Morgan Stanley: Global Recession is Coming — Futures Pegged Hard

Greetings plebs!

Based upon some back of the napkin math, the gurus at Morgan Stanley are warning of GLOBAL RECESSION — thanks to Trump’s trade wars. As such futures are hammered down 150.

Investors are overlooking the threat posed by the U.S.-China trade war, which could send the global economy into recession in less than a year, according to a research note published Sunday by Morgan Stanley.

“Investors are generally of the view that the trade dispute could drag on for longer, but they appear to be overlooking its potential impact on the global macro outlook,” wrote Chetan Ahya, the investment bank’s chief economist.

Ahya noted that the outcome of the trade war at the moment “is highly uncertain” but warned that if the U.S. follows through with 25% tariffs on the additional Chinese imports, “We could end up in a recession in three quarters.”

I don’t consider -150 hardly anything to worry about. It strikes me as tepid and I suspect it won’t stick. We’ll either accelerate rapidly to the downside or bounce. Gold is up, however, and that’s where I’m positioned now and I’m glad I bolted out of GUSH before the close on Friday. This is not a time to be brave and resolute, but instead malleable and open to the idea that we can, in fact, collapse from present levels — into the dirt and into the fiery flames of hell — skin removed from bones, bones removed from muscles and CRUSHED into dust and sent back to the earth to nourish the plants and the trees.

May you live in interesting times. Everyone is going to get poleaxed Sunday night.

Exodus closed OVERSOLD on Friday, relaying a signal on our 36 mo algorithms that means the market is highly distressed. In the past 36 mos, this level of stress led to some bottoming out action — providing the end of the world isn’t upon us.

I am only cautioned by the extreme levels we endured this past Oct-Jan — when the scores dove back down to 2009 levels. If we are only to use those score, the 6 mo algorithms, the market IS NOT oversold.

In fact, taking a look at the technology sector — we’re not even close.

Conclusion: I’m cautiously optimistic stocks can bounce here because the 36 mo algo is OS — but if we’re dealing with the issues that harangued us in late 2008 (recession, leveraged loans, plunging crude) — we probably have lower to go before a bounce.

Holy shit, I don’t know whose dick David Milch had to suck to green light this gem — but I’m pleased he did. When was the last time fans were entreated to such a spectacle of entertainment. Dare I say never?

This is one of my all time favorite shows and it only lasted for 3 seasons, ending in 2006. Since it’s based on true characters and real events, the writers of the show couldn’t get too scandalous and walked a very fine line between facts and let’s call it hyperbole. When the show ended in 2006, it was a bitter-sweet event. Everyone knew a show that broadcasted the popular phrase “cocksucker” couldn’t last forever. Fans of the show hated HBOs guts for canceling it, rightfully so. They’ve done lots of fucked up things in the past — but making this movie wasn’t one of them.

I don’t want to spoil anything for any of you, so I’ll just say it was fan service to the extreme and it’ll take you down memory lane in a very good way and it ended with grace, just as you would expect it to end.

Bravo to HBO and the writer David Milch for sucking whoever’s dick and getting this done.

With WTI off by 6% today and oil stocks down just 1%, I energetically sold out of my ill placed GUSH position. It is a reckless position to own, given the fact no one seems to care. VIX still sub $20 means no one thinks this drop will stick.

However, in my experience, 6% drops in WTI is a forward looking indicator. Couple that with plunging rates, copper, and surging treasuries and Yen — you’d have to be fucking mad not to lighten up into the close.

I blew out of both GUSH and SILK — raising my cash position to 30%.

My largest position is LK, at 15% of my portfolio (max for me), catapulted higher by 9% today, rendering my day a profitable one. I’ve been long defensive stocks for a week or so too — heavily weighted in ED, TR, and DLR. I am impervious to market drawdowns — fucked face.

On the Quant side, I’ll be selling out of the May portfolio on Monday for a June mix of defensive value stocks, gold, and bonds. The SPY shed more than 6%, yet I made 1% — for 700bps of outperformance.

You can’t fuck with me, not now, not ever.

Top picks: NUGT, TR, DLR

Hard to say if stocks will plunge and collapse on Monday. The easier hedges are bonds and gold.

