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Dr. Fly

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.

Futures Are Way Up — Look At How Stupid You’ve Become

It’s amazing how many of you idiots shorted stocks into the close because the Dow was only up 164. You keep waiting for shoes to drop; meanwhile spears keep getting thrown thru your chest cavity.

Dow futures are +140, Asian markets are sharply higher, and European futures are edge lording a tad higher.

It’s rather humorous, is it not — how dreadful an investor you are. That’s ok, do not feel bad. I will permit you to toss stones at me whenever one of my short vol trades blow up for 100% drawdowns or whenever CNBC visits a crypto-shit proxies office festooned with shit stained rugs, sending shares sharply lower.

I can take it — believe me.

But what I cannot take is stupidity. Quit gambling away your future on everyone else’s being ruined. Join the party and sip on the Kool-aid. It’s quite delicious.

NOTE: The Exodus Quant fund is CRUSHING SKULLS so far and will undergo a radical realignment come March 1st, should everything remain as is.

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RARE FLAG ALERT: Exodus Nearly Chimped Out — All is Fine For Now

Earlier today an apocalyptic flag was given in Exodus, a forced oversold signal that made all scores plunge. On face value, it looked like an error — an aberration of some sort that happened as stocks climbed higher. It was, indeud, the rarest of flags and it has never happened in our 10 year history.

The reason?

Correlating factors with bond yields and equity prices hit a tipping point. This is supported by decades of research that proves, inexorably, stocks do well when yields go higher. This trigger is tied to the 30yr bond. Since then yields have gone back down and the flag was removed, but if yields should race lower again — the scores of Exodus might be entering a phase of suppressed scores which will change the dynamics of all oversold/overbought prices.

Aside from merely grading stocks based on technicals and fundamentals, we have a ‘sub rosa’ category tied to currencies, commodities, treasury yields — which is also pinpointed at specific sectors. For example, lower oil prices is a negative for drillers, but a positive for airlines.

Into the bell, you should be disappointed in the market — giving up a gigantic rally like this. From what I’ve gathered, the only reasonable area of investment today is crude and crude related stocks.

I exit the day happily long CHK, ESV, and FTK.

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RIP Aubrey McClendon: I’m Buying Your Company Now

Several years ago the former founder of CHK drove directly into a brick wall at 100mph. The coroners concluded it was NOT a suicide, in spite of the fact that Aubrey was facing a decade in prison for fuckery largess.

“He pretty much drove straight into the wall,” Balderrama said on March 2, according to NBC affiliate KFOR. “The information out there at the scene is that he went left of center, went through a grassy area right before colliding into the embankment. There was plenty of opportunity for him to correct and get back on the roadway and that didn’t occur.”

Since then, his company has suffered mightily, due to its highly leveraged balance sheet and struggling price of crude.

All of that is about to change, now that I bought the company.

Effective immediately, “The Fly” is in charge of Chesapeake Energy. I expect those barrels to be filled with a fuckload of oil and the workers in the field, 24 hours per day, toiling away to increase shareholder value. If not, I will shut the company down and everyone will have to live off welfare.

GET TO WORK (snaps whip).

This morning the company reported BETTER THAN EXPECTED results. We have the best oil companies, don’t we folks?

Chesapeake Energy beats by $0.05, beats on revs (2.63)
Reports Q4 (Dec) earnings of $0.30 per share, $0.05 better than the Capital IQ Consensus of $0.25; revenues rose 24.6% year/year to $2.52 bln vs the $1.26 bln Capital IQ Consensus.

Average 2017 production of approximately 547,800 barrels of oil equivalent (boe) per day, up 3 percent compared to 2016 levels, adjusted for asset sales; oil production up 11 percent in 2017 fourth quarter compared to 2016 fourth quarter, adjusted for asset sales.
2018 Outlook

Projected 2018 capital expenditures program of approximately $1.975 – $2.375 billion, down 12 percent compared to 2017 levels, using midpoint.

Total 2018 production, adjusted for asset sales, expected to grow approximately 3 percent year-over-year, using midpoint; oil volumes adjusted for asset sales, expected to grow by approximately 5 percent compared to 2017 levels, using midpoint.

I stepped into the stock sideways, looking at the shares higher by 15% for the session. The rationale was and is simple: we are looking for much higher prices. By “we”, I mean it in the most royal way possible. You’d be wise to speak as I do, especially at cocktail parties and during charitable venues. It throws people off-guard, forcing them into spiraling identity crises.

