PAYPAL THREATENS TO FINE PEOPLE $2500 FOR WRONG-THINK — THEN RESCINDS ORDER

Last night right wing social media was in a frenzy over new rules for PayPal that entailed withdrawing $2500 from your bank accounts if you were found to be promoting “misinformation”, such as “woman can only have babies.”

After the uproar, PYPL rescinded the order and said “just kidding.” But everyone knows this was just a trial balloon and there is more freedom of speech in China than in the west. PayPal in particular, along with JP Morgan, have “de-banked” people on the right over and over again for opinions that are deemed to be wrong by the state. Once upon a time I used to espouse such opinions overtly here at iBC but have since stopped in order to remain focused on finance for a plethora of reasons — deplatforming at the top of my concerns.

Over at Stocklabs less than 10% of our user base is via PayPal and we have seen a spike in cancellations since yesterday only for our PayPal users.

If you are concerned about using PayPal — feel free to cancel and rejoin under our Stripe model — which essentially is a card processor. I would nuke PayPal altogether, but it would create a further hassle for me and fuck them. I will, however, be sunsetting their platform and removing it from our landing page for future members soon.

As far as the stock is concerned, I am seeing a lot of PayPal cancellations on Twitter, but I suspect very few of them do large volume on the platform. I don’t think it will have a material effect on them, but would be delighted if I was wrong about this.

In other news, Youtube is now demonetizing accounts who have independent views on the Ukraine war. I know it’s a private company — go make your own global banking and social media systems.

Go fuck yourself.

From the very beginning of the Russian invasion of Ukraine, the United States and its vassals have treated this event as if it were an attack on a vital American interest. The sperging out of the “deep state” and neocon scum is indicative of their schemes and those that were foiled. Whilst many Americans do as they’re told and shut up abut it, a very large faction do not think the risk-reward benefit favors the every day 9 to 5’er — risking total war with a large military power over a principality of Russia’s in their sphere of influence.

In short, I don’t give a fuck about Ukraine — not because I dislike the Ukrainian people — but because the Ukrainian government is aligned with what I know to be inherently evil forces. I am 99% sure most Ukrainians do not know the dark side of America and only see the fairy tale they were sold — iced cream trucks and Disney movies and all of the comforts and luxury that good old fashioned grift could buy.

Initially, “the west” applied harsh sanctions to Russia in an attempt to break their economy. They attempted to recruit China into their schemes and when that failed — they provoked China via Taiwan and then upped sanctions on them and prohibited the sale of semiconductors.

Then the west tempted fate by sending weapons to Ukraine, first a little and now just about everything they’ve got. They’ve been providing the UKR army with real time intelligence from day 1, helping and assisting them fight the Russians. Peace talks were discouraged by the UK and US; and apparently there was a deal in place that was nixed by US-UK, in favor of boxing Putin into a corner and creating a quagmire via a highly motivated Ukrainian army using all of America’s best and most advanced weapons.

There seems to be this fantasy in America to topple Russia and fly the rainbow flag on top of the Kremlin, perhaps commingled with new migration policies to import diversity. Both the hard left and right agree on just one thing: destroy Russia at all costs. After all, they steal elections.

But what do I get out of it? If Putin is as crazy as they say he is — maybe I’ll get a nuclear detonation at my local army base, or perhaps a long drawn out war in Europe accompanied by a draft so my sons get to see all of the splendor of European culture through the barrel of a gun.

Last week they destroyed the Nord-Stream pipelines and blamed Russia for it. Last night they destroyed part of Russia’s largest bridge, the Kerch bridge which connected mainland Russia to Crimea. Zelensky just said the “Russians had a hand in it”.

I used to believe the media was biased and simply spoke their book. But in the past decade or so I’ve come to understand it’s far more insidious than just left v right. They just make stuff up and lie — almost all the time.

