We Are Fundamentally Weakening

We jumped up at the open and soon collapsed under the gravity of technical deterioration. I measure this, as a matter of fact, inside Stocklabs. That’s right, I’m not just an odious visage — but also someone who keenly analyzes these things and likes to believe that I know more than everyone else — mostly due to an overwhelming desire to compensate for the charming life I lead in a most under-achieving manner.

There is no need to over think this. Markets are a bit weak, which doesn’t mean this is “the end” — but instead only means we are taking a little break. Is it possible we can crash? YES — but not likely.

The most likely path is the one we’re on. We had a nice run in January, but now it’s over. The market is all of a sudden skeptical, which means gains will be paired with losses and for the most part markets will CONSOLIDATE and wait for more clarity. This, in my opinion, is what creates an environment for frustration, the hemming and hawing — indecision at a time when traders just want to snort cocaine and create money out from thinned air.

BOTTON LINE: I have a fully long book paired with a 31% position in SQQQ, down 35bps for the session. My intent is to close out the SQQQ and hopefully get a little upside before I reopen it and pray for the worst.

I closed the session -58bps — losses mitigated because I am a professional. I am 40% SHORT on top of my 100% long book — but my soul, when you look at it, is black. I want stocks to crash and markets to halt for months, even though it would lock up my assets and cause my wife to panic. That’s ok — because I am willing to sacrifice for the greater good.

Today was an 85% down day, with heavy losses FESTOONED across the market place. This new demeanor has much to do with SPIRALING HIGHER RATES, now encroaching 4% on the 10yr.

This, you should know, is the worst case scenario for stocks and you should know this now in order to prepare, otherwise your losses will be SEVERE and your lives will be reduced to ruin and rubble.

GOOD DAY.

We thought the market had bottomed due to the elaborate run in January into early February. Rates were down, inflation defeated, the Fed pivoting, the war a non event. Now, all of a sudden, shit isn’t so charming anymore.

The PPI was HOTTER THAN EXPECTED.

The Fed is hawkish as fuck, talking shit.

The war is escalating.

On top of all that, rates are surging right into peak housing time of year. It would be very easy to just close my eyes, buy stocks, and hope for the best. But I am a professional and cannot ignore that writing being scrawled about on the walls. One cannot ignore the fact that the market surged on the expectation inflation had been had and rates were done going higher, perhaps even pricing in rates cuts.

Now we see that isn’t the case, logic should dictate, if I might be so bold, that we should inevitably and presumably COLLAPSE.

I suspect once WW3 kicks off we’ll need to ration gasoline. We won’t need any natural gas, obviously, since none of us would dare pollute the environment with a gas stove. God forbid.

Cuck Natty is back down to $2.

Markets are reeling today, NASDAQ -200. I think the Biden trip to Kiev has something to do with it, since it reminded Wall St how serious the US is about fomenting war over peace. But the more pressing matter is inflation and how markets are projecting its return.

How else can you explain rates soaring?

Markets and the economy cannot function with soaring rates. Last year the Federal Govt paid $800b in interest expense on their debt alone, representing 25% of the entire budget. Your government has squandered the future of this country vis a vie nonsensical entitlement and military programs.

Congrats.

Meanwhile, I’m 90% cash, with just SQQQ on the books now. I sold the open and will reallocate back on the long side after 12:30pm, because those are the rules.

Are you allocated wrongly, into areas of the market that aren’t appreciating enough? This is the essence of underperformance, assets placed in idealogical investments and static for long periods of time in spite of their staid performance.

SIR — you must assess your portfolios for performance at least once per quarter and take out the trash.

In December of 2022, I started buying TSLA in a long term account, using the same methods I used in my 17x ETH expedition. The play was and is simple: Elon Musk is the innovator of our lifetime and his products have already reached critical mass. Therefore, declines in his stock are and always will be a buying opportunity — FOREVER. That’s right, you can come back to this blog in 25 years and see that I was right about Tesla.

My plan is simple enough: buy it on the first of each month and hope it goes down, since I intend to buy it for the next 3 years — like I work there.

Year to date, these are the best performing risk assets.

Last year, all of the cunt media festooned their websites with gloating data points about the world’s richest man losing the most in history.

With the stock +69% YTD, those same cunts haven’t said a word — mostly because they’re cunts.

Why isn’t the market going down with WW3 looming?

The market is betting on 1 billion plus people in the EU and America defeating Russia and their 140 million. The narrative of weakness in the west, due to low military stocks, can quite literally change quickly — providing they all started mass producing weapons again. The major disadvantage of the west isn’t in weapons, but logistics. The war is fought on Russia’s front porch and to get western weapons there, in a hot pan European war, will be very difficult.