On the matter of oil, it is my belief House Trump and House Saud struck an accord earlier this year to walk the price of crude inexorably higher. Following the arrest and seizures of personal wealth inside the Saudi Royal family, we’ve seen the price of crude steadily increase. This bodes well for Trump, who will then shill for more oil jobs — succoring Americans into a false sense of security that all will be well once we keep drilling for the black gold. Truth is, you can suck all of the black gold dick in the world and it would have no affect on the price of crude in the interim, as that is quite literally controlled by OPEC — which is controlled by House Saud — which circles back to us.

It is a fucking tax, people.

Top picks: FTK, ESV, CHK and CLF.

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Morning Poppers (Bitcoin Has Crashed Again Edition)

Your beloved Bitcoin has crashed below $10,000 again. How stupid does that make you feel on a scale from 1-10?

Meanwhile, Dow futures made a full recovery, up from -150 to green. But the Europeans aren’t that lucky, as their markets are still mired with losses. Generally speaking, Americans are an improved version of Europeans, as a civilization. Albeit, we have no real culture and we’re mostly a cadre of gun slinging, hamburger eating, absolute fucked faces — things are far worse in Europe.

Fed’s Bullard is warning that too many rate hikes might fuck up the economy. That’s very nice of him to offer us a bit of honesty in between all of those lies he regularly spews.

Ray Dalio’s dementia deepens, alongside his gigantic short position on the market. He’s now calling for a 70% chance of recession by 2020. Impossible.

“I think we are in a pre-bubble stage that could go into a bubble stage … The probability of a recession prior to the next presidential election would be relatively high, maybe 70 percent, Dalio said during an appearance at the Harvard Kennedy School’s Institute of Politics.

And, here are some other headlines.

Shutterstock (SSTK) announced its investment in China’s leading creative social network and artist platform with nearly six million registered users, ZCool Network Technology Limited. ZCool has been the exclusive distributor of Shutterstock’s creative content in China since 2014.
LendingTree reports Q4 EBITDA and rev above guidance; guides Q1 revs in-line; reaffirms FY18 guidance given at Investor Day in December
Gibraltar Industries beats by $0.07, beats on revs; guides Q1 EPS below single estimate, revs in-line with single est; guides FY18 EPS above consensus, revs in-line
Mellanox Tech target raised to $94 at Stifel following earnings
Chesapeake Energy beats by $0.05, beats on revs
U.S. Silica target lowered to $42 at Cowen
Bloomin’ Brands beats by $0.02, beats on revs; guides FY18 EPS above consensus; Combined U.S. comparable restaurant sales were up 3.3% with traffic up 1.8%
H&E Equipment reports Q4 (Dec) results, beats on revs
Wayfair misses by $0.06, beats on revs; guides on call
KLA-Tencor upgraded to Neutral from Negative at Susquehanna
Helios & Matheson initiated with a Buy at Canaccord Genuity; tgt $15

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Reminder: Rising Interest Rates is Good For Stocks — Really Good Damn It

Every market analysis that I read discusses the deleterious pangs that higher interest rates are due to impose on equity holders. The over-arching sentiment is one that bodes poorly for both bond and stock holders. I never quite understood the need for forced interest rate hikes, controlled by an unelected board of people who rule over America’s middle class like a monarchy. Who the fuck does the Federal Reserve think they are? They can unilaterally toss America’s entire economy into a tailspin with just one rogue statement — cause the deaths of millions with policies that break the fabric of commerce.

Here is the 10yr bond that everyone is freaking out over. Once it surpasses 3%, the world is going to end.

This from the absolute faggots at Merrill Lynch, America’s most prolific boiler room operation.

“You’re on the cusp of leaving the sweet spot, but that being said, the rising rates are not necessarily bad for the stock market. Yes, from your finance courses, a higher discount rate means you’re going to see lower valuations, all else being equal. But the ‘all else being equal’ missing ingredient is a high growth rate,” said Marc Pouey, equity and quant strategist at BofAML.

Pouey said the “sweet spot” for stocks is a 10-year yield between 2 and 3 percent, but the fact that not only U.S. growth but global economic growth is strong makes it more likely that stocks will be able to positively navigate a zone where the 10-year is above 3 percent.

“There is no magic number. You have periods of positive correlations and periods of negative correlations,” Pouey said.

