Stocks Ramp into the Close; Investors Balls Out Ahead of Tomorrow’s Jobs Report (Warning: Rant Ahead)

For a minute there, maybe two, it looked as if stocks were heading lower. The Dow was off by more than 100. WTI was down 3.5% and the mood in the room was glum. Then, as if everyone was stricken with an epiphany all at once, stocks lifted and lifted some more. The prevailing wisdom is, and always has been, stocks will continue higher as long as central banks wish it so.

Gone are the days of business cycles and earnings. All that matters now is rigging and the cajoling of sentiment, across the globe, for the explicit purposes of realizing utopia–a society that is starkly divided amongst classes and where profit is paramount to all tenets, even life itself.

Oh, you’re just a low farmer, minding your business and growing food from the earth?

FUCK YOU: BUY OUR SEEDS.

Are you uncomfortable paying $2,000 per mo for your families health insurance? Too bad, profits must be had.

Eventually, most of you will become wards of the state, with the majority of property and wealth in the hands of an elite few. The indelible march towards tyranny begins and ends with the rigging of markets, which is at the epicenter of everything that’s wrong with society today.

Everyone makes such a big deal about the recent drop in gold. Meanwhile, the GLD is off by just 3% over the past two weeks.

In response to this tiny decline in gold, investors have pulled out their hair and jumped into the bathtub holding toasters plugged into the wall. Gold miners are off more than 13% over the past two weeks. Crazy.

Meanwhile, the price of crude really is crashing, down more than 11% over the past two weeks–if not more. The past two days has been dreadful, with barrels of oil down more than 6%. So, what has been the market reaction to these declines?

The drillers, which is the riskiest part of the oil chain, are down 9%. Independent producers are off only 4%.

It’s worth noting, the oil and gas sector is wrought with debilitating debt loads to the tune of $600 billion that is distressed or soon to be distressed, while the gold miners have good balance sheets and have already endured years of decline.

In summary, a 3% drop in gold has equated to a 13% drop in the underlying stocks, while an 11% drop in oil has resulted in a 4-9% drop in the underlying stocks. One of these correlations are fucking retarded.

I marvel at the behavior of humans and how group think is often a counter indicator. Isn’t it fucked up? What does it say about our species? Whenever we converge on an idea and elect it, the exact opposite occurs, sort of like what has happened with Obama.

It sure seemed like a good idea then. Now? Not so much.

BofA/Merrill is out with a report that discusses some of their research into sentiment and how an overly hated market like this one has led to gains in every instance on record.

“Historically, when our indicator has been this low or lower, total returns over the subsequent 12 months have been positive 100 percent of the time, with median 12-month returns of [more than] 27 percent,” they wrote. “While sentiment has improved significantly off of the 2012 bottom, today’s sentiment levels are well below last summer’s high of 54.0 and where they were at the market lows of March 2009.”

I’ll call bullshit on those numbers above. Being well versed in statistics, having invented Exodus, I can tell you that in order to get a median return of 27% over 12 months, the data set must be incredibly small, which renders it unreliable. Still, it makes for good cocktail conversation.

Forget about the infantile nature of this guy’s self absorption. He’s literally ruining the football season for his entire team. If he wanted to protest, he should’ve done it away from the team. But because he’s a selfish bastard and it’s all about him and his statements and what he believes in, he’s wearing pig cop socks today.

Didn’t they teach him as a kid, there’s no I in team?

The negative ISM numbers, at first cute and funny, have begun to take their toll on investors and stocks are in pullback mode.

The Dow is off more than 80 and WTI is down 2%.

Gold is bouncing after a 2 week slump, indicative of a possible dovish Fed coming out on the other end of an economy that is apparently contracting.

The last negative ISM number was in February of 2016, when the world was ending. Granted, March ended up being a surreal time to invest, all built upon a foundation of sand. The premise being, a bad economy equates to more central bank rigging and a potential for reflation. This, of course, hasn’t materialized, as WTI dives lower into the low $40s again.

