Minerd: Get Aboard the Ark, Lassies, the 10 yr Yield is Going to 0.25-1%

Scott Minerd, CIO of Guggenheim Partners, managing upwards of $250 billion (who’s counting, really?), declared on CNBC today for all able-bodied lads and lassies to board the ark, as the 10 yr yield descends into the sublimely ridiculous level of 0.25% to 1%. This, as you know, would mean a terrific rally in store for those owners of TLT and other government bonds.

It is his conclusion, a man privy to the best minds afforded to finance, that the idiots in Europe, Japan and elsewhere, will henceforth undergo a systematic plan that will eventually destroy their economies, by going deeper into negative rate territory. It is Minerd’s belief that both zebra and man can coexist on this ark, if only for the purposes of salvaging whatever semblance of normalcy left on God’s green earth.

I am presently and incorruptibly long TLT.

I just mentioned the hedge fund hotel status of Valeant pharma last week. Well, for no reason other than a Wells Fargo analyst note last week, said hotel is on fire right now.

Shares are plunging, in a more than notable decline. This has the look of liquidation, someone forced to get out in order to save a fund or a very large account.

I hate to keep picking on Ackman, but he’s awfully concentrated amongst a few positions, VRX being chiefly his largest and most important.

For now, his other positions are holding up, namely APD and CP. Still, the ruinous losses in his VRX position alone, just for today, is about $200 million.

I don’t know how many times I need to show this to you, for you to understand the winship, for lack of a better term, is palpable.

That being said, the market has taken on the tone of a vigilante, in search of criminally minded short sellers. Using the algorithms of Exodus, we can very easily discern which stocks might be set for a significant squeeze to the upside.

Here are some names. The link is here for members.

(Stock, technical score, 1=weakest, 5=strongest)

ANFI 4.54
MAT 3.84
TTWO 3.84
ADT 3.79
FAST 3.79
OMI 3.79
ANF 3.74
BGG 3.74
VRSN 3.69
CLB 3.64

You will notice there was just 1 oil related name in there. That’s because the sector hasn’t earned the privilege of a high score, as the price action has been wholly belligerent and without any sense of decorum. My best guess, there will be a considerable number of oil names in the short squeeze screen tomorrow, providing the market and oil continue higher.

In our momentum analyzer, there are plenty of oil names, if that’s what you’re interested in.

If we were to grade investment banks and put them on a barbell, Goldman would be on one end, representing the best and smartest with just $10.6 billion in overall oil and gas exposure, and then Citi on the other, dumb as shit gorillas with $58 billion in a toxic wasteland loan portfolio of oil and gas nonsense.

The figure, which counts both loans made and future promises to lend, accounted for $4.2 billion of a total $10.6 billion as of the end of December, the New York-based bank said Monday in its annual regulatory filing. Goldman Sachs has $1.5 billion in loans to energy companies rated below investment grade and $2.7 billion in unfunded commitments.

The total exposure jumps $1.9 billion counting derivatives and other receivables, which were “primarily” to investment-grade firms, Goldman Sachs said.
Concerns about banks’ energy loans have helped spur share declines for lenders after the price of oil fell 42 percent in the past 12 months through Friday. The Standard & Poor’s 500 Financials Index slumped 13 percent in the same period.

Goldman Sachs’s total is below some of its biggest competitors. Citigroup Inc.’s funded and unfunded commitments amounted to $58 billion, analysts at Susquehanna Financial Group LLP wrote in a note last week. Most of Wells Fargo & Co.’s $17 billion in outstanding energy loans is for companies that aren’t investment grade, Chief Financial Officer John Shrewsberry said last month.

I think it’s fair to say that 40% of oil and gas loan portfolios can and will turn bad for investment banks. By my last count, there was $356 billion in unmanageable oil and gas debt, soon to be restructured. Behind that was another $351 billion that is likely to fall by the same sword, unless we see a measurable rally in crude and other basic resources. In all, a total of around $700 billion in debt might need to be restructured. This, of course, doesn’t mean total loss. There are assets associated with these loans, collateral through land and equipment. But the losses will be significant and we’ve yet to endure their sting through the reporting of them by any of our banks.

