MAY 18, 2012 DAY OF ICY TVIX’ING FACEDOOM
As melodramatic panic hits the waves, Facebook and all social media stocks topple into total despair. The indices crumble. Morose manic depression forces men to wallow in their boots, while widows and orphans cry from an unforeseen location. The entire world is ending, and everybody hates you.
It was not supposed to be this way.
$FB was the single greatest effort of investment banking in the last 5 years. It was to be a shining beacon of financial splendor, complete with all the trimmings. FB IPO DAY WAS SUPPOSED TO BE SOMETHING BEAUTIFUL.
Instead, we have this disgusting “Woodstock” before us; as dirty vagrants dance on their graves, and mourners go about the streets.
Where art thou! Cocaine lines and mustard seeds? WHY DID YOU FORSAKE US!?
“I just wanted hookers and blow…,” cries the vicenarian trader. He was but hired to his new job only two weeks ago. So sad. So sad. Now, he will be fired, and forced to eat his dog. And Christmas will be cancelled.
California has always sucked dick. But now they will have to own up to it.
Now, with all of Europe and Asia being swallowed by the deepest circles of Hell, there is no more hope.
My Predictions Of Facebook’s IPO Demise Were Vastly Overstated
This is just a post dedicated to me throwing in the towel on my prior prediction that market turbulence would force an IPO delay. The FB IPO has conquered this market, at least for the time being.
I do not brush dumb things I say under a carpet. I will be hanging my head in shame this afternoon.
All Eyes Pegged On June 19
The second mouse gets the cheese.
All that I warned you about is steadily coming to pass – it’s last year, all over again. Europe is cratering, and the result has been carnage to the euro. This in turn is propping the dollar, pushing it towards a breakout.
It has been a little over one year since I first came out, suggesting that cash was a strong position; coincidentally nailing the bottom of the channel, almost perfectly.
Manufacturing in Europe continues to crack and their economies (sans Germany) are folding left and right. The latest US numbers were horrible, as all benefits from the Capital Goods Tax Deduction and cyclical winter activity have now fully worn off, revealing a country (ironically) increasingly at the mercy of exports.
Commodities continue to be brutalized, as the fluidness provided by dollars overtakes any advantage of trying to hold oil, gas, or rocks. For the second time in two years, it looks like the crude oil markets will implode on themselves.
And, of course, debt and derivatives standing with notional values in the trillions of dollars must be serviced, putting a massive bid under the USD…
But despite appearing on the cusp of victory, once again, I am aware of my vulnerabilities.
I have been mercilessly taunting QE3 speculators, especially when the ever elusive “next round” failed to materialize, time after time after time. However, this is difficult to juggle, because I really do believe that there will be more quantitative easing, ultimately. My mocking QE3 hounds isn’t about QE3, so match as timing and responsive policy – I think this is a big Catch 22.
I don’t know if Bernanke will announce more loose policy when the FOMC meets on June 19-20 or not. I suppose that ultimately depends on how much damage those of you who were counting on free money sustain over the next several weeks.
But, whether or not QE3 is announced, I will be prepared for it.
CHRISTMAS HAS COME EARLY FOR OL’ CAIN
Well well well well well…
My targets for ERY are $16-17.
My targets for SCO are $48-50.
My targets for TVIX are $18-20.
I’ll be buying a round of SLV or AGQ (hat tip to Chivo) when spot silver gets below $27.
I’ll follow up with a purchase of real physical silver when the $EURUSD gets close to last year’s lows – around 1.26-1.27; somewhere in there.
Around the same time, I VOW ON ALL THAT IS HOLY AND SACRED TO LIGHTEN UP THIS GOD FORSAKEN SHORT OF ENERGY, WHICH OH SO NEARLY CLAIMED THE LAST OF MY SANITY.
Merry Maymass,
Cain Hammond Thaler
I’m Quietly Watching Cameco Corner The Uranium Market
Cameco announced yesterday that they are going through with plans to acquire Nukem Energy for $136 million, plus taking on Nukem’s outstanding debt of another $164 million – which is expected to be reduced by current cash flow before the deal closes towards the end of this year.
I’m still not sure what I make of this. But here are the basics.
Right now, there are two primary sources of uranium, if you are running a reactor. You can get it through the miners, or you can get it through old, decaying empires like Russia, which are decommissioning some of their nuclear warheads.
Places like Russia take the Highly Enriched Uranium (HEU), and mark it for use in reactors; I’m not sure if they physically do anything to the uranium to “de-weaponize” it, or if they just keep very close watch on where it goes. Nukem Energy brings together these parties and brokers sales.
Now, the uranium space has already been getting pretty excited, because Russia (which for obvious reasons has been the largest supplier of the ex-military grade fuel) is set to stop decommissioning warheads sometime soon. There was already a good expectation that companies like Cameco would see the fruits of that development as a key source of fuel goes offline, leaving more reactors than fuel to run them.
So I’m confused why Cameco is busy dishing out a few hundred million to acquire the brokerage that has been making revenue from deals that are about to decrease in volume substantially. This confuses me.
But on the flip side of that, Cameco is now increasingly in charge of uranium globally. If you’re looking for fuel, you’re probably doing business with them. They just recently broke into US markets. They are busy expanding their production targets by 70% by 2020. And now, they control one of the primary sources for acquiring uranium at market that doesn’t involve working with a miner.
What will happen from here? Will Cameco keep Nukem Energy up and running as the business is? Will they jack up spreads for brokering deals, helping push uranium prices higher? Or will they just scuttle the brokerage and force the system to deal with the inevitability of HEU becoming unavailable – but right now, months or years before anyone was planning?
The Resurgence Of All Cash Transactions
I want to point out to everyone a phenomenon I personally first noticed around the middle of 2011. A hat tip to you, if you’ve noticed it also.
It was probably the Fall, right around the time when I was getting my face clobbered by the energy-short-gone-wrong that I pulled into a gas station and realized, “holy shit, there are two prices listed on the sign for the same octane.”
And indeed, there were.
One of those prices was for cash, and one of those prices was for credit.
This is a fantastic experience, which is crowded out by the seeming innocuousness of the observation. In the age of credit and computerized transactions, the good, old fashioned ledger book and under the table trade is winning out.
And why shouldn’t it? Cash transactions are excellent, in their ability to afford the cashier certain “leeway” in interpreting just how, when, and under what conditions said transaction took place.
Did that gasoline get sold when the price was $3.99 a gallon, or $3.88? If both prices were witnessed between refilling of the tanks, who’s to say? Plus, those convenience fees that are allocated to the extenders of the credit, those nickels and dimes, are wiped out, buffering the salespersons bottom line.
I want everyone to recognize how important this is. The single greatest outcome from digitalized transactions was the transparency of auditing. With all cash transactions, auditing begins to become, not opaque, but certainly more translucent.
It’s no wonder that the FBI put out a warning not long ago on the “terrorist nature” of all cash spending. Cash transactions will hit local, state, and federal budgets, while taking huge sums of money into black markets and out of the controlled circulation of bank transactions and financial circles. It undermines economic policy from the Federal Reserve. It strengthens the dollar, while causing the potential to impair debtors and their delicately balanced loan maturities.
In that sense, all cash transactions are a key sign of economic degradation, like carrion birds marking a carcass.
It will be interesting to see whether this phenomenon continues for long, or if at some point incentives or underhanded government strong arming attempts to force these transactions back into electronic form.