iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
16,227 Blog Posts

GOOD MORNING LADS: ARE YOU READY FOR STOCKS TO GIVE IT UP AGAIN?

Stocks head into Friday’s open with a strong tailwind behind it. If things remain as they are, it would be the first week in three that stocks outperformed both gold and bonds. Year to date, gains have been quarantined in mega cap sectors — leaving smaller, higher beta stocks, pissing in the wind.

Oh, you think I’m fucking with you?

Observe. Pay attention to this.

Stocks with market caps over $50b, 170 of them in all, have returned +9% for the year. The composite market caps is upwards of $21 trillion.

If invested in stock with market caps of $50b and below, gains shrink to a paltry 1%. The universe includes almost 3,900 stocks with a composite market cap of $16 trillion.

God forbid we decided to invest in stocks with market caps of $5b and lower, we’re be down for the year.

Having access to the Exodus platform, I am able to dial down to see where the issues are found. Small cap stocks have performed miserably for the year. So my point is this: if you’re not modeling to larger cap stocks in your stock picking routines, you’re playing yourself, more or less.

European stocks are moderately lower, by 0.55%. Gold is pressing gains of 0.74% and futures are flat.

Stocks performed admirably this week, particularly in the large cap sectors. I am obliged to execute trades today in a sundry of stocks, according to my model. I will review it this afternoon, hoping to not be disappointed again by an equity drawdown, which would prevent me from having some fun. Judging by the early pin action, it looks like risk off might prevail today.

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Greg Gianforte Crushes Opponent in Congressional Run-Off, In Spite of Body Slamming Reporter

The vapid taste of loss must get repetitive for Democrats in America. In spite of the scandals, the Russians, and John Podesta’s email box being the laughing stock of the entire world, they keep losing. The Republican candidate for Congress, Greg Gianforte, grabbed a reporter from The Guardian, Ben Jacobs, by his neck, body slammed him to the ground, and then pounded on him — Saul Rosenberging his glasses. Yet, on election night, despite the negative press, the good people from Montana voted in droves for Gianforte.

With 84% of precincts reporting, Gianforte had 172,743 votes — or 50.4% of the vote, compared to Quist who has 150,007 votes, 43.8% of the vote, according to Edison Research.

It’s embarrassing, really.

Being the rugged gentlemen that he is, Rep. Gianforte apologized tonight, just before he graciously accepted his win.

Here’s how the rural folk felt about the whole body-slamming ordeal.

Via CNN:

“We whole-heartedly support Greg. We love him,” said Karen Screnar, a Republican voter who had driven all the way from Helena to support Gianforte. Screnar said she and her husband have known Gianforte for the better part of a decade. After Gianforte was charged with misdemeanor assault, Screnar said she was only “more ready to support Greg.”

“We’ve watched how the press is one-sided. Excuse me, that’s how I feel. (They’re) making him their whipping boy so to speak through this campaign,” Screaner said. “There comes a point where, stop it.”

Her husband, Terry, chimed in that he believed Gianforte was “set up.”

The left argues that the GOP is an out of control train-wreck, being led down wayward paths by Trump-Hannity and now Gianforte. Drama aside, even if that was true, what’s more alarming is the fact that people are so sick of establishment politics, they’d rather vote for a man who punches reporters in the face, rather than cordially declining his questions.

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OIL HAS BEEN UTTERLY DESTROYED FOR MY BIRTHDAY; THE GODS HAVE SPOKEN

Out of all things, this is my favorite birthday present. WTI crude plunged by more than 5.7%, amidst tumult and turmoil. OPEC members agreed to continue their idiotic supply cuts through the first quarter of next year. This had a deleterious effect on the sick and perverted minds of traders, who were expecting everlasting cuts, rigged markets, perfidious men in nightgowns making them rich by starving out their own people.

“Let the oil flow and flow with vigor, along with it the blood”, a great unnamed source once told me.

Subsequently, oil and gas stocks hit rock bottom today, entirely fucked, entirely without respite. This is an industry without a purpose and it has been tossed out like red meat to a pack of starving wolves. Not before long, I expect this disease to spread and permeate every orifice of the market — even bitcoins, which, incidentally, underwent a most heinous reversal in fortune today.

On the plus side today was retail and airlines, a flawed and imprudent trade — one with a very short expiration date affixed.

As for me, my model demands discipline and I’ve been stuck with 80% of my assets in cash, 20% in GLD and TLT. If stocks outperformed risk off assets by tomorrow afternoon for the week that just passed, I will then reduce my TLT/GLD positions in half and allocate 70% of my assets into a diversified portfolio of stocks beholden to the tenets of fundamental analysis, curated by using technical factors inside Exodus that is destined to send all of you shit talkers in my comments section to an extended period of forlorn supplication.

