iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
20,318 Blog Posts

No Bottom in Crude — Heading To Zero

Markets are +215 and I am having a miserable day. The fucking Nasdaq is +152 and I sold my DRIP on Friday, which is flying today. In its stead, I have FAS — which is lower, a bunch of old man stocks and some fucked mortgage plays. I was angling for financial rigging and a run today and got it — but not in the way I expected. Today’s run is laser focused on tech, healthcare, and tankers — naturally. I was FIRST to the tanker trade and have now watched that ship sail right by my nose.

DECISION TIME: cut losses or press on stubbornly?

It’s never a good idea to press on — because that’s what losers do. The right thing to do is reset and move on — forget about the bad trades and look at Dave Portnoy making a mockery of finance. That makes everyone ok.

The US 10yr is down a staggering 12bps to 0.62%, whilst markets are up. This is not your typical correlation and suggests someone or something is fucking with the matrix. My guess is the Fed. If you’re wondering WHY stocks are up as the global economy is completely shut down, the answer is simple. Stocks trade on emotion, the delicate line between greed and fear. The fundamentals will matter, but at a time when they matter. Now everything is settling into place and traders don’t know what the true damage to GDP will be. This is similar to many other black box trades I’ve mentioned before.

Eventually, the fundies will matter and stocks will get fucking cremated. Until then, we have a short squeeze taking place in one area of the market while the area I happen to be long is getting poleaxed.

Oh, crude is down nearly 7% to $20. There’s no point in discussing it any further. It’s going to zero.

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19 comments

  1. heckler

    I want negative oil prices and 50 cent gasoline

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  2. numbersgame

    I think the market and the President are still misunderstanding the virus numbers and their economic effects. The problem is equilibrium.

    The latest thinking is that the US confirmed cases curve flattens in 2-3 weeks. This is quite possible, maybe even likely. However, the follow-on thinking that the economy can start to get back to normal after that is compeletly wrong due to a misunderstanding of equilibrium.

    If you are in a row boat with a bad leak, then you start bailing. At some specific bailing speed/volume, the water flowing in through the hole is the same as the water you are bailing out. This is equilibrium. However, ***it doesn’t mean that you can stop bailing***. Simirlarly, when the curve flattens out, the US won’t be able to loosen restrictions and curfews. If they do, then the curve will just “unflatten” again.

    In fact, if it does take two weeks, our caseload will be so high at that point that the healthcare system will be well-over capacity (above its equilibrium). This means that we will be triage (death panel) levels, with high death rates, so if anything the restrictions woudl have to be increased to bring us to a lower equilibrium.

    I don’t have a feel for when te market will figure out that the economy will be bascilly shut donw for **months**, not **weeks**, but it shoudl be very interestign to see ehat happens after the Quarter closes. April Fools indeed…

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    • acehood

      The market isn’t the economy.

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      • numbersgame

        Okay… so what’s you point?

        DO you think that the market is pricing in that Q3 profits will be just as bad as Q2? That we will have a global recession?

        Don’t forget, that we started from an elevated point or rainbows and butterflies.

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  3. the_wolf

    Does anyone think Apache or any of these guys survive ?

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  4. purdy

    You were correct last night when you implied that, because many will be disappointed as stocks trade higher today, stock will go higher today.

    But as for your statement above that stocks trade on emotion, that is only occasionally the case. Too many non-humans and humans playing with money they didn’t earn.

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  5. tjnyt

    Same here, DJ up 500, i am down 7%

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  6. numbersgame

    So I have some 3x bears, but I’m long a few stocks that I’m willing to hold through S&P 2000

    I sold CLX at $200, but rebought it at $165.

    Also, I bougth EBAY @$28.21. It’s up 10%, so I’ll share my seeds.

    My thinking is three-fold:
    1) e-commerce is less affected by the virus
    2) as peopel lose their jobs, they will sell their useless crap to raise money for stuff they actaully need isntead of stuff they *think* they need.
    3) unlike other e-commerce stock (AMZN…) the stock was hammerred

    The only weakness is that the balance sheet isn’t as cahs heavy as some other tech companeis

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  7. tha pirate

    Just watched a vid of Portnoy accidentally hitting the ‘sell’ button instead of ‘buy’ and supposedly blowing $40K in the process..
    Trading is NOT for everyone laddies. Arrr.

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  8. tjnyt

    Peak degeneracy.

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  9. numbersgame

    India is going to have a death toll in the millions as a direct and indirect cause of the coronavirus.

    How do you spread a virus? Like this:

    PM Modi (basically the Indian Donald Trump) has put New Delhi on lockdown
    -> unemployment has skyrocketed in the city instantly
    -> no social net, so many can’t afford to live in the city without a job and are froced to leave
    -> peopel gather in large crowds (by the **thousands**) at bus and train stations
    -> people disperse to their home village

    Besides the fact that Modi has now *optimally* dispersed the virus into villages with *zero* ventialtors, you will have mass starvations and simialr recessioanry effects. I would probably feel worse for India if they didn’t elect and re-elect Modi…

    The fact that he has cmompeltly isolated Kashmir may turn out to be a blessing in disguise for them.

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  10. numbersgame

    Unintended consequences of the FED’s buying bonanza:

    “Mortgage bankers are sounding alarms that the Federal Reserve’s emergency purchases of bonds tied to home loans are unintentionally putting their industry at risk ”

    https://www.zerohedge.com/markets/mortgage-lenders-demand-fed-bailout-after-blaming-fed-forcing-staggering-unprecedented

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  11. tjnyt

    Light at the end… for the shorts….

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