THE DRY BULK COLLAPSE CONTINUES

Whenever I’d speak with management at some of the big dry bulk shippers, they always referred to the upside move in Capesize rates, moving off a low of $7,000 per day, with a real sense of relief embedded in their tone. They were fortunate, almost to a higher being, that their collapse was staved off by the Chinese gods who demanded steel, no matter the expense.

Well, Capesize rates just fell another 6% this morning, down to $10,000 per day.

In short, Capesize rates are now off 77% over the past month!

Can you imagine operating in such a ridiculously volatile environment? These rates are now back to levels when people were worried about the solvency of the bulkers.

I’m a buyer of the bulkers under two conditions.

1. Rates snap back, sharply, by 50%.

2. Share prices drop by another 20-25%.

NOTE: Under these conditions, DSX benefits, since they’re not tied to day rates. They are 90% charter rates, whereas BALT is 100% spot.

CAT reported a big number this morning, and they’re buying back almost every single share possible–amounting to $10 billion. It’s an outrageous sum, a gross and negligent use of shareholder money. If I were a shareholder of CAT, I’d much rather see that money issued in the form of a special dividend. Nonetheless, I am not a financial engineer and do not even try to play one on the internets.

Markets will bounce on the open. Let’s hope (fingers crossed) it sticks. I must admit to being a bit glum this morning, after working myself up about a market calamity. I had visions (extra Nostradamus) that I’d skip the whole event, watching movies at the theatre, as the nation crumbled like a cupped cake in the hands of a glutton. I’d step in later on, when everyone was strewn out to waste, and buy it all up, profiting from the despair of others.

Oh well, all that is gonna have to be put on pause. My cash horde isn’t that big anyway and I stand to profit from any bounce in the general indices.

Good news out of AAPL, with regard to Sapphire on silicon, which should boost the shares of GTAT and RBCN. AAPL is moving towards Sapphire and others will follow. To hell with gorilla glass.

I’ve been thinking about my ANGI position and have decided to ride it out through earnings. As much as I would like to avoid it, there is no two ways around it. If ANGI is ever going to break higher on “normalization of its multiple”, they’re just gonna have to smash earnings, at some point or another. If they do, I suspect the shares will quickly move towards $25, encapsulating short sellers into a tomb, buried hundreds of feet below ground.

The Dry Bulk market has been destroyed. Those ships out there are better off docking and having their seamen smoking cigars all day, instead of wasting fuel on delivering goods to China. Better yet, they ought to fix their vessels with sails and just sort of float on the seven seas, until oil collapses.

As of Friday’s close, the day rate for leasing a Capesize vessel (the largest shipping vessel) ran down to 10,609 per day. Rates were upwards of $44,000 at the beginning of 2014.

Also, 5 year credit default swaps for the “Great Satan” nation of China are nearing Italian levels, up to around 138ish. Actually, Chinese 5 year CDS are now higher than Spain’s, a harbinger of assured doom if in fact the credit markets are right about China. Hell, everything runs on China, not Dunkin’ Donuts, from the steel markets to met coal to oil and of course to the dry bulk shipping. Perhaps the dry bulk markets are telling us something.

If it is, the sages who trade US futures aren’t made aware of it, thus far, as they are now higher by about 3 points.

Just to give you laymen folk a reference point, the disastrous economy of the UK possess a CDS spread of just 24; now extrapolate that against 138 and what do you get?

Good news everyone: the markets aren’t set to open down 10%, just a mere 2%.

However, let’s not get comfortable with such minor losses, as China just halted bank cash transfers.

Pardon the link to the nefarious advertising whoring folks ar Forbes; but the story is theirs.

Here is my favorite part of the tale:

The specific reason given—“system maintenance” at the central bank—is preposterous.  It is not credible that during the highest usage period in the year—the weeklong Lunar New Year holiday beginning January 31—the central bank would schedule an upgrade and shut down cash transfers.

A better explanation is that the country’s banking system is running dry.  Yes, there is an increased need for money in the run-up to and during the Lunar New Year holiday, but that is only a small factor.  After all, central bank officials knew this spike in demand was coming—it occurs every year at this time—and a core function of central banks is to manage seasonal liquidity fluctuations.  Moreover, the holiday has not started yet, and the PBOC, as that institution is known, could have added more liquidity to meet cash needs.

So what’s really going on?  This crunch follows similar incidents in June and December of last year.  In June, for instance, the central bank used the excuseof a “system upgrade” to allow banks to shut down their ATMs and online banking platforms.  As a result, they conserved cash and thereby avoided a nationwide meltdown.

The meltdown is coming folks. Are you ready?

S&P cuts are -5.5 below fair value and European futures are indicating a -1.5% open as well.

UPDATE 8:05pm: Both Korean and Japanese markets have bounced of the lows, but still down about 2%. However, european and American futures have recovered, considerably, pretending that the world isn’t about to meltdown. FOOLISH WESTERNERS!

Now just because I am not a devout fan of apocalyptic financial meltdowns doesn’t mean that I cannot, overzealously, spectate from the battlefield. I intend to tell you great stories of mishap and misfortune; as the market unwinds, so do the lives of the purblind.

By the way, if any of you are interested in seeing a play that Karl Marx himself would be proud of (workers unite!), go see the Newsies on broadway. It makes for wonderful communist small talk across from the fireside.

