UN: FOOD PRICES SOARED MOST ON RECORD LAST MONTH, +13%

Food prices worldwide rose 13% last month, the most on record. And looking at data like this — one has to accustom oneself to a brave new world of need and want and perhaps tumult. If you fuck around with our iPhones — we might get irritated. But when you fuck around with our food — we will kill you, or so goes the mantra paraphrased by me to suggest food shortages and inflation is a key driver of civilian discord.

UN agency says food prices rose by 13% last month, the fastest pace ever recorded.

We have been here before, rapid inflation was enjoyed in the late 70s and into the 80s — until the Fed crushed it with mind boggling interest rate hikes.

Fed Funds/Inflation rate

Under a scenario, such as now, where interest rates are still under 1% and inflation at 7% and climbing — one has to assume, at least based off historical precedent, rates will be raised to match inflation if not exceed them. Are we looking down the barrel of 7% interest rates, for fucks sake? Imagine trying to service the US debt of $30 trillion+ with rapidly spiraling higher rates. Imagine the housing market with mortgages at 15%.

Today KR caught up upgrade at BofA citing them as a winner in the inflation trade.

BofA Securities’ Robert Ohmes notes, “Our new $75 PO (based on 18x) reflects rising potential for upward EPS revisions as accelerating food inflation drives sales upside while KR’s expense structure is contained by $1bn targeted cost savings, & the cycling of COVID costs.”

Aside from grocers, I would imagine all commodity plays would also garner appeal during a rapid inflationary period. But it’s going to be hard, as governments actively meddle to suppress prices with controls in order to keep the status quo going.

In spite of the headwinds, stocks managed to jimmy rig higher. I will tell you this now — the clandestine run in today’s tape was mostly based on WAR STOCKS: old man divvys, military, commodities etc. There was very little participation in software and/or growth names. I would think next leg will be a frantic upwards movement in the prices of natural gas. You see it ebbing at 2008 highs above $6.66. Well soon you will see it about $10, as VLAD shuts off the valves to Europe and collapses their economies.

Although wishful thinking, it’s always a possibility — considering his obstinate view that he wants Russian Rubles in exchange for RUSSIAN GAS.

I ended up the session higher by 1.1%, LEVERAGED at 122% of assets with a 10% hedge in TZA. The bulk of my account is in RISK AVERSE secular stocks. There is a rotation underway and it’s not bullish for stocks.

The downward collapse of markets this morning triggered an OVERSOLD signal inside Stocklabs and I bought, as part of my trading program in one of my accounts, a 33% position in TQQQ. This account is designated to only trade the mean reversion signal.

Lo and behold — we bounced furiously off the lows and now have a mean rally underway.

In my trading, I am +51bps, due to a more muted portfolio of stodgy old man stocks. My thought process is as follows:

Preserve the gains I have during a period of uncertainty. We have rallied furiously off the March lows and even though there could be room to the upside, it is my view the bulk of the ribald natured gains have been achieved. Going forward, or at least until we correct lower again, I will comport myself in a manner on par with a country gentleman, leisurely and with grace CAVORTING the countryside amidst pastoral views as my portfolio increases but in a genteel manner and not in a way that might upset me as I glance upon my pocket watch for the time.

The rhetoric is almost non-stop. The US meddled in Ukraine, captured the state and underestimated Russia’s resolve to protect its sphere of influence. Now like a child who just got its toys taken away, the US is lashing out and throwing a tantrum, threatening anyone who does not help them get their toys back.

Here is the latest:

NATO chief Jens Stoltenberg: “We have seen that China is unwilling to condemn Russia’s aggression. And Beijing has joined Moscow in questioning the right of nations to choose their own path. This is a serious challenge.”

FRANCE HAS WARNED CHINA TO AVOID REPEATING RUSSIAN PROPAGANDA – ELYSEE

Also, Finland is rumored to be in the process of applying for NATO. This is great, just what is needed now.

Finland making preparations to apply for NATO membership – Iltalehti

A Chinese government officials response.

#US sanctions target not just #Russia. 20 years after the start of the war in #Afghanistan, the US still seizes billions of dollars owned by the impoverished Afghan people which is life-saving money.
Is there any difference between US behavior and mass murder?

