We’re Seeing a Huge Divergence in Risk Assets Today

Since the beginning of 2016, all stocks have traded lower. Inside Exodus, I keep an array of portfolios to help me assess risk. My old man portfolio is down almost 6% for the year, while my super risky bubble basket is lower by a staggering 20%. But today’s divergence is between the two is meaningful.

For the day, the bubble basket is down more than 4%, while the old man portfolio is up. To me, this is a positive development, as it means cash isn’t just being stored in treasuries or under the mattress, but also in counter-cyclical names. This could possibly be the very first sign of stability in this fucking livewire of a market in 2016.

Look for managers to start buying bargains next, which then might lead to a full fledged melt up.

I realize it’d a little unfair to place all of the blame on @Jack when @Dick was busy at Twitter, readily destroying the place for the past few years. Nonetheless, I find it amusing that he’s now CEO of two (count ’em) publicly traded companies whose share prices are broadly underperforming the market, both down about 30%.

If I were to take out my calculator, I’d find that the market value destruction, under a certain Mr. Jackard Dorsey, is in the range of $5 billion. In other words, he’s the Ron Johnson of tech CEOs.

Should @Jack be fired from both companies? Probably not. Is it appropriate for him to be the CEO of Square, whose market value is 1/10th of Twitter’s? Only an orangutan would do that.

Jack should quit being an orangutan and focus all of his efforts on trying to pull Twitter out from the grave it’s currently domiciled in.

Apple is leading an army of centaurs to the NYSE, where they will kick the eyebrows off all of its traders.

This is the very worst case scenario for stocks. Oil stocks are lower by 7.6% FOR THE DAY. Biotech stocks are down more than 4%, FOR THE DAY. Bear in mind, the lower these oil and gas stocks dive, the worse the debt crisis looms. Right now, it’s looming pretty fucking terrible.

Earlier this morning, at the open, I sold 1/6th of my SPY position–as scheduled.

Lastly, TWTR’s stock price is diving lower by 8% and SQ is down by 11%. In other words, Jack Dorsey is actively destroying the purses of all parties involved. He’s a destroyer of wealth on a monumental scale.

More on this later.

This is the rally we’ve been waiting for? Clearly the futures guys were drunk off toilet bowl moonshine, because this market is trying for lower prices.

Huge disappointment in commodity assets, led by oil. Huge let down in everything but SHAK.

Bottom line: I’m invested in a positive outcome for a bounce; but anti climatic opens like this is what draws men into the world of science fiction and mental insanity. I’ve never seen such a stupid tape, frozen in its own waste, unable to mount a mere counter trend rally.

Alas, the day is young. Perhaps this is all part of an elaborate rouse that will provide the markets the tinder it needs to set flame to prices and burn the flesh off short sellers.

Or this is a market destined for infamy.

Bob Parker from Credit Suisse is easily my favorite market strategist. I do not pretend to know more than him and will not debate the merits of his argument. If he thinks fears of a Chinese hard landing have dissipated, I’m inclined to give him the benefit of the doubt and surmise that the market is very soon going to adopt Bob’s opinion and run higher.

Truth be told, I’m inclined to think that nonetheless, as I am 200% long SPY.

Judging by European indices and U.S. futures, it appears the party has only just started.

Not to be outdone by the last guy who said China was really growing at 4%, Dr. Doom and Gloom, Marc Faber, said China’s economy was really growing at 4%.

I will see your 4%, Dr. Faber, and lower the bid to 3.5%.

Chinese GDP came in as expected, hitting 2009 lows of 6.8%.

“Growth is still soft but it’s not collapsing,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors Ltd. in Sydney. “Policy stimulus measures are helping but more is needed to help the economy as it transitions from a reliance on manufacturing and investment to services and consumption.”

Industrial production rose 5.9 percent in December from a year earlier, compared with the 6 percent median estimate of analysts and November’s 6.2 percent. Retail sales increased 11.1 percent from a year earlier, compared with the 11.3 percent seen by economists. Fixed-asset investment excluding rural areas expanded 10 percent last year, the weakest pace since 2000.

Hang on for a rebuttal from a certain Mr. Marc Faber.

DEVELOPING…

Next up June. Futures traders are playing with fire, lulling an already scared-shitless stock market into a false sense of security, attempting to hemlock the Fed into not jacking up interest rates, (count ’em) four times in 2016.

Futures traders at the CME now indicate the central bank will not move on rates until June, following a major selloff in the market Friday morning. The chance of a March hike, above 50 percent just a few days ago, has dwindled to 35 percent.

The next closest month for a hike is now June, which has a 54 percent probability. Earlier in the morning, expectations had put the hike off until July, but that pulled in after New York Fed President William Dudley said in a speech that he still sees rates on a steady trajectory higher.

Despite global equity markets crashing through the floor boards the first 10 days of 2016, Federal Reserve talking heads still went out and said the economy was strong enough and awesome enough to absorb, and rather enjoy, 16 rate hikes over the next 3 years.

Should the Fed pursue this strategy with vigor, the last rate hike will be announced atop of mountain of smoldering rubble–in the midst of American revolt.

Does anyone really doubt it? Tonight, the Chinese will announce Q4 GDP numbers–which are expected to come in at 6.9%. This analyst says, according to the data he’s reading, the Chinese are lying and their economy grew by just 4.5% in 2015.

Judging by the price of copper, oil and iron ore, I’d be surprised to learn if the Chinese were growing at all.

I smell recession.

Classic expression on the face of the CNBC asia host when he said 4.5%

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