Treasury strategists say the 10-year could make a quick run toward 3 percent and could do that as more information comes out from the Fed. The Fed did not tip its hand, in the January meeting’s minutes, as to whether it would raise rates more than the three times forecast. But some Fed watchers viewed the comments in the minutes as being more confident about the path they are on. After its March meeting, the Fed will release new projections for rate hikes and the economy.

“Now the yield trend is intact. The new high is important,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “It looks like 3 percent is the next stop. … I think [stocks] can get used to this at some point. They certainly didn’t like it today. … I think it’s important for stocks to see how many times [the Fed] will go this year. They signaled yes they are going in March. It’s still up in the air how many times they will go this year.”

As for the market freak out because MUH higher rates.

As for rising rates, Pouey studied 15 periods of rising 10-year yields since 1954 and found stocks generated positive returns 90 percent of the time. “I think what’s interesting in this bull market is the best year for stocks was 2013, when you saw the ‘taper tantrum,’ 100 basis points higher in yield,” he said. The S&P was up more than 29 percent that year.

BofAML said over the past 64 years, the correlation has ranged from negative 63 percent to positive 75 percent. The relationship tended to be negative in some of the 1960s through the 1990s, with rising yields being negative for stocks. The average level of rates then was 7.5 percent.

But in this century, the correlation was more often positive and the average level of rates was 3 percent. The relationship with rates and stock returns peaked about five years ago, but has stayed positive and has been trending higher since the trough of 13 percent in 2015.

Rising rates could hurt corporate margins, but the impact should be gradual since large-cap debt is mostly long term and fixed rate, BofAML said.

“Inflation is probably more important, and the sweet spot is 1 to 3 percent,” Pouey said. The most recent reading was January’s headline CPI at 2.1 percent annualized.

That’s right. The last time rates rose was in 2013, due to the ‘taper tantrum.’ That was the last year stocks were any good under Communist Obama. Remember all of the good times we had back then, playing the game, getting rich?

Bottom line: inflation is a fiction. Rates will not go up too much more, unless the rigged CPI shows inflation greater than 2.3%. After this phase of consolidation passes, expect stocks to break the fuck out to the upside again — just in time for St. Patrick’s Day.

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ATTENTION MORON $ROKU SHAREHOLDERS: YOU SHOULD HAVE READ THE PROSPECTUS — IT WAS ALL THERE!

I was having some smoked salmon with a bit of dill after the bell when I was approached by someone asking about the ROKU earnings report that just came out and positively raped shareholders for 18%.

Here’s the ‘news’.

Roku beats by $0.17, beats on revs; guides Q1 revs below consensus; guides FY18 revs above consensus (41.10 -0.08)
Reports Q4 (Dec) pro forma earnings of $0.06 per share, $0.17 better than the two analyst estimate of ($0.11); revenues rose 27.8% year/year to $188.3 mln vs the $182.54 mln Capital IQ Consensus. Platform rev +129% to $85 mln; player rev -7% to $103 mln.

Q4 2017 gross profit grew materially faster than revenues, up 64% year-over-year to $73.5 million driven by an increasing mix of higher-margin platform revenue which represented 87% of total gross profit in the fourth quarter of 2017, up from 65% in fourth quarter of 2016. This was a key driver of gross margin expansion of 9 percentage points to 39% in the fourth quarter of 2017.

Active Accounts increased 44% YoY to 19.3 million at quarter end; Streaming Hours grew 55% YoY to 4.3 billion hours; Average Revenue Per User (ARPU) grew 48% YoY to $13.78 (trailing twelve-month basis).

Co issues downside guidance for Q1, sees Q1 revs of $120-130 mln vs. $131.71 mln Capital IQ Consensus Estimate; gross profit $52-58 mln; EBITDA ($16-10) mln

Co issues upside guidance for FY18, sees FY18 revs of $660-690 mln vs. $661.58 mln Capital IQ Consensus Estimate; gross profit 275-295 mln; EBITDA ($25-10) mln.

“We enter 2018 with strong momentum and are very encouraged by the trends we are seeing in our Platform segment which we expect to contribute the majority of our total net revenue in 2018, and the vast majority of our total gross profit. Given the trajectory of the Platform segment, we expect rapid revenue growth and gross margin expansion to continue in 2018. We plan to remain focused on driving active account growth, overall gross profit dollar growth, and increasing customer value. Our profitability goal for the year is to operate our business at, or near, break-even on an operating cash flow basis while we reinvest gross profit into strategic areas that can drive continued long-term growth.”

