CNBC: Financial Rigging Works!

It’s also fun to do, apparently.

Let’s examine the mechanism that helped propel Apple’s share price to new heights.

The company was and is generating a shit-tonne of free cash flow. Carl “fuck you, give me three seats on your board” Icahn demanding that Apple, incredulously, borrow money in order to buy back shares. Tim Apple acquiesces and a new era of financial engineering was born.

Fast forward 5 years and Apple isn’t making all that much more in FCF, but the shares are +125% — double the return of the SPY. How?

Well, because THEY FUCKING BORROWED $104 BILLION DOLLARS AND USED IT TO JIMMY RIG THEIR OWN FUCKING STOCK, reducing the amount of shares and artificially increasing earnings.

Is that a really good fucking idea?

You tell me? What if Samsung’s phones did not catch fire and instead poleaxed Tim Apple into a giga factory? Well, if that happened then business would sink, earning collapse, and then Apple would be out of $104 billion with nothing to show for it. This really is a shameful exhibition of journalism by CNBC, cherry picking Apple as a poster child for financial rigging, when in fact the exact opposite is true for 90% of companies doing share buybacks.

HOW MUCH DID LEHMAN WASTE ON BUYBACKS?

In present day, how much did GE waste buying back their own stock? Or how about old Valeant Pharma? Remember those fuckers? Companies desperate to get a rise in buybacks usually buy back shares in an attempt to assuage activist shareholders. Instead of using the FCF to build the business, they dick around with their brokers reducing shares and creating artificial EPS growth by this insidious fucking process.

My previous post was an outstanding example of good writing. It was quickly soiled by two physical goldFAGS, who will not be featured in this here blog. You fuckers collecting gold bricks and disastrous morons and I hope very soon you hang and strangled to death upon somebody’s gibbet.

I don’t care to give you explanation as to why I feel this way, only that I do.

With that said, I am going fucking crazy over here at House Fly with repairs and my mind is being racked by nonsense. I only ate a giant bowl of cocopuff cereal and a red bull (sugar free) for the day. In between trips to HD and working on home repairs, dealing with handymen, my life is in shambles. I exaggerate of course. But the fact still remains, my life is in shambles.

I do not have any insight for today. I took an L on yesterday’s overnighter and today’s overnighter is low conviction, lazy and sloppy, SAD! It’s just one of those days mate — a sojourn throughout the pits of hell, stepping on stones made from fire — doing great injury to myself of the mental sort. My eyes are twitching and my mind hurts with pain. I’m nearly there, the finish line. I can almost taste it.

When I say “gold is for men” I mean in the most gender neutral way possible. I realize some of you women out there, those without dicks and testicles, fashion yourselves to be men too; and that’s cool, bro. You grow beards and walk around slapping women on their asses for sport. So this post applies to you too. Also, many of you dick’d men prefer to be women, prancing around in dresses — doing catwalks and shit in the ghetto. This post is also for you — because you’re a man too. Everyone is a man, ultimately — because man is God. That’s not to say women cannot be God. You can. But first, you must fashion yourselves to be a man.

With that now said, I can tell you without equivocation, gold is, in fact, the single best asset class in the market today. If you happen upon someone who says otherwise, punch him in the nose. Get a good hard shot at it and try to bend the bridge until you hear a snap. After it snaps, you’ve broken the bone and will soon get to enjoy a stream of blood flowing from his face and his eyes might swell. I do not recommend doing this to women who are now men — because the non gender fluid justice system will punish you severely and your neighbors will think you’re a monster. If you hit a dick’d man, make sure he isn’t in a dress and is clad in burly clothing, preferably flannel shirts.

I’m getting off track here. Markets are weak, but gold is strong. Gold has been strong for a long time now and it’s still very undervalued. Do yourselves a favor and get long — hold into the idiotic rate cuts, and harvest your crops when they’re good and ripe.

Well, you live by the tweet, you die by it too. Here’s POTUS talking mad shit, extreme greasiness, over China being Chinese — always attempting to rip us off with their fucked up stuff and trickery ways. It’s also worth noting, I said from the beginning China would wait to see if Trump got reelected before etching a deal. After all, it makes sense — does it not?

