Bond Shorts Need to be Destroyed

Since the Fed cut rates, rates have gone straight up. Part of this is due to the statements out of the Fed talking about being moderate in their actions and the other part, the much larger problem, is you the unwashed pleb obsessed with inflation, stacked to the gils with gold and other precious metals, singing the inflation boogeyman story over and over again. This is the same story which has been told many a drunken nights, as you permanently fixed yourselves to a bearish, crossing your political beliefs with finance. These ideas are pervasive and the bond shorts need to be stoped, and destroyed.

Here we have the chart of the 20yr treasury, $TLT, fixed lower again.

And here we have the intraday chart of the NASDAQ. Notice the resemblance?

We should not have to live this way and deserve more. The fact that there are monsters out there shorting the govt debt and causing rates to jack up based on their notions of inflation is both madness and with criminal intent. I propose we find these people and draw and quarter them, up until they close out their shorts and stocks recover.

All jokes aside, this market wants higher, but the bastard bond shorts have other things in mind and we’re now all hostages to it and them.

I had gains of +130bps early on and gave it all up, closing down 3bps, losing a grande total of 1.4% for the week. My MTD gains have shrunk from +6% to +2.7% and because my portfolio of stocks sported a beta of 1.9 into the close, I was forced to hedge with a 10% $TZA position, since the $IWM is the weakest of the indices. All of my indicators are saying we go higher and I too feel this way; but it’s hard to ignore intraday fades like this, into the weekend where anything can happen. Worst case I’ll give back 20 or 30bps of gains on an opening rip via the hedge, but still end up nicely.

Much of our time is dedicated towards the craft of proper money management, with the attempt to find a salient or a mega theme that can ride us towards new unbound riches.

In my investment career I’ve had several notable epiphanies, the first of which was the dot coms. I’ve mentioned this here before, but it’s worth noting again, I was quite literally one of the first people to take note of internet stocks back in the early 90s. I made fledgling investments in AOL at a time when everyone said MSFT would dominate them. There was a period of time from 94 to 97 where these stocks did nothing but trade lower. The market thought it was pie in the sky, until Dell and Gateway scaled PC sales and AOL became a mainstream story. The rest is history.

Fast forward to today, $NVDA is the most valuable company in the world. Everyone knows about GPUs and the cloud and have bid up the hyperscalers to levels never thought possible. But ask yourselves: “is this over?”

The idea that this is ‘just getting started’ isn’t hyperbole, when taking into consideration the 500 hyperscale centers today and the 150 to be built every year for at least the next 5, and that’s just America.

My point: there is no second best narrative or theme. We often hear about “AI” but barely 5% of database traffic is AI related. In other words, this is the second inning of an extra innings game.

The only issue to concern ourselves with is valuation and overall market sentiment. There will be down 4% days in the future and ripping days to the upside. Markets will fluctuate. But there isn’t anything even remotely as interesting as the relationship between transmitting data and procuring the power necessary to keep the centers going.

All my life I’ve been talking about stocks to people and for that entire time I got pushback from people who always said “it was too late”, “that stock is too expensive”, “the market is going to crash.”

SHUT THE FUCK UP.

Your industry experiences does not equate to an ability to make good decisions. Also, your anecdotal experiences in the shithole you reside in isn’t representative of the global economy. This isn’t limited to your neighborhood, but also your mental state and/or associations.

There is no bear market. We are teeming and brimming with bullish exuberance, buttressed by better than expected corporate earnings and supported by the backdrop and specter of cheaper credit.

Bear markets aren’t by surprise and often telegraph themselves in advance, leaves hints of disrepair or warnings regarding financial instruments gone awry.

The best time to buy a stock is right now and the best stocks to own, historically, are stocks at record highs about to make fresh records.

Off to tennis.

I want to impart what I know in these halls before I have to rip these halls down. We are all familiar with datacenters and $NVDA and the imposition they place on utilities. But the small details are what’s really interesting, such as the latest PJM auction clearing 450MW per day, a price for power never thought possible. All of this because 25% of Virginia’s power is consumed by Hyperscalers in N. Virginia.