I bought NUGT earlier this morning, first posted in Exodus — naturally.

This is all just a veiled scheme against millennials. Early going, here are some of the losers in the Mexica-American trade war. Guacamole comes to mind — and cheaply made American cars in Mexico. Sounds like twisted irony.

Via Briefing.com

The White House said a 5% tariff starting June 10 will rise incrementally to 25% by October 1 unless there is progress on the immigration crisis.

Stocks are tumbling to an eleven-month low as the market prices in these unexpected tariffs with our Southern neighbor that mixes domestic/immigration policy with economic/trade policy. The White House has become increasingly unpredictable. These tariffs also add uncertainty to the USMCA trade pact that would replace NAFTA, which the White House hopes will be approved by Congress this Summer.

Equity futures gapping down premarket: Nasdaq 100 (QQQ) -1.4%, Russell 2000 (IWM) -1.3%, S&P 500 (SPY) -1.1% DJIA (DIA) -1.1%… led by Consumer Discretionary (XLY) -2%, and Industrials (XLI) -1.9%

Auto stocks (CARZ) with already low margins that import vehicles across the US-Mexican border are being hit the hardest:

FCAU -5.30% GM -5.08% NSANY -4.74% F -3.70% RACE -2.45% TSLA -2.26% DDAIF -2.09% HMC -1.95% TM -1.54%
Auto suppliers:

DLPH -8.5% LEA -5.34% BWA -4.45% TEN -3.63% AXL -3.47% ALV -3.25% DAN -3.25% APTV -2.65% MTOR -0.86%
Other Mexican importers:

STZ -6.3%, CVGW -2.3%, CMG -1.5%

Good morning traders!

You thought the stock market was bound to spiral higher and that all of you summer expenses would be covered by this rally — but you were wrong and subsequently destroyed. President Trump has opened up a new trade war with Mexico and they’re going to pay for the wall — whether they like it or not. Periodt.

Over in Europe, the gamblers there are being shattered, root to crown, based off what exactly? I don’t see the connection between a North American trade spat and Germany. At any rate, the ripple effects of this fresh round of protectionism is having a deleterious effect on just about everything — sans bonds.

WTI -2%
BTC -5%
Nasdaq futs -105

And the 10yr treasury is now nearly 7bps to a new low of 2.157%, whilst the 3mo is flat at 2.368%.

I cannot believe this is happening. Truth be told, this is worth losing money for. Granted, I did not see this coming and as a result — STOCKS WILL GET HAMMERED. But boy oh boy is this fun.

On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..

— Donald J. Trump (@realDonaldTrump) May 30, 2019

Dow futures are OFF by 200, Nasdaq 69. WTI is down 1.45% and the 10 yr bond is at a staggering 2.18%.

A statement from the White House.

To address the emergency at the Southern Border, I am invoking the authorities granted to me by the International Emergency Economic Powers Act. Accordingly, starting on June 10, 2019, the United States will impose a 5 percent Tariff on all goods imported from Mexico. If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed. If the crisis persists, however, the Tariffs will be raised to 10 percent on July 1, 2019. Similarly, if Mexico still has not taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States, Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019. Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory. Workers who come to our country through the legal admissions process, including those working on farms, ranches, and in other businesses, will be allowed easy passage.

Boss.

A 5% tariff on $350 billion in total Mexican imports = $17.5 billion.

Think that’ll get Mexico’s attention? You know it will.

On Trumps watch, the invasion of America is ending.

And it appears that yes, Mexico is paying for the wall.

— Kip Herriage (@KHerriage) May 31, 2019

So many of you brain surgeons are taking the summer off from trading — opting to be led around by the neck by your wives to some exotic locale in order to drain you of all your money.

We do not stop trading because the warmer climes makes our wives want to do stupid things. We press on, backs against the current, until we’re dead and in graves.

Into the close, I bought SY. I am now long a fuckload of LK, SOXL, LABU, GUSH and several other names — positioning for a big ass bounce. After we bounce, I’ll position for the coming storms.

Good day and ciao (the most annoying form of goodbye)