Cashin: All Eyes on Small Caps and the BOJ

The Great Marinator of Ice’d Cubes in Chief, Art Cashin, points to crude as being the obvious catalysts in this market and explains why stocks are so strong, in spite of the spate of poor earnings reports.

Looking forward, he thinks the fate of small cap domestic stocks hold the key to market sentiment and whether or not the BOJ can deliver on their depraved form of central banking.

Is there any truth to what Arthur is saying, or is he drinking at work?

Let’s have a look under the hood.

Here are the 1 week returns of stocks, grouped by market cap.

Over $50 bill: +0.10%
Between $10-50 bill: +0.18%
Between $5-10 bill: +0.39%
Between $1-5 bill: +0.33%
Under $1 bill: +0.20%

It looks like the sweet spot has been in market caps from $5-10 billion. But over the past month, with more data to analyze, there is a clear bias given to companies whose market caps fall under $5 billion. The highest returns could be found in market caps ranging from $1-5 billion. Within that market cap grouping, the winners are almost exclusively in basic resources.

As such, wherever oil goes, so will the market.

Bossman Gundlach suggests buying treasuries here, especially after the recent spike in yields. Amazingly, he thinks we’re at a point in this central bank QE narrative that ‘helicopter money’  might come into play.

Essentially, what that means is central banks giving money away. How the fuck do they think they can do that without becoming Zimbabwe? Or, maybe that’s the goal here. Who knows?

All I know is that earnings blow, the economy is Yellen soft, and Gundlach manages $95 billion and was inspired to run money from watching Lifestyles of the Rich and Famous.

I think it is a reasonable strategy to start legging into the Treasury market,” Gundlach said in a telephone interview.
“We’ve been buying a little bit today … we bought a small amount of guaranteed mortgages,” particularly Freddie Mac MBS, Gundlach said.
Gundlach, who runs $95 billion at DoubleLine, said he does not expect much from the latest Federal Reserve meeting but does expect somewhat “hawkish” language about the potential for hikes at meetings later this year.
Gundlach suggested that a “helicopter money” drop could be the government’s next big monetary and fiscal move to stimulate the U.S. economy.
“Helicopter money is going to happen,” he said.

TLT is moderately higher today, but well off recent highs. All ark dollars, apparently, have gone into oil stocks again.

Strong words for the hedge fund industry– coming from one of the best in the business, Dan Loeb from Third Point Capital.

“There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies,” the New York-based firm said in a quarterly letter posted on its website.

Third Point, which was founded in 1995 and lost 2.3 percent in the first three months of this year, described the industry’s performance as one of the most “catastrophic periods” that it could remember since the firm was started. It said the “increasing complexity” in markets over the past few months is here to stay.

Most investors were “caught offsides at some or multiple points” since August, Third Point said, when China’s surprise currency devaluation roiled global markets. The firm said market participants were hurt by bets against the yuan in February and investments in Facebook Inc., Amazon.com Inc., Valeant Pharmaceuticals International Inc. and Pfizer Inc.

“Further exacerbating the carnage was a huge asset rotation into market neutral strategies in late the fourth quarter,” Third Point said. “Unfortunately, many managers lost sight of the fact that low net does not mean low risk and so, when positioning reversed, market neutral became a hedge fund killing field.”

Here’s a free piece of advice for Dan and his buddies struggling to make ends meet in the stock picking business: get on over to Twitter. I’ve found everyone there to be quite the fashionable expert on the economy and for the management of money. They’re always right. To prove their success, I’ve seen many pictures of exotic vacation spots, as well as new cars and fast women.

Dan, if you want new cars, fast women and a chance to parlay in exotic places around the world with stacks of cash on your desk, do yourself a favor and visit Twitter and behold the expert opinions of so many astute and well qualified investors.

I’ve done my good deed for a lifetime. I can die now, knowing that I’ve made a difference.

The market is barely lower, after the world’s largest company missed…by a lot (Extra Trump). More than that was the horrid numbers coming out from a sundry of companies, like BWLD, TWTR and any number of banks of your choosing.

Apple is down 8% and the Dow is off by 40. Amazing.

While this can change as the day progresses, I can’t help but to marvel at how different this market is from what we’ve seen over the past two years. Gone are the days of false rallies and failed momentum. The market smugly presses higher, with crude marooned in the $40’s, after the energy sector has bled out to the tune of $100 billion in free cash flow over the past 12 months.

Everyone is so optimistic and filled with hope. If I didn’t have a brain, I might be fooled by it and sop up the koolaid myself.

What balls these hedge fund shills have, posting reports via Seeking Alpha for the explicit purposes of making a stock trade lower. This is all very convenient for these people who take positions before hand. It’s perfectly legal, apparently.

iBankCoin has a fairly large audience. Why, I’m missing out on huge pay days by not publishing hedge fund short reports on the site for a large sum of coin.

I wonder how many puts the catamites at Seeking Alpha bought before publishing the latest XON short piece?

The first report really crushed the stock. This being the second report in as many weeks, it’s having a much more subdued affect on the share  price.