China is doing very badly, worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. That is the problem with China, they just don’t come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years….

— Donald J. Trump (@realDonaldTrump) July 30, 2019

…to ripoff the USA, even bigger and better than ever before. The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now…or no deal at all. We have all the cards, our past leaders never got it!

— Donald J. Trump (@realDonaldTrump) July 30, 2019

Nasdaq futs are -62. This is not conciliatory jargon, the type of diplomacy one would expect in the 11th hour of a major trade agreement.

UPDATE: Chinese state media shill responds.

Whenever it's time to negotiate, the US side comes up with the trick of piling pressure. Really not a good habit. Americans need to change their negotiating style, show more sincerity, not just wield stick. The past one and half years have proved big stick is useless to China. https://t.co/T9xR9ryw4y

— Hu Xijin ??? (@HuXijin_GT) July 30, 2019

I read this shit and roll my eyes so hard — I feel like they’re going to fall out of my head. I used to give a shit about moral hazard and predict widespread panic and doom. But its been a fucking decade of this shit and I’m sick of waiting. On morons sit and wait for doom.

Now if this was a normal environment in a non-fucked up world, seeing share buybacks exceeds free cash flow would raise a tonne of fucking red flags. But not in this asshole environment. Guess what? We’re gonna lower rates again and produce a fresh crop of assholes doing buybacks. Fuck free cash flow. SAAS has proven all we need is growth.

U.S. companies are on pace to break another record for share repurchases in 2019, using a combination of cash and debt to push the total to close to $1 trillion.

For the first time since the financial crisis, companies have given back more to shareholders than they are making in cash net of capital expenditures and interest payments, or free cash flow, according to Goldman Sachs calculations.

The level of buybacks to free cash flow hit 104% for the 12 months ending in the first quarter of 2019, the first time that number has topped 100% during the economic recovery that started in 2009. In 2017, the level was 82%.

Goldman projects buybacks for S&P 500 companies to total $940 billion, a 13% increase over the previous year and a new high for a number that has continued to increase through much of the post-financial crisis period. Total buyback executions among all companies this year were up 26% through mid-July.

From a market perspective, investors have been moving to companies with more debt as they prepare for an expected interest rate cut later this week.

Burning cash, increasing debt

The buyback increase compares with a projected 8% gain in capital expenditures and 9% for research and development this year.

The rise in buybacks has had a twin effect on corporate balance sheets, both drawing down cash and increasing leverage. It also represents a more-of-the-same trend that has come despite the $1.5 trillion tax cut passed in late 2017. The record cut had spurred hopes that companies would eschew the buyback formula that has helped generate the longest bull market run in Wall Street history and instead lead to more investment in equipment and personnel.

“Although we expect growth in capex, R&D, and cash M&A, we expect companies will continue to increase cash return to shareholders as they have in recent years,” David Kostin, chief U.S. equity strategist at Goldman, said in a report for clients.

Over the past 12 months, nonfinancial companies have drained $272 billion in cash as part of the push to return still more money to shareholders. That represents a 15% decline and is the steepest drop since at least 1980, Kostin said.

At the same time, corporate leverage continues to rise as gross debt outstanding has climbed 8% over the past 12 months. That has come during a rough time for corporate profits, with S&P 500 earnings tracking for a 2.6% second-quarter decline, according to FactSet.

“Unless earnings growth accelerates materially, companies will likely continue to fund spending by drawing down cash balances and increasing leverage,” Kostin wrote.

For the record, Goldman’s David Kostin has a monkey’s brain and hasn’t been right since 1971.

If I told you all of the things that have been breaking in my house you’d think I was dramatizing it for homosexual flair. I am almost at the finish line, moving down south, and shit keeps breaking.

Hundred foot trees COLLAPSING unto large areas of fence and woodshed.

Dishwasher COLLAPSE.

Washer machine COLLAPSE.

Big Ass Benz COLLAPSE.

Just a sundry, a fucking sundry, if you will, of issues cropping up out of nowhere — the blue dust, out of the vapors, to fuck with me. This house is trying to kill me and I will not allow this to happen.

