DAY FROM HELL: THE FLY GIVES UP BIG DICKED GAINS FOR SMALL BREASTED LOSSES

(PAUSE)

I had it all figured out this morning, decadent and spoiled — accustomed to comfort. I opened up splendidly and smugly — gaining more than 2%. I fashioned myself something of a movie director, wearing French garb and smoking cigarettes through a diamond encrusted holder. I also viewed myself terrifically as a genius — world’s finest investoor — the mastermind behind iBankCoin and Stocklabs.

All of these things raced through my mind — as I posted Russian news on Twitter — and then it happened. I permitted comfort to permeate my way of life and got relaxed. I didn’t sell the things I should’ve and I began to spend in a profligate manner — and then BLACKNESS came upon me and stripped me of my comfort and I bore witness to a horrible rape — as my account went from +2.2% to down 0.3%.

While you might not consider DOWN 0.3% a disaster, I view it as an utmost CATASTROPHE and it has affected my mood and ruined my day.

All of the things I thought I was — it turned out I was not. I am a FOOL who let +200bps slip away in the blackness of the night and now I have to get batteries for my flashlight to get it all back tomorrow.

Markets closed very bogged, -175 NASDAQs with pronounced strength in commodities. However wonderful they were, the oils and all of the other great basic material plays were shot through the face today — taking yours truly to the woodshed.

Germany has reported they convinced Putin to accept payment in Euros/Dollars for gassss.

Olaf Scholz’s office said Russian President Vladimir Putin told the German Chancellor that European companies could continue paying in euros.

In a phone call with Scholz, Putin said the money would be paid into Gazprom Bank and then transferred in rubles to Russia, a German statement said. The bank is not currently subject to sanctions.

“Scholz did not agree to this procedure in the conversation, but asked for written information to better understand the procedure,” the statement added.

If true, this is good news for German bros. It’s hard to understand why Putin will acquiesce other than to possibly use this to divide NATO. Nevertheless, I would not bank on this arrangement for much longer, should sanctions continue and the west continue to foment escalation in Ukraine.

In other news, Biden announced the US is giving Ukraine ANOTHER $500m, bringing the grande total minus weapons and equipment, to a staggering $16b. This is perverse but we should expect this in late stage Pax Americana.

And then there’s this out of Moscow:

Sergey Ryabkov: BRICS nationswill be one of the backbones of the new “fair world order”.

There is now an overt attempt to supplant dollar reserve status by Russia and opaquely supported by Brazil, Indian, and China. I think it would be much more forceful should Russia succeed in Ukraine, which is probably why we are throwing the kitchen sink at it, sans direct involvement.

Markets are weak, but nothing too substantial — with outsized performance on commodity related stocks.

UPDATE: No idea what’s what now.

Russia releases summary of conversation between Putin and Sholz pic.twitter.com/es5iUut7FZ

— The_Real_Fly (@The_Real_Fly) March 30, 2022

We can endure $200 WTI and $10 at the pump. We can live with war and famine and crime. What we cannot live with, under any circumstances, is another housing collapse. The fate of that eventuality, or lack thereof, lies with interest rates

As you can see rates have recently soared and over the past year the 30yr mortgage, backed by MBS, have soared from low 3s to now 5s.

How can rates remain low while at the same time defeating rampant inflation? I know what you’re going to say — ‘demand destruction’ as per slowing economy. But that’s off the table with Russian sanctions. Supply disruptions all but insure elevated commodity prices for the foreseeable future — which will be directly applied to the faces of the poors. This will lead to increased budgets and profligate spending and even more inflation. Our leaders are fucking morons and prescribe the exact tonic to cause inflation while at the same time hoping to defeat it.

Like I said earlier, we can deal with the pangs of higher costs and as long as the dollar remains currency reserve and the Russian war doesn’t spread — we can spend like idiots and wait for things to stabilize. But none of that will occur if rates jimmy higher. An environ where mortgage rates are higher than 6% all but prices the middle class out of housing and will collapse MLS listings, as people find themselves imprisoned in their homes, unable to move anywhere affordable sans shitholes like Detroit. Under such a scenario, mark to market will happen and banks will take immense losses — especially since prices are so elevated now.

Headline from BBG.

The west is starting to realize it needs materials to continue its life of comfort and have begun making plans for long term supply shortages. Biden evoking war powers means materials such as lithium, nickel, cobalt are in short supply.

There are ways to play this and in Stocklabs I’ve already gamed it out weeks ago.

