How About a Late Day Rally?

SPY has been rallying since 12pm

NFLX is green.

FCX is green, reversing a huge 10% drop.

X is up.

TWTR is running higher.

BBG, AGIO, WLL, LRCX, QUNR and a bunch of stocks that have no business being up in this sordid tape, are all higher.

This could only mean one thing: A LATE DAY RALLY.

I reallocated into SPY this morning, giving me, once again, a 200% SPY position–alongside 25% in TLT.

LET THE RALLY COMMENCE!

As an American, you enjoy the fruits of a dollar backed by the full faith and credit of the strongest military on earth. It is the reason why we are currency reserve. Make no mistake about it.

Ever since Europe decided to do QE and our Fed pursued a strong dollar policy, there have been consequences. Now that our Fed has decided to RAISE rates into the teeth of a cataclysmic decline, the situation has been exasperated.

For example, crude.

Or, the Mexican peso, at new lows–down 25% over the past year.

Are pesos too Spartan for you? How about our loyalist friends to the north and their ridiculous oil backed loonie, down a whopping 45% over the past two years. This is great news for you road trippers out there, wanting to see the vast expanse of wasteland called Canada.

Or Brazilian real, getting really crushed, down 53% v dollar over the past year.

Argentinas peso, off by 56% v the dollar the past year.

Let’s not forget Vlads ruble at new lows, down 30% v the dollar over the past 3 months.

All hail, King Dollars and its ruinous side effects. Do you see the dislocations?  Everyone is freaking out over China’s 6% depreciation, while  the deleterious deflationary affects of King Dollars stabs the third world, and Canada, in the face–sponsored by your insane Janet Yellen Fed.

It really is a cruel thing to discuss “Trader Bill’s” portfolio amidst this crisis, after the misfortune that he endured in 2015. Then again, he’s a guy who bought a $100 million apartment just for fun. All is fair game in love and war and Le Fly loves to make war, all the time.

By the looks of Bill’s portfolio: APD, CP, HHC, MDLZ, PAH, QSR, VRX and ZTS, as well as his HLF short, he might be down 18% for the year.

He reported Pershing’s NAV a week or so ago and it was off by 11.4%. But that was then, when times were good and the losses were midget sized. Now we have bigger losses and Bill’s concentrated portfolio of complete shit is leading the charge for an industry that is having a problem wading through the Federal Reserve induced wealth destruction.

Hopefully this post marks the absolute bottom in stocks, permitting Bill and I to celebrate, in separate venues of course, popping champagne corks into the faces of our prospective employees.

One does not rumble without including Dally and one does not have an economic crisis without having Nouriel Roubini tell listeners that things are collapsing and how the Fed might’ve made a policy mistake.

Maria interviewed Roubini today, in Davos (naturally), to discuss recent turmoil, the Fed and how it pertains to equity markets cascading into the pits of hell.

We all now know the Fed made a policy mistake. Some of us (audibly clears throat) knew this was going to happen. The only way out from this mess is for the Fed to shut the fuck up about hiking rates and to be a little realistic about the current situation with regards to ZERO-FUCKING-INFLATION in the system.

Cramer wants to know where are the “jokers” who said raising rates would be good for the economy and the market.

–Sobering time

–Housing peaked

–Autos peaked

–Oil has to go to $20

You can tell he’s a ticking time bomb and he’s one -300 open away from blowing his top and going John Rambo on the Fed.

How apropos for the fiends in Davos, spending millions to be seen at the decadent splendour of the world economic forum, to have a real life crisis to discuss–and donkeypunch each other– over glasses of hot chocolate. As their helicopters descend upon the mountain resort, Dow futures drop by 300–making their shallow lives a bit more tangible.

Here are some of the pre-market movers.

SDRL -11.8%, CHK -9.1%, VALE -8.6%, DDD -7.1%, BBL -6.8%, SUNE -6.5%, DVN -6.3%, BHP -6.2%, DOC -5.7%, FTNT -5.5%, SYMC -5.3%, MT -5.1%, AMD -5.1%, PBR -5%, DB -4.6%, HSBC -4.6%, IBM -4.6%, FCX -4.5%, MU -4.4%, IBKR -4.4%, RDS.A -4.4%, APC -4.3%, STO -4.2%, CS -3.9%, JOY -3.7%, BAC -3.7%, SLB -3.5%, TWTR -3.5%, C -3.4%, TOT -3.4%, AEG -3.4%, SSS -3%, BIDU -2.9%, BABA -2.9%, BCS -2.9%, JPM -2.7%, ING -2.7%, LYB -2.7%, RACE -2.6%

Look, I can’t recall a market this stressed since the dot com collapse, when we’d simply gawk at the screens in utter amazement and make fun of the prices of the S&P for delving into the colonial era years. We’d be so distraught over the capital destruction, the only logical course of action would be to get drunk during lunch and pretend we were all participating in a group nightmare–like from the movie Nightmare on Elm Street. The country was just getting over 9/11 and everyone was insecure about the future.

But what about today?