What is a hyperscaler? A very large datacenter at scale: $GOOGL $AMZN, $MSFT, $META, $ORCL

Due to this insane demand, the power generation industry is in flux, which is making nuclear energy look real good and causing spot uranium to spike. Companies like $CEG are converting coal to gas and there is a lot of talk about converting those old coal plants to nuclear, because it’ll save builders 30%.

Nuclear/Uranium plays: $SMR, OKLO, $BWXT $CCJ $UUUU $UEC $LEU $DNN
Within this construction world, there are several key players: $ACM $FLR $J $BMI, $GEV, $EME

Since the demand for this power is almost entirely coming from data centers and hyperscalers, it’s worth looking into what makes a datacenter.

ELECTRICAL: $ETN $VRT $HUBB $NVT $ENS $POWL
GENERATORS: $CMI $CAT
CHILLERS (COOLING): $VRT $SMCI $JCI $TT $CARR $SPXC
NETWORKING: $ANET $CSCO $ALAB $BDC $CRDO
CHIPS: $MRVL $NVDA $AMD $AVGO $ARM $QCOM $MU $INTC $MPWR $GFS $TSM
RETIMERS FOR GPUs: $ALAB $MRVL $AVGO $CRDO $DIOD
SERVERS: $DELL $SMCI $IBM $ORCL $HPE
Smallers Datacenters: $DOCN, $AMT $IRM $DLR $EQIX $DBRG
SWITCHES: $CSCO $ANET $JNPR $DELL $CIEN
OPTICAL AND LASERS: $COHR $GLW $CIEN $MKSI $LITE $CCOI $IPGP
ACTIVE COPPER CABLES (AEC): $CRDO $TEL $APH $BELFB

I might have missed a few areas, but you get the gist. There is a daisy chain of companies benefitting from this explosion of BIG DATA and by all accounts, we are in the opening salvo of the growth cycle. There are ~500 hyperscale centers in America, 1,000 globally, and we are building 150 to 200 more every year. The CEO of $ETN said 95% of his business is dealing with 200g and 400g datacenters and that all of the AI business is in the future. Once the 800g datacenters come online, you will begin to see even higher demand for power and in turn more facilities to accommodate all of the companies deploying AI applications.

If you’re investing and like growth, there really isn’t a better or more relevant area of the market than this. Naturally, prices might fluctuate with valuations but the overall story is here to stay for many years to come.

I am getting close to re entering the esteemed field of professional money management and what that entails is the following:

Better control of my trading, better practices
More in depth research, augmenting my algorithmic based trading to instill core convictions
Less churn
More macro ideas, top down analysis

It won’t take time to get back into practice, mainly because I am not a fucking idiot and have done this all my life. For many of you who’ve bore witness to my trading style over the decades, this might be different for you, especially if you’ve only followed me the past 8 years in my post industry trading career.

I am BULLISH and did not waiver today, even at the depth of hell itself. It felt bad going lower, but I had conviction that the sell off was unwarranted. I closed down 82bps, up from down 170bps at the session lows. I have just 7% cash and no hedges and a portfolio I deem to be filled with “the very best stocks” publicly traded.

It’s true, things are going to change once I get back into the biz official. But we’ll always have the good olde days to reflect upon, shared memories of maximum happenings and crises to navigate, many a world ending collapses only to morph into massive and unending bull runs.

Let’s see what these earnings look like and hope for the best. If you have any concerns about the economy, I suggest you go listen to the last $ETN call.

My first reaction to the ecoli news that injured 49, killed 1, was “what an odd coincidence.” President Trump does an impromptu event at McDonald’s and the next thing you know news of a death at one of their locations via hamburger.

A few years’s back $CMG was feeding their customers listeria or some shit and the stock was absolutely tanking on a daily basis. The occurrences were so random, at the time, I suspect sabotage by some hedge fund who was short the stock.

This morning shares of $MCD are barely down 7% on news that their disgusting quarter pounder quite literally killed someone. BIG RANCH will pretend that grass fed beef isn’t really a thing and how cows are fed chicken shit instead of corn; but whatever type of meat is served at $MCD isn’t real at all. Have you ever seen those experiments where the burger can last unblemished for years without decaying?

The oddity of this event at $MCD is that the company had previously been pristine about their health codes for their Frankenstein meat. I do realize many of you reading this are NPCs, barely sentient, and really love MACDONALD’s but bear in mind that you’re also idiots and don’t know any better.

