NEGATIVE FEEDBACK LOOP CRUSHES XMAS

*** The Capstone Programme has 6 hours left and then I close the doors until someone drops out. Make an appointment today ***

It’s over SantaFAGS. Your accounts have been destroyed for Xmas. All of the money you spent on presents, washed away twice, once by the store, and then again by the market. You’re looking into the mirror, seeing the visage of a very ugly man. I know the look, having seen it myself on numerous occasions throughout my existence. I will say this to you, boldly and flatly, nothing is a given in this world — not life, nor food, not even a bull market.

TAKE CONTROL OF YOUR FINANCES.

Do not subjugate yourselves to the academic opinions of those in charge of this country. You have a stock and it’s barreling lower — sell it. The idea to buy should be rooted in the actuality that said asset is rising in price. Catch a falling knife — you’re gonna bleed.

I do not say this without a heavy heart — but I did fucking warn you. I did try my best to alert you to what I was seeing. Very few people are able to see the market the way I see it and I’ve always known that. You play the piano; I play the market. This is my specialty.

YOU DO NOT BUY UNTIL OIL GETS BACK INTO AN UPTREND.

Oil lower causes oil stocks to go down, which then causes high yield bonds to go down, which then causes panic in the market. That is the workflow you need to follow. No position should be greater than 5%. No loss should ever exceed 10%. No stock should be bought unless it’s in an uptrend. I can go on for another thousands words. For the love of stolen Xmas presents, stop inflicting wounds onto yourselves.

Merry Xmas you terrible disasters.

Ciao

Fly

Zerohedge has a wonderfully written report out on the chicanery that is HYG-JNK in the ETF world of ill repute.

Yesterday, someone sold Mongo-sized quantities of HYG and JNK. Today, both ETFs are again under pressure.

The size of both trades flagged by Tyler is ~$589 million.

“This is a bid-wanted situation in high-yield credit ETFs,” he told Bloomberg: “HYG options are also very active, currently trading 400 percent above their average daily volume, with a 15-to-one put-to-call ratio.” The fund, which has declined for fix straight days, was down another 0.2% on Friday, to its lowest level since February 2016; as part of the selloff, HYG shares hit their steeped discount to the fund’s NAV since early 2018, suggesting that the underlying bonds have even more to drop.

Fund flows, as you can imagine, are supremely negative — with record amounts of selling taking place. The important thing to look out for is January offerings and refinances.

About $52 billion of CLOs are eligible to be reset this January.

Commenting on what may be yet another place where the loan market pipeline will soon be clogged, is “stuffed”, JPMorgan analysts Rishad Ahluwalia and Heather Rochford wrote that “generally speaking, execution of refi/reset/re-issue can be more challenging compared to new-issue in a volatile environment.” Separately, Deutsche Bank reported that the fact that AAA CLO spreads are nearly as wide or wider than the original spread when they were first issued means that there is less of a cost savings for undertaking a refinancing or reset.

In layman’s terms, we could see some credit seizing up, which is another reason to sell stocks. Back in the good old days, recessions were just that. Nowadays, they’re coupled with banking collapses — thanks to decades of low regulation and leverage.

We’re moving in lockstep with HYG. When it goes higher, stocks go lower and vice versa. I’m gonna show you a chart with a bunch of shit on it. The important thing to note is high yield has broken out of uptrends before, but not like this. We’re now threatening some important levels that could persuade some long termFAGS to break.

Markets just dove off a cliff. I picked up some SJB, short high yield. Let me preface the bearishness of this title and post with the fact that stocks do not go down in a straight line, nor up. We’re in a very unique trading pattern, the sort of thing that isn’t picked up by AI or mean reversion algos. In Exodus, I’ve been ignoring the oversold signals, with exception to our 3mo algo, which HAS NOT flagged OS since 11/20. It’s important to note, that algo nailed the market bottom several times inside of this range.

I have no idea where we close. All I do know is I have 100% of my Quant invested long, some in value, some in growth. I am trying my hardest to mitigate those losses in my trading account, which has also been hamstrung by false moves and me trying to trade every tick. I am not immune to the pangs and the bangs; but I have not blow up. I’m up, rather considerably, in my trading account this year and need to figure out how to protect my larger, longer term, investments in 2019.

Best case, we capitulate here, bottom on a Friday, and change the narrative.

