Let’s Raise Rates. Why the Hell Not?

This would’ve never happened under Chairman Bernanke. In a few short years, under the tutelage of a unqualified Yellen, the Federal Reserve have become irrelevant, neutering themselves a little bit at a time, slowly but surely, speech after speech. The whole notion of hiking rates in this fucking environment is beyond absurd, it’s suicidal.

We know our Fortune 500 companies are hurting, laying off jobs, because of a strong dollar. So what does out Fed do in response to China blatantly devaluing their currency? They discuss rate hikes!? Think about that for a minute. We are working for the Chinese, bolstering our dollars for their benefit.

I am not surprised by anything anymore. This isn’t a nation led by the people for the benefit of the people, but instead for a select few, by a group of individuals I’d never like to see at my children’s birthday parties.

We closed down more than 300 today. Nothing was resolved. We left the marketplace without a glimmer of hope. Asia is going to get harangued into submission tonight and Volkswagen will ensure more bad news in Europe. It’s a good time to be short. I harbor zero regrets because every decision I made, I made them with good intentions based upon the reliable information that made me coin in the past.

What’s the point of discussing “buy lists” and levels to look out for? It’s full blown crisis out there and no one is manning the ship. Janet Yellen is at her local diner, eating an egged salad sandwich, then vomiting the whole thing back into her mouth, practicing for her next public speaking performance.

Fuck me.

As the market winds down another day of crash sequence trading, I am enlivened and comforted by the fact that Fed Dudley insisted, just this very morning, that the Fed would raise rates in 2015.

Biotech stocks are off by 8% today…as an index.

Our oil and gas industry has been decimated, thanks to the absurdity of its business model, which calls for oil to price above $70 per barrel…forever. Otherwise it’s grossly unprofitable and therefore must cease to exist.

Our tech sector has been swallowed whole by Apple. Nothing else exists.

Our shopping malls are barren and the stores inside of them teetering on bankruptcy…mainly because job creation in this country has moved away from the higher paying varietal and more towards Shake Shack.

Plus anyway, the deflationary vortex known as AMZN is, slowly but surely, making sure that the retail landscape changes on a permanent basis.

All of these things, these great wonders, permits our new Fed chair to make speeches and to allow her underlings to make speeches about the virtues of higher rates. If the argument for higher rates revolves around the idea that we must do it now, so that we can cut rates later, why the fuck are we doing it in the first place? It seems like a giant circle jerk to me.

The sad part about this drop is that it’s not the worst I’ve ever seen. I am entreated to these drops once per year, each time in a difference sector. My only wish is for the whole thing to just fucking crash already, down 15% in a single session, so that I could get some closure in my life.

Since the Hillary Clinton comments pertaining to expensive drugs costs, the biotech index is off by 14%. Understand something, this sector was in bubble mode, thanks to Fred Wilson and his cohorts cornering innovation in the tech space, hoarding them like greedy little goblins in the private markets. I’d be remiss if I didn’t mention that NASA found evidence of “flowing water” on Mars today, a precursor of an alien invasion no doubt.

Regarding the biotechs: these are no longer trading on prospective FDA decisions or takeover targets, only fear.

Biotech

Hospitals

Big Pharma

Inside of Exodus, I track high valuation stocks in what I call a ‘bubble basket’. Said basket peaked on 7/23/15 at $122.6 and is now trading at $92.79. Last year October 13th, the index hit a low of $87.30, before spring boarding to $101 by Halloween. The all-time low of the index was reached on 5/8/14 at $82.57. Back then, doom and plenty of gloom was rife in the daily stock market discussion. Persons of great importance would gallivant onto the teevee stations to cast aspersions and stake a claim in the top of the stock market, never to be reached again.

By July 1st of last year, the bubble basket hit a high of $104.76, a gain of 26% in less than two months from the contretemps festooned days of May.

One last thing before I go (extra Columbo), just in case you thought the biotech index was cheap, I wanted to place some hard facts on the table.

