Stocks Fall on Open: Welcome to the Grindhouse

The back and forth of the market is equal to that of that little aluminum can opener on a soda can. You know what I mean, right? As kids, we’d twist that fucker to and fro, reciting the letters of the alphabet out loud. When it fell off, the last letter recited would represent the name of a future girlfriend.

We were devilish boys, bad mostly. I had dozens of friends growing up in my neighborhood and about 2 or 3 of them made something out of their lives. On paper, I was supposed to fail, but I didn’t. I’m too stubborn.

Markets opened down 100. It will not recover unless WTI bounces. The recent drop in crude has become a thorn in the side in an otherwise happy group of bulls.

I’ve never viewed volatile markets favorably. Some people delude themselves by declaring it ‘healthy.’ I always felt ‘healthy’ was up 40 points per day.

That being said, it’s perfectly normal for stocks to struggle in September and recover in October. Heading into the holiday season, it’s imperative that H. Clinton not die and win the election. And, also, retail sales must improve, in order for the market to truly breakout.

Until then, avoid the Grindhouse. Go eat a sandwich and watch a good movie.

Futures have markedly improved, after a big guide up by chip giant, Intel.  Of all things, the company cited an improving PC market as a reason for the rosy outlook. I suppose people are, finally, replacing their old computers for newer models? It had to happen at some point, especially on an enterprising level.

Via Briefing.com

09:04 | INTC | (36.56)
Intel raises Q3 rev & gross margin guidance guidance primarily driven by replenishment of PC supply chain inventory & improving PC demand

Co issues raised guidance for Q3 (Sep), sees Q3 (Sep) revs of $15.3-15.9 bln from $14.4-15.4 bln vs. $14.89 bln Capital IQ Consensus Estimate.

The increase in revenue is primarily driven by replenishment of PC supply chain inventory. The company is also seeing some signs of improving PC demand.

The company is forecasting the mid-point of the third-quarter GAAP gross margin range at 62 percent, plus or minus a couple of points, up 2 points versus the prior third-quarter GAAP outlook gross margin midpoint of 60 percent, driven mostly by higher PC unit volume. The midpoint of the third-quarter non-GAAP gross margin range is now forecasted at 63 percent, plus or minus a couple of points, up 1 point versus the prior third-quarter non-GAAP outlook gross margin midpoint of 62 percent.

Third-quarter R&D plus MG&A spending is expected to be ~$5.2 bln, $100 mln higher than the prior expectation of ~$5.1 bln.

All other expectations have been withdrawn and guidance will be updated with the company’s third-quarter earnings report on Oct. 18.

Related Stocks: STX, WDC, AMAT, LRCX, AVGO, MU, AMD, HPQ

The stock is surging on this news, as well as the related tickers above.

I’m guessing if the boys at Deutsche Bank can convince the EU to lower the fine levied against Apple, this can go away nicely.

In what can only be described as comically shocking, the Department of Justice proposed a settlement of $14b with the German bank for crimes against the American people, regarding mortgage fraud.

This fucking shocked the Germans, as they were eating brats and sauerkraut. It’s widely rumored that several board members nearly choked on their sausages upon reading this news and were only saved by drinking a nearby stein, filled with warm beer, to dislodge the meat from their throats.

If they were to agree to such a fine, it would represent 70% of their market cap, a sum forged in the bowels of hell itself.

Deutsche said in a statement it “has no intent to settle these potential civil claims anywhere near the number cited.” The bank emphasized that negotiations have just started and that it expects the outcome to be “similar to those of peer banks which have settled at materially lower amounts.”

The Wall Street Journal first reported the figure, citing sources familiar with the situation.
The company previously thought that a settlement between $2 billion and $3 billion would be fair, as it had already paid $1.9 billion in 2013 to resolve similar claims, the Journal said.

Reuters reported that, in January, Goldman Sachs said it would pay more than $5 billion to settle claims it misled mortgage bond investors during the financial crisis. The following month, Reuters reported that Wells Fargo reached a $1.2 billion settlement over mortgage fraud allegations. The news service also reported that Bank of America came to a $16.65 billion settlement in 2014 and that JPMorgan settled for $13 billion in 2013.

