Prediction Of The Day: Facebook IPO Will Be Cancelled

If we keep cratering into weakness, the much anticipated 2012 Facebook IPO, and Zuckerberg’s status as a billionaire, will be in jeopardy. This is the last thing I think any of the banks wanted, as a soft market makes for a horrible public offering.

How many groups were counting on the FB IPO to set their revenues for 2012? Well, I’d guess we’re about to find out.

Zuckerberg has already said he won’t be attending a roadshow today. More to follow soon.

The most savory, satisfying taste of vengeance is in my mouth, as the Erinyes circle overhead, preparing to exact my Fury.

The pause in this campaign is over. My temporary setbacks have been dealt with. Now I will regain what is rightfully mine, by force whilst comfortable decorated in my finest war tent.

Those of you who clamored to by oil (helping to give the banks bids to sell their stock to, I would add) are now like little piles of straw; dry tinder for my spreading fire. You will begin to feel the strain as my war machine marches over your backside.

You are soaked in your precious oil, and I am over here playing with matches.

Ha, it always does my heart good to watch these vermin get entrapped by flighty visions of loose monetary policy tied to the yesteryears of 2009-2010, only to have Bernanke and Draghi flick the ashes of cigars onto their heads, transforming them into financial infernos.

I should feel the need to remind you that we are just two months out now from a most spectacular 2012 ONE YEAR REUNION OF QE SPECULATORS AND COLD, MERCILESS FATE party.

Get your confetti, mix it diligently with copper dust and a light sprinkling of gasoline and gunpowder, while using your bare hands, standing on a shag carpet – because it’s going to be an explosive event of ineptitude coming to full fruition.

So far, oil has bounced reliably off the $102 mark, based on some lunatic’s theory that the rest of the free world gives a fuck about the budgets of Russia or Saudi Arabia.

I’m not getting my hopes up that this sell off will be “the one”. I’ve witnessed the rebound too many times to dare try for such a call. But it’s coming. The 9th floor will not be denied for much longer…

Where did this “election-years-are-always-bountiful” nonsense get started? I’ve seen the analyses that show outperformance during election years, but how does that translate to Bernanke making it rain dollar-dollar bills?

If anything, I’d say markets outperform in election years because the Executive Branch has an incentive to reign in the extremists and curb check their agencies.

Look at the EPA. Some twat who also happens to be the regulator of Texas gets caught making like a nutbag, trying to argue that the best way to protect the environment is to give out the Brazen Bull treatment at random to energy companies – BAM! his ass gets fired less than a week later.

You think that kind of vigilant self-governance would be present otherwise? Hah! That guy would have got invited to the White House for steak dinners if this story came out off an election cycle.

Instead, he watches as his career is set on fire right in front of his eyes. It’s entertaining, because he seems like a real piece of shit, but I don’t translate that to anything other than what it is.

Election years are impossible for politicians to make dumb in. That’s why they’re so profitable. Once every four years progress is attainable, especially right now in this jobless recovery, because every project that can be imagined is getting green lighted. But, even without all the pipelines and approvals coming from agencies, just having them out of the way is useful. They can’t afford a scandal, and the rest of us are glad to be rid of them.

But don’t go thinking that translates to a guarantee of panacea. Why would Bernanke care if Obama gets elected or not? Would he gain something from it?

You are assuming, among other things, that:
1) The next administration would somehow inhibit Bernanke’s control of policy
2) An Obama administration would be more beneficial to Bernanke’s policy
3) Loose money will foster a more positive environment for politicians
3) Bernanke even wants to print more

Why does Bernanke care if a Republican becomes president? His term isn’t even up until 2014, and there is no established practice of removing him from office. Moreover, Mitt Romney is not exactly a gold bug, and unless Bernanke starts ushering in Weimar Republicesque hyperinflation, there’s no reason to think that Mitt Romney will do anything to affect Bernanke at all.

Bernanke’s biggest critics have been coming from the House of Representatives. The House has been such a vocal opponent, Bernanke has even gone to the unprecedented lengths to send emissaries to the House to try and win support. The House is where Bernanke’s problems rest, and the House’s demographics are unlikely to dramatically change this election. If you believe printing money is good for incumbents, how exactly does printing help Bernanke get rid of his biggest adversaries?

Besides, Bernanke has been harping repeatedly on the need for government to get its affairs in order. He fears more than anyone what would happen if demand for treasuries was impaired; the man is using treasuries to try and stabilize the economy, for Christ’s sake! What happens if they become relatively illiquid next to today’s standards?

How does Obama winning reelection aid that end? The US Government would still be check mated, and any progress on balancing the budget would still be virtually impossible. An Obama victory does not somehow favor the likelihood of more stimulus or reform getting through the chambers, anymore than a Romney victory would. Bernanke would have to somehow return the house to democratic control, while also orchestrating a supermajority in the Senate. That would get him stimulus. It would also crack any faith in the US budget, as a Democratic supermajority would unquestionably spend like mad. Or he could try for the opposite, running for a Republican supermajority. That *might get him a balanced budget. But both ends are unlikely to play out well, and he doesn’t have that fine level of control.

