Report: China to Restrict Selling of Stocks — Schemes Massive Liquidity Injection to Avert Crash

No idea how much weight this report has, but apparently the Chinese stock market has become one giant boiler room.

Notice about stock market in #China. No one is allowed to sell when the market resume on Feb. 3. Biding price to be controlled before opening, no net sell before Feb. 7. Needs special permission for sales over 10M yuan. #CCP fearing market crash #Coronavirus #CoronavirusOutbreak pic.twitter.com/lnGIdQJCe2

— ?? Jennifer Zeng (@jenniferatntd) February 2, 2020

For color, in the olden days of the late 1990s, NYC was wrought with bucket shops that promoted micro caps. If you worked at one of these brokerage firms and wanted to sell said stock for your client — your ticket was ripped up unless you had a buyer for the stock. It appears China is taking a cue from the Wolf of Wall Street and implementing such measures. Chinese markets are due to open tonight and it’s bound to fucking crash into an early grave — due to the vaporized lockdown of the country — total isolation from the rest of the world — and the plague that is scorching the countryside.

Source: ZH

Shanghai futures are down between 6-8%.

The People’s Bank of China announced that the total injection announced was 1.2 trillion yuan, the largest single-day addition of its kind in data going back to 2004. The money will be supplied using reverse repurchase agreements to ensure liquidity is “reasonably ample” during the outbreak, according to the PBOC.

The new measures follow the announcement last week that China’s biggest banks will lower interest rates for firms in Hubei, the center of the outbreak.

However, as Tommy Xie, an economist at Oversea-Chinese Banking Corp notes, the net effect of this admittedly huge liquidity injection is much lower as there are more than 1 trillion yuan of short-term funds scheduled to mature on Monday.

Separately, I have received emails from people working at industrial plants in China who say workers are due back in about 1 week and managers are very worried that people won’t show up to work — which would inevitably place a strain on the global supply chain.

Meanwhile, the price of copper is fucking Mcplunging.

In case you’re wondering about your beloved iPhone supply chain, Foxconn says don’t worry about it. They got this.

“Foxconn is closely monitoring the current public health challenge linked to the coronavirus and we are applying all recommended health and hygiene practices to all aspects of our operations in the affected markets. Our facilities in China are following holiday schedules and will continue to do so until all businesses have resumed standard operating hours,” the company says. It’s referencing the Chinese government’s extension of the Lunar New Year holiday, a measure to try to mitigate the spread of the virus by encouraging citizens to stay home and avoid travel.

“WE CAN CONTINUE TO MEET ALL GLOBAL MANUFACTURING OBLIGATIONS.”

“As a matter of policy and for reasons of commercial sensitivity, we do not comment on our specific production practices,” the company adds, “but we can confirm that we have measures in place to ensure that we can continue to meet all global manufacturing obligations.”

On the Wuhan virus front, here is the latest.

• The coronavirus outbreak has killed at least 305 people and infected more than 14,300 globally
• US Department of Homeland Security to enforce restrictions on travelers from China
• US national security adviser: “There is no reason for Americans to panic”
• Israel closes all air, sea and land traffic incoming from China
• All major cities in China’s Hubei province under lockdown
• Hong Kong confirms additional coronavirus case, bringing total to 15
• Tenth case of coronavirus confirmed in Germany

UPDATE: The Buzzfeed blogger who got ZH banned, apparently, has a thing for young children.

The man who got zerohedge banned. ?8/29/2012 pic.twitter.com/vPaW8vCxa1

— Ed ?? #FreeZeroHedge (@DowdEdward) February 2, 2020

UPDATE: Tyler responds.

I’m always amused by people who hate Zerohedge — because they’re not in on the joke. They don’t get it. I get it and I love Tyler for being who he is — bravely and resolutely publishing things no one else dares to take on. From exposing the banks and their HFT schemes to exposing the inner-dealings and corruptness of government officials, Zerohedge is a must read for anyone in finance or people interested in reading smart news.

