LOOK AT ME: I’m a Drug Dealer Now

I stepped in and bought CRON — thoroughly looking forward to pot smoke being shared in churches, synagogues, and mosques in the not too distant future. In the meantime, I’ll be happy if the stock went to $18.

NOTE: I sold out of NUGT for a 5.2% loss.

This is like predicting Amazon will land a man on the moon by 2024. Adam Jonas, who probably left the Jonas brothers to become an analyst at Morgan Stanley, is out making a dramatic splash today — thanks to his research note that says TSLA can go to $10, if a sundry of things coordinate and all work towards the stated goal of destroying the company.

Needless to say, the TSLAQ crowd on Twitter are besides themselves with joy this morning — retweeting one Tesla car crash after the next — warning people of the dangers of auto fires, and simply stating to others that there aren’t any Tesla auto-mechanics to fix or service the Tesla fleet — alongside this Morgan Stanley note.

We have long held that Tesla’s share price performance is driven by: demand for its products, ability to generate cash flow, and access to capital markets. This year’s sharp deceleration in demand has led to a substantial curtailment of the company’s ability to self-fund through free cash flow generation, at the margin potentially impacting the firm’s access to capital. Tesla’s recent $2.7bn equity and convertible debt raise may provide an extra year of liquidity to run a business of this size and cash consumption. However, Tesla may now find itself in a cycle where a lower share price may itself contribute to a potential deterioration of employee morale as well as potentially increased counterparty risk with both customers and business partners (suppliers,governments)… potentially further impacting fundamentals.

We believe Tesla may have over-saturated the retail market for BEV sedans outside of China. Tapping into new demand could require aggressively expanding into: 1) the Chinese domestic market, 2) lower-priced SUVs, 3) and logistics/mobility fleets. Tesla is a large and highly vertically integrated company, capacitized to build between 500k and 1 million units annually. In our opinion, Tesla has grown too big relative to near-term demand, putting great strain on the fundamentals.

Shares of TSLA are -3.1% in pre-market trading.

Full research note.

While you bozos leverage up the account for a big bounce off the bottom, Mother Market is roasting your fucking balls in hell.

Look at all of these sectors in correction territory. You’d have to be a madman to dive in headlong here.

Trump is also insane, and that’s not saying much. He’s now gallivanting throughout the country telling folks the trade war is helping the economy. I don’t know what to believe anymore. But this god damned tape should be down 30% from the top — yet everyone is here calmly and glibly positioning for a fantastic summer run.

I hope you all get what you deserve, and more.

Admittedly, that title is click-bait AF. Truth is, the semis are going down pretty hard, but not in ruins — at least not yet.

Here’s all you need to know. INTC is down 25% the past month and NVDA -18%. These are staggering losses, considering VIX is sub $20 and everyone is complacently waiting for stocks to regain it’s upward bias — back to new highs.

Perhaps there is something to learn from all this — or no?

Top longs: TVIX, DRIP, NUGT, FAZ.

China has 90% market share in rare earth minerals, which is used in a sundry of things pertaining to electronics, especially smart phones. Since China has weaponized their supply against us before (2010), it’s now widely believed that Xi’s visit to a rare earth facility yesterday was a signal that Beijing was willing to do it again.

Via South China Morning Post

Chinese President Xi Jinping has sought to tap into the “Long March” spirit of endurance to rally the public as trade and technology tensions rise with the United States, observers said.

In his first domestic trip since the escalation of the US-China trade war early this month, Xi visited one of the country’s major rare earths mining and processing facilities in Ganzhou, Jiangxi province, state news agency Xinhua reported on Monday.

He also paid respects at a monument in Yudu, a county in the city, marking the start of the Communist Party’s Long March 85 years ago, the report said.

Xi was accompanied by Vice-Premier Liu He, Xi’s most trusted adviser and China’s top trade negotiator in the year-long talks with the US.

State media gave few details of the trip and made no mention of the trade war, but analysts said the president’s visit sent a strong message of China’s determination in the stand-off.

China has toughened its rhetoric in recent weeks as Washington raised tariffs on thousands of Chinese exports and put China’s telecom champion Huawei on an export-control list. There is also growing speculation in China that Beijing could consider banning the export of rare earths to hit back at the US.

Beijing has weaponised the trade of rare earths before, slashing the export quota by 40 per cent in 2010. The US, Japan and the European Union filed a complaint against the Chinese quota at the World Trade Organisation in 2012, with the WTO ruling against China. Beijing dropped its export restrictions in 2015.

But other observers were sceptical of the effectiveness of a rare earths ban.

Renmin University international relations professor Shi Yinhong said rare earths were not significant given the wide impact of the trade war.

“It would be a small matter even if China weaponised rare earths to retaliate against the US,” Shi said.

“We should prepare for an intensification of Washington’s ongoing efforts to stem the flow of technology from the US to China by investment restrictions, export controls, and limits on visas for tech-oriented students and workers,” Kroeber said.

Shares of the rare earth ETF, REMX, is soaring on high volume.

China to U.S.: You wanna cut us off from your electronics components? We’ll cut off the materials that go into the components. How does that sound? https://t.co/py9B77fA7i

— Eunice Yoon (@onlyyoontv) May 20, 2019

I talk a lot of shit, mostly to draw a rise out of some of you. I understand it’s a fool’s errand to be bearish for a long period of time — but it’s so much damned fun. I can’t resist.

This morning I got caught holding a Chinese shit-bag, so I sold it — PDD for a -9.5 drubbing. That was partly offset by my profit in FTDT, +5.3%. I have several others longs down, but I’m mostly cash and long inverse ETFs and gold. I am not adding to anything here, because I have enough shorts and do not want to short into the hole and get hole’d.

