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Dr. Fly

18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.

RUSSIAN THREATENS TO SEVER TIES WITH U.S. — YIELDS SOAR TO HIGHEST LEVELS SINCE 2019

War mongers in the US are overwhelmed with joy in front of their Moloch statues this morning, elated to see death and mayhem perhaps a bit closer to American boys and girls. After all, our dear friends, the fucking Ukrainians, need our help.

A series of horrendous headlines are causing small market weakness today, nothing too scary from a financial point of view. But, given the current state of the war in Ukraine (much tougher than expected) and NATO’s increasing involvement, I would be surprised if this war did not spill into other countries by summer.

EU’S FOREIGN MIN. BORRELL: RUSSIA IS GUILTY OF EXTREME WAR CRIMES; WE ARE PREPARED TO DISCUSS ENERGY SANCTIONS.

GERMAN GOVT SPOKESPERSON SAYS GOVERNMENT IS DETERMINED TO DELIVER MORE ARMS TO UKRAINE, ONE WAY IS VIA PLACING ORDERS AT DEFENCE FIRMS

RUSSIAN DEPUTY PM: OIL PRICES COULD JUMP TO BETWEEN $300 AND $500 PER BARREL IF EUROPE BANS RUSSIAN OIL

CHINESE FOREIGN MINISTRY: CHINA WILL CONTINUE ITS USUAL TRADE RELATIONS WITH RUSSIA

Prime Minister of Poland calls on Switzerland to freeze accounts of Russian oligarchs

RUSSIA CONSIDERING BAN ON URANIUM EXPORTS: TASS CITES NOVAK

RUSSIA TELLS U.S. AMBASSADOR THAT TIES ON VERGE OF BEING SEVERED

THE RUSSIAN FOREIGN MINISTRY HAS ISSUED A STATEMENT OF PROTEST IN RESPONSE TO US PRESIDENT BIDEN S UNACCEPTABLE REMARKS REGARDING PUTIN.

The west is being lulled into a false sense of security watching Russia stumble in Ukraine. The Ukraine army is arguably the most formidable in Europe and they’re losing, make no mistake about it. On the entire continent of Europe, there are no formidable armies that can take on the Russians at this time. All of that would rest in the hands of Americans and perhaps we can easily manage Russia; there will be massive casualties in the process. Also, and this goes without saying, if the war expanded into Europe proper, Russia would likely do a draft, which would then be mandated in western nations as well, all the while gas at the pump fetched $20 per gallon.

If ties get severed, expect Russia to halt deliveries of enriched uranium, causing stocks in that space to moon: DNN, UUUU, UEC, NEX.

The US 10yr is +9bps to 2.24, highest since 2019 due to inflation.

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CRUDE BUSTS LOOSE; BOEING TANKS AFTER AIRLINER CRASHES IN CHINA

Tragedy in the skies, 133 people in China have perished.

A Boeing 737-800 that crashed in the Guangxi region of China was a twin-engine, single aisle aircraft. It had been flying for over six years, having been delivered to China Eastern Airlines from Boeing in 2015, according to The Associated Press.

On this news the stock is down 6%. Since it’s very early, there’s no way of knowing what happened and why. I was bearish on BA before the accident, even more so now.

WTI is up 5.3%, alongside every other thing Russia makes, as pressure mounts on “the west” to stop all trade with Russia. You will pay more for everything and like it — Slava Ukraine.

The market should be down a lot, but it isn’t. We are seeing rotation out from tech and back into commodities, a rational trade given the circumstances. I will keep this simple: as long as supply disruptions persist and our economy is strong — commodities will continue to get bid. While the war rages and countries like Poland think about entering the war against Russia, markets will respond by applying a risk premium to anything coming from Russia — oil, gas aluminum, wheat, potash etc.

I’m long this trade, +220bps early going.

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GERMANY CUTS DEAL WITH QATAR TO POSSIBLY CEASE RUSSIAN GAS IMPORTS BY 2023

Germany announced a deal with Quatar for LNG, which will be supported by new terminals being built soon — effectively and possibly enabling Germany to extricate themselves from the evils of Russian gas.

Remember the conspiracy theorists during the Syrian-ISIS war that floated the idea of seizing Syria in order to get a pipeline from Qatar into Europe?

After clinching gas deal with Qatar, Germany’s economy minister says, ‘we might still need Russian gas this year, but not in the future’ and adds ‘he who has ears should start to listen’.

Well then, the pipeline never happened, so they’ll just have to do with LNG.