Ooh, everyone is so surprised now because ROKU missed earnings and its shares are no longer viable on the exchange — a total fucking waste of time and money. But, had you done your research and took the time to READ THE PROSPECTUS, like our beloved James Cramer likes to warn, you would’ve known the risks.

Here, I grabbed an extract from the ROKU S-1 for your reading enjoyment.

See, it’s all there in black and white, outlining all of the many risks associated with buying ROKU. Ultimately, as technology evolves and Apple gets even bigger, ROKU will  just go away — like a bad dream on a rainy summer night.

You have only yourselves to blame.

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Dollar Soars After Powell Fed Measures Cock Size Against Investors — Rapist on the Loose!

Okay, what exactly happened here? I was out speed eating sandwiches and came back to a market in turmoil, up only 35, and the dollar fucking ripping against the euro, +0.40%. Moreover, the price of gold got Swiss cheesed up; naturally right after I stepped in and bought some JNUG. I should’ve read the prospectus — fucked again.

Federal Reserve officials see increased economic growth and an uptick in inflation as justification to continue to raise interest rates gradually, according to minutes from the central bank’s latest meeting.

Though the policymaking Federal Open Market Committee chose not to hike its target rate at the Jan. 30-31 gathering, members indicated clearly that the path ahead for rates was higher.

Officials concluded that “upside risks” to economic growth had increased thanks to tax cuts, increased consumer spending and confidence and a general plethora of signs that growth was moving along at a sustained pace. Members said they have revised upward the economic projections they made at the previous meeting in December.

“A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,” the summary stated.

“Almost all participants” saw inflation moving up to the Fed’s 2 percent inflation goal over the “medium term” as growth “remained above trend and the labor market stayed strong.”

Either everyone trading stocks today has Downs syndrome and are unable to properly read a few poorly written paragraphs, or something is afoot here. What in the world did you think would happen? Did you, for some reason, believe the Fed would not hike rates in 2018 — just because a few morons forgot to read the XIV prospectus, causing the market to collapse a few weeks back?

NO!

Powell doesn’t give a shit about XIV or anything else for that matter. He’s a God damned lawyer — a heartless demon who is only interested in one thing: billable hours. Trust me when I tell you, even though he’s on salary at the Fed, he’s thinking billable hours and will always take the path of most resistance, whichever keeps him busiest to justify his existence. He’ll do and say anything to hide the fact that he’s a useless wastrel, filling a post that is literally redundant and ceremonial.

Will he cause a market crash?

Of course he will!

Any idea how many fucking billable hours are in a market crash? Lots. Jerome will be toiling away like Scrooge on Christmas Eve — figuring out ways to tie America into pretzels, the hard type too, just so he can exert leadership.

Yellen wasn’t interested in any of that — mainly because at some point in her long life — she was a woman. Members of the fairer sex do not concern themselves with needless battles because they do not have a cock to measure; but Powell does.

That asshole is gonna measure his cock all over you people — making himself known and feared — no different from a rapist.

Welcome to the Powell Fed.

UPDATE: The last 10 minutes of trade were lovely. That’s what I call ‘flash boiling.’

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GET INSIDE THE FUCKING GOLD MINE

Gold stocks are down ~8% over the past month. Coincidentally, my quant strategy in Exodus is also +8% for the year, absolutely poleaxing the broader indices — making the lot of you look like illiterate fools. Yes, the strategy is fairly static — updated once per month — all very trackable. You’d be wise to immerse yourself in its grandeur.

As for gold/silver: our predictive oscillators are implying the sector is oversold. I am merely spitballing here — but I think people are fucking retarded for thinking that rates can go up without inflation, or vice versa. Something has to give. At a bare naked minimum, stocks get shattered to pieces and the gold trade is once again a safe haven.

Bottom line: the dip in gold was fake, a scheme purported by crisis traders, and it never happened. Get in the goldmine; go and see for yourself. It’s wonderful down here. The air is brisk and the food…to die for.

I bought JNUG at ~$13.60.

NOTE: I sold KODK, in light of the crypto correction underway. Trade netted +14%.

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Morning Poppers (BTFD Edition)

European stocks are lower today, deservedly so. Additionally, Dow futures are -58, but Nasdaq are +18. Both gold and oil are weak and the dollar is higher v the euro by 0.3%. Bitcoin cracked below $11,000 again and the cryptoFAG space is in flummox again — beset by losses.