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Markets Rip Higher Again, a Reminder That Exodus Rarely Loses

When I created the algorithms that many of you enjoy today, I did it with posterity in mind. This, on my 41st birthday, I know that when I was busy trading like an animal, in and out of stocks for profit and loss, I was very sensitive to the subtleties of the market. You lose that when you’re thinking macro, with longer time horizons. I was 32 when I made The PPT, which was the previous iteration of Exodus. The financial crisis was in full bloom and I wanted software that could automate my tedious process of finding high quality stocks that were technically strong.

All of the reading that I used to do, all of the charts that I used to peruse, was digitized with PPT. Frankly, with the grading system that I put in place, there wasn’t a reason in the world for me to rifle through charts or 8-ks anymore.

What I did not know at the time was the composite scores, the overall, would amount to a mean reversion tool that would change the lives of people using it. At first, I started to see patterns. Then these patterns were used to implement strategies. Back in 2011-2012, I turned $100k into a million on this blog, using the oversold signals only. It was one of the craziest runs of my life. I was hopped up on Monster Energy soda all the time, trading 3x ETFs on margin, even delving into weekly options to fulfill my degenerate needs.

Moving past that, I’m a bit older now and I want to create something new, which starts and ends with machine learning. I intend to build upon the successes of Exodus — exploring macro strategies that are systematic in nature, designed to help people invest their money without the help of advisors. I did it for 18 years. Now I want to help make that industry obsolete.

Last week, Exodus flagged oversold on its 12 month algorithm. We have 5 algos: 3, 6, 12, 36 and all time. They all serve a purpose, but I rely heavily on the 36mo, which is why I didn’t take action when the 12 flagged. Nevertheless, I know some of you did and the track record for this signal has been flawless over the previous 7 occasions.

The OS signal flagged last week, with the SPY at $235.

Off to see about a cup of coffee.

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There’s a ‘National Will’ For Chinese Stocks to Head Higher: Here Are the Winners

The Shanghai had its best trading session in 9 month’s last night, led high by blue chips. One analyst cited by Reuters, unnamed of course, said it was a matter of ‘national will’ that stocks went higher. An alternative theory would be the PBOC.

One stock analyst at a Chinese securities company said there was “national will” on Thursday for the market to go up.

The blue-chip CSI300 index .CSI300 rose 1.8 percent, its biggest gain since Aug. 15, and ended at 3,485.66 points, its highest close in more than a month.

The Shanghai Composite Index .SSEC advanced 1.4 percent to 3,107.83 points.

Chinese stocks also rose a touch on Wednesday after Moody’s clipped China’s credit rating by one notch, prompting official criticism.

The strongest performers in China’s markets on Thursday were banking .CSI300BI and real estate stocks .CSI300REI, whose indexes jumped 3.3 percent and 4.0 percent, respectively.

The SSE 50 .SSE50 – dubbed China’s “Nifty Fifty” index – leaped 2.7 percent to close at a near 17-month high.

Year to date, Chinese stocks listed here are higher by about 10%. I know this because years ago I quarantined all Chinese stocks in Exodus, after seeing they traded in a convoy and rarely in line with their respective industries. Here are the winners of 2017, thus far.

SORL +185%, MOMO +109%, HPJ +87%, CYOU +87%, WB +85%, BZUN +75%, EDU +73%, PME +70%, ATHM +70%, BITA +68%, etc.

The list is endless, really.

Here are the heavily shorted stocks.

By the way, and on a separate note, there isn’t an advantage to owning heavily shorted stocks over the long run. I’ve looked at the data and was even biased in favor of buying heavily shorted stocks heading into my research, but couldn’t find a quantifiable edge. You’re better off sticking to fundamentally sound quintiles of stocks, then further filtering by whatever technical factors that appeal to you.

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The Cryptocurrency Market Eclipses $90 Billion; Bitcoins Rages Higher Again

Bitcoins are higher by another 11% at the time of this post. That number can change dramatically shortly after this post. I think it’s important to note, in addition to Bitcoin, the entirety of the cryptocurrency market is entirely on fire — now worth more than $90b. Bitcoins alone is worth $44b and the all important Pepe Cash, based off RARE PEPE ART, is  now worth $18.5m.


Bitcoins, the Bubble Edition

While stocks look exciting pre-market, led by retail, they pale in comparison to the infectious nature of this bitcoin melt up. I am certain this blow off top move is luring a lot of normies into the asset class — which is bound to create weaker hands, in turn will only exacerbate the move lower — whenever it comes.

