The Ackman-Einhorn Spread Has Widened to 2400 bps

Both Greenlight and Pershing shed about 20% in 2015. One fund manager learned from his sins and corrected (extra Delbert Grady) his ways, while the other, wantonly, and aggressively, Eddie Barzoon’d himself–barreling down Wall Street like a fucking errant bowling ball to the tune of a negative 21 odd percent drubbing.

This evening, in an email sent out to clients, Einhorn’s Greenlight capital reported it was up another 1.9% in February, putting it ahead by 3.3% for the year. Gains were most abundantly found in his KORS and M positions, as well as his shorts in ‘bubble’ stocks as well as his long position in gold.

On the other side of the mountain is a certain Mr. William Albert Ackman, currently under siege in an enormous bet gone wrong in VRX, as well as his HLF position careening upwards–exacerbating losses ranging to and from 18-23%.

I’d love to get paid to borrow money too. I could envision myself stepping into my local bank, top hat and cane in tow, demanding to speak to the manager. Upon being seated in his office, I’d remove my white gloves and ask him to give me 1 million dollars, which could be invested at my discretion for the benefit of only myself. To this end, I’d demand that, upon receipt of these monies, he pay me an interest rate for safe keeping such a large sum of money. I’d then walk out, bid everyone a good day, give them a tip of the hat, and jog on.

Japan sort of did that tonight.

The Japanese government got paid to borrow money for a decade for the first time, selling 2.2 trillion yen ($20 billion) of the debt at an average yield of minus 0.024 percent on Tuesday.

The sale drew bids for 3.2 times the amount of the securities offered, according to the Finance Ministry. Japanese government bonds of as long as five years in maturity sold at a negative average yield for the first time last month, after the Bank of Japan pushed yields lower across the curve with the announcement of negative interest rates Jan. 29.

Wait for it.

“There aren’t that many bonds available in the market, and the feeling of a lack of supply has strengthened,” said Souichi Takeyama, a rates strategist in Tokyo at SMBC Nikko Securities Inc., who said the average yield may well be below zero. “If investors sell bonds now after having bought them when yields were positive, there’s the risk they won’t be able to reinvest with positive yields later, so they’re reluctant to let them go.”

Fuckery, largess.

Since I have a downward bent to my stock market bias, I felt it was incumbent upon me to provide you with some ideas to toss into the flaming barrel of garbage, while relishing in its pungent smells of perfidy.

These stocks perform miserably during March, a month that is known for outperformance and the beginning of the idiot American tradition known as ‘the driving season.’ It’s also host to both Drunken Irish day and Easter this year, something that is considered by some to be a dark omen that will precede the very end of the world that Jesus fought so hard to avoid from happening.

These stocks suck in March.

(stock, percentage of times down in March, percentage loss)

JKS 80% -12.1%
YOKU 80% -11%
RDCM 76% -8.9%
CF 80% -3.6%
VC 80% -3.2%
IPGP 77% -2.66%
QLIK 80% -2.48%
INXN 80% -2.2%
SIL 80% -6.1%
EGPT 100% -4.8%
FXY 77% -0.97%
DBA 77% -3.18%
CYNA 100% -15%

It’s worth noting that the SPY has risen in 69% of time in March, dating back to 1993. Moreover, last year was the first down march since it fell by 0.8% in 2008. It is, inherently, a very strong month for equity markets, one that has lulled many investors to sleep, prepping them for the sharp contrast to come in June, which has wreaked havoc upon portfolios, with regularity, dating back to the Tontine Coffee days.

The ark, normally, is an ill performer in March. As you know, it’s a very rare occasion for the ark to be anchored in port for repairs.

The media is doing a great job of not reporting on the wholesale invasion of ancient european countries by savages. They are depicted as poor women and children in search of succor by most in the media. The truth is a lot more insidious than any of them want to believe. These are belligerent military aged men, who aren’t respecting the traditions or laws of the nations they’re seeking refuge in.

I do believe as the warmer climes prevail over this part of the world, the migrant issue will become an unsustainable deleterious drag on the Greek economy, forcing them to finally exit the Euro, or threaten to do so in the most serious of ways.

This is a demographic altering invasion that will change the face of Europe forever.

What sort of horseshit is this? Cramer is out again with his voodoo charts, suggesting if the market should indeed trade higher tomorrow, even by the most meaningless of ways, then henceforth we shall soar to new highs, summarily ignoring all fundamental concerns.

While a rally may indeed be in the cards, I find it very childish to rally around the idea that tomorrow’s trading session holds the skeleton keys to the fate of global equity markets. As the market moves higher, accordingly, the news flow will become exceedingly bullish. The same could be said for when markets drop. As such, the noise is loudest by people talking their books at these important inflection points.