— Hua Chunying ??? (@SpokespersonCHN) April 7, 2022

See where this is going? We have so many enemies, yet the people don’t give a fuck about any of these trivial rivalries. War has always been a SCAM, foisted onto the working class by rich scum. This is no different and I hope that if you’re reading me you do not misconstrue my position here — which is 100% anti-war. I cannot protest in Russia and that is not my government. Sadly, I cannot influence any of the events on the ground in Kiev. They are not blameless, insofar as they too underestimated the resolve of Russia and as a result of their move towards NATO — directly caused the deaths of many Ukrainian citizens. Did the working class Ukrainian give a fuck about NATO membership? Of course not. But now they fight for their lands and of course this is admirable — but there is a reason why this is happening and it’s not because “Putin went crazy.”

So here we are again, fucking with China, threatening India and any country that permits Russia to trade. What this is suggesting is the government of America and most western nations in Europe are preparing for kinetic war with Russia — all for a place that has no bearing on the lives of every day Americans struggling to afford the fucking meat in the grocery store.

Markets are CAREENING lower, with marked strength in old man dividend stocks and gold. This is a defensive tape and even oil is getting hit — as the market ebbs towards pricing in recession now.

I get the sense this Ukrainian war will become another Syria, with countless dead and country is ruins. No one seems to want to stop it. The Polish President said yesterday it was meaningless to discuss anything with Russia, opting instead for a scorched earth policy. It’s very easy for him to say this within the confines of Warsaw. The very last thing we should want, as civilized people in the 21st century, is war.

This morning Belarus basically said they invaded Ukraine.

LUKASHENKO SAYS BELARUS HAS CARRIED OUT SPECIAL OPERATION IN UKRAINE TO RELEASE BELARUSIAN CITIZENS – RIA

Stocks are somehow sanguine and commodity markets more of the same. The big story is the move in the Ruble, now at the $75 level vs the dollar up nearly 5% for the session. The currency is now higher than where it was before the invasion, a testament to rigged markets and the fact that the Fed isn’t the only central bank who can manipulate prices. But it is worth noting, there are reasons to own Rubles, even though you cannot. India is doubling down on their position to side with Russia for trade and it doesn’t look like China gives a fuck what we think.

It should be noted, Pelosi is scheduled to visit Taiwan, her first visit there in 25 years and the Chinese are irate. Maybe out grande scheme is to just wage war with all of the countries that pose a threat to us, all at once. It seems very stupid to saber rattle like this, but perhaps this is a side effect of western decadence and comfort — now lashing out at the windmills in its way.

I closed out my shorts this morning and bought some more commodity exposure to go with my portfolio of mostly large cap divvy stocks.

Don’t lean over too much otherwise you might tip the fuck over and fall into the blades.

Market whipsawed me to pieces today, but I ended up basically unchanged with investments in old man divvy stocks, some commodities with some large hedges in SQQQ and UVXY.  I am not too exposed because I sense my market hand has cooled and I’d like to keep the +45% I’ve made since my January lows. It is easy to get caught up in your own bullshit, believing you to be infallible. I come on here and have been since 2007 and I boast about my gains and all of my successes — but like you (maybe not exactly like you) I too struggle with the market and putting together the pieces to figure this puzzle out.

I find the best way to me to remain mentally healthy is to consume vast amounts of information, not take myself too seriously, be malleable, eat healthy, avoid booze, exercise often, and live a moral life.

What does morality have to do with it?

For me, I cannot think correctly when I am feeling bad about myself. I feel good when I am helping others, living my life to improve the lives of others.  I eschew the things I once loved when I was younger and am humble enough to know that no matter how good I think I am — I can always learn more and get better.

If you’re new to investing and come here for clues on how to get better — there are no shortcuts. Invest 10,000 hours of your time to get good and then trade 45 times in a day and lose 0.1% on a day the NASDAQ shed 315 to feeeeel good about yourself and your progress in reading the tape.

Look at that fucking chart. Let me tell you how I played it.  See where all the green candles were — very methodical and easy yes? I stepped in small and then kept adding into that I had forgotten was FED MINUTES. I had gains of 1.3% at the time of the minutes and my exposure was about 50% all long — lots of tech and biotech. Real shit stocks. This is off the backdrop that stocks are generally down 5%+ today, in an array of areas.