At any rate, where there is smoke there is fire. Just like we saw $CMG struggle with their poisonous food for weeks before the hospitalizations stopped, I suspect we are just getting started with safety concerns at $MCD.

I lost money today and am proud about it. All of the best stocks were down and the very worst up. Should you be reading this, glib and fat, content off the profits you allegedly earned today, you should understand that your illicit gains were achieved by chance. You have no skills other than the fact you’re a degenerate gambler, because those are the sort of stocks that went up today.

I stand before you winning while losing, confident in the face of shaky underperformance. It’s never a question of if but when The Fly will kick into high gear. For the better part of 2024 I have traced the broader indices and that’s just fine, olde sport. What is your rush? Why do we need to make all of the money now?

The way I see it, I am preparing, interminably, for THE BIG RUN. All of these small moves are merely appetizers and practice runs for what will be this grandiloquent sperg higher, amidst great pomp. We will pop champagne corks into each other’s faces on the tennis courts and pour it all over complete and total strangers.

While the market is basing out, pretending to want lower, just know that it is lying.

Good day.

Let’s start with some notable losers:

Nuclear stocks are off and down by 10%

$PII -10%, $PCAR -8%, $GE -8%, $PSTG -8%, $WBA -7%, $NUE -7%, $PHM -6%, $SMCI -6%, $ELF -5.5%, $LMT -5.5%, $PINS -5%, $MHK -5%, $SHW -4%, $VZ -4%, $MCO -4%, $SNOW -4%, $KMB -4%.

It’s an unusually bad day hitting the housing stocks and related sectors, whilst precious metals crests to record highs, leaving $BTC on the bench doing nothing.

On the upside, aside from shit stocks, we have $C, $GM, $CVNA, $DGX, $CART and fucking $DJT. That’s it, mate.

If you woke up this morning thinking you’d bank come coin in this tape, think again. It appears the stock Gods are angry and the areas of the market that are green are of the lowest class varietal. In other words, if you are up today you are a degenerate.

That’s not me speaking out of frustration and callous jealousy because I am down 88bps; I am simply stating facts.

I drew down 41bps today in dispassionate trading, opting to not chase $OKLO and a few other retarded stocks into what will eventually be a car detonation. I have to admit that the pullback in $BTC from last night’s highs was unexpected and it says a lot about the quality of investor long the world’s largest crypto: wholly and entirely bereft of honor and dignity.

On the other hand, shares of $NVDA crested to new highs and seemingly nothing can stop it. There are other chip stocks, but none as important or better than $NVDA.

These narratives come and go and the importance of companies ebb and flow with the mark of time, always represented by market cap and performance. If you want to know what stocks are good, look towards the most valuable companies whose stock prices have performed best. It really is that simple. Everything else is risk management.

The US 10yr is +10bps to 4.18% and the 30yr mortgage is once again at 7%. News of famous hedge fund managers shorting bonds at the same time gold and silver are busting loose to the upside, accompanied by Fed statements regarding moderate data dependent rate cuts, has investors on edge. You can feel the air leak out from the market at the bond market gets lit up.

The way this ought to work is, markets are supposed to accept the fact that the Fed wants to avoid a Lehman style collapse by averting a major debt collapse by 2028, preparing in advance for that and lowering rates to 3.5% to get ahead of the curve. The curve I speak of is the $7.2T debt wall coming due by 2028.

So why are rates soaring? Is this real?

In the short term, nothing about the market is real. This is all emotions and men positioning into asset classes to ruin others or those on the other side getting ruined. We have all of the makings of a bull market, yet the bond market and its infinite wisdom keep getting in the way of progress.

I see no reason to believe this tape is unique in any shape or manner and the Stocklabs mean reversion and intelligence algorithms should be in a position to produce false positives. While it’s true, the efficient market theory says the all knowing market cannot possibly be wrong. I am also keenly aware of innumerable times when it was wrong, and by a lot.

Today is a poor breadth day, with many stocks in the dumps. This coming after we had some micro cap stocks surge last week and today has me thinking this is a garden varietal risk off trade, which will resolve itself once the sellers have exhausted themselves.