble” that’s beginning to unwind, he said on “Squawk on the Street,” as new Fed Chairman Jerome Powell appeared on Capitol Hill for the second time this week. “Prices are too high” on bonds, Greenspan added. Bond prices move inversely to bond yields, which spiked higher in the new year, recently hitting four-year highs of just under 3 percent.

“As real long-term interest rates rise, stock prices fall,” Greenspan said, but added that’s probably not the cause of the recent wild market swings.

“The last few weeks are responding to the good part of the tax cut,” he said, meaning that any tax-cut inspired economic growth could increase inflation, which Wall Street worries could result in the Fed raising rates more aggressively than the projected three hikes for this year to tamp down rising prices and wages.

And new Fed Chair Powell made some comments on wages and interest rates.

“We don’t see any strong evidence yet of a decisive move up in wages. We see wages by a couple of measures trending up a little bit, but most of them continuing to grow at two and a half percent,” he said. “Nothing is suggesting to me that wage inflation is at a point of accelerating. I would expect that some continued strengthening in the labor market can take place without causing inflation.”

“By continuing to gradually raise interest rates over time, we’re trying to balance those two things and achieve inflation moving to target but also make sure the economy doesn’t overheat,” he said. “There’s no evidence that the economy is currently overheating. But that’s really the path that we’ve been on. My expectation is that that will continue to be the appropriate path as long as the economy continues to perform this way.”

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UPDATE: Trump announces tariffs.

Tired of winning yet?

There’s a musky aroma in the steel sector today. At the vanguard of this movement are the actions of President Trump — his fierce open handed smack across the face of President Xi of China. We’re going to impose tariffs and there’s not a single damned thing to be done about it. It’s as simple as that.

Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!

— Donald J. Trump (@realDonaldTrump) March 1, 2018

According to the Commerce Department, steel tariffs will be in the ballpark of 24%.

Here are today’s beneficiaries.

X +5.2%
AKS +8%
CLF +4.7%
STLD +2.5%
NUE +2%

The day is young old sport. Let’s give the news some time to marinate in the thick brains of asset allocators. I’m sure that once they do the math and set aside their political reservations, they will support this five fingered assault across the collective faces of the Chinese steel industry, as I do, and get long CLF in bulk size.

Today is reshuffling day for Exodus Quant monthly strategy. I’ll be done by noon.

Keep those hedges on. We’re not done barreling lower.

Ciao.

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Futures are down 100 and the DAX is off by 1.5%. Every financial advisor I know is a genius and none of them are scared of a prolonged pullback — because of stock market muscle memory. There is a strict routine which is to be adhered to very closely.

We dip, we buy, we hit new highs.

None of the people that I talk to are truly prepared for a pullback that lasts longer than a week or two, let alone one that could last for months. We just broke the longest monthly winning streak since 1959. Think about that from a statistical point of view and now think about mean reversion and how Trump brags about his great big beautiful stock market and how Chair Powell isn’t an economist and the collapse in Bitcoin and what that might mean for semis. I realize it’s early and that’s a lot to ask from you so early in the morning — but you’ll do so nevertheless or you’ll stop reading me fookin’ blog.

Gold, oil down, equities down — you have fake muscles. Welcome to March.

Best Buy beats by $0.39, beats on revs; guides Q1 EPS below consensus, revs in-line; guides FY19 EPS and rev above consensus; raises dividend 32%
Kohl’s beats by $0.22, reports revs in-line; guides FY19 EPS in-line, revs in-line; Comparable sales increase 6.3%
Macy’s upgraded to Buy from Hold at Gordon Haskett; tgt $36
Sotheby’s beats by $0.15, beats on revs
Toyota Motor upgraded to Neutral from Underperform at BofA/Merrill

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I have a stifling headache, probably caused by stress. My new dog darted out and ran into the woods earlier, forcing me out of a slumber and into the thickets to fetch a dog. Along my journey, I spotted a dead dear entangled upright, hanging upside down, in a ceremonious setting. There are many masons in this area and it seems they’re doing some carcosa type shit in the woods.

After an hour, I found the dog — covered in mud and thorns — and then I gave her a hot bath and a cold shoulder for a solid 30 minutes.

Dinner consisted of Japanese takeout and perhaps the sodium crushed my metaphysical being — because I now feel like shit.

At any rate, Exodus Quant shed 4% for the month of March, outpacing the SPY by 100bps. There is no honor in losing money. However, I lost it at a slower pace than the market, proving the strategy to be effective.

We were mega cap in February, long stocks like ACN, MSFT, XOM and MA. For February, several defensive positions will be triggered and we might get an Exodus Oversold signal, which will automatically deploy my permanent 20% cash into the SPY for a 5 day trade. Also, the allocation will be of a much smaller capped varietal.

There are a slew of oversold stocks and ETFs in the system tonight, including IWM. This has been a stress point that has resulted in gains for longs, so look for the market to pivot to the upside soon and with vigor. Should that not occur, we might be in for a different tape, a character shift, which means everything needs to be reviewed.

My tactical account has cash, a shitbrick of oil stocks getting mauled, and two hedges: SQQQ, DRV.

Off to take a few aspirins and consume some teevee.

