Saturday Cinema with Le Fly: Cobb

I’m a big Ty Cobb fan. Growing up, small Fly was a yuge baseball fanatic. In the neighborhood I grew up in, we’d play ball from dusk till dawn. I was never home, always out in the streets trying to get hit by trucks. We’d play hardball surrounded by glass, in a parking lot. It taught me to hit the ball straight; otherwise, I’d break a windshield or two.

This is one of my favorite biopics. It’s a true story, based off Al Stump’s legendary book that was written during Cobb’s final days.

Truth be told, I haven’t seen this movie since I was a kid. Sometimes the stuff you watch when young doesn’t translate very well as a mature adult. The reviews on this movie are dreadful and it was a monumental flop in theatres.

Nevertheless, if you’re interested in the life and times of Cobb, this movie will certainly entertain you, if anything.

Cobb was a super crazy asshole.

Good news for Japanese exporters: your currency is in shambles.

This is the biggest story never told, the experiment of negative interest rates that must work, otherwise, the very fabric of western finance will unravel. The 2% drop in the yen is the largest decline in 17 months. The working theory is for the Bank of Japan to take action next week, in light of the plunging sovereign yields that aren’t supposed to be happening.

“The market is seeing more scope for the BOJ to do something next week,” said Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas SA in New York. He cited recent news reports “suggesting there are discussions underway about pulling the trigger on further measures — that’s why the yen is weakening.”

Perhaps MOAR QE, or maybe a little economic stimulus spending is in order. Either way, the Bank of Japan must do something to stem the tide of deflation that is washing over its banking system. Some have even floated the idea of negative interest rate bearing loans. Could you imagine getting paid to borrow money to buy a home?

This is the upside down world we are entering in now. We are in the first inning of this new economic reality. Thus far, everything is going swimmingly.

Just one day after the stock collapsed on rumors that the FDA hated them and was going to decline their application to have their muscular dystrophy drug approved, shares are, seemingly, effervescent today–fully and without requital, offering up primordial treatment to all those saddled in a large short position.

Commiserate with the traditions of biotech hazards, the charade of equanimity within the healthcare field has once again been shattered. As such, traders have been upbraided in a Banana Republic like condition–one wrought with rusticate milk sops running in and out of bankruptcy courts–finaglers left in ruins from the theatricalities of an industry bereft of decency and decorum.

RBA notes on the SRPT spike:

RBC noes the FDA has just posted 5 voting questions and explanatory discussion points ahead of Monday’s eteplirsen panel. They view the fact that panel members will have to vote on Monday as an incremental positive for SRPT, simply because of the understandable pressure committee members will be under, in the presence of the DMD community and families. However, the questions should leave little room for interpretation: Despite that view, when they read through the actual questions and the language of the accompanying discussion, they see a document with the exact same tone and tenor as the January and April briefing documents. The questions and the discussion ask the panelists to focus on the trial conduct, the evidence for dystrophin and clinical efficacy. They expect the answer to all of these to be No.

Shares of SRPT are higher by 40%.

I don’t even know where to start with this. The Federal Reserve is supposed to be an apolitical organization, whose sole purpose is to create chicanery within the economy to ferment opportunities for the banks to acquire valuable assets cheaply. In what could only be described as a brazen statement by Fed’s Brainard in showing her allegiance to the Hillary Clinton campaign, one has to imagine what a Donald Trump candidacy will do to the Fed and their cozy relationship with the democratic elite.

Trump is on record saying he wants to audit the Fed. He’s on record saying he doesn’t like what the Fed is doing. Therefore, and it goes without saying, the Fed is actively campaigning for the Clinton campaign, a bold step that has ruined the impartiality they’ve worked so hard to maintain.

What in the hell is going on here?

I shelved a sundry of doomful news stories on this Friday, sparing you of the uncomfortable realities of living during the end of times. As you can see by today’s pin action, investors are shrugging off dire news out of SLB, whose CEO cited the oil industry as being one and the same as living through a full blown cash crisis, slashing North American spending by 50%–firing thousands of workers and sending them to the Walmart unemployment offices for new career opportunities.

Oil crested this week, higher by 8% and the ark fell the most in 5 months. Everything is pointing towards higher prices. If it weren’t for the specter of annoying earnings shortfalls, this market might take off to 20,000 by the first of May.

