CRASH — MARKET DISLOCATES AGAIN AND IS IN FREEFALL

If you’ve tuned into Fox Business today, you were told today’s market rout was a mere pitstop en route to grandiose riches. You were told to buy the dips — but I told you, I TOLD YOU — not to get HOOKED. Now with the market down over 600, you may be HOOKED.

Cue talking cigarette.

But here’s why you shouldn’t be panicking.

The dollar isn’t running vs the euro.
WTI is only down 1.5% and copper is flat.
Volatility is above $30, a level that has been unsustainable in recent years.

While I’d love nothing more than to ride this pig down the drain, AND MORE, it pains me to tell you this might be a buying opportunity. Don’t get me wrong. Exodus hasn’t issued an systemwide oversold yet and I am still 20% cash, waiting for a chance to buy — but we’re close.

That being said, I’m still long SOXS and may be looking to short some banks here, betting for a black swan contagion event.

I’ve long advocated for lower rates — due to the lack of inflation. But there’s another dynamic at play here, one that supersedes traditional laws of economics and it has to do with the Federal Reserve unwinding its balance sheet.

As you know, the Fed is in the process of unwinding its $4.5 trillion balance sheet, albeit slowly. But we’re going from increasing money supply from ~$50b+ per month to negative, accelerating rapidly by October of this year. This is bound to have a profound affect on markets, in ways that I am unsure — at this present time.

The Fed’s plan is to unwind its balance sheet over a period of 4-6 years, hardly reasonable considering there might be a recession or two along the way. No?

I often taken contrarian bets, but in this case I am going with the herd, following the sheeple to fade treasuries — 3X mind you, buying TMV here.

Also, watch GE for sport. The lower their share prices goes, the more dastardly their $31 billion underfunded pension becomes. It’s like a negative feedback loop that worsens with every tick lower for the stock.

Shares of GE are down a staggering 50% over the past year. Jeff Immelt REKT.

The Dow is off by 123, not really a big deal. I wouldn’t be surprised to see it down 500 or up 300.

They should send Trump a thank you card.

While traditional advertising is slumping and physical delivery of paper newspapers might be a relic, the company is killing it in digital, posted +51% increase in digital only products for the 4th quarter. It’s also important to note that digital advertising now represents 46% of total advertising revenues.

Total digital revenues were $600 million for 2017.

Reports Q4 (Dec) earnings of $0.39 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $0.29; revenues rose 10.1% year/year to $484 mln vs the $467.3 mln two analyst estimate.

Subscription revenues increased 19.2% vs. high-teens guidance, while advertising revenues decreased 1.3% vs. guidance for a high single digit decline and other revenues increased 12.0%. Excluding the additional week, estimated total revenues increased 3.5%, with subscription revenues up 11.0% and advertising revenues down 6.6%. Subscription revenues in the fourth quarter of 2017 rose primarily due to significant growth in recent quarters in the number of subscriptions to the Company’s digital-only products. Revenue from the Company’s digital-only subscription products (which include our news product, as well as our Crossword and Cooking products) increased 51.2% compared with the fourth quarter of 2016, to $96.3 million. Digital-only subscriptions totaled approximately 2,644,000 at the end of the fourth quarter of 2017, a net increase of 157,000 subscriptions compared with the end of the third quarter of 2017 and a 41.8% increase compared with the end of the fourth quarter of 2016. Of the 157,000 additions, 99,000 came from the Company’s digital news products, while the remainder came from the Company’s Cooking and Crossword products. Fourth-quarter digital advertising revenue increased 8.5%, while print advertising revenue decreased 8.4%. Digital advertising revenue was $84.2 million, or 46.1% of total Company advertising revenues, compared with $77.6 million, or 41.9%, in the fourth quarter of 2016.

Q1 guidance: Total subscription revenues in the first quarter of 2018 are expected to increase in the mid to high-single digits compared to the first quarter of 2017. Total advertising revenues in the first quarter of 2018 are expected to decrease in the mid to high-single digits compared with the first quarter of 2017. Operating costs and adjusted operating costs are expected to increase in the low-single digits in the first quarter of 2018 compared with the first quarter of 2017.

“We’re pleased with the continued rate of growth and particularly pleased to be seeing strong retention from the large group of new subscribers who came to The Times late last year. We believe there remains a large opportunity to continue to extend our subscription reach and will continue to invest in areas of the business that will allow us to achieve that growth. “For the full year, we grew digital advertising revenue by double-digits and saw continued challenges in print advertising, though our rate of decline moderated somewhat in the late part of 2017. Advertising now represents just one-third of our total company revenues. “We finished the year with more than $600 million in digital revenues, putting us well on track toward our goal of $800 million and we accomplished that just two years into the five-year plan we laid out in our 2015 strategy document, Our Path Forward.”

Shares of NYT are higher by 82% over the past two years.

Failing never looked so good.

