This Week in Exodus: A Mid Year Update

It was an eventful week inside Exodus, with several developments and a year to date update. Late last week EDZ had flagged oversold and I took a fairly large position, equating to 20% of my assets. I booked a 7%+ gain earlier in the week.

On Friday, the market ripped higher. Amongst other sectors, the Pacific Banks look stretched. This is a chart of the Exodus oscillator that depicts overbought and oversold ranges. Clearly, we’ve closed at the high end.

For the week, oil and gas were the biggest losers.

Once again, silver and gold outperformed.

On the oversold side are the utilities. They sold off late last week and are now saddled at the low end of the recent range. Although I believe the sector is way overvalued, based on fundamentals, technical traders might want to take a look at the utes this week for a bounce.

Lastly, here is my YTD update. Bear in mind, I am no longer trading on gut instincts, or reacting to the market based on news events or breakouts, or playing earnings. For the entirety of 2016, I’ve decided to rely solely upon the Exodus algorithms for trades, coupled with some core thesis positions based upon what I believe to be the best ways to invest in this economic environment. Year to date, my gains stand at 4.04%

For the week ahead, I am expecting the market to continue its march higher, into new all-time highs–but then trade off mid to late in the week after investors wake up to the obvious facts that they’ve been made a fool chasing an overvalued tape into a harrowing news cycle.

If he means the market will dip and then soar back to all time highs, I don’t really see how a BREXIT II scenario might scare people now. But the message is inexorably clear: vote for Hillary and do the right thing. God only knows what D. Trump will do once in office. He might even levy tariffs against French lavender products or maybe fuck with the croissant trade.

“The arguments in the Brexit vote and in the American presidential campaign are about the same,” Hollande told reporters Saturday at a NATO summit in Warsaw. “In a friendly way, may I also give some advice to the American people to make the right choice when the moment comes.” He didn’t mention either of the presumptive candidates by name.

If elected, Hillary R. Clinton would become the first openly mentally ill President of the United States. As an equal opportunist, I say you give her a shot. I’d love to see her have a nervous breakdown and crack during a live press conference.

The concept is great. Some guy with amnesia has super human abilities to kick the asses of his fellow human and the intelligence to look at a map and memorize every single detail of it, in order to defeat more humans in single combat.

Matt Damon was born for this role. Everything else he’s done, sans Martian and Good Will Hunting, has been shit. Before Martian, he was doing a lot of weird roles, playing out of shape creepers. I was beginning to hate his existance after seeing him act a fool in Interstellar. Needless to say, I’m glad he’s back to acting in Jason Bourne movies. The new one comes out in late July.

Quick note: Jeremy Remmer was ok in the previous Bourne movie; but shame on the producers for making it without Damon.

If you’ve never seen any of the Bourne movies, start with the first and I promise you’ll be hooked and want to see the rest of them.

The S&P 500 closed at new and fresh and fantastic all time highs. Just two weeks removed from the devilish BREXIT vote, markets have, seemingly, erected itself upon a new petard and has skyrocketed in kind. All of the fear has been reduced to ash. Short sellers have been castrated and kicked into perimeter drains for all the world to see.

In spite of this robust American sledgehammer of an economy, the Federal Reserve remains idled, unable to move for fear of upsetting markets.

German 10yr bunds are yielding close to -0.20% and the entirety of the Swiss curve, all the way out to 50 years, is negative. All of these things are, of course, great news for equity holders.

All of the banks are mired in some sort of purgatory, eagerly awaiting for this glorious bull market to spread its tentacles to every crevice of the market.

Congrats!

The inversion of the yield curve has predicted every recession since the beginning of time, dating back a whole 6,000 years–according to my King James bible. Today’s jobs report was so fantastic, it caused a frantic circle jerking run to the upside. People are stampeding over one another to get a piece of the pie, like greedy little gluttons trapped in a house made from chocolate bars.

But then I swing on over to the bond page in Exodus and bear witness to our beloved yield curve, shrinking to new lows–now just 75 bps.

The smart money says otherwise. This is your Braveheart moment. Observe.

Those Russians are out of control again, always meddling in our affairs. Just before Russia started to bomb our operatives in Syria, they were doing just fine, expanding their little empire, driving around in our up armored humvees. Then they had to go ruin everything and kill the party. But we’re gonna teach them a thing or two now. NATO is ‘bolstering’ the eastern flank by sending 4 battalions, of the ‘robust’ varietal.

“These battalions will be robust and they will be multinational. They make clear that an attack on one ally will be considered an attack on the whole alliance,” NATO Secretary-General Jens Stoltenberg

Sure, it makes all the sense in the world to saber rattle against a struggling nation with 2,000 ICBMs.

Obama is contributing 1,000 of his Praetorian guard to Europe, in order “to enhance our forward presence in central and eastern Europe”. In addition to Poland, NATO is sending troops to Estonia, Latvia and Lithuania.

The fucking Russians, such aggressors.

I know, this is annoying as shit already.

“When is Fly’s fucking ark going to capsize and drown all giraffes aboard”?

Answer: Never.