Also, let’s not ignore the construction numbers that came out today, a true harbinger of doom.

It’s also worth pointing out that Donald Trump is now up by 1% in the latest Rasmussen poll. He is the biggest threat to the globalist oligarchy since Reagan. It’s not a secret that Wall Street prefers Hillary, as corrupt people are inherently corruptible. Plus, she’s the status quo and that’s good for people with wealth. A Trump presidency throws everything into a fucking blender and turns that fucker on high.

The August ISM manufacturer numbers were just what the Fed needed to avoid having to hike rates. Look at these numbers, they’re deliciously abysmal.

10:00 | ECONX
August ISM Manufacturing 49.4 vs 52.2 Briefing.com consensus; July 52.6

10:00 | ECONX
July Construction Spending M/M 0.0% vs +0.6% Briefing.com consensus

Construction numbers were off big too. What ever will we do?

Via Briefing.com

The key takeaway from the report is that it plants a negative seed for third quarter GDP growth prospects and also supports the notion held by many market participants that the Federal Reserve should refrain from raising the fed funds rate at this month’s FOMC meeting.

The August reading is the first reading below 50.0 since February 2016 and it was driven by a downturn in every component index, with the exception of new exports orders, which was unchanged at 52.5.

The key indexes of new orders (49.1 from 56.9), production (to 49.6 from 55.4), employment (to 48.3 from 49.4), and backlog of orders (to 45.5 from 48.0) were all below 50.0.

The Prices Index (to 53.0 from 55.0) remained above 50.0, but still reflected a deceleration in price increases versus July.
Of the 18 manufacturing industries covered by the report, only six reported an increase in new orders in August.

Isn’t convenient for these numbers to present themselves to us now? Ever since these shit throwing numbers came out, markets have firmed, even oil. I suppose, a really crappy economy equals more market rigging. Why not? Seems like moar fun.

WTI is off by another 1.5% this morning and dropping fast. There are desperate reports that Saudi Arabia is seeking to convince OPEC to freeze production, in order to boost the value of soon to come public Saudi Aramco. However, the Iranians aren’t onboard and generally tell the Sauds to fuck themselves.

I wouldn’t trade anything ahead of tomorrow’s jobs report. Keep an eye on over leveraged garbage stocks for a barometer of the oil sector: WLL, CLR, CHK, OAS.

The  communists in China are the worst casino operators ever. In 2014, the government cracked down hard on corruption and grifters, causing Macau gaming revenues to plunge by mid 30% range.

After years of horrible numbers, finally, Macau posted a positive growth number, which is causing the stocks of casinos to surge.

Macau Gaming Inspection and Coordination Bureau reported August gross gaming rev +1.1% YoY to 18.84 bln patacas ($2.36 bln) vs -35.5% in Aug 2015 and -4.5% last month. GGR is down 9.1% YTD. Gross gaming rev peaked in 2014 and fell 34.3% in 2015 after the Chinese govt cracked down on money laundering in Macau. Estimates call for a ~low double digit decline this year.

If in fact Macau gaming is back, then shares of WYNN, MPEL and others are going to skyrocket.

Here is the casino sector in Exodus and its returns over the past two years.

The companies with heavy exposure to Macau have been halved since then. Lots of potential upside.

In a fiery speech given in Arizona tonight, Trump reiterated his stance on immigration, which includes a wall that Mexico will pay for. More than that, Trump laid into the infirmed democratic candidate, Hillary Clinton, saying we’re going to enforce the laws of illegal immigrants who’ve evaded justice, just like Hillary Clinton has evaded justice.’

Pardon the fucking graphics on this video, for it was being recorded by an infantile mental asylum patient.

I must admit that I was surprised to learn that 90% of the people in the trending news department were liberally biased.  That’s almost cult-like numbers. Having never used Facebook for news or given a shit about what the Zuckerberg network had to say about the world, I can comfortably say that I would not miss this product if it were phased out.

From every article I’ve read about the news algos and curation, it’s 100% shit.

This former ‘curator’ confirms my suspicions.