The writing is on the wall. Russia might’ve invaded Ukraine, but the west is making sure there could be no peace ever. The UKR fantasy writers on Twitter believe this ends with Ukraine recapturing Crimea. If so, it might also be met with large scale tactical deployment of nuclear warheads aimed at decapitating your entire army.

There has to be a better way than this course of action. It’s not my job to figure it out — but I know that sharply lower stocks prices against sharply higher inflation and crippling energy costs, alongside the potentiality of world ending war, is not exactly the path I wanted my children to walk down in this fucking country.

Stocklabs did not flag OS into this maelstrom but it did for individual ETFs like QQQ and the data is poor, which bodes poorly for the poors long stocks here.

Listen to me.

We are at Defcon 3. Russian military assets are on the move near Alaska. They cannot defeat the US head to head, so might as well detonate some nukes over DC. This is where our leadership has gotten us and I don’t blame Biden. American Presidents are not in charge, as clearly shown by the Trump admin, who resorted to tantrums on Twitter rather than wielding power.

Pax Americana is over. I have been telling you this for a year now and I hope you’re starting to understand it isn’t us vs them. We have no natural enemies in Russia or China. The enemy is within.

I shed 15bps in my trading today, made almost 2% for the week to start October. The session was maligned with startling losses and those losses might doubled up soon.

NFLX is 38% off the lows.
AMZN is 12% off the lows.
AAPL is 8% off the lows.

Should tera cap tech drop 10% from here, expect another 15% lower in the overall market. Under those deleterious conditions, one would expect to see black smoke and shards of metal bustling throughout urban centers — balls of fire presiding over the countryside — creating infernos out of corn fields.

As such, I ended with a heavy UVIX and DRV positions, hedged with some SOXL and mixed in with long CRUDE (not oil stocks but fucking crude you asshole), short euros, and short bonds.

I look into Joe Biden’s sunglasses and see the visage of his iced cream cone and sell short every single time.

WTI is up more than 4% now.

This is what I’ve done so far.

I closed out my short bond/euro trades since they were meant to be low alpha hedges which turned out to be pretty high alpha. I had done some trades early going — long and short — all profits. I am now 16% weighted in GUSH, in the hopes of a small pocket, or respite if you will, spearheaded by the fact that oil cannot be checked.

We are now in the inexorable position is ramping commodities and a very strong economy — paired with rampant inflation that is causing anguish amongst people on fixed wages. Because of this, we are in a very vulnerable position for equities and I’d be SHOCKED if the market didn’t close at the lows for the day, ahead of the long weekend.

With the NASDAQ down already 350, there is room for a 50-75 point move — but I would not suggest that is a high probability play. Breadth is hammered lower at 25% and that’s only because oils are up.

Breadth for tech, for example, is 16%.

Botton line: prepare for a raping or two, if you’re buying tech into this crash.

Unemployment tumbled to 3.5%, which means the Fed has more work to do. What sort of work does the Fed have to do? They need to fulfill their mandate of totally destroying the economy.

Jefferies:

“To the extent that there are any implications for the Fed, the data brings us back to where we were before last month. There is not a lot of capacity for the labor force to grow, and thus strong wage pressure is going to continue to be an issue. We still expect another 75-bp rate hike in November.”

First thing I did this morning was liquidate my entire TNA position, keeping my short Euro and short bond position intact and then I bought NRGD to bet against crude — soon after booking a 3.3% gain.

For the session I am +15bps.

Do we buy this dip, on a Friday?

No.

The economy is too damned strong and the self inflicted “good inflation” the Fed had targeted back in 2020 is now a malignant problem that needs to be reigned in. The only way we do that is by hiking rates to match inflation.

Tomorrow we get the jobs numbers.

Here is my take.

1% down, 2-3% up.

The numbers should be bad. If so, retarded trades will think this might cause the Fed to pause. The entire bull thesis now is depending upon FOMC mercy. They have nothing else going for them. If the numbers are strong, we will trade lower — but not too much since the assumption will be circulated that the numbers were BACKWARD looking and future numbers will be horrendous.