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RETAIL HAS RETURNED FROM THE DEAD; THE MALL’S REVENGE IS UNDERWAY

Just when you thought it was safe to declare the mall dead, it rises from its swampy grave, as you’re sitting there sipping a cup of earl grey tea (milk and orange honey) short retailers, and it eats your face off. You didn’t see it coming. You just got your fucking face chewed off, period.

Head zombie leading the assault is SHLD — soaring higher after a better than expected, horribly bad, quarter.

Reports Q1 (Apr) loss of $2.15 per share, excluding non-recurring items, $1.43 worse than the two analyst estimate of ($0.72); revenues fell 20.3% year/year to $4.3 bln vs the $4.05 bln two analyst estimate.

At Kmart, comparable store sales decreased 11.2% during the first quarter of 2017, primarily driven by declines in the grocery & household, pharmacy, apparel and home categories.
Sears Domestic comparable store sales decreased 12.4% during the quarter, primarily driven by decreases in the home appliances, apparel and lawn & garden categories.
Adjusted EBITDA was $(222) million in the first quarter of 2017, as compared to $(181) million in the prior year first quarter.

“In April 2017, we provided an update to our restructuring program, including increasing our annualized cost savings target to $1.25 billion. On May 15, 2017, the Company entered into an agreement to annuitize $515 million of pension liability with MLIC, under which MLIC will pay future pension benefit payments to approximately 51,000 retirees. In addition, the Company recently reached an agreement to extend the maturity of $400 million of our $500 million 2016 Secured Loan Facility from July 2017 to January 2018, with the option to further extend the loan until July 2018.”

Number 2: GES

Does anyone still wear these faggot jeans? I remember in my early 30s buying a pair for like $100 and feeling like I’ve been raped. The store is heavily gay and the clothes, more or less, really suck. That has been built into the share price, which has gone straight down, until now.

Reports Q1 (Apr) loss of $0.24 per share, $0.08 better than the Capital IQ Consensus of ($0.32); revenues rose 2.2% year/year to $458.6 mln vs the $449.22 mln Capital IQ Consensus.
Americas Retail revenues decreased 14.9% in U.S. dollars and 14.7% in constant currency. Retail comp sales including e-commerce decreased 15% in U.S. dollars and constant currency.

Europe revenues increased 23.3% in U.S. dollars and 29.1% in constant currency. Retail comp sales including e-commerce increased 5% in U.S. dollars and 11% in constant currency.

Asia revenues increased 16.9% in U.S. dollars and 15.5% in constant currency. Retail comp sales including e-commerce increased 4% in U.S. dollars and 2% in constant currency.

Americas Wholesale revenues increased 5.7% in U.S. dollars and 7.7% in constant currency.

Licensing revenues decreased 9.3% in U.S. dollars and constant currency.

Co issues downside guidance for Q2, sees EPS of $0.08-0.11 vs. $0.12 Capital IQ Consensus Estimate. Sees net revenue growth of 2-4%.

American Retail comps to be down Low double digit to high single digit; Net revenue down LDD to HSD

Europe revenue up mid-teens
Asia Revenue up mid to high teens
American Wholsesale down mid single digit.
Licensing revenue down mid single digit.
Co issues in-line guidance for FY18, sees EPS of $0.34-0.44 vs. $0.33 Capital IQ Consensus Estimate. Sees net revenue growth of 3.5-5.0%.
American Retail comps to be down Low double digit to high single digit; Net revenue down LDD to HSD
Europe revenue up high teens
Asia Revenue up mid to high teens
American Wholsesale up low single digit.
Licensing revenue down mid single digit.

Number 3: BBY

Interesting in buying a brand new flat screen teevee? I know I’m not. Or how about one of those stupid fans for $600 or an iRobot? We all need that shit, not to mention the wide variety of DVDs on display. The stock is crushing higher today, after reporting better than expected results.

Reports Q1 (Apr) earnings of $0.60 per share, excluding non-recurring items, $0.20 better than the Capital IQ Consensus of $0.40; revenues rose 1.0% year/year to $8.53 bln vs the $8.28 bln Capital IQ Consensus. Enterprise Comparable Sales Increased 1.6%. Domestic comparable sales % change — 1.4%.

Co issues in-line guidance for Q2, sees EPS of $0.57-0.62, excluding non-recurring items, vs. $0.59 Capital IQ Consensus Estimate. Q2 Guidance: Enterprise revenue in the range of $8.6 billion to $8.7 billion. Enterprise comparable sales change in the range of 1.5% to 2.5%. Domestic comparable sales change in the range of 1.5% to 2.5%.

