No Resolution Thus Far — Sandwich City

I was hoping we’d get some clarity on the direction of markets today. But with the Dow up, Nasdaq lower, and Russell unch — this is turning out to be a gigantic nothing-burger. To make matters worse, both oil and gold are sharply higher — and breadth is dead flat at 50%.

Lucky for me, I am long NUGT.

Nevertheless, I eagerly wait for stocks to break either way. Given the strength in crude, my bias is for higher stock prices.

I’m tempted to buy JNUG or anything for that matter — but that would be an exhibition of impatience. Being that Le Fly is an ageless institution amongst men, I must adhere to a different set of standards — one carved out of the fossilized stone of antiquity.

Eating sandwiches at a profuse rate is how I like to kill time.

I’ll wait.

You can’t stop what’s coming — fuckheads. You were all concerned about war in Syria, so you voted for an Orange Gorilla (OG) to help escape the pangs of war. Little did you know, the theatre would be played out in the Western Hemisphere, battling fagLORDS from Venezuela and Cuban conscripts, alongside their Russian advisors. This is Red Dawn, the real deal, and Americans should find joy in know John Bolton flashed a notepad today, which said “5,000 troops of Colombia.”

READ IT FOR YOURSELVES, FUCKERS.

White House spokesman's explanation for Bolton's "5,000 troops to Colombia" memo on his legal pad: "As the President has said, all options are on the table." pic.twitter.com/3ZOtMGwjxB

— Kevin Liptak (@Kevinliptakcnn) January 28, 2019

This, of course, is bullish for stocks, as America fixes new ways to sack oil from poor countries. Consider this, Venezuela has the largest oil reserves in the world — at 297 billion barrels, or 10x America’s, even after all of our stupid fracking.

That’s right, MOAR than House of Saud.

Remember when Trump said we should’ve taken the Iraqi oil? Well, here’s his chance to exchange American blood for oil. Do you think he’ll take it? Perhaps the proceeds will be used to, dare I say, PAY FOR THE FUCKING WALL?

So where did it all go wrong for Maduro? What was the tipping point that led John Bolton and his stupid fucking mustache to want to attack him and his supporters?

Observe.

Don’t fuck with the petro-dollar.

UPDATE: Take the oil

"We're in conversation with major American companies now…It would make a difference if we could have American companies produce the oil in Venezuela. It would be good for Venezuela and the people of the United States." – John "Chickenhawk" Bolton, servant of Swamp King Trump. pic.twitter.com/M8rl8UqAdm

— HootHootBerns #RunBernieRun?? (@HootHootBerns) January 28, 2019

My DTEA is working just fine, up more than 20% since this morning’s purchase. Aside from that, I took profits in PDD, BILI, and TLRY today, while buying some NUGT.

I had a good day and do not feel this weakness is cause for concern. However, I am open to the idea for more pain.

Fun to see John Bolton speaking on behalf of the Venezuelan people. They do, indeed, deserve a renewed American form of democracy. It’s worth nothing, there are 25,000 Cuban troops there, in addition to Russian contractors. Now that we’re seizing their oil money and demanding the rightful leader of Venezuela be recognized, it would be fitting for us to send a few bombers down there to ANNIHILATE ALL OF OUR ENEMIES INTO DUST, preserving the Monroe Doctrine, reminding evil doers that America means business.

We cannot simply sit by idly and watch so many barrels of oil go uncounted.

God speed.

This is a small position and one that I think should work.

Narrative:

Be a Canadian tea vendor whose stock price is a buck and change, stubbornly refusing to include the #1 selling herb in the world in your fucking herbal beverage chain. Plus, you’re based in Canada — land of the depraved.

Back in September of 2018, the stock exploded to the upside on rumors of CBD infused tea. Bear witness to NBEV, a stock I flagged very early on, which has since exploded to the upside. No one had NBEV before me, believe me.

This is literally a tale of two cities sort of shit. DTEA opted to decline embracing CBD and their stock fell 80%. NBEV sucked CBD cock. The stock has more than tripled since then.

Any questions?

If you’re on the board of DTEA — you fucking demand the company get involved and in a big way. Otherwise, the stock is going to zero.

Both worked — made 4% on PDD and 7% on BILI. The idea was to get long non-correlated stocks and it worked.