Immediately after the minutes came a big FREEDOM CANDLE developed and I bought one more stock, celebrating my genius. Then rape happened with that red FUCK YOU CANDLE. I bore witness to my +1.35% gains dissipate to almost nothing so I quickly sold near that last red candle. This is pro stuff.

At the bottom, I took a 10% position in UVXY and now we’re swimming the fuck higher again and all of the stuff I sold is ripping and now I am stuck with just 2 stocks and a 10% holding in UVXY — which is getting RAPED by Mother Market — again all off the backdrop of stocks still down significantly for the session.

My gains are now 0%, ebbing into losses. My approach was dreadful and I realize had I just went to the bathroom to urinate — this blog would’ve been filled with self-praise congratulating myself for being such a wonderful trader.

My options going forward: position for tomorrow morning and do nothing stupid.

We blipped up briefly and now have collapsed, giving way to sellers once again. Post Fed minutes, as you can see from the headlines below — the Fed is trapped by markets. They understand inflation is raping the economy but fear by hiking rates they would cause a cataclysmic decline in assets. Ergo, they’re attempting to walk the tight rope.

FED MINUTES: PARTICIPANTS GENERALLY NOTED THAT EXTENSIVE HOLDINGS OF T-BILLS ARE NOT REQUIRED UNDER AN AMPLE-RESERVES OPERATING FRAMEWORK.

FED MINUTES: SEVERAL PARTICIPANTS ALSO MENTIONED ADVERSE RISKS TO THE OUTLOOK, SUCH AS THE RUSSIAN INVASION, A GENERAL TIGHTENING OF GLOBAL FINANCIAL CONDITIONS, AND A PROTRACTED RISE IN ENERGY COSTS.

FED MINUTES: PARTICIPANTS AGREED THAT UNCERTAINTY ABOUT THE COURSE OF INFLATION WAS HIGH, AND THAT INFLATION RISKS WERE SKEWED TO THE UPSIDE.

FED MINUTES: SEVERAL PARTICIPANTS MENTIONED THAT GRADUALLY LOWERING T-BILL HOLDINGS WOULD BE APPROPRIATE BECAUSE THEY ARE HIGHLY VALUED AS SECURE AND LIQUID INVESTMENTS.

FED MINUTES: PARTICIPANTS AGREED REDUCING THE BALANCE SHEET WOULD PLAY AN IMPORTANT ROLE IN FIRMING THE STANCE OF MONETARY POLICY AND EXPECTED IT WOULD BE APPROPRIATE TO BEGIN THIS PROCESS AT A COMING MEETING, POSSIBLY AS SOON AS IN MAY.

FED MINUTES: PARTICIPANTS AGREED THAT THE FED WAS WELL PLACED TO BEGIN BALANCE-SHEET REDUCTION AS SOON AS THE FED’S MAY MEETING ENDS.

FED MINUTES: MOST PARTICIPANTS THOUGHT IT WAS ACCEPTABLE TO REDEEM TREASURY COUPON SECURITIES UP TO THE CAP AMOUNT EACH MONTH AND TO REDEEM TREASURY BILLS WHEN COUPON PRINCIPAL PAYMENTS FELL BELOW THE CAP.

FED MINUTES: MANY PARTICIPANTS REMARKED THAT ONE OR MORE 50 BASIS POINT HIKES IN THE TARGET RANGE MAY BE APPROPRIATE AT FUTURE MEETINGS, ESPECIALLY IF INFLATION PRESSURES STAY ELEVATED OR INTENSIFY.

FED MINUTES: ALL POLICYMAKERS’ ALTERNATIVES FEATURED A FASTER PACE OF BALANCE SHEET RUNOFF THAN IN THE 2017–19 EPISODE.

FED MINUTES: MANY PARTICIPANTS STATED THAT THEY WOULD HAVE LIKED A 50 BASIS POINT RISE IN THE TARGET RANGE FOR THE FEDERAL FUNDS RATE AT THE MEETING.