Today’s trading session is all about commodities and resumption of full war activities in Ukraine.

The themes working so far.

First thing I did this morning was sell all non commodity stocks and then add to an already solid performing list of ag, oils, and material holdings. I’m now up 1.95%, with 30% in cash. My sense is for the commodity trade to resume and eventually take out previous highs.

Dutch gas is up nearly 11% now on Russian gas stoppage fears.

Come Thursday all of Europe is expected to pay for their gas with Rubles, but they don’t want to. I don’t see why not. Russia has gas that they need to heat homes and power their electricity plants. I understand they want Russia to just die and they want to be able to steal their dollars and gold without retribution— but if they really want to do that and get away with it they’ll need to do several things. The first thing they’ll need to do is defeat the Russian army in Moscow and the second thing they’ll need to do is seize Russian oil and gas supplies by force. Anything short of that dictates they must adhere to Russian demands, or simply not buy Russian gas.

Germany is panicking over this and asking its citizens to stop using so much gas. Germany also banned any support of the Russian war in Ukraine and the letter Z. I’m not making this up.

Russia’s war of aggression against #Ukraine is a criminal offense. Anyone publicly approving the war may be liable to prosecution in Germany. This applies to using the "Z" symbol, too. German security authorities are keeping an eye on the use of the symbol. – Ministry of Interior https://t.co/diQEgGwR7a

— German Embassy (@GermanyinUSA) March 28, 2022

As for sanctions and markets:

The Ruble is soaring against the dollar on a daily basis, in what might turn out to be the biggest FX short squeeze in history.

The Russian MOEX is +4.3% today, while the DAX is down 1.66%.

GRAIN EXPORTERS IN RUSSIA MAY REQUEST RUBLE PAYMENTS – KOMMERSANT.

— The_Real_Fly (@The_Real_Fly) March 30, 2022

But Russia no longer has access to Disney.

PRES OF $DIS:

Karey Burke: "as the mother [of] one transgender child and one pansexual child," she supports having "many, many, many LGBTQIA characters in our stories" and wants a minimum of 50 percent of characters to be LGBTQIA and racial minorities.pic.twitter.com/IpU6Ykz6JT

— The_Real_Fly (@The_Real_Fly) March 29, 2022

Who’s really missing out here?

Yesterday now sanctioned Russian billionaire Abramovich flew to deliver a hand written note from Zelensky, which detailed his terms to end the conflict.

Putin’s response was “tell him I will thrash him.”

Today, during the alleged peace talks and subsequent minor cessation of hostilities, Zelensky issued the following statements:

Trump’s take:

TRUMP CALLS ON PUTIN TO RELEASE INFO ON HUNTER BIDEN’S DEALINGS WITH OLIGARCHS

And then there’s statements out of the US and UK, basically trolling Putin in an attempt to mock and deride him. If we’re really trying to stop the killing, this isn’t the best approach.

UK Ministry of Defence intelligence says Russian statements regarding reduction in activity around Kyiv may indicate Moscow’s acceptance that it has ‘now lost the initiative in the region’.

Bottom line: Do not fall for peace. I suspect by the end of the week, we will be back to business as usual between Russia and Ukraine.

Listen to me very quietly.

Nothing can stop the market from rising tomorrow, since there is a lull in peace talks it all but assures we cannot get any market moving bad news. I closed the session +2.9%, 117% leveraged long without hedges. I did this, not because I am feeling lucky, but because I know I will be right.

That said, my only pseudo hedge lies in my commodity oriented stocks against tech. I am also most loaded up with piece of shit small cappers, late 2020, early 2021 plays — and do so with vigor and tenacity.

You are bearing witness to market greatness and of course you take it for granted. I have raised you via this site since 2007 to understand the market and know how to respond and now you think you’re all grown up and can do it better than me.

WRONG.

“The Fly” isn’t done yet and has many more wins left in the tank.

MTD gains are now 17.2%, YTD +28%.

INDEUD.

The most important economic shift in 100 years is about to occur and it isn’t getting the press it deserves. On 3/31, Russia is demanding hostile countries pay them for gas with Rubles. France’s Macron, obviously in panic mode, just issued this statement.

FRANCE’S MACRON TOLD PUTIN THAT PAYING GAS CONTRACTS IN ROUBLES WAS NOT POSSIBLE – FRENCH PRESIDENCY OFFICIAL

The entire world order of the west is predicated on the Federal Reserve system and dollars. Should an alternative system emerge, it would great reduce our ability to finance growth with debt. More importantly, divide the world in east v west, which seems where we are going anyway. We toppled governments in the past (Libya) for far less. This is a substantial topic that is likely to spread to other Russian exports, even oil.