Truth is, I think some of these short sellers do the market a great service. Many of their reports are spot on. My sole complaint is the obvious front running taking place here, a method of stock manipulation by which nefarious American Greed type scam artists will use to commit fraud.

In what is being described as the boldest move against foreign steel interests since 1978, U.S. Steel is trying to get China from cheating and stealing its way into the American steel markets.

The petition, known as Section 337 and used to protect against intellectual property theft, listed some of China’s top producers, including Hebei Iron & Steel Group and Anshan Iron and Steel Group and Shandong Iron & Steel Group Co [SDONGG.UL].
“We have said that we will use every tool available to fight for fair trade,” said U.S. Steel Corp President and Chief Executive Officer Mario Longhi in a statement.

“With today’s filing, we continue the work we have pursued through countervailing and antidumping cases and pushing for increased enforcement of existing laws.”

It comes after U.S. officials last week warned that China should take steps to cut excess output or face possible trade action and Australia said it will impose import duties on certain types of Chinese steel to protect domestic steelmakers.
China’s Commerce Ministry called steel a “mature product” where “intellectual property rights disputes do not exist”, and said industry from both the United States and China should work together to address overcapacity caused by weak global demand.
“So-called accusations of intellectual property rights violations have no factual basis. We hope the U.S. International Trade Commission will reject these accusations,” the ministry said on Wednesday in a statement on its website.

China has been dumping subsidized steel on our shores for a long time. It’s basically a welfare state for China, with the government paying steel makers to employ thousands, enabling them to dump steel on our markets for a fraction of what American steel makers charge.

Monetization is slowing. The Twitter is dying. The company is a house of ill repute.

Shares are plunging by more than 15% this morning, on much worse than expected quarterly results.

The analyst community are casting wide aspersions this morning.

Mizuho Securities notes, so far, 2016 is not looking rosy for the blue bird. MAUs were up only 5m sequentially, revenue came at the low end of guide and below expectations due to weakness from brand advertisers, and the 2Q revenue guide implies very modest sequential growth. Firm maintains Neutral rating given that it does not see any material near-term catalysts, but certain products/ad units could drive growth later this year or in early 2017. Firm is impressed by the product innovation at Twitter since Jack Dorsey took over, but the business model continues to lag. Remain on the sidelines for now.

Pivotal Research notes weak 1Q16 results and 2Q16 results suggest a worse-than-expected 2016 and longer-term growth trajectory. Despite firm’s own confidence in the still-favorable prospects of the business, investor confidence is unlikely to return any time soon. Continue to rate Twitter Buy, but reduce price target from $39 to $27 on a YE2016 basis. Advertising as-reported was up by +37%, constrained slightly by foreign exchange down from a +48% growth rate in 4Q15. More concerning than the deceleration was that O&O ad revenue grew by only +23%. Conservative guidance for the current quarter is sensible

RBC Capital notes Organic Rev growth is clearly decelerating; all-important MAUs are showing limited growth (though was a bit ahead of Street). Maintain Sector Perform, but lower ests and tgt to $20 from $23. Q4 Keys- 1) Better than Expected MAUs, firm remains cautious on TWTR’s ability to show meaningful user growth; 2) Continued Revenue Growth Deceleration; 3) Strong Margins; 4) Monetization Slowing.

Come hither Apple Computer corporation and the Buffalo Wild Wing entity. Your presence is no longer required in these convicted halls of Goldman, as you’ve proven to be unworthy of our grace. Heretofore, your attendance was quite popular amongst our customers and denizens of our banking interests. But now, you’re an albatross of the first magnitude.

Be gone from this place and erase it from your memories, forever, or until you come across a great deal of cash. Only then will you be welcomed here and considered to be something that we have ‘conviction’ in.

Yours everlastingly,

The Goldman Sachs Corporation

Apple target lowered to $136 from $155 at Goldman; Removed from Conviction Buy List, maintain Buy rating

Buffalo Wild Wings target lowered to $166 from $185 at Goldman; Removed from Conviction Buy List following the Q1 results

Super assholes.

The Wall Street Journal is reporting that Comcast is in talks to acquire Dreamworks for more than $3 billion. At or around $3 billion, that would equate for a massive premium to Tuesday’s closing price of approximately 30%.

Year to date, DWA is up around 5%. Both revenues and earnings have upticked recently, thanks to big box office smashes, such as Kung Fu Panda. Truth is, DWA is a giant turd, with limited creative skills as a studio. They’d be smart to cash in now, before Comcast figures out they’re getting ripped off.

He laid waste to Rafael Cruz and the road slob Kasich.

It looks like a clean sweep of 5 states: MD, PA, RI, CT and DE are all his. Some might argue ‘those a liberal states.’ Fuck off. This is a republican primary, not a general election. Moreover, the state of PA is as backward and checkered pants as they come, being the #1 state in the union in terms of bearing arms.

The results weren’t even close, utterly embarrassing for the other candidates. People literally hate them.

Stay tuned for Trump’s celebratory speech.

NOTE: Trump is up by sixty points in PA.