After the great big wonderful melt up of stocks in early January, it appears we’re in for a bit of consolidating. Gone are the halcyon days when we could buy a stock after seeing it join the blockchain, riding it up for a 500% single day return. Nowadays, we are forced, almost cruelly, to endure small moves — which takes forever to materialize into something meaningful.

I hope we can put all of this nonsense behind us and run higher again, this time without the shackles of austerity.

Meanwhile, there’s some news to review this morning.

TTPH +10.1% (enters into an exclusive licensing agreement with Everest Medicines to develop and commercialize eravacycline in mainland China, Taiwan, Hong Kong, Macau, South Korea, and Singapore)
MOS +2.6% (upgraded to Overweight from Neutral at JP Morgan)
Tile Shop misses by $0.10, misses on revs; comps -4.9%; traffic weakened during Q4 due in part to a shift in promotional strategy; names Cabell Lolmaugh as COO (8.45)
Owens Corning beats by $0.07, beats on revs
Six Flags target raised to $78 at Stifel — Dubai chatter spooks investors; Sell-off creates buying opportunity as core biz remains healthy
Garmin beats by $0.03, beats on revs; guides FY18 EPS above consensus, revs above consensus; Announces cash dividend plan for 2018
The Information discusses that Amazon (AMZN) made an offer to purchase August Home in mid-2016, but was rejected
Capital One downgraded to Neutral from Buy at Nomura
HollyFrontier misses by $0.13, beats on revs
Advance Auto beats by $0.13, beats on revs; guides FY18 revs below consensus
U.S. Silica misses by $0.02, reports revs in-line
Cheniere Energy misses by $0.08, beats on revs

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False Flagtards Run Rampant Again, Post Parkland School Tragedy

It seems there is a sickness in this country and it doesn’t have anything to do with mental health. If you boil down everything to a singular common thread, amongst both the extreme right and left, it is hatred for country. This hatred makes them cynical of any news being reported on teevee. Think about how dreadful their lives must be, not being able to believe in anything.

A great man once said, “the mind that alters, alters all.”

From my vantage point, this all started with 9/11. Mostly everyone I’ve talked to about 9/11 thinks the reported narrative was bullshit, from ordinary folks watching it on teevee to marines on the ground being told to evacuate just before building #7 came down. Because of the failures of the war and the bullshit that came with it, a fringe element has grown into a fucking monster in this country — laying the seeds of doubt in just about everything from Obama’s birth certificate, the gender of his wife Michelle, to Sandy Hook shooting, Vegas, Osama Bin Laden’s death, Andrew Breitbart’s death, Seth Rich, The Hillary emails, The Russian Trump theories, and now this: The Parkland Shootings.

I must admit, I do entertain myself, on occasion, to read these nut job theories, but only for entertainment value. Even if they were true, what am I supposed to do with that information? Moreover, how is believing in that shit going to make my life better? Distrust in government is normal and I understand why people are curious, since just about everything out of the media and the government seems to have malicious intent. But spending an inordinate amount of time investigating these ideas, unpaid, is more than unhealthy — it is deranged.

Now there’s a bunch of videos floating around calling the Parkland shooting staged, stocked with crisis actors whose only purpose is to help revoke the 2nd amendment.

An aide for Rep. Harrison out of Florida was fired today for floating the idea that David Hogg, an outspoken student at Parkland calling for gun control, was a crisis actor.

Via Tampa Bay Times:

“Both kids in the picture are not students here but actors that travel to various crisis when they happen.” Asked for backup to that claim, Kelly sent another email with a link to a YouTube conspiracy video about one of the students.

“There is a clip on you tube that shows Mr. Hogg out in California. (I guess he transferred?),” Kelly’s email read.

Hogg has come under fire by fringetards because he’s been outspoken. Speaking from personal experience, having lost my Father due to gun violence, I can tell you the temptation to simply say “ban all guns” is very overwhelming, especially after a traumatic event. Give the kid some slack.

Here’s some of the stuff being floated on Twitter.

So the rationale behind Hogg being a crisis actor is due to his CBS appearance in 2017 while living in LA. People do move, you know.

And here is a compilation of clips showing students say they were trained for such an event 6 weeks prior. And? My kids have fire drills all the time. If a fire should break out, does that mean the whole thing was staged?

Some people are just sad and aren’t thinking this through all the way. When in doubt, be nice and show some decorum.

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