Another Staged Crisis

Okay, I’ve been thinking about the morbid absurdity that is Greece and have concluded this whole drama is staged, conducted by the clever German and French bureaucrats. Think about it. They cannot save Greece and Greece needs to get the fuck out of the EZ, else there will be a popular uprising in Athens. So, they showed a “best efforts” attempt to “save” Greece, but really told Papandreou to fuck off. Instead of kicking Greece out of the EU, the clever political hacks will make it look democratic via popular referendum vote AGAINST the EFSF by the Greek people.

The EFSF is very much real. However, it will be used to ring fence Italy and Spain, before their yields blow out.

The most likely scenario is as follows:

The markets trade in a volatile range to reflect the uncertainty of the Greek vote, which is ridiculous because we all know the outcome. When Greece opts out of the EU on 12/4 via failed referendum and files for bankruptcy, markets will SOAR–just in time for X-mas.

Why?

Because, believe it or not, the market wants Greece the fuck out of the EU. The haircuts will be severe, upwards of 70%. However, this will coincide with the official denigration of the euro via quantitative easing. The EU will print money and paper over everything.

In summary, the Germans and the French bought themselves time by pretending to bail out Greece. Markets stopped plunging and they soared, until recently. As we speak they are planning for the Greek bankruptcy and how to paper over the losses.

I don’t believe, not even for a second, the Greek Prime Minister sought out his conscience via unnecessary and unwarranted plebiscite– after so many months of drama. He wouldn’t do that to the French and German leaders, who put their cocks on the line (Merkel included)–no fucking way.

In short, they are still in control and will surprise everyone with their next big bazooka. My plan is to remain long VXX because volatility will reign supreme. Also, I will continue to buy silver and gold miners until they make up 35% of assets. Right now, they stand at 20%.

I am at my limit, with just 10% left in cash. I’ve had my fill with the long side, heavily invested in EXK, AG, CIEN, NFLX, RENN and WNR–just to name a few. On the short end, I am in VXX and short EXH. Based upon the irrefutable laws of mathematics, the market is rising today.

In this world, there are certain axioms that hold true. The PPT is one of them.

For those of you who doubt my pimp-hand, I intend to smack you with it. On the beard of Benjamin Bernanke, we shall have a rally, AND MORE, then scurry down the wormhole to enjoy the horrors of another great depression.

I don’t mean to sully you by calling you names and/or speaking to you with an overbearing condescending tone. But you must understand, I am very busy preparing for elaborate celebratory engagements, as iBankCoin turns 4 on November 12th. It’s been quite a ride since I’ve started this campaign, transforming iBC from a bullshit five finger website– into a fucking fist. Over the years, iBankCoin has undergone many transformations and bloggers have come and gone. But what we have done recently, adding the Blogger Network and ramping up our Financial News arm will elevate this site to levels that only God himself can see–even if there isn’t such an absurd thing.

In summary, I am very long here, but holding onto legacy hedges “just in case.” I am not bullish or bearish, but advantageous.

Off to see about some gorilla with cocaine leaves in his mouth banging on my front door.

We are oversold. I cannot eschew a risk off position following a two day 600 point decline. I will milk the upside, then step aside. However, it’s worth noting, Italian and Spanish yields are moving higher. And, surprisingly, both French and German yields are spiking today.

But, let’s be clear, US yields are spiking too. So, I think it’s fair to say the rise in German, French and US yields is simply a consequence of “risk on” in equity markets.

The Greek situation is a nightmare. What the EZ needs to do is ring fence Italy and Spain. If they can do that, while tossing Greece into the Mediterranean, the sovereign debt crisis will subside. These debt laden governments cannot function if the cost of capital keeps rising. Italian 10 yr yields need to be south of 6% soon, else investors are going to freak the fuck out and equity markets will crash.

One way or another, policy makers will inflate. They’ve decided to extend and pretend a long time ago. The main beneficiary of rapidly depreciating fiat currencies is gold/silver. For a long time, I’ve resisted the notion that gold/silver was a safe haven because “I can’t buy anything with gold.” Platitudes gets you nowhere. This is about preservation of capital and asset allocation. If the belief is Euros and Dollars aren’t safe, people with big money will need to transfer to hard assets.