Much of the glue that has bound nations in peace since ww2 was reliance upon one another for trade. This is the very basic idea behind free trade and the EU. Well, due to the Ukrainian conflict — all of that has stopped with Russia. Historically speaking, casting out a power such as Russia has led to conflict. Will Russia become a hermit state like N. Korea or continue to make provocative moves in Europe?

Does Russia strike you as a country that likes to be ignored?


Catherine Palace, Russia

Some recent developments in the war of note.

Russia used hypersonic missiles that cannot be intercepted to destroy Ukrainian arms depots. NATO said they tracked them — but they are believed to be unhittable via anti-aircraft batteries.

Southern Ukraine is on the verge of collapse for Zelensky and capitulation should be inside of a week.

Only the areas around Kiev appear to be holding up. Casualties on both sides are high, but substantially higher on the Ukrainian side — something not cited at all in western media and useless OSINT accounts on Twitter.

By May the war will be wrapped up, but the sanctions will persist and then we get to worry about Russia’s next move. It should make for a hot summer!

BONUS: Lukasheno’s forces are on the move, perhaps en route to seal the Polish border on the Ukraine side in order to prevent arms being shipped into the country.

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An Overview of the Market Last Week

We have some great content on the Stocklabs Youtube channel, so fucking subscribe and knock on the doors of your neighbors and tell them to do the same.

Lots of shit happening now. I will get into the war and why Ukraine is scheduled to capitulate soon and what that might mean for the fucking Baltics this summer in a later post.

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How’s the Housing Market Treating You?

Now that I’ve been in NC for more than 2yrs and have a better understanding of the area, I’m in the market for a new home. Lucky me, I get to pack all of my shit again and deal with mortgage lenders combing thru my finances with a fine tooth comb, all the while buying at runaway prices with elevated rates into what might be a complete collapse of the housing market.

Have you seen the housing prices recently, +50% in price over the past two years due to inflation jacking up the replacement value? The prices of everything needed to build a home has nearly doubled since COVID, so of course the price of your home is up. But that value isn’t exactly real, since you can’t just sell and live out of a box.

We had a great week for the market and everybody is feeeeeeling optimistic again. Let me remind you, during bear markets the bull rallies are always the best and they make you remember the past and lure you back into the riskiest trades, before dropping the hammer on you. Bear markets are more than terrible, but demoralizing because they give you false hope.

The issue of whether the market will continue to be in a bear market or not, at least the way I see it, lies with the Russian threat and also the housing market. You will be able to see the stress first in mortgage lenders, weak regional banks, and then the big banks like WFC and JPM. You cannot have a recession without weak bank stocks, period.

The bears this weekend will point to a flattening yield curve because it usually precedes recession. That’s all well and fine, but what I’m really interested in is this year’s housing market. The elevated prices, coupled with soaring mortgage rates, might be laying a trap for buyers into what might be an elevated unemployment rate by 2023.

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An Update on the Stocklabs Oversold Signal Success

It was a week of wanton success for the Stocklabs mean reversion algorithms. This is just the second sequence of trades I’ve conducted using this system, one I deployed with options back in 2012 to great personal gain. The method is simple: upon a 12 mo oversold signal purchase a 33% position in TQQQ. The holding period is 10 days and during that period if the system flags OS again, make another 33% tranche purchase, extending the holding period another 10 days. What ended up happening this go around is 3 purchases spread out, with my sale scheduled for early next week.

This is my algo dedicated account inside Stocklabs, now +15,6% for 2022, +28.4% for the week. The purchase are below, alongside the actual oversold signals in the final table.


If it was up to my feelings, I would’ve sold the positions yesterday, but I didn’t because I’m adhering to rules. Going forward, our algorithms suggest weakness on Monday followed by strength.

The major caveat to all this is the specter of WW3, something the algorithms cannot detect in their analysis of market technicals and fundamentals.

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Markets Celebrate America’s Hegemony

There is no clearer way to describe this week’s rally than to suggest it was a celebration of sorts of America’s grip and hegemony over the world order. The war in the Ukraine is going poorly for Russia; ergo, markets have determined America’s united economic response and ferrying of deadly weapons to the Ukraine is enough to maintain US supremacy. We are pricing in the end of Russia aggression. This could be a foolish trade or perhaps a prescient one.


Week to Date gains, courtesy of Stocklabs

Week to date, the NASDAQ is up more than 7.5%. For the month of March, the NASDAQ isn’t even up 1%. If we fade next week history will never know of the glory traders experienced this week. In my algo driven account, I am up another 4% plus, making that +25.5% for this week alone. I will be selling out of my TQQQ position next week.

