Just Got In

Covered in sweat and tones of brown from the alcohol covering half of my body, I awoke just moments ago from a raucous night of celebrating the victory of Detroit over the insidious Yankees.

…

No, I’m lying. I actually don’t give a shit about baseball, or most sports for that matter. I was out all morning in a meeting with a new client, and only just got back. I watched the game last night though, and enjoyed mercilessly taunting Yankees fans, while also commenting on the destitute state of Detroit.

Yankees: last night you got taken out of the playoffs by a city that is trying to strategically cede land to the state because they can’t keep providing electricity to all of their districts. How does that feel?

Rounding off the whole “Total Victory” thing, upon my return I found the market breaking red, as it should. I am heavily short UCO and MGM, after increasing both positions substantially this past rally.

I stand to do very well, if everything comes together correctly.

The big piece of news today that I’ve seen so far is Merkel’s suggestion that banks should try and raise capital in the markets first, before asking their respective governments. Let’s be honest; no one thinks French banks can raise capital from private parties, and the amount they need to raise is massive.

All is not well in Euroland. Merkel’s comments seem to highlight some very serious rifts in the European Union (which I think most of us were cognizant of before now). It doesn’t help that there is no good options for Europe. This is a choice between a lot of options that all sort of suck.

Next week brings new lows unless they do something drastic this weekend.

The European nations have renewed buying their own debt in desperation to stave off collapse. While they will no doubt claim that the maneuver is net neutral on the currency and therefore doesn’t weaken them, I think they’re full of shit.

There are no free rides. Even if they aren’t technically printing euros to make this happen, they are definitely borrowing money. There aren’t many European countries running a budget deficit, remember?

And if they’re borrowing money from the sidelines to inject into their banking system, then they’re still creating inflation. That’s how fractional reserve banking works.

And if they’re weakening the euro, then they’re strengthening the dollar.

Throw in a recession which is beginning to grip the entire continent, weak American growth and trouble ahead for China, and you’d have to be a lunatic to go long oil here.

Yet some people are doing just that. They do this under the guise of “fundamentals” stating that “Peak Oil Theory” dictates that there’s a limited quantity of the stuff which will necessarily cause crude oil to go to $1,000 a barrel. These are bastard arguments which should not be treated seriously.

Remember that the “fundamentals” of limited space and population growth dictated that real estate would necessarily increase forever? The argument here isn’t much different.

You might as well add that solar energy will become boundlessly more valuable, because one day we’re going to blow our sun.

Those who perpetuate this nonsense; I am your destroyer. I will cut out your tongue and plant it in the low water mark, where the tide ebbs and flows twice in twenty four hours. I will carve out your heart and feed it to the carrion birds. I will burn your entrails in front of your very eyes.

Remember that price is all about localized need. Saying that in 150 years, we may begin to see our net production taper off (provided we don’t keep finding massive oil reserves, like we are) doesn’t really change the fact that we’re pumping out more than we need right now, in the moment. All resources are theoretically finite; it’s all about relative scale.

I suppose livestock feces are in limited supply as well, but you don’t see me stabbing orphans to secure fertilizer.

Now, we seem to be continuing to rally. This is good. When the buying is greatest and pseudo-intellects go long oil hard, I will up my short of UCO by another 25-50%. And I will short ERX alongside, in outright objection to fuel prices, which are even now too high.

And you, my dear oil bulls: I will see you in hell.

Would one of you care to enlighten me as to why the entire REIT space is getting utterly decimated?

What the shit; is the U.S. homeownership rate going to 98%? Is occupancy of national rental units plummeting to 0%? What is the meaning of this outrage?

I’m just too tired to deal with this travesty. Especially with regards to the rentals (which is what I’m specializing in; luxury no less) why the hell are they selling off with the pack? They aren’t even in the same business model.

I nibbled on more AEC today, increasing my position by about 5% (.5% of my assets), for $14.58. Someone, somewhere is eventually going to have to acknowledge that selling off an REIT which specializes in renting alongside other REITs that specialize in property asset appreciation or mortgages, is RETARDED.

The same can be said for CLP. Only, I’m not ready yet to add to that. The timing isn’t right; it first goes a little lower or I take a pass.

Listen up, you; I’m extremely busy today so pardon me if I ask that you get the fuck out of my office. The 9th floor is closed for the rest of the day; a solemn pledge of mourning, if you can follow me, for this abomination of a development.

* One last thing before I slam the door in your face again. I shorted more UCO for $26.68 on the off chance that REITs are not simply bleeding out, but rather are forshadowing pain to come. If we rush higher, then I’ll consider doubling my UCO at whatever price it arrives at when the market gets overbought, all as measured by The PPT of course.

You can all thank me in your own time for invoking this rally. Through the powerful magic of sell offs, the stocks gods demanded sacrifice. Around 2 pm, embracing cowardice and desperate to cover my backside, I shorted oil again.

My blood spilling across the market’s altar, it was given the nourishment to rip free from its chains and kill any and all bears that stood in its path.

I will try my hardest to enjoy this rally nonetheless, as I still have breathing room to benefit from it. It is a little embarrassing though, standing here in front of you with my palm slashed open, dripping blood on my finest rug.

In all seriousness, this market is very frustrating to trade. Perhaps now we get a rally, and I say something catchy like, “see you at the top” but the only honest thing I think any of us can truly say is, “we’ll meet at the bottom.”

Until then, then.

Let’s be honest here, this action is not trustworthy, and I will not be caught leaning too long.

I added back on half of the UCO shares I covered yesterday, for $24.71, and also increased my MGM short by 50% for $8.30.

I’m up enough in MGM that I can afford to average down; a move to $9 would barely break me even, and I’m more than confident that that thing is headed lower. I’ll short more if we do get an epic bounce, but for now I just want to make sure that tomorrow doesn’t bring calamity down upon my head.

I still want a bounce but understand I’m liable not to get one. If we rush higher, I’ll short back up to the extra shares of UCO I shaved off yesterday, and move MGM to a full 10% of net assets. I may also trim across the board, just to get an extra 5-8% of cash.

If we bounce it will be a monstrous rally, but I really do not like the looks of things today. There’s a difference between a healthy drawdown before the next leg higher, and a market that’s undergoing a slow motion collapse.

This looks like the later; I hope it reveals itself to be the former.

I will not be allocating capital or moving positions around to prepare for any bounce that may materialize over the next few days. As I said in my last post, I already did that yesterday, and will not see myself realize a 10% loss trying to chase this market 3% at a time.

However, it is worth noting that all the stars are aligning. We have permeating strength in the euro (even after the latest round of uncertainty concerning a Greek bailout), treasuries are crashing here, crude oil is ramping up and tech of all things is leading.

Remember to be patient and not overexert yourself with regards to picking one direction or another. The main market direction continues to be down. You should be partial to that outcome, but definitely expect a massive run higher here.

Myself, I will be looking to further short MGM and UCO. There’s no need to even think about buying my other stocks in any size, if we are to get a bounce here.

Happy hunting, followers of the 9th floor. I’ll meet you at the top.