Good afternoon lads

What a stupid market. It’s one slap across the eyebrows after the next. I was looking for some short ideas, but couldn’t find any. Everything is too overstretched to the downside. It’s a little nutty to short down here. That’s funny, since I own DRIP and DRV.

I guess the question is where will stocks be by next year, if earnings decline by 50%, thanks in large part to a drastic economic decline? That’s what we’re pricing in, right?

I am starting to wonder what in the fuck we’re pricing in anyways? The last two recessions were met with blood-letting on a biblical scale, 78% earnings reductions, and the end of western finance as we know it. Eventually, the sins of 2008, and the expensive wars, catches up to us and destroys America. Mexican hordes will overrun us with their lawnmowers and English will, once again, become the second language in this wide land of waste and ruin.

Maybe the world will be a better place, without America delivering freedom to it on a regular basis? Maybe Russia and China are the good guys, and we’re the tyrannical cock-suckers with the largest prison population in the world? Maybe everything you thought you knew about the world is, in fact, wrong — part and parcel of a ridiculous public education system?

One thing is for certain, irrevocably. My DRIP game is strong and I don’t fucking lose, especially when markets crash in operaesque Wagnerian fashion.

Since it’s Friday, let me shill for two reasons.

1. I am building an Orbital Space Cannon (OSC) to be used for offensive purposes.
2. I know I can help you.

Join Exodus, join Capstone. Ask around — they’re well worth the small expense.

Good morning lads

I’m nearly done with my Xmas shopping. Last night I was trapped inside of a Macy’s, lights went out and they told me to fuck off about my purchases. I kindly explained ‘but it’s Xmas good Sir’ and how I needed these toys for Tiny Tim and they begrudgingly reopened one of their registers and accepted my money.

Tonight I will parlay myself into an outlet to make some last minutes purchases, wanton depravity on an industrial scale. Waste, shame, and obsequious to the whims of consumerism.

Early this morning futures are higher and President Trump is tweeting away, trying to get himself a border wall for Xmas.

Let me be a reminder to you, good sir, markets shan’t bottom on Fridays. ‘Tis the laws of nature and science, all that is logical and worthwhile. If you’re barreling into stocks now, stepping in sideways and with vigor, prepare to be dispatched. The black flag shall bend you and then break you into ten thousand pieces. Like a puzzle, it will take a long time to be made whole, because of your blackguardly and injurious manner in the markets.

You need to step away from the trading turret and remember the children in the garbage cans and how people in Africa walk around with fat stomachs, not because they’re eating giant turkeys every evening — but because they’re starving to death. You should be grateful for the excesses that you enjoy and quit trying to squander it in your never-ending pursuit for something greater. Only after you’ve achieved true financial security will you understand that happiness isn’t rooted there, but something else.

So fuck off and quit trying to find bottoms on Fridays.

Who the fuck does Jim Cramer think he is, blacklisting the bond King, Jeffrey Gundlach? In a late night tweet, Gundlach said he’d no longer be making appearances on CNBC — thanks to Cramer.

So sad that appearances on CNBC are now a thing of the past. It was great while it lasted. Blame it on Cramer. We’ll be on Fox Business.

— Jeffrey Gundlach (@TruthGundlach) December 21, 2018

The only rationale for such a black-balling is due to the previous interview, where Gundlach laid down a bearshitting thesis which help rock markets and splay a Buddy Hackett sized bucket of egg all over Cramer’s stupid fat face.

A little background on the Gundlach-Cramer drama. He’s been throwing shade at Jim since he took to twitter.

Hey, Jim Cramer, what again was my call on Bitcoin when I was on your network December 13?

— Jeffrey Gundlach (@TruthGundlach) January 11, 2018

In case it's too nuanced: It's clear Kernen and Cramer don't watch CNBC 'cause if so they'd have seen my bullish equity calls last 7 months.

— Jeffrey Gundlach (@TruthGundlach) June 15, 2017

First Joe Kernen, now Jim Cramer (the alliteration twins) totally whiffing on my views. Maybe they now watch Fox Biz…like so many others!

— Jeffrey Gundlach (@TruthGundlach) June 14, 2017

Jim Cramer: fake news or fool? Says I've been wrong on equities when I've been bullish all year. Said so twice on CNBC last 7 months, even!