That’s a 10 graph of the biotech price to sales history. As you can see, it is elevated to absurd levels right now–trading at 32x sales. That number is a little misleading, however, since most biotechs don’t have sales to speak of. For the most part, the biotech industry is wrought with r&d labs that were brought public due to investor demand, again thanks to Fred Wilson. Major pharma, a better barometer of healthcare valuation, is trading with a p/s ratio of 5.86x, the lowest level since 2012.

Icahn is out with this gem this morning, warning America of a great doom approaching, probably because he was just outbid at a Sotheby’s art auction.

Before you go freaking out because Carl Icahn is coming out with his bearish thesis soon, just know he always says this stuff, just prior to taking billion dollar positions in the riskiest stock bets in the world.

Only in this instance, he just took down an 8.5% position in FCX, bought MOAR CVR and also a little CHK and RIG to boot, just a few weeks ago–prior to these statements. Perhps he’s lost his marbles?

Or, maybe Carl is doing what Carl does best: look out for his best interests.

Don’t be surprised to learn that Uncle Carl bought into this decline, even while warning the great unwashed public of cataclysm.

Stocks are getting hammered into the fucking ground this morning, led by Apple. They announced iPhone 6s sales beat by 1 million, to 13 milliion units. Wall Street is in full retard mode.

Biotech is being destroyed, yet again. I cannot believe JAZZ is this low. They stand to earn $10 this year. Amazing.

Finally, NFLX is up. That’s your market America.

How was your weekend? Did you miss the stock market? Don’t worry, you’ll be enjoying yourselves soon amidst a sea of carcasses, as we pile drive into the blood. For those of you who are short: congrats. You’ve managed to hold your butter and withstand the temptation of profit. You’re probably a genius or a moron, which would eplain your recent success.

As for stocks, only the long bond appears to be working today. Commodities are off terribly, as the continent of Europe cascades away from the light, into the depths of an evil darkness not seen since the fun days of panic–circa 2011.

All eyes will be on biotech, to see if risk appetite continues to get devoured whole, or perhaps a miracle asserts itself in the form of a relief rally.

So today’s astrological significance, super blood moon/ total eclipse, is a once in a life time occurrence that has all of the “astro-bears” out with tidings of doom. Pray tell me, why do all of these omens couple with events of horror? Why can’t we all just drink a few martinis and see the market go higher?

Last week’s spectacle of our Federal Reserve Chairwoman mouth vomiting at the end of her abbreviated speech, followed by the absurd excuse of dehydration following a long, arduous day of speaking to other human beings, lends to an already uncertain environment, one that is ruled and enforced by the clowns out in Beijing.

China is slowing. Europe is staid. South America is a mess. Africa has never been relevant. American is the last hope for a generation of unfortunate souls, who’ve braved the burden of a volatile stock market–dating back to 1997.

One thing I can promise you is this: we could be entering the worst bear market since 2008 and you can still get wiped out leaning in short at the wrong time. Go into my archives and view the commentary from March of 2008. See how I was having fits short a market that was hell bent on bouncing, pretending nothing was wrong. Once the sellers exhaust themselves, buyers will creep back in and then drop the fucking anvil of absolute death onto their faces. It’s going to be horrific. We’re already deeply oversold and only a moron would press his shorts here.

We bounce. That’s all there is to it.

I like SHAK, GG, AMCX.

As you probably know by now, I’m a big fan of Sherlock Holmes. My favorite teevee show of all-time was House, which was based off the Sherlock Holmes character. The new BBC version of Sherlock, starring Benedict Cumberbatch, was fantastic. And, despite what a few tolls had to say about Robert Downey Jr. playing the famous detective,  both movies acted out by the former drug addict were smashing successes.

Naturally, I prefer the second movie–because it stars his nemesis Moriarty. The ebb and flow between the two characters was great. Plus, we got to see the famed showdown at the end of the second movie. They did not disappoint. Bottom line, if you haven’t seen these movies and enjoy a good mystery, do yourselves a favor and rent both of them this weekend.