There is no reason Bernanke should care who is President of the United States.

And how can you be so sure that cheap money is even in the best interest of Obama/Democrats/Republicans/Independents/Kittens…etc? Gas prices are near $4 a gallon as a national average. Do you think the price of goods and services somehow just get a pass in elections? Like printing money will somehow overcome the fact that it costs >$50 to fill up a midsized sedan, rather than make things worse?

My point is, the advantage of election years is political submission, not implicit guarantees of inflation. The argument that the Fed will wipe the ass of markets in an election year is a cop out. Why would you think any of the candidates even wants inflation right now? Our employment issue “looks” better than it did. I daresay, most politicians would like to see gasoline prices plummet a good 25% from here to help things along.

In fact, I know they would, because I’ve been paying attention to the calls for more regulation of “those damn oil speculators”. I think Obama would be as furious as any Republican if Bernanke started QE3, because it would probably spark a gas crisis.

And then Bernanke would have every politician in American calling for his head, not just some House Republicans.

Take a look at the futures curve of natural gas, and then tell me;

tell me, how exactly you think you’re going to “nail” this bottom, Bob Pisani style;

go on…I’m waiting.

If you’ll notice that futures contracts for delivery of natural gas are 50% higher just two months out, I would tell you you’ve earned a cookie. If you would say that they’re more than double about three years out, I’d actually consider shipping one to you.

This is obviously a storage issue. There is obviously not enough storage space to hold all the gas they’re pumping out of the ground.

So explain to me how you’re loading up on all that cheap GAS and are going to double or triple your money from the $2 spot price.

You want to know who’s going to “nail” the natural gas trade? Industry insiders. Their SEC handlers. And US Senators.

People who work for one of the companies that are rushing to expand storage capacity and have a pretty good idea, within a two month time frame, of when that capacity is going to come online, will be able to load up on natty, maybe at $0.

The rest of us are not “nailing” anything. If you buy a 1 month gas future, tell me;

TELL ME!

Where the fuck do you plan on putting the gas?

The problem with markets – all markets – right now is an issue of benchmarking.

Thanks to Central Bank shindiggery™ all basic risk measures have been and will continue to be thrown off. Case in point; US treasuries.

Now, on an annualized “blah blah” return compared to stock “dewdiggory”, well stocks are looking pretty cheap right now, I will tell you what!

And those commodities; why gold’s “shimsham” ratio is set to send that metal running at least four and fish fathoms past their 2001 “cerflunket”.

…

I understand, you think I’m crazy. And I am, sincerely. But please know the fact that such metrics are absolutely meaningless, because the things that define them are being distorted.

Now, sure, stocks are real cheap compared to bonds, particularly that golden standard the US Treasury. But don’t confuse that with thinking stocks are cheap. I expect having your hand lopped off beats having wolverines devouring your entire arm, but fuck me if you would choose either of those willfully.

That’s the market right now; you can pick to have your eyes eaten out by rabid badgers, or your intestines perforated by javelins. How is that a choice?

Globally, we continue to see demand getting crushed, from everything from energy to raw goods, with inventory and basic replacement stepping in now and again to force demand. Sales by and large have continued to fall, and people are getting all hyped up on “better than expected” earnings.

Great. Awesome. Except that the contraction hasn’t finished yet. Demand is still falling, so your forward guidance is still dropping. Dropping less than expected, whatever that means, is still dropping. Corporate balance sheets are largely offsetting this by deep cuts in employment, and you can’t do that forever.

And meanwhile, you’re adding in to equity near all-time highs. Why?

Well because the other option is to add into bonds of sovereign entities run by deranged idiots that are levered 100% to their annual gross domestic product. And that means either subjecting yourself to near imminent defaults of less than 2 years away, or risking slightly less imminent defaults of 2-5 years away.

Oh, or you can load up on commodities – like oil; which has experienced a 20+ million inventory build in less than a month, largely from plummeting demand…the same demand that is affecting corporate forward guidance.

So, your investment options seem to consist of buying shrinking businesses, unneeded commodities, or investing in over levered, incompetently run governments, all for record high risk premiums naturally.

Oh, or you could keep in cash. Which will all but definitely be devalued from here on as the aforementioned problems continue to manifest themselves.

Now, some of us are choosing to chase returns in very specialized cases. We are destined to see bipolar mood swings from cash, commodities, equities, bonds,…each will be temporarily crowned as the “golden safety play” OVER AND OVER AGAIN. And if you’re patient, there will continue to be the means to make boat loads of soon-to-be-worthless cotton slips over the next two to three years.

But honestly, all of these investment options kind of suck. The real opportunity will reside with private money and start up companies, because all publicly available investment options continue to see such rough competition and overbidding.

So if you’re unsure of yourself, or don’t have the skill/patience/risk tolerance to try and play the volatility while knowingly betting your fingers, let me offer you a better choice. Just spend your fucking money. Diversify what you need across all the above allocations. And otherwise, enjoy yourself. Because we’re all about to take a taste of peas, here.