There are several obvious choices: art and collectables, real estate, wine, stocks or gold/silver. The problem with stocks is they are tied to economic output. Art and other collectibles are great, but illiquid. Suffice to say, gold and silver is where the money will flow, indefinitely.

Top picks: EXK, AG, RENN

Do you see that asshat on the left? His name is Dick B. Handler and he is the CEO of Jefferies, ticker JEF. Forget about the other caveman in the picture with him for a moment and appreciate the lunacy of his name. Fuck his parents. As a rule, all banks run by men named “Dick” trade to zero or get bailed out. JEF, an old Guy Adami favorite, said they have limited exposure to PIGS sovereign debt. Well, the market wishes to put those words to the ultimate test, via taking the stock out and shooting it.

When the shit hits the fan, firms like JEF will be cannon fodder for the large banks. If the snowball gets rolling, I want to short custodians again, like BK, TROW and asset management asshats LM.

People want no part of this market. Asset managers will lose assets, by hook or crook.

Speaking of crook, the former Governor of New Jersey, big democrat hot shot Jon Corzine, was dipping into retail accounts to fund his trading desk. This a big no-no and he should go straight to jail for it. Jon stepped into MF and levered up the balance sheets 40:1 to buy Portuguese debt at $94, only to see his whole institution blow up. Desperate to stay in the game, the criminals at MF dipped into client accounts and blew $100 maybe $200 million to smithereens. People who cleared via MF cannot trade and are now enjoying the luxuries of escrow. They only get to lose coin, as commodities get smacked around.

I blew this trade. I had 10% of assets in TLT and kicked it out last week. Shame on my house.Furthermore, I had 15% of assets in VXX and sold half into panic. The only reason why I kept 50% of VXX and all of my EXH short is because of Italian 10 yr yields. They weren’t dipping, as the market firmed. Due to appreciation, my short exposure is now 15% of assets and I am within 3% of my basis on VXX, up from a -26% hole.

Fuck me running sideways with a turnip.

For the day, I lost just 1.5%, thanks in part to EXK’s late day surge. I added to AG too and kicked out ERY. I do not want much short exposure going into clam-day. Ben has a certain swagger about him that puts fear into the hearts of every bearshitter. It’s a low probability trade betting against him now.

Holy shit I am conflicted between good and evil. On one hand, I want to load up on TVIX and launch scud missiles heading towards the stock exchange, just to see black smoke emanate from Wall. On the other, the contrarian in me, amongst SHOMP, says this is some bubble gum bullshit, nothing to see here but the wind rustling a few leaves.

Here’s what I do know, for a fact: uncertainty is back in vogue and the cocaine addled gorilla with a naked ass hanging out of the limousine is dead. All we have to trade on now is news headlines, which are controlled by complete imbeciles.

Fuck this shit, I am not selling a single share of stock, despite my belief that it’s all falling down. “The Fly” will dine with dignity amongst the rubble.

As I write this news broke that Greece was just kidding, ROFLMAOLUZ! They aren’t really going to call for a referendum vote on the bailout. Instead, they’ve decided to sodomize the Germans for their treasury. Fuck Greece and feta cheese.

Everything is ass-backwards. Generally speaking, I spit on all of you readers who claim market dominance. Fuck, if I can’t get a handle on this shit, none of you ball-shiners are nailing it. None of you.

You know what I’m gonna do? I’m gonna buy millions of dollars worth of silver stocks and prepare to kill werewolves. These government hacks don’t give a shit. Nationalism is dead; therefore, they will extend and pretend via funny money.

Bottom line: gold and silver trade higher.

Policy makers are adamant about creating artificial inflation in order to hedge the real deflation. We have seen their insanity first hand for over three years. Just because Greece is on the verge of collapse doesn’t mean the dollar will remain strong forever. Keep in mind, there is a pecking order to these things and, eventually, US debt will be called into question, just like Italy.

The reoccurring theme that is worth noting is strength in precious metals. The stocks get crushed and come back to hit new highs, over and over again. There is no reason to believe the gold and silver trade is dead, just because they are weak today.