If you like dumb news, written by catamites, you read Buzzfeed.

Tonight, Buzzfeed is celebrating the banning of Zerohedge on Twitter after publishing this article regarding the Coronavirus.

In the article he’s citing Dr. Ding, double Phd epidemiologist from Harvard, regarding a new study that basically equates the Wuhan virus to airborne HIV.

17. …WHOA- the authors said the finding was “Unexpectedly” related to genes from HIV virus. Notably there were 4 gene insertions (see figure in above post #16). And so, which HIV gene proteins were found in the new #coronarvirus? Gag protein and Gp120- key HIV proteins… pic.twitter.com/epN66WcObj

— Dr. Eric Feigl-Ding (@DrEricDing) January 31, 2020

A source of mine at ZH believes this article by Buzzfeed led to the banning of the site’s 650,000 follower Twitter account — easily the most influential Twitter handle on Fintwit.

In the Buzzfeed “hit piece” and I place that in parenthesis because the author is too fucking dense to write an effective one, he claims ZH is a “pro-Trump blog” and “far right wing.” Wrong. Anyone who reads ZH knows he is anti-establishment and couldn’t give two fucks about Trump.

Buzzfeed gloats:

“The account was permanently suspended for violating our platform manipulation policy,” a spokesperson for Twitter told BuzzFeed News.

For me, this is a huge resource loss. Like many others in finance, I use his Twitter account as a newswire. Now I’m gonna have to be the newswire, because no one does it like ZH. Period. From what I’ve gathered — Twitter represents less than 7% of overall site traffic. If you didn’t know, ZH is a fucking monstrous site — biggest in finance.

#FREEZEROHEDGE — but I know it’s a meaningless cause. Twitter has an agenda and he simply doesn’t conform.

Fuck Twitter.

Markets are off nearly 600. I have 35% cash, was 75% cash, but I hedged a lot this morning in some triple inverse ETFs. Normally I do not share ideas with the UNWASHED public; but I’ll make an exception with this one. It could be special.

BIMI — owns and operates over 300 pharmacies inside China. How can you possibly want a better virus play?

Their news today:

Since the epidemic of the novel coronavirus, the company has been actively contacting and negotiating with pharmaceutical manufacturers and wholesale companies, including the Sinopharm Group, CR Pharmaceutical Group Liaoning Branch, and Jointown Pharmaceutical Liaoning Branch. So far, the company has maintained a sufficient inventory of drugs and medical supplies, such as N95 masks, surgical masks, rubbing alcohol, and antiviral drugs, etc.

To meet the consumers’ surging demand for drugs and medical supplies, the company decided that all pharmacies will be open during the Chinese New Year holidays. Consumers can register as members and browse product inventory information on Boqi Zhengji Online Medical APP. The chain stores also provide members and employees with information and knowledge about epidemic prevention.

“As a consumer-centric health company, we strive to meet our consumers’ demand and mitigate the impact of the novel coronavirus,” said Mr. Tiewei Song, the Chief Executive Officer and President of BOQI International Medical Inc. “Through our supply chain and customer information management, we are contacting more pharmaceutical companies and preparing for the current epidemic and future outbreak risks. Meanwhile, we will further improve the emergency plan and provide our customers with high-quality, affordable products and services as much as we can. ”

This is sort of the inverse play on LK. No one is drinking fucking coffee in China — zero people. But everyone wants a face mask — believe me. Is the stock too high? I don’t think so. Fact is, this was a reverse merger and the company flew under the radar under its former name.

Is it a piece of shit? Absolutely. But even shit floats during pandemics.

Ciao.

I had purchased TVIX earlier today and just sold it for +7.7%. I sold it because it’s a fucking bastard ETF and it always ruins me. It felt good to finally win one in that.

Things I am avoiding.

Buying this dip in LK. Muddy Waters is short and they’re good enough for me to stay away.