Source: Digiday

Were trending topics “biased?”
I wouldn’t say that it was a systemic problem with biases per se, but there were things in that Gizmodo article that were accurate. Ninety percent of the team identified as liberal, including the copy editors, who essentially had the final approval on topics. If a source came up that may have been less credible to a liberal reviewer — like Breitbart or another publication like that — it would require more extensive secondary sourcing. However, if there was an article that came from a more liberal-slanted publication, it was essentially given less critique and was a more viable topic from the get-go.

Did anything change once the article came out?
Facebook actually put more checks in place to make sure that that wouldn’t happen. And it did kind of stop. They balanced it out in that those liberal publications came under more scrutiny. If there was a topic that could potentially be biased, they would require more eyeballs on it. They made changes to the algorithm itself, so less credible topics wouldn’t pop up into the feed. People paid a lot more attention. The writing style also got drier. Any headline with loaded adjectives, like ‘Hillary Clinton attacked for emails’ or something like that, they were more focused on changing the verbiage.

Was anything exaggerated?
There were things that were bullshit, like how they said we weren’t treated like other Facebook employees. That’s not true, we were treated like anybody else. We could go to the happy hours, participate in the events, people talked with us in the office. We weren’t tucked away in some corner. We got three free meals. But my biggest problem was that while all these perks were great, they pampered us into complacency.

What do you mean?
Most newsrooms have discussions about what’s going on. You don’t just sit on your computer and write with your headphones on all day. When we were on these topics, and I had a question or wanted to get an editor’s opinion, I always felt like I was bothering them. The push toward quotas and producing content didn’t allow for that. You never felt like you were able to voice any considerations. Like, for instance, there were problems with the tool’s tagging feature. There were pre-set keywords, but they were sometimes inaccurate and wrong, and there was nowhere for us to voice that these topics were insufficient.

Was this symptomatic of a bigger issue of communication problems between the trending team and Facebook’s broader culture?
It never seemed like anyone in the company ever actually understood what we did or understand how the topics were curated. There were times when another team was working with a client and they happened to be trending, and they would ask if we could add a video or something because the client expected that. They didn’t get that it would mean breaking that wall between editorial and business. We would sometimes end up acquiescing to their requests and adding that video, and I just felt like that broke journalism ethics.

Wait, sales could influence trending topics?
No. Sometimes we’d get a request saying, “Hey, our client did this and it isn’t trending, can we make it trend?” And the answer for that would be, no, because that’s not how the algorithm worked. You couldn’t just inject a topic after the Gizmodo article came out. In the past, we had the ability to inject news topics, but I didn’t see it happen with any sales requests. The requests we got from them were more like if a topic was already trending, and there was related media or articles, they would request that we add that. But I still felt like that was a break of journalism ethics.

Can an editorial function live within Facebook?
You would essentially have to have them be a completely independent team, where they had full control over the editorial process and didn’t have to answer to anybody at Facebook. It would have to function like a newsroom. Had that gap existed between editorial and the rest of the company, it would have been a more legitimate product. We never felt the support of Facebook behind the product. It was just a little tab, you couldn’t go anywhere, like facebook.com/trending, where you could read all these topics in a feed.

Did that make you feel disposable?
Yes, I expected that we were going to get laid off and had already started applying elsewhere about a month and a half ago. You know how it looks like now? With just a simplified topic and the number of people talking about it? We saw that before anybody else did, and a few of us put two and two together and figured that it was probably how it was going to look like; otherwise, they wouldn’t be testing it on Facebook employees.

So the purpose of the trending team was just to teach the algorithm how to eventually filter the news itself?
I would like to believe that, because that would mean that we actually served a purpose and did something good. But if you’ve used the tool in the last few days, you’d realize that the algorithm didn’t learn shit. The topics are just wrong — they have bad articles and insufficient sources. I think they are just going to get rid of the product altogether, because there is going to be backlash when people who do use the tool realize that the quality has gone down — unless there are severe algorithmic changes that improve the quality of the topics.