I am looking at the IWM closely and do not like the fact that crude is strong. Junk bonds are stable an panic is at a minimum. I’m looking at $150 on the IWM for near term support. Bear in mind, we’re in a new FAGbox and have built it since the beginning of the year. It’s very important we hold this level, otherwise it’s very possible we will see a trend reversal and complete fucking of markets.

It’s too early for this shit. I read this note by Goldman on tariffs and I felt like my brain was going to explode. Maybe one of you mathematicians out there can spell it out for me.

Goldman Sachs estimates that if the president imposes duties on the remaining $300 billion in goods not already targeted, it could lower earnings estimates for U.S. companies by up to 6%.

That impact is in a worst-case scenario, issued as the U.S. escalated tensions in the trade war by raising the tariff level to 25% from 10% on $200 billion worth of goods.

In reality, Goldman said the impact probably will be less as companies adjust prices to make up for increased costs that the tariffs generate. The firm expects companies in aggregate to have to increase consumer prices by 1% to make up for the tariff costs.

If profits will be hit by 6% off 25% tariffs, why would they only off-set the increased costs by 1%? Please explain.

In other confusing news.

Fed’s Bostic: Both Upside And Downside Economic Risks – CNBC

— LiveSquawk (@LiveSquawk) May 20, 2019

Nasdaq fits are down nearly 100. I told YOOOO not to get involved with dat.

Here’s the top news on CNBC now.

Google has suspended business activity with Huawei that involves the transfer or hardware, software and key technical services.

That means Huawei will not be able to license the Android operating system complete with Google services and will instead have to use an open-source version.

Analysts said that could cause big problems for the company internationally, where nearly half of its smartphone shipments go.

Other Huawei suppliers, including Qualcomm and Intel, reportedly told employees they will not sell to the Chinese firm until further notice.

Bear in mind, we have the fucking CFO under house arrest in Canada.

And here is what the top talking heads for Beijing are up to on Twitter now.

The US Commerce Department put Huawei on its Entity List, making trade war more like a real 'war'. Trade talks have been stuck in deep shock. The Chinese are more convinced concessions won't bring peace. The only way for China is to strengthen independent research & development.

— Hu Xijin ??? (@HuXijin_GT) May 17, 2019

China to U.S.: You wanna cut us off from your electronics components? We’ll cut off the materials that go into the components. How does that sound? https://t.co/py9B77fA7i

— Eunice Yoon (@onlyyoontv) May 20, 2019

#China state TV airs anti-U.S. films in prime time over the weekend, preparing the public here for a protracted trade war. (All 3 movies about Chinese triumph during the Korean War.) pic.twitter.com/Xabmlw4NmN

— Eunice Yoon (@onlyyoontv) May 20, 2019

I don’t want to get into the weeds of how much money I stand to make in my short bets now, but instead would prefer to express how disappointing the Game of Thrones finale was last night.

What in the fuck was that?

Here is a few scenes with a much needed laugh track attached.

Dear HBO,
You forgot the laugh tracks, so I added it.
You're welcome.#GameOfThrones pic.twitter.com/BCozJtxuAY

— Shamander (@Shaman_der) May 20, 2019

Happy Monday.

Finna get a lambo soon off my cryptos wins. I’m selling my house in order to go all in for the big bounce off the bottom.

Tonight's action in $BTC pic.twitter.com/5d2MFsA0dQ

— The_Real_Fly (@The_Real_Fly) May 20, 2019

The entire complex is up. Everyone is rich again.

Related: Dow futures are +100. This will not survive the evening, believe me. Crash is coming, so horrible and morbid. It’s going to be the greatest crash ever — it’ll make 1929 look like a fucking cake walk.

I woke up and was instantly made butler of the residence. My job entailed cooking, cleaning, and also chaffering the residents of House Fly in and around Princeton, NJ. We visited numerous farms and took a quick opportunity to see how cheese was made for the thousandth time. I spotted a wine tasting room and partook. It was just like Napa, minus the quality and cache.

My lunch consisted of a tin of Virginia peanuts that I bought and a cider donut.

After the food job ended, we had to explore the area for “articles of decor”, since we’re selling the house and really really need a new table. That’s gonna make people buy it, not the tens of thousands of dollars invested into trim work and fancy ceilings and shit like that. When I was a younger man, I tended to spend money more freely. My thought process was that I needed to push myself to make more and to not concern myself with budgeting or constraining myself in any way from the hedonistic lifestyle I both desired and deserved.

By late afternoon, my head began to pound due to lack of crack-coffee and I quickly grew bored of Mrs. Fly’s caprices. I’m here now in my study, drinking a Cafe Americano — trying to get past the personal stuff of my day and into the sticks of why you should be concerned with equity prices here.

This market is like the best days of your Grandparents, the halcyon days when they were old, but wise, still agile, and seemingly impervious to the age that crept up on them. Fast forward just five short years and time took its toll, tremendously, and their frailness showed, like a snowcap melting under the heat of the sun.

This trade war doesn’t look like it’s going to be resolved. And US investors don’t seem to give a shit about anything at all. But there is something happening now that is beyond the scope of our control. China isn’t immune to this war and even if they were — they like to fuck with their currency, by depreciating it to gain an advantage on America via trade.

Watch the USD/CNY cross very closely this week, for your pathetic lives might depend on it. Should it break $7 to the upside, you’ll want to get your priorities in order and make arrangements for the after-life — for shit is gonna pop off and markets will get BOGGED the fuck out.

“Capital flight” will be the catch phrase.

Happy Saturday, fucked faces.