All wars, eventually, end with diplomatic terms. Markets are betting on a WW2 belligerence by the west to force unconditional terms unto Russia, a nation without outward allies. The notion of China siding with Russia might turn out to be real — but for now it is clandestine.

I only mention this now because of the plethora of pro war statements coming out of the west today.

"Some worry that our support to Ukraine risks triggering escalation,let me be clear,there are no risk-free options,but the biggest risk of all is if Putin wins" – Jens Stoltenberg
pic.twitter.com/bUJOTM4Hlw

— The_Real_Fly (@The_Real_Fly) February 18, 2023

EUROPE IS ALREADY INDIRECTLY AT WAR WITH RUSSIA: ORBAN
Sunak Says NATO Should Make Ukraine Security Pledge by July
NATO Secretary General: The risk of an escalation of the conflict in Ukraine for NATO is incomparable with the danger of Russia’s victory.
“Ukraine must win the war” – German Defense Minister Pistorius
“The UK will be the first country to provide Ukraine with long-range weapons”

Markets will move in the direction it thinks will be victorious.

The Russian Ruble has been under considerable pressure the past 6 months.

Once upon a time, US markets dropped nearly 40% during WW2 because it was pricing in an Axis victory. When things on the ground and in the sea changed, markets went straight up. I believe the fate of this market, at least for 2023, is directly correlated with the conditions on the ground between Ukraine (NATO) and Russia, which is why I am somewhat fixated on news now.

I can easily blame my friend for invading my house and causing me to lose money this week, and I will. I was unable to get a proper handle on the tape. Have a look at my booked trades this week.

You see all that green you fucking pussies? My core holdings are static, so those are all extra day trades and/or hedges that I hold and close out overnight.

“If you’re so good, how come you didn’t make any money and hang out with us bums?”

Because, unfortunately, my weekly quant happened to have several oil stocks — which were down on avg 7% this week and I also have a fucking OPRA position that is now down 14% or $7k. That was the difference. I am now TRAPPED in OPRA because liquidity dried up.

If I had been wired the fuck into the matrix, I would never have let myself fall prey to a liquidity trap and also I’d do more to protect my downside.

HAVING SAID THAT, in spite of the losses I still traded masterfully and have not lost my touch. I just need to focus more intently on what I am doing and really try for one or two more big days for the balance of February.

I closed 131% leveraged long, no hedges.

The NASDAQ is diving lower again amidst pomp and circumstance. This, as you know, is a well deserved drubbing and if we’re being honest with one another — we do deserve a bit more.

I have been splattered about the pavement a bit, down 1.5%. But I have an excuse, as I am hosting company from NY — who will be departing this afternoon. By next week Le Fly will be back and fully concentrated on the matters at hand, banking coin with ease and equanimity.

The fate of the market is really being decided upon in the bond market. If the 10yr yield cracks lower, expect stocks and rise and vice versa. The Fed seems intent to hike another 50bps and the permanent bull class of investor really wants to believe in the pivot and soft landings.

This is fanciful nonsense, but it’s also fun to pretend.

I closed down 2.2% today, even after hedging like crazy in order to stem the flow of blood protruding from my head. For the week, I am -0.16%, mostly due to being a professional and understanding how to invest with appropriate tact and decorum.

It’s important that we acknowledge several palpable items now.

1. Inflation is resurgent
2. Rates are going higher

These two facts REBUKE the idea of Fed pivot and pause and instead place a 50bps hike right back on the table.

Whilst this drop wasn’t exactly deadly, it was enough to warrant a hedge, so I went 20% SQQQ into morning. I don’t want to squander what I have achieved and I also don’t want to be glib about the decline in an attempt to persuade myself that easy money is still possible in this tape.

We had fun. We made fast money quickly. But it’s over now and things have instantly become arduous, so prepare for volatility and the idea of dramatically lower prices in the near term.

We came in hot, 6% v 5.5%. The producer prices don’t really mean that much and I am sure within a day or two — the market will forget all about it. But for now, stocks are diving lower and rates are +5bps to 3.86% and Wall Street, all of a sudden, is scared. The Vix is +9%.

We had a real nice market going as of yesterday — but now it’s over. Again.

What to do? Do we hedge heavily or wait for the market to possibly turn up and then sell?

For now, I am holding only long — taking the hits and feeling the pangs of calamity — down 2.7% for the session.