Either way, I think yields go up and I also think the Euro smashed its stupid face against parity with the dollar.

Ergo, I am 10% weighted in TMV, 10% EUO and 20% TNA, 60% cash.

I gained 100bps today, mainly due to some smart intra-day trades.

Ciao.

Back in 2008 I was still managing money and I had to give ultimatums to clients to go to cash, short, or transfer out. I was so convinced we’d have a catastrophe I was willing to throw away business, which is something I am rather adept at doing.

Down 30% here might seem like a lot and for your average trade getting RACKED in his “Diamond handed” TNT bombs via Reddit — this current swoon might seem like enough. But it isn’t.

In the event you are mandated to be long only and need areas of the market to hide, might I suggest a heavy concentration in oils/gas or perhaps some staples? Normally, client portfolio should look like the S&P, which means 10-15% allocations in all the principal sectors. If you are leaning heavy tech because MUHHHHHH “we’re cheap” — you are being greedy and setting up for failure.

Here are some stocks that are up YTD, non basic material.

Consumer Staples:
ABEV, CPB, GIS, K, CTVA

Financials:
PGR, ITUB, IBN, BSBR, ALL

Healthcare:
LLY, MRK, BMY, CI, VRTX

Industrials:
LMT, NOC, GD, PWR, CSL

Services:
MCK, AZO, ABC, CAH, BAH

Tech:
TMUS, ATVI, ENPH, AZPN, PCTY

If long only and long term, the way to withstand the coming fires is to BE BORING and flexible. Assess your positions quarterly and make adjustments when needed. DO NOT permit XYZ to just sink and sink without placing a line in the sand. In Stocklabs we have longer term algorithms to pick stocks over longer time frames and they work. Our quant is completely automated and we re-assess and redeploy it monthly and it’s up 9.5% for the year — thanks to the criteria I have filtered and our technical algos.

Don’t just fucking sit there and wait for someone to help you. You are the one who needs to act.

I don’t need to read research or look at news. Whatever is happening to REITs has happened before, sans the SHARPLY HIGHER cost of capital for a dreadfully capital intensive business. Let’s also not forget bonds are yielding greater than 4%, which competes with some REITs for capital now.

Look back on the IYR and previous crashes, you can see this recent squall might have further downside.

The rapidity of the decline has hastened in recent weeks and borders on a fucking crash now.

Best way to profit from the demise of the REIT is via DRV. The old school method was SRS. I must admit to be somewhat surprised by the manner of this decline, way outperforming XLF to the downside. Typically banks crash and then REITs. For the most part, banks have been awful, but nothing atypical.

The market makes a fool out of me from time to time. My previous blog was alluding to the grandiose excellence of the price action. As soon as I published it, we collapsed.

Now the NASDAQ is encroaching on -100.

Here’s what I’m doing.

I kept the TNA, TMV, EUO, and added to TMV. For higher beta hedge, I took a 5% position in UVIX, and believe it or not I also added to my TNA and will continue to catch it as it falls. If I can find the right equanimity and heft in my weightings, I’ll be able to pivot quickly when and if the market turns back up.

I gave back 40bps of gains and now sit +45bps.

We shot up as soon as markets opened in classic ‘fuck you’ fashion. This is why I often liquidate all opens, since trends are countermanded at a drop of a hat, only to later on resume.

My thesis heading into today was a down open. I got it and covered some my shorts and then followed up by selling my longs. I did this whilst replacing them with TNA for simplicity purposes.

The price action is bullish and I’ll try to refrain from meddling in my own affairs today. I’m keeping two hedges in place: short euros via EUO and short bonds via TMV.

The fact that the dollar is strong makes me uneasy about being too long, so I’ll likely keep my 75% cash position intact.

+85bps early going.

UPDATE: upon publishing this, we collapsed the open. Go figure.