The Food Industry Has Forever Changed

YUM Brands is meeting its maker in after hours trade this evening, down 15 points or 18%. I don’t know the history of YUM’s share price volatility, but this has to be one of the largest single day drops in the companies inglorious history.

When I was growing up in the 80’s a visit to KFC, Burger King or McDonald’s was a treat. It didn’t carry the negative connotation that so many people harbor today, when considering these brands. Back then, fast food was fun, tasty, and a break from Mom’s meatloaf. As these corporations grew in size, their methods changed and their quality control suffered. All of the legacy brands, including Dunkin’ Donuts, Wendy’s, McDonald’s and Burger King, are shit. Their food is sugar and salt laden death traps.

I fully admit being a customer of all three of these brands up until about a decade ago. Around that time I started to become aware of the things I put into my body and was horrified to learn about how unhealthy MCD’s super-duper BIG GULP soda bombs were. I cast them all away and started to frequent PNRA, CMG and WFM instead.

Today, even the organic market has changed. WFM has become the monstrous, oppressive organization that was once their polar opposite. I speak to all of the employees at the Princeton location and they all complain about how corporate management is, “filled with dicks.” The hipster employees are leaving their ranks in exchange for former Keyfood employees who work angrily.

A few years ago I had an insightful conversation with a big shot hedge fund manager, regarding his CMG short. He cited YUM’s “Cantina” line of tacos and how they’d eat into CMG margins. WRONG. I laughed at this assertion and quizzed him if he’s ever even eaten the shit that YUM shovels onto their plastic trays. He hadn’t.

Jim Chano’s can short China without ever visiting it. Numbers don’t lie.

But if you’re gonna sell short a food chain, I think you should see what you’re betting against–first hand.

Having said that, when it comes to the legacy brands, MCD is the biggest mark. Companies like SHAK will wear them down and annihilate them, in time. A new era of fast food is here and it’s gonna last for at least 20 years. SBUX has done a great job at adjusting to the environment, unlike DNKN.

My #1 takeaway from YUM’s numbers is even the Chinese are smarting up to the poison they sell. This has nothing to do with Chinese deceleration. YUM Brands just sucks.

We are actually in October of 2011. Anything said to the contrary is complicit with the great lie being thrusted upon us.

Trade Accordingly.

Enter Decadence
Thu Oct 6, 2011 3:48pm 78 2,859 views

Fuck it. I am riding into tomorrow with all of my positions intact, with exception to TNA. I sold that shit because I have a brain in my skull.

Barring some Twilight Zone type of late day trading action, I will make about 4.5% on my money today, pushing YTD gains north of 11%. I sit here, like a greedy little boy with chocolate all over my face, wanting more chocolate. I want more chocolate and I want it now!

This is where I make my year or squander it. When I say “squander,” I do not mean disastrous lightening bolts will strike my face tomorrow. But if we get a down 300 open tomorrow, my gains will be muted and my momentum staggered. But if I am right. Oh, if I am right, it’s champagne and beluga, Bordeaux and howitzer exhibitions, totally demolishing my neighbors’ homes. Fucking cannon balls on fire, piercing their fucking lawn furniture.

I should be selling today; but I want more. No one gives a fuck about your opinions, son. Take notes and get out of my way.

“The Fly” wins all the time, even when it appears he is being obliterated. Never forget those words. Ever.

I’ve always said this market is like playing a giant game of real life whack-a-mole. How else to explain the ferocity of sector takedowns? Last year it was tech. Earlier this year it was oil and commodities. Now it is biotech, the crowned albatross hanging low around everyone’s neck.

You must understand that biotech is nothing more than a dream mixed in with liquidity. Since liquidity is now gone, so is the dream. It’s hard to catch falling knives in sectors that do not have fundamental underpinnings.

On the other hand, we might be setting up for a real turn in commodity related stocks now, if the dollar continues to weaken.

I like FCX, SLCA, and any oil with debt/eq less than 3.

Get your heads out from your assholes. This move is so much more important to the global economy than some two-bit scam with 10 phase 1 drugs in the pipe.

I offer you grandiose gains in commodities and you tell me $IBB is down? Tisk, tisk.

The market didn’t drop from the highs because CELG was expensive. It fell because of China and oil, and copper, and the dollar.

Gold and oil are gapping higher today. These are healthy developments for my GG and SLCA positions. It lends to the idea of an easy Fed, one not hell bent on thrusting us into the pits of hell.

The U.S. dollar is up 16% over the past two years. This is like a giant short sale gone wrong and people got fucked on it hard. They borrowed in dollars to buy commodities and were raped for it.

But recent developments at the Fed, thanks to a weak jobs number, might alleviate this pressure, paving the way for weaker dollars, stronger commodities, and stronger equity prices.