FY18 Guidance: Enterprise revenue growth of approximately 2.5%. Enterprise non-GAAP operating income growth rate in the range of 3.5% to 8.5%, based on the recast FY17 non-GAAP operating income of $1.733 billion. On a 52-week basis, Enterprise non-GAAP operating income growth rate in the range of 1.5% to 5.5%, based on the recast FY17 non-GAAP operating income of $1.733 billion

Number 4: PVH

How’s that new Tommy Hilfiger sweater or Van-Heusen dress shirt? Oh, you stopped buying those brands in the 90’s? Surely, you still buy Calvin Klein jeans and underwear, no? Maybe no one buys their nonsense, but the stock is flying in the pre-market.

Reports Q1 (Apr) earnings of $1.65 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $1.60; revenues rose 3.7% year/year to $1.99 bln vs the $1.96 bln Capital IQ Consensus.

Co issues raised guidance for FY18, sees EPS of $7.40-7.50 from $7.30-7.40, excluding non-recurring items, vs. $7.43 Capital IQ Consensus Estimate; sees FY18 revs of +3% from +2% to ~$8.367 bln vs. $8.42 bln Capital IQ Consensus Estimate.

Revenue in 2017 is projected to increase approximately 3% (increase approximately 5% on a constant currency basis) as compared to 2016. Negatively impacting revenue in 2017 as compared to 2016 is a reduction in revenue due to the effects of the Mexico deconsolidation and the G-III license. Revenue for the Calvin Klein business is projected to increase approximately 6% (increase approximately 7% on a constant currency basis), which includes the negative impact of the Mexico deconsolidation.

Number 5: WSM

Jeff Macke sums up the Williams and Sonoma quarter. We all need a $5,000 espresso machine. Let’s be honest.

Reports Q1 (Apr) earnings of $0.51 per share, $0.02 better than the Capital IQ Consensus of $0.49; revenues rose 1.3% year/year to $1.11 bln vs the $1.11 bln Capital IQ Consensus.
Comparable brand revenue growth of 0.1%.

By brand:
Pottery Barn -1.4%
Williams Sonoma +3.2%
West Elm +6.0%
Pottery Barn Kids +5.7%
PBteen -14.3%

Co issues guidance for Q2, sees EPS of $0.55-0.61 vs. $0.60 Capital IQ Consensus Estimate; sees Q2 revs of $1.195-1.230 vs. $1.19 bln Capital IQ Consensus Estimate.

Co issues in-line guidance for FY18, sees EPS of $3.45-3.65 vs. $3.54 Capital IQ Consensus Estimate; sees FY18 revs of $5.165-5.265 vs. $5.2 bln Capital IQ Consensus Estimate.

“In the first quarter, we saw strong sequential improvement in the Pottery Barn brand, demonstrating the effectiveness of the brand initiatives that we are implementing. West Elm, our newer businesses (Rejuvenation and Mark and Graham), and our company-owned global operations delivered another quarter of double-digit growth, and Williams Sonoma started the year off strongly. We also continued to realize positive results from our supply chain initiatives, as we drive continuous improvements across the organization to deliver increased efficiencies and a superior customer experience.”

Number 6: ANF

Everyone likes their faggot-gear, yes? I’m always mesmerized by their live feed of Huntington Beach inside of their Hollister stores. Fascinating stuff. I do appreciate how discriminating they are against fat people, however. They don’t even make clothes for you — only for pretty thing people.

Reports Q1 (Apr) loss of $0.91 per share, excluding non-recurring items, $0.21 worse than the Capital IQ Consensus of ($0.70); revenues fell 3.6% year/year to $661.1 mln vs the $651.25 mln Capital IQ Consensus. Q1 comps -3%.

FY18 Guidance: Comparable sales to remain challenging in the second quarter, with trend improvement in the second half of the year. A gross margin rate down slightly to last year’s adjusted non-GAAP rate of 61.0%, with continued pressure in the second quarter. Net income attributable to noncontrolling interests of approximately $4 million.

“While we anticipate the second quarter environment to remain promotional, we expect results to improve further in the second half of the year, as we see returns from our strategic investments in marketing and omnichannel. The international roll-out of full omnichannel capabilities, coupled with insights from multiple customer touchpoints online and in-store, including our rapidly growing loyalty programs, means we are better equipped to anticipate our customers’ needs whenever, wherever and however they choose to engage with our brands. We continue to tightly manage costs and inventory, and focus on execution to position our business for sustainable growth.