Longer term, the commodity trade will work, not only because of the war, but due to the sheer economics of their free cash flow. For now, at least closing out this week, we celebrate the halcyon days of when Chamath took selfies of himself naked and SPACs were all the rage — because we were going to space in electric planes, smoking cannabis, enjoying life watching Netflix and mining for crypto currencies all the while printing guns in our 3-d printing presses inside our metaverse because someone burgled one of our NFT paintings from inside our estate in Decentraland.

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CHINA: THE US IS ON THE WRONG SIDE OF HISTORY

Ahead of Biden’s phone call with Xi at 9am Friday, the Sino-American tensions have heightened considerably, at least on Twitter.

It started early on with these statements out of the White House:

OFFICIALS IN THE US BELIEVE BEIJING IS MOVING CLOSER TO SUPPORTING THE KREMLIN.

THE US’S STANCE ON CHINA HAS SHIFTED AHEAD OF FRIDAY’S PHONE CALL BETWEEN BIDEN AND CHINA’S PRESIDENT XI.

U.S. Will Punish China if It Gives Military Aid to Russia, Blinken Says

“We’re concerned that they’re considering directly assisting Russia with military equipment to use in Ukraine,” Mr. Blinken said at a news conference in Washington. “President Biden will be speaking to President Xi tomorrow and will make clear that China will bear responsibility for any actions it takes to support Russia’s aggression, and we will not hesitate to impose costs.”

But “it appears that China is moving in the opposite direction by refusing to condemn this aggression, while seeking to portray itself as a neutral arbiter,” Mr. Blinken said.

Then a Chinese spokeswoman, Hua Chunying, took to Twitter with some choice comments tonight:

If the #US had truly abided by the purposes and principles of the #UNCharter, how could it have staged wars without remorse for the people of Yugoslavia, Afghanistan, Iraq & Syria …?

On the #Ukraine issue, between the #US and #Russia, there are scores of countries besides #China that are drawing independent conclusions, trying to deescalate the situation, encouraging peace talks in deeds as well as words, and protecting their legitimate rights and interests.

#Ukrainian people need peace & security instead of weapons & ammunition.

If relations with China continue to deteriorate due to Russia, this would have a most profound effect on US supply chains and GDP — casting widespread damage to a number of industries. Let’s not even think about what Chinese tech stocks would do. Needless to say, YANG would surge.

I cannot help myself but to editorialize here and say this is a profound diplomatic misstep, one that pushes China into the arms of Russia — creating an alliance between two Asian nations that are perfectly fit for one another — with Russia providing natural resources and materials and China manpower and technology. The hubris of American diplomacy to demand China to heel before US policy in Ukraine could end up being a total disaster.

In other news, our boy from Belarus is at it again:

LUKASHENKO: IF ZELENSKY DOESN’T SIGN A PEACE ACCORD SOON, HE WILL BE SIGNING A CAPITULATION ACCORD. RUSSIA WILL NOT LOSE

NASDAQ futs are -130, commodities bid higher.

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MARKETS SOAR; TIME TO GET DRUNK

Today is my second favorite holiday after Halloween. The corned beef is boiling in beer and now it’s time to prep and cook the potatoes and cabbage to accompany copious whiskey and beer drinking. It is, and this goes without saying, a bull market in the midst of a bear. We can hypo-analyze it all we want but at the end of the day — STOCKS ARE PRESSING HIGHER.

I do have some thinking behind my trades and took profits throughout the session and positioned heavily into commodities with 10% cash and 15% short via inverse ETFs.

I managed to slay the markets again, +305bps for trading, +470bps for Quant and +332bps for my algo account. I am at record highs. All trades conducted in real time inside Stocklabs.

Cheers.

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SANCTIONS FOR CHINA NEXT: BLINKEN WARNS CHINA TO NOT ASSIST RUSSIA

Good thing the adults are back in office. It looks like the United Steaks is quickening a path for war with China too.

US SECRETARY OF STATE BLINKEN: BIDEN WILL MAKE IT CLEAR TO XI THAT CHINA WILL BEAR RESPONSIBILITY FOR ANY STEPS IT TAKES TO ENCOURAGE RUSSIA’S AGGRESSION.

U.S. SECRETARY OF STATE BLINKEN SAYS CONCERNED THAT CHINA IS CONSIDERING DIRECTLY ASSISTING RUSSIA WITH MILITARY EQUIPMENT

Apparently Biden is scheduled to speak to Xi today and this comes off the backdrop of Beijing telling the US to fuck off — as they’ve declared “normal trade relations” with both Russia and Ukraine. It’s not their fight — but apparently we insist that it is and if they don’t heel — we will declare them a belligerent.

Having fun yet?

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