Until this time, the opinions of a certain James Cramer, have hitherto been of the ursine varietal–regularly running about the earth warning others of an impending doom. BEHOLD his metamorphosis from mouth foaming mad bear into a red faced steaming bull.

Things have gone from bad to worse at the embattled drug-scam company, now under SEC investigation. I would expect nothing less from a Canadian based company, home of the Blacked Berry and Nortel Network.

Their statement goes as follows:

In response to media inquiries, Valeant confirmed that it has several ongoing investigations, including investigations by the US Attorney’s Offices for Massachusetts and the Southern District of New York, the SEC, and Congress. With respect to the SEC investigation the Company confirmed that it received a subpoena from the SEC in the fourth quarter of 2015 and, in the normal course, would have included this disclosure in its 2015 10-K. We do not have further detail to provide at this time

In other words, they’re fucked.

Speaking of which, no word on how this affects Cowboy Bill Ackman’s year to date boondoggle. Word around the street is that its been quite onerous, on numerous fronts.

Aside from Broadway Bill, Valuact, Sequoia and Paulson are fervent and zestful bagholders of the Michael Pearson’s playhouse of smoke and mirrors.

If this fucking thing crashed into my car, I’d take a crowbar to it and destroy it, from soup to nuts.

The car, a Lexus sports utility vehicle, hit the left side of a public transit bus as it was attempting to avoid some sand bags on a road in Mountain View, California. The automobile had a test driver, who saw the bus approaching in the mirror but “believed the bus would stop or slow to allow the Google AV to continue,” according to an accident report filed with the state’s Department of Motor Vehicles.

Google is betting that its efforts will lead to a future when a large number of cars on the road will drive themselves, and has been testing autonomous vehicles on streets near its headquarters for the past few years. The company acknowledged that the technology still needs work. The incident with the bus happened because the car’s software also predicted the bus behind it would yield so it could merge back into traffic.

“We can imagine the bus driver assumed we were going to stay put,” Google wrote in its February monthly report on self-driving cars, which Bloomberg obtained. “Unfortunately, all these assumptions led us to the same spot in the lane at the same time. This type of misunderstanding happens between human drivers on the road every day.”

I can’t wait for these things to start littering the rush hour lanes.

It looked like the market wanted to rally a bit, then the dust storms settled upon Wall, and investors began to choke on their own bullshit.

At the same time, Pershing Square is being dismantled, with VRX taken to the woodshed, off by 16%. That equates to a $190 million loss for the old Gotham manager.

Separately, government bonds continue to outperform.

I am short of complacency in global terms. Save yourselves from heinous sized losses. Board the ark.

In spite of the indices up a little, there is significant buying in many risk assets today, stemming from oil to high valued restaurants.

Shares of SHAK are on the move higher today, as well as members of my TWDFM (these will definitely fuck me) stocks.

Taking a look at the broader market, one could easily see there’s interest to buy.

The bulk of the selling is ripping apart both the biotech and banking sectors, with a keen focus on the shares of VRX, whose decline is shattering both the hopes and dreams of many prominent hedge fund managers.

Aside from risk oriented stocks, both bonds and utilities are climbing too. I suppose there is a divergence of sorts taking place today amongst asset allocators. Either way, the market looks strong and should build upon recent gains.

Citi is trying to scare people with this note, pointing to an eerily quiet primary bond market and a total disastrous high yield market, one that has seen a 75% drawdown in issuances.

With $570 billion in maturities scheduled to get refinanced by year end, Citi is fatalistically ominous when it comes to the lack of activity in the best rated credits. Moreover, they declare the ‘no go’ credit shutdown days, over the past 12 months, exceeds that which was endured during the financial crisis of 2009.

“It’s the increased irregularity of the new issue flows that’s concerning, particularly since we may have something on the order of $570 billion of maturities to get refinanced by year-end,” write Citi analysts led by Stephen Antczak. “Throw in the M&A pipeline, and it’s a large number to push through a stop-and-go primary market.”

Indeed, by Citi’s calculations the market for significant new investment-grade deals saw 75 “no go” days over the past 12 months, in which the primary market was essentially shut. That’s a higher rolling 12-month figure than was seen during the depths of the financial crisis in 2008 to 2009.

Citi concludes in the most bearish of ways:

“The second factor is the weakening fundamental backdrop—more leverage, falling profits, downgrades, etc.,” the analysts say. “We’ve seen volatility in recent years that didn’t result in as sharp a rise in no-go days thanks to a healthier fundamental backdrop, or at least [a] more supportive Fed[eral Reserve]. But in the current environment, we really don’t have an offsetting factor to volatility.”

“Given that volatility has ebbed in recent trading, it’s important to monitor how broadly the primary markets open,” Citi concludes.

Brace yourselves for contagion.