Markets Spike on Rapid Increase in Borrowing Costs

The FOMC hiked by 75bps and the market is pricing in another 75bps in December. On that news, stocks have taken off to the upside, with a wide array of things gingerly trending up. I took an opportune to trade a little of this and that before the spike and have more than halved my losses to -45bps. The initial move is way up, with the Dow +300. The NASDAQ is only +5, OFF the highs, but still more than 100 OFF the lows.

Into the close, who the fuck knows. I presently have a long only book with 40% cash, no high beta stocks — just larger capped old man risk averse names in an effort to slow down my beta to provide me with time to understand what the fuck the market intends to do.

Short stocks, long oil is the “FUCK BIDEN TRADE”, which makes me feeeeeel good because he’s an idiot and a terrible leader and I have anger issues. On the other hand, the fucking FOMC is about to light up markets at 2:30pm. Anything can and will happen. They could signal pivot and we might gap higher by 1,000 or they might suggest even greater tightening and the doom you see before you will deepen and blacken until your portfolios are left in dust.

I am unsure as to the direction of markets today, and have been unsure for sometime now. Nonetheless, I continue to navigate and search the markets meadows for treasure and am convinced, at some point, I will cast upon a salient I deem suitable and propel higher.

As a dark winter of death and destruction awaits around the corner, we should be mindful that the United Steaks has just two things left of note.

1. Dollar reserve
2. Wealth via stock exchange.

The latter is being dismembered as we speak. But we still do have a strong and robust dollar, the envy of the world. This only can be threatened if US power is called into question, which is why they are all in for Ukraine. Should we lose the war against Russia, I suspect the dollar will collapse, at which point gold and even Bitcoins might become attractive again. Bear in mind, SHITCOIN has weakened as the dollar gained and stocks fell. The morons who ebbed into BTC when DOGE was all the rage have been dismantled and burned, no longer on the chess board.

Bottom line: No one can honestly predict what will happen at 2:30pm. My gut is for a spike, but I would not be surprised if the Fed said things to purposely wreck stocks in order to keep inflation at bay.

You’ve got to be fucking mad. These lunatics live to roast bears upon their spits. At 2:30pm today, Chairman Powell will be making a speech in order to RIG markets higher. Also, I believe Cadaver Biden / Hitler will be speaking too. His speech, however, will be retarded — because he is in fact the father of a crack head. I suspect Hitler will discuss seizing oil profits from American companies in order to fund the nazis fighting the Russians in the Ukraine.

For the most part, I am a long-term now — leaning heavily into insurance and large financials and semis, with a IWM hedge via TZA. I am vacillating between down 20-55bps this morning.

I see oil stocks are down on a day oil is barely down. Relax. Oil stocks were up 30% last month. The FUCK Joe Biden trade is on with vigor and oil is destined to squeeze his nuts to $150 by spring 2023.

I closed the session FLAT, but made +230bps in the Quant and +120bps in my YOLO accounts. My hedging strategy works so well it all but negates the thousand transactions I do per session. Into tomorrow, I am fully invested with a 16% hedge in FNGD. I like the weakness of FANG stocks, spearheaded by AMZN, to plunge America back into a state of equity panic.

All is coming to a head soon. But before we get to the point of shooting fish in a barrel, we must first exhaust all buyers and destroy all rallies to the point they become dispirited and acquiesce to market forces lower.

My bias is long but that can switch quickly. The sideways action all day, in my opinion, is constructive action and aside from tech — much of the market was rather indifferent to bullish today.

INDEUD.

Markets quickly gave back all gains and more after people concluded it was a stupid idea to rally with stoked inflation caused by China coming back online. But more than that, and this is an abstract view of things, we seem to be unhinged as a nation in regards to foreign policy. I have never seem them this bad, desperate even, to enter into armed conflict with a formidable power. If you only judged the Ukrainian war by Twitter and the shills on it — you’d conclude Russian soldiers weren’t actually killing any Ukrainians but instead stealing washers and falling off cars into artillery fire by the infallible Javelin or the HIMARS army crusher. This is simply the definition of stupidity and we will regret letting these people wield this much power. Their crimes are bold and in public view and their enemies are punished with cruelty and nothing stops them. Their malevolence is supported by state sponsored media and dissenters are financially and socially ruined.

How does one go long with comfort as these lunatics steam roll the country into crisis?

The short answer you don’t — just like you’d never relax if sashaying with diamond gold chains in a bustling city brimming with degenerates and drug addicts.

Why would you walk around in the stock market bristling with lunatics and thieves all around you unprotected?

Hedge up or die.

One might argue this is the stupidest fucking reason to jimmy stocks. Then again, markets are always making excuses for its actions. In this case, the fact that people will no longer be welded into their homes is good news for stocks here too — for reasons I cannot tell you.

But notice what is busting loose in the pre-market: oils and other commodity related stocks. Copper is +3.5% and oil is +2.7%. But this is legitmized by the bond market reacting — with the US 10yr -14bps to 3.93%. Ergo, even though this might seem retarded, the proper things are moving to keep a rally.

Today I rebalance my Quant portfolio. If you don’t have the appetite or time to trade often, this is the perfect solution for you. I re-balance this just once per month — buying the top rated stocks in Stocklabs with 5% weightings per position and leave it alone. YTD, this strategy is +11.7% and has achieved 23%, +29% returns the past two years.

For members, I will sell current positions this morning and replace with the November portfolio around noon. This is exactly the screen I use, buying 20 stocks in order.

