It’s over again. Bad news all around us. Russian wars harangue us around every corner. Jamie gives the US economy a 66% chance of diving head first into a pool without water.
Jamie Dimon puts to odds of a US soft landing at 33%, mild recession at 33%, severe recession at 33%
I got caught and hooked today, had to sell several stocks for big losses and now I’m down 1.8%. I pared down the losers and placed a hedge on, but my day is all but in ruins as markets race lower, revoking any and all gains in tech and biotech areas of the market because fuck you.
I went to see my new house today — that I bought sight unseen at 25% over ask. It was like buying a book on Ebay, with the sole caveat of having to live in it instead of just reading it. Now that I got a chance to see what I bought, I realize I will all but have to gut the place and also the HVAC needs to be replaced — because it doesn’t work at all. ‘Tis is life at House Fly — where his investments flourish but everything else turns to dust.
I spent the afternoon discussing important things inside Stocklabs, such as Megan Fox being a man, the Indian caste system mandates all trannies but dragged to death behind a convoy of Rolls Royces, and viewing some messages from disturbed members with fetishes for Chobani yogurts and eating asses.
When I passed the series 7 exam in 1997, I recall sharing dreams with my good friend Pete, who came from a rich family in Great Neck NY, that we were going to be extraordinarily successful and we’d smoke cigars inside upscale NYC denizens and discuss our plans — where we’d live and how we’d live. Wall Street was ours for the taking and the clients we’d land would make Gordon Gecko look like a piker son of a bitch.
Nowawdays, 5 years removed from the money management business, I entertain MORONS telling me how to invest money the RIGHT WAY while being +6x since 2020 — hoping they’d UPGRADE TO ANNUAL and quit being such hard headed FUCKED FACES in my face all day.
I gained +38bps in my trading +6.2% in Quant for the session.
I stand before you in complete control — all knowing Capstone in the face of unprecedented perils. We have big moves underway in a series of commodity sectors and some of my favorite names are running higher. Before you utter the words “demand destruction” just shut the fuck up and acknowledge you don’t really know what you’re talking about.
Although early to position for tomorrow, these are the type of names I’d be focused on if I were you for tomorrow’s rip. We are overdue an extended rally — one that reels in many new money FOOLS into the fray to be eaten whole and fresh out from the water — heads first.
Having said that, I might toss on a hedge or two into the close because world wars tends to have a deleterious effect on equity. But it is my opinion, and the opinion of others, that the easy money on the downside has been achieved and the hard money is on the way up, best found in commodity related names.
I rotated out of my tech stocks and back into a heavy commodity trade, since that’s all the runners today. It’s possible this is a trap, like so many morning rotations or even ordinary lifts before noon. Nevertheless, I’m making a moderate stand that the commodity trade is back on. I say moderate because I’m 53% cash.
My quant, however, which was rebalanced yesterday is up nearly 5% for the session, due to a very heavy commodity allocation.
The narrative for commodities is a logical one, but the trade was crowded. Since it got crowded, many of the leaders are down 20-30%. Now is a good time to reenter, in my opinion, for the big push up into war.
AP is reporting Russian forces are now storming the steel plant in Mariupol. Last night there were reports to suggest Poland was readying to invade Western Ukraine in order to create a buffer between them and Russia. Oliver Stone, who interviewed Putin and did a full documentary on Ukraine post 2014 coup, thinks the US might create a false flag event to enter into hostilities with Russia.
Natural gas is higher by almost 7% now — because let’s face it — Russia is going to turn off the gas and the US is going to be the main supplier of LNG to Europe, which will deplete our reserves and create an environment where Americans no longer enjoys abundance of natural gas.
Famed hedge fund manager Paul Tudor Jones says he can’t think of a worse environment for stocks and bonds now.
And of course Germany and everyone else in the west is sending more weapons than ever into Ukraine, to kill Russians, because we are no longer scared of the bomb and in fact embrace it.
Yet futures are higher — because nothing goes straight down or up and even during the worst of time there are people willing to take a stab at a potential bottom.
There’s an old saying around these parts that applies “bet against The Fly and lose your house, wife and kids.” Those rules still apply, more than 15 years after starting this piece of shit website that hasn’t been updated since 2014. Nevertheless, my panache for trading is eternal and all wrongs righted once in front of a computer terminal.
Take today, as an example. I was inside Stocklabs Pelican Room talking shit, buying stocks — a real dip BUYOOR into what seemed like a bottomless pit. The lads inside there, trolls like Nothing and Index, laughed and derided me — as my losses doubled and my outlook became grim. But I held firm with the idea that I’d soon be vindicated and all of those shit-talkers would be castrated under my knife of vengeance by the close.
I stand before you with dicks in hand (pause) completely victorious — higher by 1.26% for the day with 53% cash. My algo driven account gained 5% and the new Quant was +33bps.
My outlook is for misery and pain. But in the short term, I’m looking for a bounce.
And yes, my account is at record motherfucking highs.
Everything is bedraggled. Not only that, we are all of a sudden stricken with apathy — slow dripping molasses onto soggy grass and the crowd has dispersed leaving all of their trash behind. We have pockets of strength in biotech, semis, and pot stocks. We have attempts in the commodity space to come back — but everything lacks vigor and/or violence. The only area of the market with any verve are the refiners. For now, we still have an economy, although the catamites in DC are trying to negate all of that and have you eat bugs. You know it and I know it we are heading for, racing towards, the very worst of times.
Rates are through the roof and the 30yr is now above 3%, up 10bps. The market was supposed to Jimmy higher, but is being battered down. Your safe havens in commodities are being FESTOONED all over Wall Street, blood and guts everywhere. This is what happens when stagflation happens. We tried to warn you, tell you it could happen, but you chose not to listen. Now you are absorbing the consequences of your actions — as your brokerage accounts STEAM to zero.
In all seriousness, markets should go higher today, but not commodities. They are marked for dead — because of “demand destruction” or the idea of that. The global engine of GDP is slowing. Ergo, so will the demand for commodities. If the Fed is successful, we might see unemployment go to 7%, stocks down another 20%, and commodities down 50-75%. This is what they are attempting to do. Prove me wrong.
I’m having a late start today, so no trades so far. I own some refiners and all cash, down 12bps. Will update this fucking blog when I get a better look.
Assessing the landscape of the market — the novice sees nothing but value — based upon a false perception from historically absurd valuations. The notion of a “new dichotomy” has been negated and we are quickly seeing things revert back to historical norms. Inside Stocklabs we track valuations and can tell you with absolute certainty — should the US economy head into recession there is substantial downside left in tech stocks.
The first line in the sand that comes to mind is the COVID 2020 lows, now 45% lower from present values.
On a more substantive analysis, here is a table of the Application Software industry and their price to sales ratios over time. I highlighted the years where the tech sector was under pressure for comparison.
At a median price to sales of 5x, where is the value? The last time the NASDAQ fell this much was April 2002 when valuations were 1.3x sales. Granted, we haven’t seen revenues revised lower yet and once they do get revised lower the dynamics of valuation will look even worse. At 5x, we are assuming that revenues will continue to grow at 20%+ like they have for the past decade. Should we begin to get DOWNWARD revisions, we will also begin to see SHARPLY lower share prices.
I do not tell you this to scare you, but only to alert you to the fact that we are not in value territory yet and things can get much worse before they get better. I am in the camp that stocks should bounce from present levels, as we are extremely oversold and the mood of the market is decidedly bearish — which usually lends to a mean reversion bounce. However, longer term, shares of CRM, SHOP and your other favorite go to tech stocks will get CUT IN HALF AGAIN, providing the recession deepens and the war worsens.
