While You Were Getting ‘Terminated’ in $XIV, Goldman Made $200 Million in a Massive Volatility Bet

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How lovely. Remember a few months ago when Credit Suisse unceremoniously terminated XIV, depleted the accounts of millions in an after-hours session for the ages.

While all of that was happening, muppets getting muppetted, Goldman’s trading desk was raking in a fucking fortune — $200 million to be exact.

Equities sales & trading revenue $2.31 billion, estimate $1.85 billion, up 38% from $1.67 billion

As Zerohedge points out, Goldman warned of an impending XIV collapse in a note three weeks before it happened.

“VIX ETP rebalancing would be most impactful should there be a quick SPX selloff near the end of a trading day, pushing issuers to rebalance positions quickly to avoid unhedged overnight risk (ETN issuers) or excessive tracking error (ETF issuers). With the rebalancing need primarily driven by inverse products instead of levered long products, a multi-day volatility spike (e.g. VIX futures rise 1-3 points for several days in a row) would be less impactful than it would be with more levered long product open interest, since absent inflows the inverse products would shrink quickly on an initial vol spike (and their vega-buying is limited to the total position they are currently short).”

On February 5th, 2018, Goldman’s trading desk, led by Managing Director David Casner, made $200 million on its VIX trade. To put that into perspective, the trading desk typically makes $200m per annum and rarely does more than $100m for a day. Last year it happened just 4 times.

It’s must be good to be King.

Reminder, only ‘complete morons’ lost money in XIV.

Only morons who didn't read the prospectus thought $XIV would not trade to zero. Here is the CEO of @CreditSuisse explaining how it all worked. He read the prospectus and knew it would trade to zero. Did you @RampCapitalLLC ? Did you @howardlindzon ? pic.twitter.com/krteWmvjep

— The_Real_Fly (@The_Real_Fly) March 15, 2018

NEVER FORGET — it was 'complete moron' $XIV traders who didn't know the different between a stock and a bond who blew up and made stocks go down in February of 2018. pic.twitter.com/3E1BM3q30R

— The_Real_Fly (@The_Real_Fly) March 15, 2018

Eat the rich. Go ahead and do it.

Literally nothing can stop this ascension. At this point, anything I say is redundant. Markets want higher and that’s all there is to it.

Here are the top rated stocks in Exodus, sorted by technicals. Our technical algo is graded by Accumulation/Distribution, Price Performance, Relative Strength, Volatility, Volume, and sub rosa, which is a series of metrics that make up our secret sauce.

The week is halfway done and my birthday fast approaches. Email me for access, 1 week free trial: flybroker@gmail dot com.

Markets like anything. The Fed could’ve said they jerked off to cartoons this afternoon and EA would’ve popped on the news.

CNBC writer-slaves sum it up.

The Federal Reserve minutes from its May meeting said “a temporary period of inflation modestly above 2 percent would be consistent with the Committee’s symmetric inflation objective.”

The central bank also pointed to an interest rate hike at the June meeting.

“It would likely soon be appropriate for the Committee to take another step in removing policy accommodation,” the minutes said.

In a world of fantasy and delusion, the Fed sees inflation above 2%. What’s interesting about this sudden surge in inflation is that it coincides with the fact that we have HIGHER INTEREST RATES. Poor Erdogan from Turkey is mocked daily because of his belief that higher rates portends higher inflation. Truth of that matter is, does anyone really know the answer? For as long as I could remember, countries with heinous inflation rates have always hiked. Those hikes cause panic and that panic leads to a further run on the banks.

“A few participants commented that recent news on inflation, against a background of continued prospects for a solid pace of economic growth, supported the view that inflation on a 12-month basis would likely move slightly above the Committee’s 2 percent objective for a time,” the minutes said. “It was also noted that a temporary period of inflation modestly above 2 percent would be consistent with the Committee’s symmetric inflation objective and could be helpful in anchoring longer-run inflation expectations at a level consistent with that objective.”

For some odd reason, Ethereum and other cryptos are getting REKT even further on this news. I really don’t car enough to look it up. What is important, however, stocks are rising. The Nasdaq is now +15.

Erdogan believes if you lower rates it will lower inflation. What a crazy idea. Look at how well inflation is under control in Venezuela and Argentina. At the same time, in negative rate territory (Europe), inflation is simply exploding with vigor to the upside.

Nevertheless, Turkey’s central bank defied the rhetoric and hiked rates from 13.5% to 16.5% — an increase of 300bps.

The Lira had been down 4.5% and now it’s marginally higher v the dollar, a titanic move in FX terms.

The Nasdaq seems to like it, as it’s rallying hard off the lows.

The Turkish Lira rout is having a much bigger effect on European equities than here. The Eurostoxx 50 is getting lit on fire now, off by 1.8%. Gains are being evenly distributed amongst the cucked state of Europe, some more evenly than others.

Why is this happening? Major flight to safety in Germany and Switzerland, divergence in Italy.

Paul Krugman is on Twitter doing his best to gin up some panic over EM.