Pre-market gappers:

TWTR +21.5%, INFN +20.3%, GRUB +19.4%, RSYS +17.8%, USAT +9.8%, CFMS +9.5%, PSDV +9.4%, (also announces results from the Company’s second Phase 3 trial for Durasert three-year treatment for posterior segment uveitis confirmed a significant reduction in uveitis recurrence rate at 12 months), APPS +8.9%, COTY +8.7%, TSN +7.7%, WSTL +7.4%, JE +7.2%, IO +6.8%, ECHO +6.3%, PSEC +6.1%, LB +5.7%, VIRT +5.2%, SYNA +4.9%, PRLB +4.6%, ITI +4.3%, ZNGA +4.3%, MD +4%, GT +3.9%, LLNW +3.7%, CSRA +3.7%, REGN +3.3%, ENTA +3.1%, NXEO +2.7%, SMI +2.4%, TOT +2.4%, FISV +1.7%, GPI +1.6%, PM +1.6%, PNNT +1.5%, CVS +1.5%, ICHR +1.4%, EVHC +1.3%, (also amended its bylaws to extend the deadline for stockholders to nominate candidates for election to the Board), PRI +1.2%, MC +1.2%, PRI +1.2%, CCK +1.1%, BHE +1.1%, VSTO +1.1%.

Dow futures are in recovery mode, down just 60, and Nasdaq futures are +11. WTI is -1% and Bitcoin is nearing $8,500.

There were a slew of earnings reports out this morning, highlighted by the Twitter beat.

Via Briefing.com

I think it’s fair to say Jack Dorsey has finally proven himself to be a fine CEO, running two companies at once and creating massive amounts of shareholder value for both.

Shares of TWTR are higher by 23% this morning, after reporting solid results — achieving GAAP profitability for the first time in company history.

Jack’s other company, Square, is up 384% over the past two years. After today’s jump in Twitter, that stock will be up more than 100% the past year.

Twitter beats by $0.05, beats on revs; Achieved GAAP profitability for first time ever (26.91)
Reports Q4 (Dec) earnings of $0.19 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.14; revenues rose 2.0% year/year to $731.6 mln vs the $686.12 mln Capital IQ Consensus.
Advertising revenue totaled $644 million, an increase of 1% year-over-year.
O&O advertising revenue totaled $593 million, an increase of 7% year-over-year.
Data licensing and other revenue totaled $87 million, an increase of 10% year-over-year. o US revenue totaled $406 million, a decrease of 8% year-over-year.
International revenue totaled $326 million, an increase of 17% year-over-year.
Total ad engagements were up 75% year-over-year.
Cost per engagement (CPE) was down 42% year-over-year.

Q4 adjusted EBITDA of $308 million, an increase of 43% year-over-year, representing an adjusted EBITDA margin of 42%, highest adjusted EBITDA margin to date and within long-term target range of 40-45%.

Users:
Average monthly active usage (MAU) was 330 million for Q4, an increase of 4% year-over-year and flat compared to the previous quarter.
Daily active usage grew 12% year-over-year.
Achieved GAAP profitability for the first time and delivered highest ever GAAP net income, adjusted EBITDA, and adjusted EBITDA margins in Q4. GAAP net income in Q4 reached $91 million with adjusted EBITDA of $308 million.

Outlook
Q1:
Adjusted EBITDA to be between $185 million and $205 million;
Adjusted EBITDA margin to be between 33% and 34%;
Stock-based compensation expense to be in the range of $100 million to $110 million.
FY2018:
Stock-based compensation expense to be in the range of $350 million to $450 million;
Capital expenditures to be between $375 million and $450 million.

Conversely, shares of YELP are lower by 11% on disappointing earnings. However, more or less, the social networking space is on fire, especially after SNAP set the tone yesterday with a 46% jump on better than expected results.

Futures are off by 230, Nasdaq -45. WTI is -0.3%, gold +0.3%. Bitcoin is pulling in, now at $7,700, which coincidentally is in sync with the dive in the futures market. The ramifications of the XIV blow up, but more importantly, the OTC shadow volatility market, hasn’t been realized yet.

We’ve already heard of several hedge funds closing down, one of which is under the umbrella of Man Group PLC.

One of Man Group Plc’s main funds plunged on Monday as market trends suddenly reversed, according to a person with knowledge of the matter. Option Solutions LLC, a hedge-fund that trades equity options, lost as much as 65 percent after it was forced to sell holdings overnight.

“Traders who were short volatility just had to puke,” said Tobias Hekster, co-chief investment officer at True Partner Advisor, who was speaking in general ahead of trade opening in the U.S. on Tuesday. “And our expectation is we’re not done yet.”

The CBOE Volatility Index had its biggest ever rally on Monday, hurting investors who had piled into products betting on low volatility after central bank policy helped it to record lows last year. U.S. wage data issued last Friday pointed to quickening inflation causing bond yields to soar and global stocks to tumble.

Hekster’s relative value volatility hedge fund surged 14 percent in two days through Tuesday as turmoil roiled the stock market, he said, profiting from price movements between indexes in the U.S., Korea, Taiwan and Japan. The fund purchases volatility equity-index options that it thinks are underpriced and sells those that it believes are overvalued.

