TRADERS KILLED EN ROUTE TO NATIONAL FUNERAL

It’s over, fuckers. I want you to repeat after me and keep saying it until you believe it.

This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.

Got it?

High yield is an issue. With ~$3 trillion in BBB rated debt, about 10x what we had back in 2008, there is a distinct chance this crisis, once it gets going, will make 2008 look like a cake walk. No idea what a cake walk is — but it sounds easy. It’s important for you to understand, and listen to me very carefully, the infrastructure of the market and financial system HAS NOT IMPROVED since 2009. As a point in fact, at the lows of 2009, CALPers had 91% coverage on their pension. Today, post bull market, it’s at 68%.

If we get a persistent move lower, the already corrupt and bankrupted pension system will need to be bailed out. Corporate credit shrink and freeze up and anything high yield shattered to pieces. The negative feedback loop is the most important aspect of any market squall. Right now Quants are moving the market and I think it’s fair to say — they’re net sellers.

Trump had two magic bullets in his pistol: the Fed pause and China trade deal. Both have been shot and neutralized. Now the real danger is growth and lack thereof.

Heading into NATIONAL FUNERAL, I am 85% cash, 10% TZA.

In summary, we have ~$10 trillion in corporate debt that was borrowed during ZIRP period to do mergers and execute buybacks. Rates have gone up and now credit is tightening. HYG is more important than the SPY now.

Markets are closed tomorrow, so prepare for vapor lock pin action into the bell. Very thin and very furious. The market is angry, pissed the fuck off that Trump thinks he’s a ‘tariff man’ and only now coming to the conclusion that he, cannot, in fact, negotiate a deal with China. His support amongst fellow politicians is too weak and China knows it.

They’ll just wait it out for 2 years, buoy their economy using cash, and then annihilate us through increased shipments of fentanyl, cleverly disguised as those little silicon packets in sneaker boxes.

I sold all of my trading positions, sans CANG (too illiquid) and bought a 10% sized stake in TZA. I have high conviction that market is heading lower, for a variety of reasons.

We hit the top of the channel and failed. We’re now inside said channel, racing for new lows. Watch IWM closely.

The ark floats and I do indeed regret having sold out of TMF. This is what happens when you’re a trading monkey. You slip on banana peels left by others.

Rates are crashing lower because the perception is recession. All of the financial models are predicated upon PEs and now the E portion is uncertain, to perhaps heading lower. That means downside revisions and a total fresh look at where stocks belong to be priced.

How low can we go?

Look at this metric extracted from Exodus, the median PE ratios for the tech sector.

We’re at 21x now, based upon earnings that might weaken. Back in 2008, the median PE was 14x. Let’s not assume the worst, but it’s fair to say that stocks are fairly priced here and can fall in line with earnings revisions. If said revisions is 10%, so be it. Today, people are panicking and selling it all. Choose to be a better person.

My TZA position is a 10% holdings. My trading account has 85% cash and has been this way for a while. I’m rarely in cash for a long duration; but I had nothing to buy and the gains happened too suddenly for my trading style. I do not enjoy to buy into sharply lower tapes. My strength lies in buying into a repeatable trend. If you find yourself making mistakes, TRADE SMALLER or not at all.

We’re getting a lot of this today.

Jeffrey Gundlach, ceo of doubleline capital, says yield curve inversion on short end signaling that 'economy is poised to weaken' @Reuters

— Jennifer Ablan (@jennablan) December 4, 2018

What’s the drama?

Yield curve inversion. I discussed it earlier.

How do we fight this?

You cannot.

What about the Trump-China trade deal?

How about I answer your question with another series of questions?

Is Trump a lifetime President like Xi? Does America have $3.7 trillion in cash reserves like China? Is Trump’s trade war supported by fellow republicans and democrats? If someone else were President, do you think he/she would end the trade war? Will Trump get reelected? Will Trump get reelected if the economy and market is in shambles?

There’s your answer.

….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN

— Donald J. Trump (@realDonaldTrump) December 4, 2018

Because they believe the economy is about to roll over and into the shitter, they double upgraded WM today.

Via CNBC:

Garbage stocks may be the key to success in a sluggish economy, and Waste Management “should be a core holding in every portfolio,” according to Goldman Sachs.

The firm on Monday raised its rating on the trash giant two notches to outperform from underperform, a rare “double upgrade.”

“Given the age of the current business cycle and expectations for slowing economic growth, we believe now is the right time to own waste stocks,” analyst Brian Maguire wrote to clients. “The waste sector not only compounds earnings growth at a higher rate than the overall market, but it does so with much less volatility and draw-downs in its earnings.”

The $40 billion garbage and recycling company’s stock has outperformed the broader market this year and proved to be a reliable bet amid growing volatility. Shares are up 7.8 percent since January and have remained above their 200-day moving average — often considered a barometer of whether securities are in a healthy long-term trend — for the vast majority of the year.