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Beta Male Reporter from The Guardian, Ben Jacobs, Gets Body Slammed by Actual Male in Montana

Some might argue that I condone wanton acts of violence against all American media — especially against the numales at the Guardian. I haven’t given it much thought, but I must admit being pleased to here of this small story. It’s like a morsel of greatness buried amidst endless piles of refuse found in the news nowadays.

Ben Jacobs, beta male reporter from The Guardian, got body slammed today by man nearly twice his age. As a result, he’s in the hospital now, recovering from an ‘elbow injury.’ Without question, Mr. Jacobs will be dispatching a band of lawyers to fleece Gianforte for everything he’s worth, AND MORE, due to the assault.

The whole incident occurred when the pest refused to stop asking questions to the manly GOP candidate for congress, Mr. Gianforte. He didn’t listen to the man, so the man tossed him to the ground and broke his glasses — alpha dog style.


Mr. Gianforte, actual male

Frazzled and without the natural instinct to defend himself, Jacobs took to Twitter for help.

Here is the audio from this great event.

Mr. Gianforte denies being the aggressor, instead painting the flaccid Jacobs as the rabid alpha male.

God bless Mr. Gianforte.

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John McAfee’s New Company is Making a Killing in Bitcoins, But No One Gives a Damn

Crazy John McAfee from the jungles of Belize is running a tiny company, specializing in cyber-security and mining bitcoins.

Revenues for the last quarter eclipsed $300k, from nothing, based solely on mining activity.

The stock has been stuck in retard range, thanks to a pending SEC execution.

Nevetheless, McAfee says his little offal of a company will be profitable by year end — all thanks to bitcoins.

“We will definitely be profitable before the end of the year,” McAfee said in a phone interview Wednesday. “From bitcoin mining, we will get the experience and expertise to apply the blockchain to our security products.”

Their bitcoin mining operations are located deep in the mountains of Washington state, manned by two lads whose only task is to ensure the air conditioners are operating efficiently, in order to protect the mining machines from overheating.

There’s digital gold in them hills.

 

On Monday, the company said it got financing to acquire 1,000 mining computers from Bitmain Tech, a Chinese based firm. With these new computers, MGT will have a total of 1,300 mining for bitcoins. McAfee’s goal is to become the biggest bitcoin miner in the world.

With the new mining capacity, McAfee intends to generate 225 bitcoins per mo, up from the current 100.

The blockchain has taken on an absurd amount of ‘alternative currencies.’ One of the hot one’s now is based on RARE PEPE art, designated as PEPE CASH, backed by rare Pepe art. You can’t make this stuff up. McAfee insists we’re not in a crypto-bubble.

“No matter how much government and regulators may scream and complain, there will be a world standard alternative currency,” McAfee said. “Bitcoin appears to be the one… It cannot possibly be a bubble.”

Aside from suing Intel for the right’s to rename their company John McAfee Global Technologies, McAfee’s employees, 12 in total, are focused on cyber-security. They’ve developed a product dubbed ‘Sentinel’, which is an anti-hacking software, and they’re developing a ‘privacy phone’ that has a kill switch on it.

 

“I don’t know anyone more capable than me,” said McAfee. “I have never lost in terms of business and I certainly don’t intend to start now.”

 

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Barring a Large Drawdown, I’ll Be Allocating Into Stocks on Friday

I know this doesn’t appeal to the knuckle-draggers who roam these halls. You’re more interested in which stocks are going to barrel-roll higher tomorrow. I’ve moved past picking stocks, a fucked up and high octane lifestyle which has infuriated me and kept me on this fucked up rollercoaster for most of my adult life.

Finally, I am committed to creating systematic models, via Exodus, that will grant me license to cavort sea-side this summer, drinking properly frapped champagne while my account fixes itself through quantitative greatness. Some of the old school types, especially active managers, scoff at machine learning — casting aspersions on data science because, well, they’re idiots and their livelihood depends on investors falling for the Fred Flintstone method of trading.

I am going to create something greater, move the discussion away from XYZ to a more macro picture. For those interested in great picks from a great investor, check out Jeff in After Hours with Option Addict.

According to my current model, which starts by pitting market caps against one another vs bonds/gold, I will be placing 80-90% of my assets in stocks on Friday. Only two things can disrupt this:

1. Bonds/Gold melt higher, far outperforming stocks.
2. Stocks collapse.

If stocks are chasing alpha again, I’ll be allocating into a model that places emphasis on companies with great free cash flow. Long story short, the combination of fundamentals that I created had resulted in the best returns over the past year.

Seasonality is a detriment this time of year, so I wouldn’t be surprised to see stocks flag for the next few days — as bonds and gold catch up.

We’ll see.

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