Proceeds move to cash, ~40%.

I view solar, weed, and Chinese stocks as non-correlated sectors of the market now and are very bad tells for overall risk. The most correlated are SAAS — and they’re down around 1.1% for the session.

All in all, the near term technicals are okay. There is a big ass black candle today to look at; but the past two have resulted in higher prices. The reason why you should tread carefully is due to the fact we were butting up against former support, which is now resistance. Wall Street loves jerking off to poetic shit like this — so be on guard for a fresh leg lower tomorrow — led by oil and HYG.

Going long here is the equivalent to going to Vegas to grow your retirement savings. With a warning out of CAT and NVDA, one would have to had suffered by a brain malady to get long now. Seeing the pot stocks higher and the Chinese stocks is part and parcel of non-correlated sectors outperforming in the midst of a storm. I sold TLRY, a bit early, but I took a profit nonetheless. Where it trades after my sale is immaterial.

With the proceeds, I bought NUGT, not because I like gold, but because I like it as a hedge against more tumult.

The world is filled with tumult. My recency bias on trading pivot points is poor, so I’ll refrain from attempting it again. However, at some point the rally will end and like all things — this too shall crumble under the pressure of hubris, an amalgamation of monsters created by higher prices, filled with wanton greed and hatred for others.

For the day, my trading account is now higher and I am not exactly pleased by it. This is a perversion of what should be — and I’m on guard even more because of it. Just 34% of stocks are higher today and the broader indices are hugging the ass-end of today’s range. An agile man might take this opportune to liquidate and step aside.

Lots of bad news today. To some, this news means nothing — because there are zero scenarios where stocks should deserve to trade lower. Admittedly, I’ve been trading like an ape the past two weeks, specifically due to the length of the recent bull run in what I believed to be a bear market. Last time I traded like this was when we bounced off the bottom a month or so ago, in what I termed the “FAGbox” — a level of chop that ended up being, just like I called it, a floor from which devil would be born.

Now we have a scenario where traders have gotten fat off the recent gains and have forgotten the reason why we went down in the first place.

I am 30% cash, which is usually a large cash position for anyone in the business of managing money. But because I am not managing money for anyone now, and simply trading my own account, this is equal to being caught flat footed, boat caught in a storm without paddles.

Because I have some longs trading up this morning, the money I have invested is only -0.8%. With the 30% cash, it’s appreciably less. The point is this, very simply: FUCK OFF you cock-gobbling bastards. I hope this market goes to hell and takes you with it.

The real reason why stocks are going to gap lower today is because I went long on Friday. It seems, and perhaps this is my paranoia kicking in, I’ve done something to upset the balance of the cosmos. It seems, the celestial Gods are watching me directly and punishing me for something I might’ve said or done. It could be an infraction as little as looking into the sky sideways. Maybe the Gods saw that and said ‘fuck that guy — punish him.’

Whatever it might be, I would like to take this opportunity to tell the Gods to FUCK OFF. I don’t give a shit about my money and would gladly watch it go all the way to zero, just so I can start over again and get it all back.

This out from CAT this morning.

“Sales in Asia/Pacific declined due to lower demand in China, partially offset by higher demand in a few other countries in the region,” the company said in its earnings press release. “Unfavorable currency impacts also contributed to the sales decline.”

And this out from VALE.

VALE -8.3% (Vale S.A. updates information on the breach of the Dam I of the Córrego de Feijão mine that occurred in the early afternoon of January 25th, 2019; suspends dividends on interest on capital as well as any deliberation on share repurchases)

And this out from NVDA. BIG fucking shock. I knew this was coming.

NVIDIA lowers Q4 guidance
Co issues lowered guidance for Q4 (Jan), sees Q4 (Jan) revs of $2.2 bln from $2.7 bln vs. $2.71 bln S&P Capital IQ Consensus.

Let’s see how it goes. Prepare to get fucked.

Let me preface this by offering a hat top to Jeff Macke from the land of Twitter for taking CEOs to task on moronic buybacks several years ago. Up until that point, I was indifferent on the matter, chalking it up to CEOs doing things to improve shareholder value. However, after taking a deeper look into this issue, time in and time again, share buyback prove to be a terrible avenue for capital. As a point in fact, it’s simply a fucking waste.