Shorting too much into the hole. It’s ok to have hedges, but history has been unkind to short sellers.

Buying the dip with too much vigor.

You can buy into this decline, but don’t over do it. As a matter of fact, the best bet is probably nothing.

Lastly, I am trying with all of my might to avoid buying virus stocks. They’re running and people are sloshing gasoline on each other having a grande old time. I’m trying to avoid getting burned on a fast money trade without real relevance.

Do not take this lightly. The world is in lockdown mode due to the virus scare — which is definitely going to reduce growth. The Chicago PMI just posted the worst numbers since 2015.

Via Zerohedge:

42.9 vs 48.9 expectations

Business barometer fell at a faster pace, signaling contraction

Prices paid rose at a slower pace, signaling expansion

New orders fell at a faster pace, signaling contraction

Employment fell at a faster pace, signaling contraction

Inventories fell at a faster pace, signaling contraction

Supplier deliveries rose at a slower pace, signaling expansion

Production fell at a faster pace, signaling contraction

Order backlogs fell at a faster pace, signaling contraction

Heading into today I was 75% cash. This sort of data doesn’t convince me to step back into stocks. Quite the opposite, actually.

I’ve been obsessing over bananas recently, in spite of the fact that I do not eat them. Low carbs and all, I don’t eat them. But did you know the varietal we eat today in America, the Cavendish, was considered to be a “junk banana” back in the day — mainly because it sucked?

The way I are across this fact is curious, after reading this passage from F. Scott Fitzgerald about the market crash.

Now once more the belt is tight and we summon the proper expression of horror as we look back at our wasted youth. Sometimes, though, there is a ghostly rumble among the drums, an asthmatic whisper in the trombones that swings me back into the early twenties when we drank wood alcohol and every day in every way grew better and better, and there was a first abortive shortening of the skirts, and girls all looked alike in sweater dresses, and people you didn’t want to know said “Yes, we have no bananas,” and it seemed only a question of a few years before the older people would step aside and let the world be run by those who saw things as they were–and it all seems rosy and romantic to us who were young then, because we will never feel quite so intensely about our surroundings any more.

That line stood out as nonsensical, so I chalked it up to some recency bias he had, some cultural event that caused him to write it. I was correct.

So then I looked into why such a song was made and lo and behold there was a banana shortage in the 1920s, which really came to a head by the 1950s, leading to the extinction of the Gros Michel banana in the Americas thanks to the Panama disease, a blight that destroyed the wonderful banana as we know it. So then BIG BANANA switched to the shitty Cavendish and that’s the horrible banana you eat today. In certain asian countries you can get the Gros Michel. You can even order it online. From what I understand, it tastes much better with less starch.

Why is this important? It really isn’t at all.

I’ve been reading about Churchill too. What an absolute moron he was with his money. Also, he smoked 12 cigars per day. Who does that?

On the news front, the Coronavirus is getting so much worse. Read my twitter feed for the up to date news. NNVC is soaring the pre-market, as well as LLIT and several others. They might pose as great trades today. I have to see them trade first. Plus, it’s a Friday and the news is bound to get worse before it gets better. My knee-jerk reaction is to not believe “this time is different.” But what if it is?!

More on this later.

Big fucking move in the after-hours. Amazon crushed earnings and everyone who bought is rich-er than before.

Amazon beats by $2.49, beats on revs; guides Q1 in-line

Before that happened, markets spiraled higher, with ease, because betting on the plague is most likely a dumb bet. Even though the plague looks bad now, very soon it will pass and become a mere footnote in the year that was 2020. I made my score, the 300% gain in the beginning, and now I am moving past that and into other stocks. Real stocks that move higher based upon real things. So many of you failed to trade the virus stocks because you’re of the low information type, stumbling though life without a care in the world. This is why platforms like Exodus exists, to give you and your loved ones and edge, enough to make a difference in your otherwise moribund and miserable lives. I know this because I live it too. But I am a highly skilled instrument of financial warfare and know the tea leaves better than most.