I’ll get you through this shit. I promise you. I always do.

For Exodus members, my top 10 holdings are in the blog section now. Also, don’t forget to secure your ticket to the iBC Conference. If you upgrade your membership to annual, you will be admitted for free.

Lastly, the bloggers here have been through this type of end of days action before. Now is the time to get perspectives and advice from those with experience, After Hours with Option Addict and 12631 are fantastic places to garner insight–much better than the muck on television and on Twitter.

Markets are setting up for a decisive move soon. My guess is to the upside, despite what we’re seeing here now. I am not a fan of shorting into holes or buying into 1,000 point rips. Mean reversion always comes through during the clutch. We’re real clutchy right now.

Stocks are being lit the fuck up. A full reversal of fortune is happening. This was somewhat predictable, being that NKE was the Dow points and breadth stood at a paltry 51% at the highs of the session.

This downslide is being led by biotech stocks, following news that money isn’t all that valuable for the industry anymore. Bernard Sanders, prospective President of the United Steaks, will transfer the profits from the biotechs into homeless shelters and hospices.

Seriously, though, the Fed Chair is seizing out in public, Russia is moving drones into Syria, Iran is shitting on American flags while accepting our peace offerings, and Obama is the Manchurian candidate– a Kenyan who snuck into the White House to fuck it.

THIS IS THE WORST FUCKING WEEK EVER, for biotech. Come look at the carnage, son.

Here’s big pharma

Data provided by Exodus.

In my experience, these types of drops are either immense buying opportunities or a prelude of hideous things to come. The banks endured this type of pin action in early 2008, before melting the fuck down in the latter part of the year.

We all know the biotech sector is overvalued. Why is that? It’s Fred Wilson’s fault. All of the tech IPO’s are incubated for years, jacked up by assholes, then dumped onto an unsuspecting public who provide liquidity for the VC devils. So we became keen to this game and opted to steer clear of the scams. We bought up the biotechs because the FDA offered us extreme upside, upside that wasn’t controlled by Mr. Wilson.

It was a high risk trade and it’s dead now. This is a bear market, 100%. Position for recession. Stocks like CLX, CL and PG might do okay. I think it’s abundantly clear that you should be selling short the rips now. The Fed put was swallowed by  the incompetent Janet Yellen– and mouth vomited– on stage, for the world to see.

https://youtu.be/lrcj_4_k0Vc?t=194

So Exodus had just flagged 3 consecutive OS signals in a row, something of an oddity since 2009. The results are in: 200+ point melt up, albeit a weak one.

The point is, the SPY is now up for all of those watermarks.

Second, I ran some scans to try to identify a trend, any trend for that matter. I could live with this market, as long as there is rhyme, reason and order to it.

Here’s what I found, delving into companies whose markets caps exceed $5 billion.

Software stocks are exhibiting strength. I recall an old deskmate of mine who used to buy software stocks and nothing else. When times were tough in the market, he was the only one making commissions. He’s walk around the joint like he fucking owned the place. His head got so big, he got himself fired for impersonating a sales manager and signing trade tickets for other reps. Brokers would line up to get him to sign their tickets. He’d sign anything, mainly because he gave zero fucks.

Here are some software names that have been outperforming.

INTU, CRM, MSCI, MSFT, RHT.

Soda pop

MNST, DPS, KO.

Business services

BR, CTAS, GPN, IRM, PYPL, VRSK.

Cleaning products

CHD, CLX

Discount Stores

COST, DG, DLTR, TGT

A shit load of utilities

Just buy XLU

Personal Products

PG, EL

Packaged and Processed Foods

FLO, GIS

Property and Casualty Insurance

ACE, ALL, CB, HIG

Restaurants

DRI, QSR, SBUX

Waste Management

RSG, SRCL

Listen to me: these are recessionary allocations. This doesn’t necessarily mean we are barreling towards recession. However, money managers are positioning for it.