More than that, these god damned CEOs are borrowing money in order to execute these buybacks. Think about it, borrowing money in an effort to effect a short term pop in the stock. How fucking stupid are these people?

Yeah.

How perverse were the buybacks last year? How does $1.1 trillion sound to you?

Dick Bove is out with a piece tonight, dropping shit-bombs on bank execs for wasting shareholder money. This a change of pace for Dick, since he’s usually cock-holstering for them. Please read the following.

Approximately 21 of the nation’s largest banks have reported their earnings in the past two weeks. In aggregate, these 21 companies posted 2018 earnings of $154.6 billion. The common equity of these companies grew by a net $2.4 billion over the same time frame.

Implicit in these numbers is that these banks paid out $152.2 billion of their earnings to their shareholders in stock buybacks and dividends. It is believed that they did this because Boards of Directors and managements felt strongly that these payouts would increase the value of their stocks. Not only did this not happen from Dec. 30, 2017 to Jan. 23, 2019, but in every case, but one, the stocks also went down in price.

The return on equity farce

In sum, banks, gave away $152.2 billion, mostly to people who wanted nothing to do with their banks (sold their stock back to the banks) and the banks received nothing in return. Bank managements argue that this is not so. They state, universally, that their returns on equity rose as a result of the stock buybacks. This argument is almost a farce.

Return on equity is just a number on a piece of paper that has nothing to do with cash. To calculate this number a bank divides its net income by its common equity. In the past, if the bank had a high return on equity one would argue that the bank’s growth rate would be high and its price earnings multiple should grow.

These arguments make no sense today. The reason is because the banks are, basically, not reinvesting any of the money they earned back into their businesses. Repeating out of $154.6 billion in earnings they reinvested $2.4 billion in their businesses. This plowback of earnings into the businesses was 0.2 percent.

No business use for the money

Most company managements have publicly argued that they have no use for the money. Others have actually stated that they believe stockholders may have better ways to put this money to use than the banks can.

Really? Am I supposed to invest in a company that cannot find any use for its earnings in growing its business? Is a bank really a great investment if it thinks investors can earn more money than the bank can on bank cash? How about this one? This bank is a solid investment because it cannot find a way to invest incremental funds – really?

The fact is that the bank argument makes no sense for another reason. In the fourth quarter of 2015, the effective Federal Funds rate was 10 basis points. It is 240 basis points today. Simply stated these banks could have earned $3.5 billion more if they held on to their cash.

When pundits scratch their beards as to why bank stocks have done so poorly for 18 months, they may consider what investors know. That is that one invests in companies with positive outlooks for the future. They are not attracted to companies that publicly state that they do not know what to do with their money and so they give the money away. Banks meaningfully lower their earnings growth rates when they give their money away and this does not create enthusiasm for their stocks.

In other words, ROE is a useless metric now, something bankFAGS have been fawning over since the beginning of time. Banks aren’t reinvesting in their businesses — because banks are broken.

As an aside, went skiing this weekend and I’ve been investigating a potential serial killer in the neighborhood.

I’ve been nearly forced and against my will, coerced into drinking a “green juice”, every single day for the past two months. It is both very thick and caustic in flavour. I don’t know what is exactly in it. The taste reminds me of a fresh lemon squeezed into a pile of grass and then chopped up lazily in a low powered blender. This, amongst other alternative health remedies, is supposed to provide me with vigor, an elixir of sorts designed to improve my health.

Bear in mind, I did not ask for this, nor do I condone it.

I draw the line at vitamins, nonchalant digestion of pills sought out by health vendors who promise vitality in exchange for obedience. I’d rather die than swallow 5 pill per day, naively being sold on the idea that they work.

On the whole, dying is completely underrated.

In regards to the markets, it appears gold is the standout last week. While all of you cock-gobblers genuflected over the semis — gold made a clean break higher.

As for the overall condition of stocks. The Nasdaq is higher by 7% for the month. If this is 2011 and not 2008, it would not befuddle me to bear witness to another 3% gain next week, followed by a harrowing return to the mean in February.

Be patient. Pick and choose your battles carefully. One day take the green juice and throw it on the ground.