I’ll be covering part of my XLE short today, not out of need, but part of my 10 day holding pattern. Thus far, the trade has been an unmitigated disaster. Nevertheless, there is always hope and a chance that something truly awful will happen over the next two weeks.

It reads like a comic book tale of a gluttonous CEO gone wild. The Chief Executive of General Motors is doing very well indeed, disproportionally might I add, in spite of the indelible facts that shareholders aren’t sharing in the success she seems to be enjoying.

Over the past 12 month’s, GM’s share price has slid by 9%. At the same time, Mary Barra was granted, awarded and paid the sum of $28.6 million.

Let’s break down her splendid year.

Salary: $1.75m

Performance based bonus: $3.06m

Bonus Plan (she hit 3 of 4 goals. No word on whatever the fuck they were): $12m

Special one time grant (why the hell not?): $11.2m

Past equity awards: $2.48m

Revenues were down last year, anywhere from 2-5%, the first annual decline since 2008. Perhaps Mary Barra should give out free social security cards with the purchase of every piece of shit GM car, in order to stoke sales.

Addendum: President Dan Ammann made $11.8 million, of which $2.85 million was cash, and Chief Financial Officer Chuck Stevens was paid $8.1 million, of which $2.38 million was in cash.

Naturally, these were ‘good’ numbers for the ‘oil patch’ by SLB. See, by slashing spending by 50% in N. America, jobs will be lost and production will be hurt. After everyone goes bankrupt, they will then emerge out of bankruptcy with skeleton crews and shattered prospects. This, of course, means that oil will finally bottom and forklift up to $200 per barrel.

In other words, buy the ‘oil patch’ now, ahead of apocalyptic 50% capex budget cuts, because after everyone goes out of business oil will head to $200, maybe $300.

Notes that 1Q16 rev declined 16%, the second steepest quarterly decline within the downturn in commodity prices

Net debt increased by $1.1 bln to $6.7 bln in 1Q16

Total cash & equivalents balance of $14.8 bln in 1Q16

Co notes that job cancellations and rig count declines have weighed on revenue

Global spending reductions in 2016 are now approaching 25%, corresponding to the fall of 40%-50% in North America and around 20% in the international markets

FY16 capex budget reduced by $400 mln to $2 bln, when compared to previously announced guidance

Oh, and the CEO didn’t sound to sanguine about the industry, citing a ‘FULL SCALE FUCKING CRISIS’ is underway.

“The decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis,” Chairman and Chief Executive Officer Paal.

Notes from call, via Briefing.

Expects market conditions to worsen further in 2Q16 as customers continue to reduce activity

Excluding the additional revenue from Cameron, this market outlook together with the decision to reduce activity in Venezuela could lead to a sequential percentage fall in rev for 2Q16, similar to 1Q16

Discusses that the magnitude of the E&P investment cuts are now so severe it can only accelerate production declines & the consequent upward movement in oil price

Notes that domestic capacity reductions in the service industry will help restore a ‘large’ part of the international pricing concessions made once oil prices & activity levels start to normalize

Cameron rev is expected to be flat sequentially. In this environment co plans to continue to tailor service capacity and overhead costs to activity levels while preserving long-term operational & technical capabilities, which could represent a further burden on operating margins going forward, particularly in North America

Comments that non-OPEC production overall dropped by 930,000 barrels in 1Q16

~60% decline in North America & ~40% internationally
OPEC production expected to be reduced by 1 mln barrels/day in FY16

Believes that the current oversupply is expected to shrink to almost 0 by the end of 2016, and in Q4 this year, OPEC production is now forecasted to be down 1 mlnn barrels per day y/y, notes the oil market is in the process of balancing
Expects a significant drop in rev in 2Q16 compared to 1Q16, making it difficult to retain margins of ~30%

I give up.

Sales declined in all segments in every part of the world. In other words, every aspect of CAT’s business sucks, yet you monsters keep bidding up the stock.

Shares are off by a pedestrian 2.2% in the pre. Don’t worry, CAT will ‘cost save’ some more by replacing annoying humans with fucking robots.