I bought 4 normal stocks towards the end of the day, mostly tech stocks. I will likely buy more tomorrow and finished off my allocation early next week, hopefully into another market scare.

Rates are collapsing, presently at 1.55% — a real harbinger of doom.

Gold is soaring.

Oil and copper #COLLAPSE.

An infectious disease is rampaging throughout Asia, forcing businesses to close the fuck down — people are sloppily falling in the streets iced cold dead. The inner doom in me wants to short things and preside over the apocalypse, but my brain keeps getting in the way. The virus stocks are emotional trading tools, not serious. The only real money to be made here is effectively timing the bottom in stocks like LK. Problem is, no one knows when this virus will ebb. We have a runaway train off the tracks and trading around it is dangerous.

As such, in my trading account, I am 100% cash now. I might purchase a few things later, or maybe even short sell something. But for now, I really don’t have a fucking clue what happens next.

All I see are bad headlines. When I see that, I am pre-programmed through years of dealing with crisis, to buy said dips. That is the play, believe me. I just haven’t figured out when things might start getting back to normal again.

Long trip and I’ll need to head back soon. Emotionally taxing and I can honestly say trading was a fantastic distraction, especially when it entails winning so much. I often find my best trades to be done when traveling, probably because I’m not baby-sitting them and I let narratives play out longer.

I see futures are sharply lower and that’s supposed to mean something — because a fucking pandemic is on the loose. I had a guy sitting next to me coughing his brains out and I wanted to tare his head off for doing it.

These are the headlines I’m watching now.

3 Japanese citizens evacuated from Wuhan have coronavirus
China reports over 7,000 cases of Wuhan coronavirus cases, including 170 deaths
Student starts petition to cancel classes at Arizona State University over coronavirus fears
White House announces creation of coronavirus Task Force
Carriers of the Wuhan coronavirus face criminal charges if they knowingly infect others in Hubei
Ikea closes ALL stores in mainland China
Tesla Model 3 production delayed in Shanghai because of coronavirus outbreak

So this is what I’m thinking. Epidemics are very low probability plays. The idea that this flu is going to kill millions is an extremely low probability. However, in the interim, people are fucking panicking. I know the virus stocks look like interesting trading vehicles, but they might be a little to hot to pick up right now, even though they’ve fallen sharply the past two days. They can offer incredible intra-day returns, given the right horrible news and all that — but logically the best play here is resumption of normalcy.

Meaning, buy great stocks that fall on a disruption in their business — due to the virus.

More tomorrow.

I don’t want to apply any critical thinking into the reasons for this surge. I will simply ignore any internal monologue I might have and simply accept the fact that Bitcoins are up nearly 30% the past month.

Maybe there is a reason. I don’t care at all to know about it. I am not buying shitcoins, or even thinking about it — only marveling at the fact it is still here.

The Coronavirus has now surpassed SARS and markets have already priced in forgetting about it. I sold the lot of my last virus stocks yesterday and went long three ordinary stocks, holding 85% cash. I am tempted to buy more, but also bear in mind my trading account is roughly ~25% of my overall assets, which are invested fully into a long only portfolio, quantitatively. In other words, while I am away from home and in NYC, I will probably will do nothing.

I depart tonight for NC.

I’d rather not make any predictions, other than to say things are still very fluid and complacency is something the market is comfortable with. Being defensive or even taking long positions in virus stocks is mostly viewed as macabre amongst traders, who only deem other investors fit to purchase shares of TGT into any and all scenarios. Truth is, TGT has been a great investment the past year, but it’s a very stupid existence and if my world collapsed into choosing between owning TGT or doing nothing at all — I’d choose the latter.

The puzzle is the only part of this game that I deem to be worthwhile. Separate from it is a world of grifters and mountebanks — stubborn and obstinate hard headed people with inferiority complexes laying waste across the internets.

Oh an yeah, shitcoins are higher today.