The Fairy Stock Father Grants the Market 107 NASDAQS

It was a solid day of short covering, on better than normal volume. Text books say we run another 2-3% before settling back in and down for a retest. Bear in mind, the currency wars aren’t done. As you enjoy the fruits of Fairy Stock Father’s labor and lavish yourselves with exorbitant gifts of degeneracy, remember the pain you felt last week–as your mind raced for ways to explain to your wife the sheer stupidity of your investment plan.

As for me, I wish I still had my 200% long SPY position. But a plan is a plan, and my sales are scheduled, etched in ancient tablets made from granite. I still have some exposure to SPY, 33% long with an additional 25% in TLT–which has done nothing but go higher. I will be selling the balance of my SPY position, as detailed in Exodus, on February 2nd.

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For the third year in a row, January is ending up a loser for stocks. The severity of this decline hasn’t been enjoyed by market players since the balling out days, when the lights were about to get turned off at the Treasury, of 2009. Those were grim days, indeed. So what’s next?

Naturally, history doesn’t always repeat itself, but often rhymes. With that in mind, it appears, either way we slice it, we’re entirely fucked for the month of February. Look at those 2008-2009 declines, boy (extra Raul).

data provided by Exodus

Or, maybe we relive the wonder year of 2014, a time and place when I had my single largest draw down ever, during the month of March.

Bottom line: I hope you’re enjoying the respite and have a mind about you to avoid diving into pools of hardened concrete.

Breadth is acceptable at 81%. There is broad participation in this rally. It has the feeling of pent up frustration being released out into the world. This is an angry move higher, designed to inflict damage to shorts.

Taking a look at the NASDAQ, clearly today’s move doesn’t even put a dent in the magnitude of the decline we’ve just had.

If this is a bear market, rallies are a natural occurence–but they’re always short lived. We moved from 5,100 to 4,400, a total loss of 700 NASDAQS. I can see this rally getting us back up to 4,750–before heading back south again.

Remember, we always retest, not matter what. That 4,400 mark will be tested again, trust in that.

In the interim, we have a stock and bond rally going at the same time. Talk about twighlight zone. I’ll take it, since I am 33% SPY and 25% TLT.

The market is giving you respite, but smart money is buying up yield, which is why REITs and utilities are doing so well.

I talked about this earlier this morning. The Bank of Japan’s actions are not in our best interest. They are manipulating their currency, in an effort to steal market share. Ultimately, we lose when the yen drops v the dollar.

Cramer hones in on this and ponders as to why traders are viewing this in a positive light.

Fourth quarter GDP came in at 0.7%, missing the estimate of 0.8%. Pray tell me, if we’re growing at 0.7% during the holiday season, a time when Americans are programmed to spend all of their savings, AND MORE, what do you think the GDP will do during Q1, 2 and 3 during 2016–post Federal Reserve induced cataclysm?

SPY futures are up 8, off their highs. TLT is now higher by 1.1%.

The result of the Bank of Japan’s blatant currency manipulation is a stronger dollar and flight to treasuries, both deflationary for citizens of this great steak’d nation.

Look for the dollar to continue to make gains v the yen, providing the robot lovers with the ammunition they need to unfairly compete with our exporters.

Interested in higher stocks? Fugetiboutit. You’re not getting shit, with TLT pressing new highs. As a matter of fact, you should be fading this rally–as it is built upon the empty skulls of brainless day traders.

Sure, anything could happen–I suppose. Then again, maybe it doesn’t. The point is, stocks can’t rally when U.S. treasuries are removing liquidity from the marketplace. The negative rate craze, which seems to be all the rage in Europe and Japan now, is lunacy and highly deflationary and detrimental to your financial well being.

Central governments love it, since they’re able to build bridges to nowhere with your money–that you PAY THEM FOR TO BORROW.

This is, by far, the greatest robbery and tax ever levied against the people on planet earth. Nevertheless, having 25% of my assets in TLT, I am happy for it.

Make no mistake, this is all about the yen, trying to recapture market share from China by devaluing their currency. It seems everyone is trying to devalue their currency at once, with exception to the United States, because the pie isn’t big enough for everyone. The world is a giant gluttonous pig, fat off of decades of excess spending, trying to stay afloat by stabbing each other in the back through currency wars.

Chinese-Japnese cross

The truth is, this is about the debt and the inability for governments to cope with it. This game of smoke and mirrors will continue, for as long as they can keep it going. But the deflationary vortex is real. Governments are stymied, unable to properly stimulate their economies because they are built upon a weak fabric.

The NIKKEI 225 has been on a rollercoaster session tonight–but it looks like it will end comfortably in the green.

European and U.S. markets should surge at the open, anywhere from 1-2%. It’s a risk on day, a well deserved respite after enduring a hellish three weeks of drawdowns.

The NIKKEI roared like a bat out from hell after the BOJ announced it was going to fleece their horde of millionaire octogenarians. At the highs, the NIKKEI was up 600 to 17,638. Then it plunged after people got all confused, and shit, forcing me to amend my headline and look generally childish in my reporting.

However, lo and behold, a more seasoned school of investor snatched up the NIKKEI bargain at 16,767 and have bid it up to where it stands now at 17,300, up 300 or so points.

S&P futures are partying again–higher by 9. I make no assumptions, however, as to where this all ends up. All I know is that people are being used as crash test dummies in the NIKKEI this evening and the folks at BBG news are having a grande old time reporting on it.

We are in full blown rally mode in Asian markets, as well as U.S./European futures, after the Bank of Japan surprised markets with an all hands on deck thrust into the abyss, moving interest rates to -0.1%. The dollar is soaring v the Yen. The NIKKEI is up more than 500–even crude is higher.

This rally is going to stick.

This is an important step towards fending off deflationary pressures, ignoring Japan’s aging population who keep their money tucked away in banks like morons. From hereon-forth, said morons will have to pay their local bank for the pleasure of holding their money.

The banksters have a strong racket going.

UPDATE: The NIKKEI gave up a 500 point advance and is now lower by 170. S&P futures are barely higher and the Bank of Japan played itself.

The fan boys at Bofa/Merrill (God I hate that fucking name) are out tonight, supporting the shit numbers that Amazon put forth. No mention of their absurd $100-700 mill operating net income guidance–just boolish talking points.

Maintain Buy; A setback but not a thesis changer While 4Q was disappointing, our long-term thesis is based on Prime drive market share gains (Prime customers grew a healthy 51% in 2016) and AWS valuation creation (higher than expected AWS margins suggest bigger long-term profit potential) and we believe our thesis is intact. We see Amazon as the best 3-4 year growth story in the sector on eCommerce penetration and cloud adoption, with a potential market cap of $500bn. We think 1x our 2016E GMV (over $200bn estimated) plus 5x our 2016E AWS revenues (over $12bn in estimated) could provide some valuation support.

Actually, I’m gonna walk back what I said in the first paragraph. Paul Bieber, likely the Father of Justin, said the $100-700 mill guidance was “neutral to positive.”

That makes sense. Nothing inspires confidence like a 700% range in possible earnings outcomes. It’s like playing a leisurely game of Russian Roulette, only with your money–instead of your brain.

Bieber maintained a $775 p/t.