Are we gonna party like it's 1997? Stuff is happening in emerging markets, with at least a whiff of an old-style currency/financial crisis. Turkey is in impressive free fall 1/ pic.twitter.com/zryjB1LBy8

— Paul Krugman (@paulkrugman) May 23, 2018

Argentina also looking not too good, despite sharp increases in interest rates. And behind the immediate headlines, there's been a big increase in corporate debt in emerging markets over the past decade, much of it in foreign currencies, esp dollars 2/

— Paul Krugman (@paulkrugman) May 23, 2018

So it's become at least possible to envision a classic 1997-8 style self-reinforcing crisis: emerging market currency falls, causing corporate debt to blow up, causing stress on the economy, causing further fall in the currency 3/

— Paul Krugman (@paulkrugman) May 23, 2018

So are we seeing the start of another global financial crisis? Probably not — but I've been saying that there was no hint of such a crisis on the horizon, and I can't say that anymore. Something slightly scary this way comes 5/

— Paul Krugman (@paulkrugman) May 23, 2018

Hey look at me, I’m a guru now. Maybe later on I will post a video of me in my expensive car sipping champagne, telling my fans that they too can live such a lifestyle. All you’ve got to do is try hard and pay attention to the details.

IQ is busting loose. This is a text book breakout for the Chinese Netflix.

Also, prepare to get BILI clubbed.

Also, I bought back HUYA, higher than I just sold it. What can I say, I want exposure to it. The fucking stock smells of success and is dying to catapult into outerspace. Imagine that.

Markets are soft — but we’re having a fine time in Exodus.

Top picks: ENPH, BILI, IQ, and HUYA

ALERT: In honor of Le Fly’s magnificent impending birthday, we are handing out 7 day trials to Exodus. Email me a nice note and gain access: flybroker at gmail dot com.

ALERT: In honor of Le Fly’s magnificent impending birthday, we are handing out 7 day trials to Exodus. Email me a nice note and gain access: flybroker at gmail dot com.

In light of the recent currency collapse in Turkey, people are beginning to worry about contagion. This is the sort of thing that snowballs because humans are absolute faggots. There is never a reason to crash markets — it just happens because of fear.

The story with the Lira is especially interesting, since they have a great balance sheet — but limited FX reserves of only $114b. They are heading into elections and Erdogan has promised to make sure rates stay low.

Here’s long term EM bull, Mark Mobius, warning of possible contagion in some of the smaller EM markets.

Long term EM bull, Mark Mobius warns of potential contagion in smaller markets pic.twitter.com/hyQGnCgDyA

— The_Real_Fly (@The_Real_Fly) May 23, 2018

So much bad news, where to start?

Let’s start with the most important chart of the day, the Turkish Lira. This is some bullshit right here. At 30% debt/GDP, Turkey has one of the best balance sheets in EM — yet market forces have sent their currency into a tailspin. Erdogan must’ve pissed someone off.

The Lira is down another 4% today on news that Erdogan promises to lean the central bank and keep rates low.

Jason Tuvey, an economist with Capital Economics in London, says that if the central bank “continues to bow to pressure from Erdogan and refrains from raising interest rates, that would lead to an even sharper fall in the currency.”

Deputy Prime Minister Bekir Bozdag on Wednesday cast the lira’s drop as a foreign plot to harm Erdogan and affect the results of the polls.

“Those who believe that by manipulating the dollar they will lead to results that will harm the nation and their pockets and change the election result, are mistaken,” the state-run Anadolu Agency quoted Bozdag as saying.

Couple that with Argentina’s 40% interest rates, and one begins to see the possibility of a contagion striking at the heart of EM. Like all panics in the past, contagion is contingent upon fear, nothing more.

Here are some other bearish bullet points this morning.

Michael Cohen’s partner has agreed to flip and cooperate.
TGT missed earnings.
Home refinances are at 18 year lows.
Russia’s VTB Bank chief says he worries about World War 3.
Trump says N. Korean summit might be delayed.
The China trade war tensions continue.
Cryptos crash.
German bond yields crash, 6yr back into negative territory.
Swiss 9yr bond sinks into negative territory.
Italian, Portuguese and Spanish yields soar, diverge wildly from German.

Dow futures are -160.

I am sure some of you were victims to physical abuse at home, by a Dad, a husband, or maybe even an older brother. We all know someone who has been a victim of this horrible behavior, insecure and weak men who use their power over others who are smaller than them. This is the very definition of coward. These people disgust me.

In a commencement speech at Carnegie Mellon, Tepper broke down and revealed his Father was abusive. I don’t know much about Tepper, other than his CNBC spots and incredibly record of charitable donations. But for a second here, you can peer into his soul. He’s a good man.

When we eat the rich, David Tepper will be spared pic.twitter.com/fhvGMy6KU9

— The_Real_Fly (@The_Real_Fly) May 23, 2018

Just a few weeks ago, there was widespread hope in the shitcoin sector. People were ripping open their discord chatrooms to discuss opportunities. Now those same people are flat broke, bankrupted by the finality of this most recent decline.

Shitcoin

I’m no longer interested in learning about news for this sector, or the opinions from retarded influencers. I view this asset class as animal instincts personified. It embodies the human spirit and right now said spirit is dead. This might be a precursor to something heinous on the horizon, with regards to equities.

Even worse is the faggotry taking place in Ethereum. I don’t need to be a technician to understand that is a gigantic house of pain, a torture chamber for broken chicken McNugget eaters who regularly exchange their dollars for cryptos at their local bodega.

Shittiercoin

If you dare to leave a comment in this thread, it better not be bullish. I do not want to read any bullish notes about cryptos. All I want to see is total compliance. I am right. You are wrong. I’ve proven this with my high IQ.