THE BEAR ROARS IN 2016; OIL STOCKS SMASHED TO PIECES

It isn’t even panic anymore. Investors are resigned to the idea that the whole ball of wax will go up in flames. Double digit losses in the basic resource space, across the board. As a group, oil stocks fell more than 6% today–as WTI and Brent fell 6% for the session–an amazing achievement onto itself.

More important than the equity picture is the state of the oil and gas credit markets. Companies like CHK and UPL are done, toast. However, there are other names that are starting to look like–they too–might soon succumb to the pressures of the market. Here are some oil and gas stocks to keep your eyes on, as the “next shoes to drop”, so to say.

(stock, debt/eq level, amount of debt)

VNR, 4.8x, $1.9 billion
DNR, 4.8x, $3.3 billion
EPE, 4.3x, $4.9 billion
TRGP,4.1x, $6.1 billion
WLL, 2.8x, $5.2 billion

Big Game problems

PBR, 4.7x, $127 billion
VALE, 2x, $32 billion
ETP, 1.6x, $32 billion
WMB, 1.2x, $23 billion
MT, 2.7x, $20 billion
LNG, 1.8x, $16 billion
RIG, 2x, $8.7 billion

On the bright side, both JNK and HYG are flat on the day.

The famed doom and gloom guy, from the outskirts of the Transexual district in Thailand, predicted great calamities today with Bloomberg, via Skype. He must’ve been taking a cocaine break to do the interview; because mid-way through he broke out in laughter when comparing the U.S. credit bubble and stock market to the Titanic, suggesting it could be halved. He wants us to break apart into pieces, against the fucking rocks, in the streets, tinned cup in hand.

All very funny indeed.

He then went onto rant about gold and how cheap it was and how it could double. Immediately following the interview, it’s rumored that that he mainlined a bag of heroin and ingested some chrystal meth, through the nose.

As sure as I was sitting there, watching Dennis Gartman say oil would be “boring” for the remainder of 2016, it got shredded to pieces.

Brent crude down 6% for the day is no laughing matter. Jobs will be lost; people will suffer. The poor folks in Saudi Arabia just got their gasoline tax raised and now have to pay 20 cents per gallon.

What is the world coming to?

In other news, the dollar is at 11 yr highs. When things get sporty, and things are most certainly sporty now, investors flee to the dollar and US treasuries, which is why I am doing so well in TLT.

“The market remains bullish about the U.S. and hawkish on the Fed,” said Joe Manimbo, an analyst with Western Union Business Solutions, a unit of Western Union Co., in Washington. The likelihood of several interest-rate increases this year “bodes well for dollar outperformance,” he said.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.3 percent to 1,243.48 as of 12:34 p.m. in New York, the highest on a closing basis since data going back to January 2005. The greenback was little changed at $1.0759 per euro and fell 0.4 percent to 118.57 yen.

Bottom line: the market has done nothing but plunge over the past week. We are overdue a bounce. But when we do get that bounce, you should take it to lighten up and/or hedge.

The EIA just released a charming stat, pointing to America’s disdain for distillate fuels. Inventories came in at an astonishing 10.5 mill.

What the fuck.

Either we’ve become a land of Netflix watching hermits, driving to and fro in electric automobiles, or something is wrong with the picture.

The weather was sublime this past month. Holiday shopping season was in full effect and gasoline is cheap as fuck.

Pray tell me, how does one simply build 10.5 million barrels of gasoline in a single month?

I’ll wait for your response.

Oil is getting poleaxed.

On a day when North Korea detonated a hydrogen bomb, causing a fucking earthquake, Dow futures were down 300, China manipulated its currency lower for the 7th consecutive day, Vice Chair of the Federal Reserve, “Stan” Fischer thought it was a good idea to imitate his favorite movie, “Zoolander”, and toss gasoline on an already happening party.

This is not your Dr. Benjamin Bernanke Federal Reserve.

This Fed is being spearheaded by a woman, Janet Yellen, who is completely delusional. She’s permitting her idiot board of Fed governors, who’ve been clamoring to hike rates for years (that’s all they ever want to do), to impose their perverted version of the world upon an injured market.

My TLT is up $1.25, effectively telling the Fed to fuck off.

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Sales will be down in the range of 14%. Earnings will coming in light, at around $1.70-1.90, dowm from $2.52.

Sales for December were down 30% and the government subpoenaed them for poisoning the American public. I am almost certain Congress is short CMG.

Shares, initially, dropped to $412, and has recovered since.

I’m calling bullshit on this warnings. I live in an area filled with gluttons, a bunch of Eddie Barzoons if you will. My local Chipotle is completely vacated. They might as well board the fucker up, or turn it into a Boston Market.

I think there is a lot more downside to the earmings story with CMG. This ecoli issue isn’t done, not even close.

Avoid.

ONE MORE THING. The company authorized a $300 mill buyback. They’ve been buying lots of stock, as of late, sort of tossing good money after bad.

During the fourth quarter 2015, we repurchased approximately 609 thousand shares of stock at an average price of $556 per share. During the month of December, we repurchased approximately 401 thousand shares of stock at an average price of $527 per share. The Board’s authorization of the repurchase program may be modified, suspended or discontinued at any time.

In other words, the company lost about $70 million in asinine share re purchases since Q4, 2015.

North Korean H-bomb tests, although awful, is not the reason why stocks are being “Clubber Lang’d” this morning. For the 7th consecutive day, China has walked its currency lower, a huge red flag amidst an idiot train filled with red flags. Also, despite Wall Street’s inclination to upgrade oil stocks, the commodity keeps getting cheaper–further deepening the debt crisis bubble that everyone keeps ignoring–hoping that will just go away.

There are $300 billion reasons for you to pay attention.

NASDAQ futures are getting hammered into clown dust.

This is how I am playing this.

My largest position since before the New Year’s was TLT. It’s a play on safety of principle and my crazy belief that eventually the yield curve will invert. After that, cash is my biggest. As of yesterday, 1/3rd went into SPY. I’ll likely lose 2-3% on that trade today, not exactly a hell storm of loss. Nevertheless, I do not like to lose any money, let alone during the first week of the New Year.

However, since my equity exposure is so limited, it’s in my interest to see stocks lower, buy the blood, acquire your margin call. That’s exactly what I intend on doing soon.

Based upon further oversold readings in Exodus, I will add to my SPY position, in a quasi martingale approach with a time limit of just 10 trading days. Details will be forthcoming inside the service.

I wish you all good luck and happy fortune. But you were warned of this eventuality and you bet against me.

Never, ever, bet against the guy in the time machine.

The Chinese Yuan dropped for the 7th consecutive day to five year lows today, in what can only be described as intentional fuckery on behalf of the anciently savage communist regime. As we speak, Donald J. Trump is looking for open lots to build new casinos in China, after the United States attacks and conquers them for trying to not allow America to be great again.

Perhaps this has something to do with the Chinese short selling ban expiring on January 8th. Nevertheless, there are serious things happening in China, a sense of desperation that is reverberating in risk assets across the globe.

That being said, the Shanghai was higher by 2.2% tonight.

Pipe Jaffray analyst tossing the NIKKEI magazine into the circular file, suggesting the panic over Apple supply cuts are wholly ridiculous.

On a more serious note: should Apple miss sales by 30%, you have much greater things to worry about than the price of Apple’s stock.

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This is the tonic, otherwise known as the remedy, for the every day dreck that we are subjected to, day in and day out.

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