This issues, naturally spilled over and into Exodus today — whole fucking platform busted up and broke down. Giant error codes BOGGED out the platform and caused it to COLLAPSE. This is my life and it could be worse. I suppose it could be a lot better — such as summering in Newport over tall glasses of champagne and shrimp cocked tails. Instead, I find myself getting my hands muddied fixing a shattered irrigation like that COLLAPSED out of nowhere and gutters that dislocated from the side of my house — also COLLAPSED.

I made three trades today, one for a 2.5% loss, one for a 7.2% win and another for an overnight hold. Fortunately, my unbelievably spate of bad luck has not spilled over into the stock market. As a matter of fact, the more things break on me and go wrong in the physical world — the more I win with my picks. Well fuck me running sideways.

That is all. I have nothing more to say.

Goodbye.

Are you in?

MONGO leading to the downside, locked in a cage with extra pad-locks. How oversold are we? Is now a good time to step in?

Here is the Exodus OBOS oscillator on a YTD scale.

Meh. Nice downside pin action — off by 3.5% on an otherwise do nothing day. Today is a good day to buy, and tomorrow, and every fucking day for the rest of your lives.

You might hate the Fed, but imagine if the President was fucking with the Fed policy of lowering rates during the financial crisis, making things worse. Trump isn’t an economist and politicians are degenerate dirt bags. Now the Fed have also proven themselves to be worthless hacks — but I’m not sure how I feel about this sort of public denigration of Powell — a man who is charged with making sure the American banking system is running smoothly.

….countries that know how to play the game against the U.S. That’s actually why the E.U. was formed….and for China, until now, the U.S. has been “easy pickens.” The Fed has made all of the wrong moves. A small rate cut is not enough, but we will win anyway!

— Donald J. Trump (@realDonaldTrump) July 29, 2019

As usual, these comments have zero effect on markets. In fact, we’ve seen a slight bump.

Good morning lads.

So far, so good at House Fly. The repairmen are streaming in and out, fixing shit, taking my money with reckless abandon. I’m trying to focus on trading, but am too distracted. Lots of risk off action in tech and SAAS and other momentum oriented names. Perhaps there’s some room here for some downside pin action; but I wouldn’t bet on it too greatly.

The safe havens are now found in high divvy stocks, REITs and of course gold — which provides you with the added hedge against Zimbabwe styled inflation. We have a bull market going in gold and nothing can stop it, as long as the Fed is intent on lowering rates. Just yesterday, former Fed head Janet Yellen confirmed that the Fed should, in fact, lower rates — destroying any notion of independence at the malevolent institution. Maybe this is all a bargaining tool against China? Maybe not. One thing is for certain, lesser men sell gold and silver here.

Into this decline, you’d be wise to pick up some of your favorite SAAS stocks and a little gold.

Good day.

Anyone believe this headline?

Before the financial media attempts to re-write history and document the reasons for Fed cuts into record highs and a booming economy, let’s remind people that the only reason why this shit is happening is because Trump ordered it. Period, end of story.

Did Trump chimp out and demand Powell stop hiking rates and instead reverse course with the threat of firing him?

Absolutely.

Should your support of Trump for other issues cloud your judgement on this FUCKERY taking place in the market?

NO.

I realize most middle upper class investors out there are capitalists and many of you voted for Trump — but this is fucking bullshit. Intervention in markets by the executive branch is a terrible thing and will, at some point, lead to extreme fucking ruin.

That being said, I’d like to give you an update on House Fly — since we’re on the topic of ruin.

Giant fucking ash tree broke and snapped in the yard, collapsing on the woodshed and three parts of my fence — costing me one month in luxury car payments.

Also, the washer machine fucked up and spit out error codes yesterday. BROKEN, in need of repair.

Finally, the fucking dishwasher broke, snapped in half — shit no longer works and is in need of repair. Until then, everyone washes the dishes. Period.

Tomorrow, handyman and HVAC guy come to House Fly to fix numerous maladies, all costing me numerous luxury car payments.

This is life as I know it — stupid and fucking repetitive. I need the keys to Zion. I need to get out of this place.