Via briefing.com

Reports Q1 (Mar) earnings of $0.67 per share, ex-items, $0.01 worse than the Capital IQ Consensus of $0.68; revenues fell 25.5% year/year to $9.46 bln vs the $9.45 bln Capital IQ Consensus.

Co guided Q1 EPS $0.65-0.70 vs. $0.95 consensus on March 17
“While first-quarter results were about as we expected, sales and profit were well below the first quarter of 2015. Sales declined across the company with substantial reductions in construction, oil and gas, mining and rail. While many of the industries we serve are challenged, we remain focused on what we can control: the quality of our products, our market position, safety in our facilities and continued restructuring and cost reduction. In fact, our period costs and variable manufacturing costs in the quarter were nearly $500 million lower than the first quarter of 2015,” said Caterpillar Chairman and Chief Executive Officer Doug

The decrease was primarily due to lower sales volume. While sales for both new equipment and aftermarket parts declined in all segments, most of the decrease was for new equipment. The unfavorable impact of price realization and currency also contributed to the decline

Sales declined in all regions. Sales decreased in all segments.
Overall machine market position better i n Q1 of 2016 than this point last year; continues to improve in China. Focus remains on quality, safety and cost reduction

Co lowers EPS guidance for FY16 to $3.70, ex-items, vs. $3.60 Capital IQ Consensus Estimate, from $4.00; lowers FY16 revs guidance to $40-42 bln vs. $41.08 bln Capital IQ Consensus Estimate, down from $40-44 bln

The decline in the midpoint of the sales and revenues outlook range is a result of several factors that, while not individually large in the context of the outlook, collectively add up to about $1 billion

Those factors include lower transportation sales (rail, marine and the ending of production of on-highway vocational trucks), lower mining sales and weaker price realization than previously expected.

Intrexon is  trying to kill the messenger and not the message, which,  in my opinion, is a mistake. Believe me, no one is a bigger Randall J. ‘Fucking’ Kirk fan than me. But blaming evil hedge funds for shorting your stock and taking a short position against you, one day after your stock plunged by 25%, probably isn’t what shareholders want to hear.

They want fire and brimstone. This is subterfuge.

In this case, however, Intrexon is providing this update given the inaccuracy of the report’s content, the stated intent of the publisher to issue several more spurious reports in the coming days, and information received last night regarding the erroneous publication
Yesterday evening, Intrexon received a draft report, dated Dec 2015, which contained similarly inaccurate claims and strikingly similar language, in some parts identical words, to that used in yesterday’s report. Moreover, Intrexon received information that the source of the report was a particular hedge fund seeking to discredit Intrexon. The hedge fund, according to our information, desired to take a short position in the company’s stock, was seeking a willing publisher of its report on the company, and intended to benefit from trading activity caused thereby
Based on this information, Intrexon believes that it is the target of a campaign to manipulate trading in the company’s securities, interfere with the company’s business operations, and destroy the reputation of the company and its chairman and CEO
Intrexon, with the advice of counsel, is taking appropriate steps in light of these developments

The stock is up a smidge in pre-market trading.

I know. No one cares about this at all. It’s sort of like not caring about where oxygen comes from. We all just take it for granted. We go outside and commit heinous acts and expect that oxygen to be there for us, in order to propel us forward. The same thing happens with iron ore and steel.

Goldman is looking for it to be halved…from current levels.

“We think this market will go back to $35 during the fourth quarter,” analyst Christian Lelong said in an interview. That’s 50 percent below Thursday’s close of $70.46 a dry metric ton, the highest level since January 2015. “Our expectation is the oversupply in the iron ore market will return.”

Iron ore has surged in 2016 in sharp contrast to the previous three years, when a slowing Chinese economy hurt prices and too much supply chased too little demand. This year, policy makers in China have talked up growth and added stimulus, presiding over a revival in the property market that’s boosted the outlook for steel consumption. Still, burgeoning supply and stalling demand growth may once again drag prices down, according to Goldman.

QuickTake Iron Ore

“Going into the second half of the year, what are you going to need to absorb all that iron ore supply?” New York-based Lelong said by phone from London on Thursday. “It’s going to be very hard to have strong enough demand growth in the Chinese steel sector to keep things in balance.”

Armageddon.