Where do you think this chart breaks?

Not really. Actually, that title is a wanton lie. Nevertheless, I am afforded with the time to now inform you that I added to my BIDU and SHAK positions. It’s worth noting that SHAK has nothing to do with China, whatsoever.

Also, I started a small position in FCX here. I did so, not because I enjoy to chase dogshit stocks higher, but because I adhere to strictest laws of Chinese parlour games of shadows.

Ironically, it’s occurring while their idiotic exchanges are closed for holiday.

What you need to know about this reflex rally is simple.

It does not mean everything is awesome. We are reverting back to the mean. Nothing goes up or down in a straight line. Again, please reference Feb of 2008.

All of the Chinese related stuff, metals, oils, chicoms, are the shit. Own BIDU and lavish yourselves in the splendour of dog-eating greatness.

This will be a great October, in my estimation.

For this rally, you will want to be long oils, chicoms, chemicals and metals. Biotechs aren’t pressing higher because they have nothing to do with this story.

Top picks: SLCA, BIDU, SHAK

Upside: DD up 6.3%, as the Illuminati felt the decline in House DuPont’s shares were more than sufficient. MNK +5.8% on guidance. PMCS +32.6% after being acquired by SWKS. STRZA +7.2% based on a rumor from the LA Times, suggesting LGF might bid. NVCR +15% on FDA kindness, EXEL +8.8% on positive phase 3 horseshit, ALKS +4.2% on FDA graciousness, PEP +3% on earnings

Downside: ILMN -19% after warnings that their stupid drugs aren’t selling enough, EXAS -35% after some USPSTF draft says their colon screening nonsense doesn’t work (duh), HAE -12% on zero fucks given, TCS -8.8% horseshit, RDWR -7.8% on no one cares, SRPT -4.2% on offering news, FFIV -2.4% on Citi sell rating, TSLA -2.2% because Morgan Stanley lowered target from nonsensical $465 to even more nonsenscial $450.

Really Morgan Stanley? Fucking waste of oxygen.

I waste so much of my time trying to trick the collective price gatherers, to sell me something for a price cheaper than what it’s worth. Believe me, I understand the nobility of figuring out this puzzle we call investing. I even went out of my way from managing mmoney to develop quant software to try to gain an edge on these price gatherers.

It’s a giant fuck-salad. I should be on a boat, floating forever, visiting exotic places, playing catch with camels. I don’t even sail and I’m not even fond of it. But I should be on a fucking boat, away from this shit.

You read about some fucked face scoring a gazillion dollars in some crazy eyed gamble and then fix ourselves on duplicating said degeneracy. What are we fucking retarded? It’s all shit. Trying to duplicate black swan trades is no different from striking oil in your backyard or the lotto. 99% of you are going to underperform the S&P this year and will underperform it for 75% of your natural born lives.

Why fucking bother?

Addicts. We’re all addicts, streamlining these fucking stocks into our systems. It’s so perverse, swashbuckling about the digital pyramids, losing and making vast amounts of money, totally numb to it like nothing. Hell, in real life, I get pissed the fuck off when the waiter puts an extra shrimp dish on my bill. But I have no problem, whatsoever, losing 300k in an options trade gone bad. Fucked.

I should just take all of my money and buy SPY, then travel by boat. But I won’t because I’m addicted. My life is built around this ego driven game to prove everyone else wrong. I endeavor to kick Bluestar into the middle of an active volcano. I’m sure he’s a nice guy and all. I’ve spoken to him on the phone and he seems like someone I could shoot the shit with, maybe initiate a bar fight with. But in this world that I live for, he goes straight into the fucking volcano pits of fire, no questions asked.

I don’t pay attention to my industry as much as my peers, mainly due to my complete indifference to the success or failures of others. But I came across this video, while reading Reformed Broker and it struck a cord. There wasn’t anything necessarily brilliant about this hour long analysis of the past 20 years of market fuckery. It was more of a fireside chat with someone who knows his shit. I’ve never heard of Passport Capital; but now that I am aware, I’ll be looking into his methods and philosophies.

The thing I liked most was how he was interested in “new things”. What’s new? It’s a very simple question. He talked about the dot coms, housing, China, commodities and how being early paid off.

Off the top of my head, there are several things today that are new.

1. Over 40% of our population is over the age of 45

2. Alternative forms of energy

3. Advances in medicine and medical instruments

4. Zero interest rate environment and negative rates abroad

5. Debt bubble

6. New forms of communication that has streamlined news and information

7. 3-D printing

8. Enhanced sensors on automobiles

The next step would be to consolidate these concepts into investable themes, trying hard not to denigrate ourselves through the purchase of early concept dice throws.

Feel free to chime in.