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It’s all over folks. Markets are off by 500 since Powell opened his fat trap yesterday. It appears we have a stand off here and someone needs to blink. Either Powell slashes interest rates, his wrist, and re-introduces another round of QE, or this market is going to belly flop off the pavement and into an inferno. There’s nothing more to be said about it and that’s that.

My oil patch plays are treating me like a pig on a spit, only faster. I am being cooked fast and with a rude amount of seasoning. The apple in my mouth is bitter and disgusting. I don’t like this. I don’t like this, not one bit.

Also, my inverse ETFs are also down — because why the heck not. It’s all there mate. It’s in the fucking prospectus. Didn’t you have a look?

The Nasdaq is holding up for now, which is why the SQQQ is lower. But not for long.

Enjoy the balance of your days and be sure to tuck in your kids tonight, for a storm is coming and it’s armed with cock-chopping guillotines, designed by malicious men who are testing the new Chair Powell.

We need a bull market Trump tweet now. That is literally the only thing that can save us from damnation.

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I always like Langone, but respected him more than ever after my Mother had heart surgery a few years ago at NYU Langone — which is a beacon for healthcare in NYC and the world. Their facilities are made possible by Ken, thanks to a donation of ~$250 million.

Feel free to read about Ken on his Wiki page to learn more about him. Had Ken not been a successful broker and co founder of Home Depot, I imagine he’d work at a gristmill or something even more rustic than that. He’s the salt of the earth, a relic from a day when men were men and didn’t apologize for it.

He is an interview with CNBC today and discussed Trump’s tax cuts, buyback, and education.

It’s worth your time.

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Don’t say I didn’t warn you this time. Had you read the prospectus you would’ve know to dear god that it was not only within Proshares right, but also their duty to take away your money and flush it down the toilet.

Last night they announced a leverage change for their SVXY and UVXY products. This is especially deleterious for out of the money call buyers who wanted black swan bets on volatility. A lot of investors utilize these trades to hedge downside. Now those people have been eliminated from the field of play.

ProShares Advisors announced changes to its investment objectives to reduce leverage on its Short VIX Short-Term Futures exchange-traded fund (ticker SVXY) and Ultra VIX Short-Term Futures ETF (ticker UVXY). The former, which allowed investors to bet against a rise in volatility, is now aiming to deliver returns equal to one-half the inverse move of the S&P 500 VIX Short-Term Futures Index. Previously, the product had sought to be a perfect mirror image each session.

On Feb. 6, Credit Suisse announced the redemption of a fund similar to SVXY — the VelocityShares Daily Inverse VIX Short-Term exchange-traded note (ticker XIV) — after a record one-day spike in the VIX wiped out 90 percent of the value in the inverse product. The popularity of exchange-traded products that allowed investors to wager on enduring market calm exacerbated the downside for U.S. stocks that week, according to some analysts, helping to catalyze a technical correction.

ProShares’s shifts will be effective as of the close of trading on Feb. 27, according to a press release. However, a permanent change of these investment objectives will require regulatory approval, the exchange-traded product provider said.

“Buyers of either calls or puts have paid premia that were based on much higher implied volatility values than will be prevailing post the proposed changes,” said Athanassios Diplas, principal at Diplas Advisors. “Similarly, anyone directly trading these two ETPs, either long or short, whether for hedging or direct investment, will have to adjust their exposures, and incur the associated costs of rebalancing.”

In other words, you’re now paying exorbitant management fees for less leverage, and of course in the process wiping out premium across the entire option matrix.

With the market up double digits, SVXY is higher for the day — but options holders, especially out of the money holders, got REKT.

The silver lining.

“The reduction in leverage reduces the amount these products need to trade daily, and makes SVXY less likely to blow up again,” said Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors. “It’s harder for VIX futures to go up 200 percent in a single day compared to going up 100 percent in a single day.”

Traders on Twitter aren’t so enthusiastic.

options got smoked, especially SVXY. spoke to Proshares, they pretty much absolve themselves of the mess, saying they are not responsible for the derivatives of their products.

— Al Orn (@AlexOrn) February 27, 2018

Implied volatility on options has dropped by approximately 25% reflecting the drop in realized volatility that $UVXY will have with the lower 1.75X multiplier.

— Vance Harwood (@6_Figure_Invest) February 28, 2018

@GunjanJS Can you look into @ProSharesETF $UVXY $SVXY, they just screwed option holders overnight. @WSJ The OCC #42683 memo said "no adjustment" but why can't options already agreed by buyer/seller trade on the agreed prior terms.

— RobotandFrank (@RobotandF) February 28, 2018

NO fun if you were long anything accept deep ITM Options on $SVXY or $UVXY. Highlights unexpected danger of trading options on leveraged products. #TVIX #TVIZ

— Scott Somer (@ScottnearSMF) February 28, 2018

You're now paying ProShares 139bps/yr to force you to keep some cash around your $SVXY allocation, like you could have done before for free

— Matt Thompson, CFA (@dynamicvol) February 28, 2018

$UVXY $SVXY thanks for playing have a nice day

— It's a trap! (@_FIREnow_) February 28, 2018

$SVXY and $UVXY options holders today, after RULES change. NOTE: IT WAS IN THE PROSPECTUS pic.twitter.com/VwhKvVzRRm

— The_Real_Fly (@The_Real_Fly) February 28, 2018

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