I view the current negotiations as a temporary lull and do not believe peace will be the net result when it’s all said and done. Nevertheless, because tomorrow is an off day for Russian and Ukrainian diplomats — markets are free to believe in the wonder of it all.

As a side addendum, the US yield curve just inverted and should be a predictoor of doom, which likely awaits us 6-9 months out. But instead we sit in front of our screens casting aspersions and leveraging into this rally — because we’re all a bunch of Eddy Barzoons expressing ourselves in most obstinate manners. It will end, all of it, and when it does — you will be better for it.

I switched to all long this morning, covering my shorts and going long tech because tomorrow is an off day for Russian-Ukranian diplomats, which means a holiday for stocks. It would shock me to see stocks lower tomorrow, on the eve of what might be the end to hostilities. Ergo and this goes without saying, I will be BULKING UP longs into the close.

But after the sugar high dissipates, we will once again be forced to focus on the following headwinds:

Biden wants to create disincentives  for share buybacks, which would prohibit a company to buy stock and then see the officers liquidate as is the case for compensation purposes. Given the market has enjoyed $200-300b in annual share buybacks for years, this would pose as a substantial blow to stocks and could unravel many quant trades that are focused on exactly this dynamic.

Lack of supply for vital commodities will cause prices to remain elevated even with potential demand destruction.

The emergence of the Petrol-Ruble is cause for real concern for dollar hegemony.

The 2-10 yield spread is on the verge of inversion — which means potential recession looms.

The US housing market is in a bubble.

All of these things point towards friction and this friction is bound to cause higher unemployment. One battle at a time, I know. However, you’d be remiss if you didn’t at least think tomorrow was a “free day” for stocks — a break from the pangs of reality, which comes Thursday.

Tread carefully and find solace in knowing “The Fly” is always winning one way or another.

SIRS —

DO NOT BE FOOLED BY THE LATEST OLIVE BRANCHES OF PEACE.

MEDINSKY: PUTIN-ZELENSKIY MEETING IS POSSIBLE: TASS

RUSSIA’S MEDINSKY SAYS UKRAINE TALKS WERE `CONSTRUCTIVE’: TASS

RUSSIAN TOP NEGOTIATOR MEDINSKY SAYS WILL LOOK AT UKRAINIAN PROPOSALS AND REPORT ON THEM TO PUTIN

UKRAINE NEGOTIATOR SAYS IF SECURITY GUARANTEE SYSTEM WORKS OUT THEN UKRAINE WILL AGREE TO NEUTRAL STATUS UKRAINE NEGOTIATOR SAYS NEUTRAL STATUS WOULD INCLUDE NOT HAVING FOREIGN MILITARY BASES

UKRAINE NEGOTIATOR SAYS UKRAINE PROPOSES HOLDING CONSULTATIONS WITH RUSSIA ON STATUS OF CRIMEA OVER NEXT 15 YEARS

RUSSIA IS BEGINNING TO WITHDRAW SOME FORCES FROM AROUND THE UKRAINIAN CAPITAL KYIV, IN WHAT THE US ASSESSES IS A MAJOR STRATEGY SHIFT

TURKISH FOREIGN MINISTRY SAYS UKRAINE – RUSSIA TALKS IN ISTANBUL WILL NOT CONTINUE ON WEDNESDAY

Let’s analyze this and make sense of it.

Ukraine is offering a deal to Russia and as a sign of good faith — Russia has begun to pull back from around Kiev. This deal will now go to Putin and a meeting between him and Zelensky might occur. As a result of this offer of peace, NASDAQ futs are +163, WTI -5.2%, and the Ruble is soaring against the dollar +6.6% to $83.88 — nearing the level it was before the invasion.

My analysis:

Even if there is a ceasefire — western powers will not remove Russian sanctions. Ergo, the idea of oil, wheat, fertilizer dropping in price long term is ludicrous. Nevertheless, markets run on sugar rushes and this is a good enough story to celebrate. The market will aways shoot first and ask questions later, so the fading of the way trade is a logical one because that is what is happening right now. Whether or not that holds is another question. Perhaps Putin really only wanted to interfere with Ukraine and had no desires to extend into other areas of Europe. Or, perhaps he did and the stiff Ukrainian resistance and loss of life/equipment made him change his mind.

Another side note: the Euro is +1.25% vs the dollar and wheat is -7.3%.