FED MINUTES: ALL PARTICIPANTS EMPHASISED THE IMPORTANCE OF REMAINING VIGILANT TO THE DANGERS OF MORE UPWARD PRESSURE ON PRICES AND LONGER-RUN INFLATION EXPECTATIONS.

FED MINUTES: PARTICIPANTS LARGELY AGREED THAT IT WOULD BE APPROPRIATE TO PURSUE MBS SALES AFTER BALANCE SHEET RUNOFF WAS WELL ESTABLISHED.

FED MINUTES: SEVERAL PARTICIPANTS BELIEVED THAT THE UPSIDE RISK TO INFLATION FROM THE UKRAINE WAR APPEARED TO BE GREATER THAN THE NEGATIVE RISK TO GROWTH.

FED MINUTES: PARTICIPANTS ALSO EXPRESSED CONCERN THAT, DEPENDING ON ECONOMIC AND FINANCIAL DEVELOPMENTS, A SHIFT TO A STRICTER POLICY STANCE WOULD BE REQUIRED.

FED MINUTES: PARTICIPANTS DETERMINED THAT IT WOULD BE APPROPRIATE TO QUICKLY SHIFT THE STANCE OF MONETARY POLICY TOWARD NEUTRALITY

FED MINUTES: PARTICIPANTS GENERALLY AGREED THAT CAPS MIGHT BE PHASED IN OVER THREE MONTHS, OR SOMEWHAT LONGER IF MARKET CONDITIONS WARRANTED.

FED MINUTES: ON BALANCE-SHEET REDUCTION, PARTICIPANTS GENERALLY AGREED THAT MONTHLY CAPS OF AROUND $60 BILLION FOR TREASURY SECURITIES AND $35 BILLION FOR MBS WOULD BE SUITABLE.

It’s all so tiring. Here are today’s headlines and then I’ll offer my 2 cents, as if it mattered.

We are more likely to retest the recent lows than springboard higher based off some enthusiasm that the world is going back to the way it was pre-COVID. It’s over and that world you once enjoyed is nothing but a memory. As tensions rise and China gets reeled into Moloch’s funhouse — real crisis will start to affect everyone.

Here we are down 2.5% for the session, with the Ruble back to pre-war levels, and all our officials seem to say is “NOW DONT YOU EVEN THINK ABOUT ATTACKING TAIWAIN CHINA. DONT YOU EVEN DREAM ABOUT IT.”

Either we are being led by incredibly evil people or stupid, no room for in between given what their policies have produced.

How does one invest in a scenario like this? Well, I wouldn’t invest for the long term in anything, which is why I prefer to trade. Are you confident in real estate up at these lunatic levels — people bidding 30% over ask as rates skyrocket above 5%? Where is all of this magic money coming from?

Are you comfy buying and holding SAAS stocks based off some 2019 model that suggested they could grow automatically at 45% per annum, providing they burned enough cash? Is that a sustainable model in this world, possibly on the verge of global war?

No.

Oil is getting hit today — because FUCK YOU that’s why. The only area of strength I see is in Ag, potash names like MOS, IPI and a few others. I will of course take some gambits towards the end of the session in the hopes they’ll pan out for me in the morning. I sold everything I owned in my trading at the open, which consisted mostly of short positions, and I am +1.1% for the day.

I’m biased against credit because of soaring debt coupled with inflated housing values and soaring borrowing costs. The math does not add up, and I feeeeeel at some point we will have a credit event.

The market is sensing it. Look at shares of AMBC, PFSI, GS, C and countless other banks.

The only problem is: I can’t find any evidence of a pending disaster in any of the data.

Sure, US credit card debt has ballooned to record highs of $930b, but delinquencies are low.

CMBC delinquencies are at record lows. Unemployment rates are near record lows. People appear to be rich as fuck.

Mortgage delinquencies did rise for the first time in 9 months, with 97k early stage delinquencies. US foreclosures are +541% YOY mostly thanks to post pandemic laws being removed. Nevertheless, the numbers are small and you can only find doom in the numbers based upon a forecast, not actual reality.

What we will need to see that will support a housing crash and credit crisis is an uptick in unemployment, rise in credit, auto, and housing delinquencies — and crashing of bank stocks to distressed levels.

As of now, in spite of all of the craziness happening, Americans are holding on.