— Jeffrey Gundlach (@TruthGundlach) June 14, 2017

Cramer today was positive on a stock pointing out its "cup and handle" chart pattern, one of the most bullish. He's right. Gold has one too.

— Jeffrey Gundlach (@TruthGundlach) August 9, 2017

In any case, Gundlach manages $150 billion in bonds and should be given a god damned platform if he wants one on CNBC.

***Confused and feeling utterly retarded? Join Exodus or schedule a Capstone appointment today ***

The negatives.

Govt shutdown
Slowing economy
Tanking stocks and oil
High yield blow out
IG starting to go lower
The Fed hates your guts
China trade war
Margin call selling by people who’ve never seen a bear market

And there it is from Dudley: “We need to slow the economy down, and so somewhat tighter financial conditions aren’t really a bad thing. They’re probably a necessary thing for the Fed to achieve its objectives””

— zerohedge (@zerohedge) December 20, 2018

The positives.

The selling has the feel of capitulation
Sentiment is dreadfully bad
The economy may not be slowing as much as expected

It’s funny how everything was great until stocks started going down. It’s a chicken vs egg paradox and we’ll never know who’s the tail and who’s the dog.

All I can do it try to communicate what I see and if I can save some of you absolute morons some coin, then so be it.

Big ass black candle posted on CLR today. This is my tell in the oil sector. Regardless of what WTI does tomorrow, oil stocks will remain under pressure because the damage has already been done.

Technically, we’re no longer in the FAGbox. New levels abound.

I bought back some DRIP into the final hour, 1/3rd the size of my original position. My top picks as of now are DRV, NUGT, DRIP, and XLU — only hedged by a position in GE.

The sell off in stocks has been hitting high yield for weeks now because of the leverage ratios blowing out. This is the negative feedback loop that is inescapable in bear markets. High yieldFAGS need to understand the blade cuts both ways.

But now we’re seeing something far more insidious, as well as ominous. It looms even. Investment grade paper ripped from its roots and forming a head and shoulders top. Is this the beginning of MOAR panic, more pain in the credit markets?

It’s worth mentioning, Black Rock’s high yield ETF, HYT, is lower by 2.5% today. It holds over 1,000 corporate bonds, notable and important.

Income ETFs are getting skinned alive across the board.

You should’ve read the prospectus.

This just in…

MEXICO CENTRAL BANK RAISES OVERNIGHT RATE TO 8.25% FROM 8.00%

— zerohedge (@zerohedge) December 20, 2018

CNBC dragged out the absolute moron, Leon Cooperman, out of the wood-works today, in order to attempt to buoy stocks. They did the same shit last week and it worked. Today, not so much. At the crux of Leon’s inane arguments was HFTs and how ‘these electronic guys’ were hurting him.

FUCK OFF CNBC.

I am seeing some indications that the crisis is entering meltdown mode, which might be good for a reversal at some point next week. I bought some Yen, via FXY — because Yen-carry trade and all of the wondrous things that come with. The downside to an unravel is income oriented stocks, like REITs. Hence, I am short them via DRV.

My new positions are NUGT for defensive purposes and also XLU, also for defense. I am 50% cash and WILL NOT buy any stocks until oil and high yield bonds stop going lower.

If you’re interested in The Capstone Programme, I have 10 hours left. I’m already pressed for time and I take these sessions very seriously. I can walk you through this stuff and explain to you why you need to worry and how to position for extreme death and agony. If you have questions about it, email me flybroker at gmail.

Check this out. This recent move is so extreme, it envelopes more than a year of gains. The people who bought on election night 2016 are next.

I think it’s appropriate to book gain here for short sellers, but in no way do I think you should go long stocks. After all, tomorrow is Friday and MARKETS DO NOT BOTTOM ON FRIDAYS.

It’s very important that you realize what is driving stocks: oil.

As oil sinks, presently down 5%, the implications are for a weaker China. Those implications have rippled effects around the world for growth prospects. This adversely affects high yield, which then scares the shit out of stocks. Because, because, people think we’re heading into another credit crisis.

The only safe havens are XLU, TLT, and GLD. I just started a position in XLU today and re-bought NUGT.

YOU CANNOT BUY STOCKS WITH OIL DOWN 5%. Period, end of story. If you do so, I will personally visit your place of business and slap the shit out you.

The selling pressure will accelerate as we approach election night gains.

Top picks: NUGT, EGO, EXK, XLU, and DRV.