The waste industry, courtesy of Exodus.

The 10yr is plunging in yield today to 2.96%, and got as low as 2.937%. For the first time since 2007, the 3 and 5 yr yields inverted; but the important yield spread to watch are the 2s and 10s.

One section of the U.S. Treasuries yield curve just inverted for the first time in more than a decade. This could be the first signal that the market is putting the Fed on notice that the end of its tightening cycle is approaching https://t.co/ABSSWJXqYz pic.twitter.com/Qi44iDFV6K

— Bloomberg (@business) December 3, 2018

Presently, the spread on the 2s and 10s are just 14bps.

Do you think this too is FAKE NEWS and should be ignored, instead casting aspersions on bears as idiots without any semblance of joy? DO SO AT YOUR OWN PERIL.

Yield curve inversions are incredibly predictive of economic activity.

And now this headline about Apple.

I’m trying very hard not to go down the rabbit hole of bearishness. I understand its persuasiveness within me and know it has served me poorly in the past. However, it also saved me from losing money in 2008. As a point in fact, I made 100% in 2008, during a time when the world burned. So what are we to do during this period of transition?

If you were my good friends or family, I’d strongly advise doing very little. Hold lots of cash and if you have to be invested, try to find a hedge — perhaps position in defensive names until we have clarity. One thing is for certain, if yield curves invert and we really do barrel into recession, you’ll rue the day you didn’t act upon this post and protect your accounts. We’ll be substantially lower from current levels.

Cash is king.

Inside Exodus, I built a tool to front run two bit money managers, by fucking with their Sharpe game. Yes, they brandish their Sharpe like it was an AK-47 and they shouldn’t be able to get away with it anymore.

Tech has been widely discarded the past two months, in favor of defensive sectors. I can dismiss this as foolish fuckery — but I won’t. Perhaps the market is trying to tell us something — such as “growth is slowing.”

Here I find the stocks with weak annual Sharpe scores, but strong weekly. These could possibly be tomorrow’s leaders. Don’t like it? Go fuck yourself.

My trading account is 80% cash and I am eager to buy another dip. By the way futures are tuning up tonight, I might find such an occasion in the immediate term.

I was busy this afternoon and only had the opportune to make 33 trades — booked a 12% gain in SOXL and positioned into a FUCKING weed stock that is bound to plunder me.

Position sizes make the difference between chill and frantic. If the chop makes you sick and you get nervous whilst reading news flow — you’re doing it wrong. The chances of you getting rich by trading or via “the next Apple” is infinitesimal.

If you’re looking for a guru to help turn $12k into $12 million in a year — you’re barking up the wrong tree. However, if you want to know how to grow and build wealth over a lifetime, stay tuned for details — FUCKERS.

News is crossing the wires that MO might bid for CRON. Out of all the pot companies, I’m surprised they’d go for that one. This, coming off news that NBEV would be acquired, makes two pot deals in a day. The best one of them all, in my opinion, is TLRY — so I stepped in and bought some.

The MO for CRON news.

Source: CNBC

Marlboro cigarette maker Altria is in early talks to acquire Canadian cannabis producer Cronos, as it seeks to diversify its business beyond traditional smokers, people familiar with the matter said on Monday.

Cronos has not agreed to any deal and there is no certainty it will do so, the sources said. The discussions between Cronos and Altria are expected to last for several weeks, one of the sources added.

The sources asked not to be identified because the matter is confidential. Altria did not immediately respond to a request for comment, while Cronos declined to comment.

Other than that, markets look like shit. The fade is a worst case scenario and if I was advising friends and family, I’d suggest doing nothing until the direction is clear.

I launched my 2019 Quantitative methodology today, which draws from two pools of stocks — one growth at a reasonable price and another defensive, slower growth ideas. Today, I drew 50/50 from both pools. I look forward to working and improving on this relatively passive method of investing all throughout 2019 — hopefully with some input.

I sold my SOXL position above $116, not so much because of the morning fade or because I was up ~12% — but because it’s a god damned triple upside ETF and I’d be stupid not to. I have ~85% in cash now and, to be honest, am in no rush to allocate now.

For Exodus members, please visit the blog section for new Quant rules.

Eat a bag of dicks, fuckers. Look at that.

We’re going to gloss over the fact that I’m 80% cash in my trading account and instead marvel at my pivot away from TVIX and into SOXL on Friday. We’re also going to keenly focus on my Quant account, which represents 75% of my money and will have made more than 3% the past month.

A new stratagem will be implemented today, one that is mindful of downside hazards and positions my person for extreme success.

Now is the time to congratulate me. Do not bother doing so later on, for I will not accept it.