Bottom line: Stocks found a reason to rally, but its inflationary.

SL quant recap

We closed October out with a clown horn, losing 115 NASDAQS. The bull theory is 100% predicated upon a Fed pivot. All other narratives have been dispatched to the sea. In the event of a Fed pivot, I am pretty sure the event would be short lived. After the euphoria dies down, investoooors will demand growth.

We are dancing atop a spinning needle, hoping to find a salient of good news to close out what is and what has always been a DISASTROUS YEAR. With Fuckbook down more than 70% for the year, it would behoove you to pretend all is well.

The likely scenario is more disappointment as the Russian war machine gets hot for a winter offensive. Things are going to get worse before they get better. This is not the market you lean into and pretend the bottom has been achieved. We are on the verge of multiple financial panics on a number of axis.

I closed the month +3.35%, now +50% for the year. My performance has been nearly flat over the past 5 months, as I’ve found difficulty committing large sums on the long or short side. I suspect my confidence level will increase as the year winds down. I can tell you emphatically my belief for 2023 is grim. My bias will be shown without hedges in early January.

Happy Halloween catamites!

For the month of October, a month which I proposed we might crash (wishful thinking), the NASDAQ rose by 4%, Semis 2.5%, and the SPY 8%. It was a nice month for the permanent bull class of investor. However, those catacomb’d inside the FANG cellars were dispatched and placed into ruin.

Shares of META, GOOGL, MSFT and other tech giants disappointed and dove the fuck lower.

The oils rose by a staggering 30%, followed by beaten down REITs at +19% and retail at +18%.

The only areas of the market truly weak in October were Chinese burritos, solar, alt energy and biotech.

Barring some sort of collapse in my picks from now until the close, I will book a 3.5% gain.

What to expect for November?

I will reiterate my suggestions given in late September: a whirlwind of pain and suffering eagerly awaits you in the month of turkey and gravy. Tranny platoons of American soldiers will be STEAMING towards Europe in an effort to prevent a giant Russian winter offensive and markets won’t like it one bit.

Markets typically never trade lower in November and rarely crash into year end. My best guess is for an A-typical end of year wrought with pain and fears.

Double Entendre alert!

It’s all fun and games until your city is a pile of ash.

Wheat is jacked this morning by 6% and natural gas by 10.5%, after Russia cordially withdrew from the grain corridor deal with the UN, Turkey and Ukraine. However, all parties are shipping grain nonetheless! It seems they’re not afraid of Russian subs and believe their torpedoes to be made of rubber. As such, today they exported with 12 large grain ships to Turkey and had 2 coming in! Perhaps that one was loaded with lots of Halloween snacks.

Anyway, I am of the belief it’s mostly bullshit at this point. If markets are never going to take this war seriously, I might need to focus my efforts on something else. Perhaps it’s time to obsess over the COVID shots again, take a look under the hood and see how many treble boosted folks dropped dead from SADS.

The NASDAQ is down 140 and I had a fuckload of everything rolling into today. I liquidated all of my inverse ETFs and still hold some risk averse stocks, +37bps for the session. I am content with the slow boil and will gun for higher returns when the fucking market is easier — you sons a bitches.

42% of Ukraine’s exports are grain related. They are the “bread basket” of Europe. A few months ago Russia agreed to open a “grain corridor” to Turkey so Ukraine could export their grain. Due to a series of underwater drone attacks in the Black Sea, Russia has canceled the agreement and blames the Uk for facilitating the attack.

Full statement:

FULL RUSSIAN STATEMENT pic.twitter.com/T1uC7sy5s7

— The_Real_Fly (@The_Real_Fly) October 29, 2022

This development will undoubtedly cause inflation to rise in Europe, as the price of food rises due to lack of grain supply.

I’d also like to remind people of the returns for the NASDAQ over a number of time periods.

Do stocks deserve to be +42% from 2019 levels?

The NASDAQ is down 14% over the past 6 months. I’m in fact only up 3% over the same time frame. My bias has been to be short, but I’ve also hedged myself almost every day because of rallies like Friday.  In October alone we’ve had 7 rallies of 2% or greater. Is that the behavior of a bear market? No. But we are in one, without a doubt.

We were up 12% in July and people thought the market bottomed. Then we sunk 15% from August through September and now we are up 5% for October. How confident are you that stocks will continue heading higher into peak shopping season? Will consumers steam out in droves to stockpile on the latest tech gadgets amidst this economic backdrop? Conversely, if you’re short stocks, how comfortable are you shorting into the hole with bell weather stocks down 50-80% YTD?

For all those disappointed that I’ve had muted returns the past 6 mos, fuck off. This has been a very hard market to navigate and my responsibility isn’t to be the organ grinder’s monkey but to preserve and methodically grow my 50% YTD returns. My breakouts usually happens in wild streaks and I always temper myself after achieving success. In 2021, my returns were +218%. But look at the monthly distribution.

I started 2021 at $150k, rose to $450k by May 1 and then traded around that level through year end, finishing at $492k.

In January of 2022, I dipped to $440k because I was wrong. That was my bottom and I busted loose in February, rising to $633k by April 1 and  have methodically traded higher since then — closing Friday at $737k.

I can comfortably assume my returns are in the top quartile of all traders/money managers on the planet the past decade plus. If I’m so good and telling you this is a hard tape, this is a fucking hard tape.

Stop complaining.