We have Fed governors more concerned with inflation than the trillions of dollars being lost in capital markets, not including the hundreds of billions that will be lost by basic resource bond holders. How can they be so stupid? Perhaps it’s by design. The real morons are the economists who come on the teevee and explain to us how QE failed and how “normalization” of rates is an absolute necessity.

The only necessity demanded of Janet Yellen’s Federal Reserve is to read the data and use some common sense when it comes to stoking the fires with incendiary comments– at a time when markets are in crisis.

Just like in 2008, the Federal Reserve is going to cause an economic crisis and then have all of us bowing to their greatness when they bail us out again.

European markets are getting hammered this morning. The velocity of the losses are picking up, with most major indices down more than 3%.

U.S. futures are being obliterated, with the Dow indicating a -378 at the open.

NYMEX futures are getting smoked, with WTI down 3%+ to $27.51. The hilarious thing about WTI at $27.51 is WTI at $27.51 and everyone saying it’s going much lower–since supply is drowning the world in oil.

How? More importantly, why isn’t OPEC cutting supply again? I get it at $90, $80, $60, even $40, but $27.51?

#fuckery

I am sure he doesn’t have a bone to pick or a book to talk up, being that he’s the author of a book called “THE COMING COLLAPSE OF CHINA.”

That being said, Chang posits China’s debt bubble is insurmountable and the best indicator of growth, Chinese electricity consumption increased by just 0.5% last year.

Maybe the Chinese are eating their dog sandwiches in the dark? You never can tell.

-Beginning stages of collapse

-Chinese monetary easing and stimulus not helping

-They’re flooding economy with money to keep government sponsored companies afloat

-They’re out of tools

Fucked. In the streets.

Stocks that trade in Hong Kong are lower by 727 points, like the fucking airplane, almost 4%. The NIKKEI is sliding another 500; crude is off by 3% to $27.56 and Dow futures are off by 250. The Yen is higher by 0.55% v the dollar, indicative of a carry-trade unwind. The very worst of the worst sentiments prevail this evening, an evening after U.S. markets failed to follow through on an early rally, collapsed, and then tepidly limped into the closing bell.

Markets are off by 10% in 11 trading days.

The last time stocks performed this poorly was in January of 2009, which led to an absolute raucous rout in February, lower by 10.74% for the SPY. To say the general economy isn’t affected by the destruction of wealth found in equity and bond markets is absolutely stupid. I recall these same sentiments being spewed by Steve Liesman and others in 2008, as the housing crisis gripped markets. Hindsight has a funny way of obfuscating the past. You hear people talk about 2008 as if it surprised everyone. Not fucking true. Anyone who was paying attention saw the signs and took measures to protect his/her portfolios. I hate to rain on your money gathering, asshole advisory business, ways– but simply waiting out the market and hoping it will cooperate over the next 30 years is asinine. Clients don’t want to draw down 40%, in order to build long term wealth.

Aside from my directional position in SPY, I have a large TLT position that will remain constant throughout 2016. I won’t even bother stock picking, as I view it to be fruitless escapades in degenerate gambling. Stocks should be traded now. This isn’t a time to build positions “for the long term.” I do not believe it is the duty of advisors, or self directed investors, to simply ignore category 5 tornadoes barreling into town–hoping the cows and cars in its vortex won’t smack you about the cheek and gums.

Get flexible, you tie wearing morons.

The noose is tightening around the Chinese necks. Credit is drying up. Equity markets are plunging. Their ghost cities are falling apart. The systemic culture of fraud is being laid bare, for all the world to see.

The nation’s foreign-exchange reserves dropped by a record last month, as the People’s Bank of China sold an unprecedented amount of foreign currency in an effort to stem a slide in the yuan. The monetary authority provided 410 billion yuan ($62 billion) to commercial lenders via its Medium-term Lending Facility on Tuesday and lowered the interest rates on the loans. It plans to inject more than 600 billion yuan into the financial system to meet demand before the week-long Chinese New Year holidays that start Feb. 8.

“The market is still tight, despite the injections,” said Yan Yan, a Shanghai-based analyst at China Guangfa Bank Co. “All the seasonal factors, plus the capital outflows and currency market-related liquidity drain, are tightening interbank liquidity.”

The overnight repurchase rate, a gauge of funding availability in the financial system, rose six basis points to 2.06 percent as of 10:07 a.m. in Shanghai, according to a weighted average price from the National Interbank Funding Center. It surged to 2.18 percent earlier, the highest since April 2015.

Tuesday’s MLF injections to 22 financial institutions came after 100 billion yuan of such three-month loans granted on Jan 15, and compare with 250 billion yuan of the credit that matured earlier this month. The loans will play a similar role to a reserve-requirement ratio cut, Ma Jun, chief economist at the PBOC’s research bureau, said in an interview with China Central Television on Wednesday.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, increased four basis points to 2.31 percent, data compiled by Bloomberg show. Sovereign bonds fell for a third day, pushing the yield on the notes due October 2025 up three basis points to 2.83 percent, according to National Interbank Funding Center prices.

This isn’t ‘blow out’ territory, but something to watch. The higher yields go, the more this topic will be talked about.