Having said that, I added to my EXK position this morning and bought some ERY. I realize my ERY buy is sort of after the fact. But it is being used as a hedge because I am retarded long a variety of idiot stocks.

In summary, the theme going forward is to buy precious metals whenever my urinal shadows whistle and hedge that with long volatility trades. Additionally, I will be trading in and out of stocks based upon The PPT OS/OB signals, as always. And, should 321 crack spreads firm, I will buy refiners on dips, but not here.

Italian 10 yr bonds are north of 6.3% and Spanish 10 yr yields are north of 5.6%. European banks are down 10%+ across the board. And here I am fighting fucking werewolves, long silver like a fucking paradiddle. I sold my TLT about 8 points cheaper and half of my VXX 20% ago. I am, without a doubt, the angriest man on Earth today. How fucking retarded is this perpetual Greek tragedy? It’s the gift that keeps giving.

In case you are unaware, the Greek government is on the verge of collapse. They are questioning whether to accept the bailout or not and as a result the leader of that ass-fucking nation might resign. This is the worst case scenario for Greece and the EU because it will lead to an unorganized collapse of the Greek economy. They are heading for decades of national poverty.

The MF Global collapse resonates with people because of contagion. They collapsed because they were levered 40:1 on Euro-trash sovereign debt. Now we all want to know, who is next? The result will be a rout in any and all financials. Moreover, the deflation trade is now the only trade that makes sense. Remember, if Italy goes, it brings the fucking world down with it. If Greece is the ass of Europe, Italy is the cock. Pardon the grotesque imagery so early in the morning; but Italy will be fucking people shortly.

How to play it?

Well, go raise cash and get short exposure ASAP, even if it means being wrong. The reason why you short here, at these oversold levels, is because of the possibility of total and absolute collapse. Should that occur, you will be beaten like a baby seal and your skin will be used to manufacture Chinese organic tents.

UPDATE: As discussed here last week, institutions are selling low quality sovereign bonds because of the voluntary 50% Greek haircut, which disallowed CDS buyers to cash in. Think about it: they bought CDS to hedge their bond exposure and and now find themselves fully exposed to a 50% Greek haircut. Is that fair? As a result, Italy and Spain gets sold.

[youtube:http://www.youtube.com/watch?v=rAOJJ15hHhk&feature=youtube_gdata_player 603 500]

I am about to go out for a little trick or treating with the kids, so pardon the brevity of this post.

The end of day sell off is indicative of hedge funds teetering on the brink of liquidation. There will be a tug and pull between underperforming mutual fund managers and hedge fund managers vying to stay in business via locking in profits.

I got suckered out of my TLT position at the range lows. I’ve said it numerous times, 2011 has been a very tricky tape for me and my paltry 16% gains reflect that. Nevertheless, the year is not over and there is plenty of coin to be made.

At the close of trade, I was heavily weighted in EXK, RENN, NFLX on the long side and short EXH and VXX on the short side for a grand total loss of about 0.7%.

Bank stocks are dropping again, as the ghosts of Jimmy Cayne and Dick Fuld haunt the minds of perverted speculators. Just a short while ago, banks were deemed to be “uninvestable.” Now they are all the rage at metrosexual NYC house parties.

When it comes to the banks, all you need to monitor are the shares of MS. They are at the epicenter of all that is wrong with society. When it comes to white shoe firms on Wall Street, no one holds a candle to Goldman. In the event something BIG occurs on Wall Street, you will see it first in the retarded second fiddle shares of MS.

Ahead of the GRPN ipo, shares of GSVC are holding firm. Look at the volume of GSVC and ask yourself, “do the unwashed know about this company?” Without a doubt, the answer is no.

With the dollar and treasuries spiking and commodities getting plugged, I am holding off on any new buys, aside from degenerate Chinese accounting dice-rolls.

Additionally, I still have about 10% downside exposure via VXX and short EXH. I will close out these positions if The PPT flags OVERSOLD.

Parting advice: stay the fuck out of those zombie banks. They’ll eat your brains out and send you packing to Zucotti park.