So, now everyone hates stocks, even the people whose very job definition is to be fully invested at all times. Bob Doll, perma-bull, Nuveen Investments, loves stocks, innately. He was programmed to tell you to buy them. He was trained, as a young lad, to run about the earth to tell people about stocks, their virtues, and to always trust their integrity.

But now he’s saying to buy dips and to avoid chasing the rally. This leads me to believe we are to go straight up, without pause or siesta.

At the very end there, when asked about financials, Bob couldn’t help himself but to suggest buying them.

Quite frankly, James Cramer is appalled by today’s rally and he’d like you to see your way out, and certainly not to chase it. For if you do, a certain spell of doom will cast over your house. It is Jim’s belief that it is an impossibility for crude oil to trade appreciably higher. Moreover, our banks have yet to feel the full downwards thrust of energy prices and the billions of dollars they lent to see the industry expand.

It is J. Cramer’s belief that investors pallor will soon be ghostly, as prices fall and fall some more. The entirety of civilization will cease to exist and in its place will be nothing but a Bristol Meyers outpost.

He finds you to be of the stupid varietal, disgusting, craven, beastly men, chaser of stocks, subjugated by pajama-clad wearing futures guys–ordinary mountebanks.

Markets are off and running again, as a major short squeeze ensues on Wall Street. The most hated of all, crude oil, is being propped up by reports from the IAE, suggesting that production out of the US shale will drop by 600,000 barrels per day in 2016 and another 200,000 in 2017.

This, of course, is having a profound effect on speculators, who are now running over one another, with ghastly intentions of trapping shorts who exhibited too much zeal in their positions, buying up futures contracts–pushing net long positions to a five year high.

The subsequent result of all this fervor is an extraordinary short squeeze amidst stocks heavily shorted. Shares of FCX are higher by 13%, amongst many other commodity related plays.

As such, I expect this treacherous market to be as punitive and absurd on the upside as it was on the downside. If you happen to be short, I advise you to seek counsel and to get your affairs in order, for the guillotine is heading your way and it isn’t going to leave until your head is in a basket.

NOTE: tonight begins the five day journey of the ibc bootcamp, hosted by The Option Addict, Jeff Macke and Raul, who will be doing a live Exodus presentation.

Macke starts tonight and tomorrow, 7pm. Be sure to attend!

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The British pound is down a staggering 2.24% right now, the biggest single day drop since 2009.  This is due to fears that England will leave the EU, which is scheduled for a Greek styled referendum vote on June the 23rd.

“Today’s weakness appears to reflect an increased probability of Brexit after political reaction to the new deal on EU membership was more split than the PM would have hoped,” said Sam Hill, senior UK economist at RBC Capital Markets.

If the pound finishes at its lows for the day, it will be the biggest one-day loss since the Bank of England cut interest rates to 0.5% in 2009 and started its economic stimulus programme known as quantitative easing.

The pound is off by 17% v the dollar over the past 18 months.

This is complete and utter bullshit. I didn’t even know there was an organization named the sovereign wealth fund institute, let alone publish erroneous reports about impending doom for equities.

This sort of refuse has been scaring people since the Middle Ages. It’s in line with “Japan is gonna buy America”, “China is gonna sell all of its treasuries and crush us” to “Gaul is gonna withhold French wheat from the Roman armies and starve Rome.”

At any rate, this group is making scandalous assertions this morning, a morning in which a terrific rally is to be had.

Sovereign wealth funds may withdraw $404.3 billion from global stock markets this year if oil prices remain in the $30 to $40 per barrel range, according to the Sovereign Wealth Fund Institute.

Wealth funds, which have amassed about $7 trillion in assets, exited about $213.4 billion of listed equities last year as the slump in crude oil put pressure on domestic finances, the Las Vegas-based SWFI said in an e-mailed report sent Monday.

“Two years ago, the cracks started to appear,” according to the report. “The commodity-price scenario changed sovereign institutional investor behavior from their heydays starting in 2004, which include investing in the Chrysler Building, Chicago Parking Meters and bailing out banks like Citigroup.

No word as to where these funds will be allocated after they’ve been withdrawn from their brokerage accounts. Perhaps they’ll all get tossed under mattresses?

There is a large party taking place in Europe right now. Indices have reduced shorts to rubble, higher by 1.5%.

Crude oil and everything that goes with it are higher, inexorably so.

It feels good to be fully invested into a global rally.