Oh, by the way, I will be live blogging the opening trade of Asia tonight, as I expect their shares to get “fully decimated” under the weight of their hubris.

Here are some videos to warm you up.

NOTE: The PPT market report (for members only) is now up.

…patiently waiting for the lauded Oversold signal by The PPT, which is flawless in calling bottoms over the past 6 months and 84% to the good during the history of the algorithm.

I shed less than 1.5% for the day.

http://www.youtube.com/watch?v=JyxBCzLh-Tc

Angie Hicks, Co-Founder of Angie’s List

I realize many of you hate Angie’s list. My best guess is that you live in housing tenements, where your super fixes things for free. In the real world, outside of abject poverty, men of industry hire contractors to upgrade their living containers. In my experiences with contractors, I’ve always found them to be nefarious, double talking, the very worst people in the world.

Then Angie changed the game.

I like to think of Angie, whether it’s true or not, as a disgruntled housewife, left alone at home while her husband cavorted with prostitutes having unprotected sex. Upset by her predicament, she decided to spend all of his money on home projects; but became angered by the incompetence of “the help” and then took even more of her husband’s money to start Angie’s list (absolutely no chauvinism involved in this paragraph).

With Angie’s list, you can screen the help and make sure they’re not miscreant vagabonds. I love it and can’t live without it. Well, let me rephrase that: I can certainly “live” without it, per se. However, I’d rather not.

HOW CHEAP IS ANGI?

It’s trading 4x sales, treated like a ZNGA operation for reasons unbeknownst to me. YELP is trading at 25x. Let’s meet YELP halfway and say ANGI is worth 12.5x sales; that means ANGI is worth about $51 per share, give or take a few pesos.

Disclosure: ANGI is a top 5 position of mine.

You can’t go long here, no matter how tempting it is, if you’re interested in low-risk set ups. Who knows what’s in store for us jerks on Monday? Perhaps we will be treated to a Chinese default or worse: ARGENTINEAN DEVALUATION.

I have my positions and they’re all being slaughtered today, in a very non-orderly fashion. I have my screens set up to isolate high growth stocks on sale, so that I might parlay some of my cash into these ideas in the not-so-distant future.

Tomorrow, I am off to Broadway, with the family to see a play. Next week I will be visited by some general contractors who will make a mess out of my house, then take some of my money. Life, as I know it, marches on.

Don’t be surprised to see BALT trade back down to the low $4’s. God damn it, Capesize rates are $10,000 per day and no one in their right mind can be optimistic about the bulkers now. However, truth be told, an executive at GNK did warn me of Q1 “volatility”, and said so with a very ominous tone. I didn’t take him seriously, and chalked his opinion up to another “know nothing seaman” with ships up his ass and bankers at his door. Nevertheless, they’re adamant about Chinese growth, so it’ll be interesting to see if the news out of China gets better.

In short, it’s tempting to nibble here, considering I am getting slapped around in my longs and have some cash to put to work. But, I’d rather wait for a higher probability entry point.

Ladies and gentlemen,

Our great nation is under assault by foreign entities. Our stock exchange is lower by triple digits for two consecutive days and down for the month of January–a great calamity indeed. The prophecy of Jennifer has taken a grip on the hearts and minds of all fair loving seamen and sent shockwaves reverberating throughout the Dry Bulk market, plunging, mind you, rates to absurd levels.

A brand new credit crisis has reared its ugly, tormented head, no different than a Jack in the Box armed with a knife, in China and Argentina. Let’s not forget about the plights of the Ukraine and Turkey, while we’re at it. There is a great satan (no America), a certain and distinct evil out there that is disrupting our way of life.

Just yesterday, I was overwhelmed with joy for ducking the correction, being able to bank coin on a day that dished out its “fair share” of agony and hatred. However, I very much doubt that I will be able to repeat such a feat today.

All of the hallmarks of panic are present: TLT and FXY are going up. Gold and silver are safe havens and volatility is back in play.

These financials vigilantes, terrorists if you will, need to be stopped. I long for the days of last week when stocks went up and I was able to kick my fellow man down a flight of stairs, without having to worry about the ramifications. Now, all of a sudden, reality is taking hold, threatening the virtual world we’ve been trained to adore.

May Bernanke save us.

BTW: ANGI was upgraded today and looks pretty good.

So after the market closed, one of my smallest positions, ATOS, raped their shareholders by announcing a dilutive secondary offering. The result was a stock price careening lower. Naturally, as I type this, I know that there is a small subset of you that believe ATOS is my largest position. There is nothing that would give you that impression, other than the fact that it is down 20% in after hours trading. Nevertheless, the perpetually driven cynicism that lives inside of your morbid brain has already congratulated me for the losses that are to come. Thanks for that!

Nevermind the truth when we have something to throw at Le Fly, hopefully, and God willing, casting a pallor over him that will remain in perpetuity. You’re all sick, carnal beings– savages addled by drugs and toxins–weaker men than most– but diabolical in the highest degree.

And here I am, a humble servant, trying to give you the security necessary to live a fruitful life, a blessed one–such as my own. I toil and then blog, then I toil some more–all for a small sum of money totaling no more than several hundred thousand dollars per annum (net of all expenses, of course).

So, with that in mind, understand that a 20% drop in ATOS, while unfortunate in the small scheme of things, represents an opportunity for Dr. Fly to exert the vast resources available to him–to buy more–whilst still smoking from his pipe–fueled by The Black Swan.

Good night.