Man AHL Diversified Futures plunged about 4.6 percent on Monday, leaving the fund flat for the year. Shares of Man Group, the world’s biggest publicly traded hedge fund firm, slid as much as 7.9 percent on Tuesday, the most in almost 11 months. A spokeswoman for the London-based firm declined to comment.

‘Very Bad Day’

The strategy “had a very bad day yesterday, that’s not a surprise,” said David McCann, an analyst at Numis Securities Ltd. “That’s in the context of some very good performance year-to-date.”

“Yesterday’s move has certainly generated a lot of damage for all implicit short volatility strategies, including trend followers,” said Nicolas Roth, head of alternative assets at Geneva-based Reyl & Cie. “Most systems are designed somehow to capture trends and this selloff appeared out of nowhere for a quantitative system.”

The $362 million systematic global macro Lynx fund lost 6.6 percent yesterday and is down 8.8 percent this month after gaining 8.6 percent in January, according to their website. A spokesman declined to comment.

Option Solutions faced a tough day.

“The market became completely illiquid as volatility increased far in excess of the market movement,” Paolo Compagno, a partner at the London-based firm, said in an email to investors seen by Bloomberg News. “We were forced to liquidate throughout the night and morning.”

The firm and fund remain in business and will waive its incentive fee, or slice of profits, for new investors until the fund returns to its high watermark, he said in an interview. The firm had managed about 65 million euros ($80 million) before the losses, he said.

The return of volatility was a long time coming for True Partner, which oversees about $325 million and acts as a hedge against greater levels of turbulence in global financial markets. Last year the flagship fund was down 5.6 percent, and up 0.4 percent in 2016. The fund had gained about 17 percent in 2015, benefiting from the flash crash that year.

That was the “last interesting day for us,” Hekster said.

Before the collapse of XIV, total exposure to volatility was roughly $2 trillion, the highest ever. It was so fucking easy — even a retard could do it.

Now all of that has ended, spawning a new crisis for us to worry about and create melodramas about end of the world scenarios playing out. For now, I remain apocalyptic, but will smile every so often when stocks revert back to rigged upwards charging.

If you came into today thinking the market would go up another 600 today, you should literally kill yourself. After gapping higher by 350 this morning, stocks did nothing but donkey punch lower — reducing SPY bulls into dust.

I’m expecting more shoes to drop in this volatility scandal, as I am certain there are dead bodies to be uncovered. I cannot tell you how many people I know were selling premium or long XIV — thinking it was free money. It was the very best investment vehicle of all time — until it traded down from $100 to zero in an after-hours termination event.

I realize it was written in the MUH prospectus, but everyone who works at Credit Suisse should be imprisoned, nonetheless. Even the janitors should go to jail for this shit. It’s unconscionable to believe they can get away with this shit — and I’ll be praying for them on a nightly basis for God to smite them and kill off their family name.

I truly want the markets to crash by thousands of points tomorrow. Hopefully it will happen. If it doesn’t, that’s fine too.

Top pick: SOXS

The market was doing great this morning. Now is looks like shit. Perhaps I should segue myself into a comfy UVXY position, sit back and watch the wood burn on the fire.

Oil is getting blasted and the Nasdaq is low — thanks to EXTRME weakness in the semis. I am holding my SOXS position through the earnings to follow. I am particularly looking forward to NVDA — which is priced for perfection.

On the topic of cryptos, the rally has paused and OSTK stopped dead in its tracks. Good thing I booked profits earlier today.

On a serious note, you’d need to have a mental disorder to buy any volatility ETNs ever again. You’d be better off playing with a box of dynamite sticks inside of an inferno.

The only other thing I did today was buy SECO.

I’l be out for the market close, but rooting in spirit for everything to collapse like a desk of clown cards.

Kerrisdale has a rich history of making retarded calls, such as short STRP, SAGE, and VSAT. I have no idea how they’re still in business. Nevertheless, they are and now they’re directing their ire at the blockchain, specifically calling out Kodak as a ‘zero.’

Shares of KODK are sharply higher on this contrarian news, as Wall Street couldn’t give two shits out the report.

“No photographer would rather be paid in KodakCoins over real money,” according to a report Wednesday from Kerrisdale, a hedge fund known for moving stocks with its outspoken calls. “It’s a last-ditch stock promotion gambit for a company hurtling towards bankruptcy.”

“Rather than dreaming of a ‘new economy’ for photographers, shareholders should be concerned about an eventual wipe-out,” Kerrisdale said. “Eventually, possibly as soon as the next time Kodak reports earnings, a share price levitating on the hopes of blockchain technology will give way to the gravity of dying, old-world fundamentals.”

Here’s Kerrisdale’s last two high profile shorts, laughable clown failures.

Fuck you if you’re shorting stocks today. We have to celebrate when given the chance. Today is a jubilee of insanity and I am at forefront making noise — banging on pots and pans.

I kicked out the OSKT I bought this mooring for a $3.50 gain.

Why?

Because.

With the proceeds, I rolled into SECO?

Why?

Because I liked the MUH chart. That’s right, the chart looked so delicious I wanted to take a bite out of it — so I did.

The party is back. Do not remind me of the dark days of two days ago. Up we go.