The ark is impervious to jobs data or icebergs or anything else. One doesn’t simply board the ark; he lives on it. As such, I find myself living out a gentleman’s lifestyle aboard the ark, feeding the wild baboons, playing ball with the hyenas.

Sure, stocks are heading higher today. But crude is down. Gold is barely off. The dollar is higher against the euro.

What exactly are you celebrating? Last I checked, German bunds were still -.176% and our yield curve was tightening.

Could we be barreling towards recession, in spite of +287k jobs numbers?

Ask yourself this question. If these numbers came out last month, isn’t plausible that the Fed would have to follow through with their infantile threats and hike rates? You betcha.

The singular reason for “holding off” was due to the weak jobs report. Conveniently, these numbers come out in the nick of time, just when markets were on edge, providing succor for asset prices.

In other words, it’s a conspiracy. The jobs numbers are a scam, a complete fabrication to paint a narrative. Naturally, I don’t have any evidence to support my theory. I’m simply using powers of deductive reasoning to make my way through the layers of propaganda. It truly is a site to behold.

Prepare for more Fed speak, menacing us with hikes, followed up by another weak data point to place them in the ‘fag box‘.

The FDA put an end to JUNO’s charade yesterday, ordering them to stop trials, following the death of 2 people. As such, shares of JUNO are being demolitioned. The other prominent car-t play out there is KITE. That stock is down too, but well off the lows, after analyst’s converged to circle jerk around their shares.

Via Briefing.com

JP Morgan downgraded JUNO to Neutral from Overweight following the clinical hold placed on the company’s CAR-T candidate, JCAR015. Firm still has high hopes for the platform, but as of the moment, sees better opportunities elsewhere in the CAR-T space.

FBR Capital lowered their JUNO tgt to $61 from $73, due to the delay in timelines for JCAR015, noting they expect to hear additional details regarding the ongoing trial and updated timelines during the company’s 2Q16 earnings call in August. They remind that in the Phase I study conducted with JCAR015 that included approximately 10 patients pre-treated with Flu/Cy and 40 patients with Cy alone, a complete remission was reported in 82% of the patients and a complete molecular remission (CmR) was achieved in 66% of the patients.

Mizuho says they would be buyers of KITE on weakness. The firm notes that the clinical hold placed on JUNO’s trial in adult ALL highlights the well-known safety risks of CAR T cell therapy development. However, firm notes KITE’s trials are unaffected and continue to progress, and they would be buyers on weakness. They see several 2H catalysts for KITE: data from the pivotal ZUMA-1 trial in 2H16; an Investor Day in October should shed more light on the commercialization strategy – a vital piece of the puzzle given the novelty of the therapy, and an FDA filing by YE to be first to market in DLBCL. Maintains Buy & $80 tgt.

RBC Capital Mkts is at Outperform on KITE noting it does appear to them that the key primary difference between the JCAR15 clinical trial and KITE ZUMA-1 trial is JUNO’s use of a high-dose chemo (~3x higher) vs low-dose conditioning for KITE. This is important because NCI studies were using both high-dose and low-dose, and KITE determined that high-dose did not impact or improve efficacy. Therefore KITE learned from that (ASCO data) and has been using the low-dose regimen in all of their studies. Originally, JUNO was using cylcophosphamide only and then later added fludarabine to match the other programs using that, including JCAR14 (41BB).

Ok, I happen to have first hand experience with the craze that is taking place amongst all young people who’ve downloaded this app. Being the father of 3, ages ranging from 11-19, I’ve seen them and their friends go nuts using this app. Essentially, it turns them into real Pokemon trainers, sending them out into the streets to catch Pokemon. They can battle at designated gyms. The app is sheer genius, wonderfully created, and it has given both Nintendo and the Pokemon catalog a significant boost.

As such, shares of Nintendo shot higher by 10% in Japan. It trades here, via adr, under the ticker symbol NTDOY.

It’s also #1 in the Apple App Store.

Boom

Frankly, I’ve never seen anything like this. I was driving last night and witnessed scores of teens walking around with their phones out, in search for Pokemon. This is definitely bullish for the stock.

Are these people fucking insane? Can’t they see QE has caused negative rates and negative rates are, by definition, deflationary?

All we hear are money changing schemes to spur inflation, but never a single fiscal idea on how to stoke growth. Do you know why? Because we’re living through the Dark Ages of monetary policy, led by goblins.

“Given the very weak outlook for inflation, the ECB should stand ready to ease further if inflation remains below its anticipated adjustment path,” IMF staff said Friday in an Article IV report on the euro area. “Dis-inflationary pressures remain strong with 11 countries reporting negative inflation in May” and “with second-round effects weighing on core inflation.”

Under the guidance of the ECB, central banks in the euro area are currently spending 80 billion euros ($89 billion) a month, the vast majority on sovereign bonds, to drive up an inflation rate that hasn’t reached the institution’s goal of just under 2 percent for more than three years. Officials currently predict consumer-price growth will accelerate to 1.6 percent in 2018 from 0.2 percent this year.

“Downside risks have grown,” the IMF said. “External demand could weaken, while political risks have risen significantly, particularly related” to the situation in the U.K.

All European markets have been shattered to pieces during QE. More of the same is a recipe for disaster.