ABN AMRO’s take.

Shares have collapsed in Germny today, off by 8%, or $1.6b in market cap.

Eurostoxx 50 is off by 1.4% now, led lower by the Italian markets grease balling lower by 2.3%. At the top of the kill list are the banks.

Here are some of the notable death notices.

Deutsche Bank -7.4%
Unicredit -4.2%
Soc Gen -3.2%
Credit Suisse -4:8%
UBS -3%
RBS -4.8%
Standard Chartered -3.2%

On the other side of the spectrum are bonds, absolutely soaring in price this morning, led higher by a collapse in German bunds off by 5bps to -0.02%

US futs are -97.

Things are beginning to get testy, as both the EU and Britain show signs of extreme annoyance due to the prospective negotiations. Sources of the Telegraph are saying EU officials believe that if they make the BREXIT negotiations difficult and arduous, Britain will give up on the idea. This, coming after Farage throwing a fit over Theresa May seemingly giving up on key BREXIT promises, will drive Nigel fucking nuts and will, unquestionably, cause BREXIT supporters to apply pressure to PM May to invoke Article 50, post haste.

More than five senior EU figures interviewed by The Telegraph this week expressed doubts that Britain would go through with Brexit when confronted by the “reality of the bureaucratic nightmare” and the “insane act of economic self-harm”, as they referred to Brexit.

One senior British official involved in the set-up for the coming negotiations said the EU elite “seem to think the game is to make us change our minds”.

This stance has left representatives fighting to explain to European leaders how “dangerous” a game they were playing, and how “unlikely” it was to succeed.

A second UK official source with knowledge of the talks added there was a danger that positions in the Brexit talks were already becoming “dangerously entrenched”, even before Theresa May invokes Article 50 that will open formal EU-UK “divorce” proceedings.

The EU’s choice of lead negotiators – the French finance expert Michel Barnier, for the European Commission and Guy Verhofstadt, the former Belgian prime minister and arch-ferderalist, for the Parliament – has also been taken as a clear sign of the EU’s determination to drive a hard bargain.

The appointments were described on Thursday as “very, very tough” by Herman van Rumpuy, the former European Council president, who warned that negotiations would be “difficult” for Britain.

In the European Parliament, which must ratify any Article 50 deal agreed by the EU 27, the mood against Britain was further soured this week by personal attacks on Mr Verhofstadt by former Ukip leader Nigel Farage and the Brexit Secretary, David Davis.

Mr Davis was reported to have referred to his future interlocutor as “Satan” when addressing the Foreign Affairs select committee, while Mr Farage – long a thorn in the side of pro-EU MEPs – lambasted Mr Verhofstadt as a “fanatic” whose appointment amounted to “declaring war” in the coming talks.

Mr Davis’s office subsequently clarified the “Satan” remark, saying that the Secretary of State had been jokingly declining the committee’s chairman’s invitation to be rude about comments made by Mr Verhostadt, but the distinction was lost in Strasbourg.

In his oratorical performance to the mongrels in the EU, Farage first congratulated the former head of the EU, Barrosa, for landing a sweet  new role at Goldman Sachs. Then, he fucking detonated a fury of verbal explosives on the EU’s chief negotiator appointed to BREXIT, Mr. Fucking Verhofstadt.

Watch.

The Clinton Collapse is taking on new meaning, now in the polls.

The LA Times is showing Trump with a 6 point lead in their recent national poll. He’s also crushing her in Ohio, tied up in Florida and gaining in Pennsylvania.

Out tonight is nothing but doom for the infirmed Clinton campaign, who seems to be losing her landslide lead over Trump in the all important state of Michigan.

“The race is tightening a lot in Michigan,” said Bernie Porn, EPIC-MRA’s pollster. “It may be a function of the timing of the survey and her health questions, (but) there has been a shift toward Trump. Whether it’s going to be a permanent shift is yet to be determined.”

It appears the RACIST XENOPHONE DEPLORABLE are against unchecked immigration into their already reprehensible state of waste and rot.

Hopefully, Hillary can remain healthy. Some think if she doesn’t, well, Obama might just cancel the elections.

I can’t even call them ‘liberal’ websites. There is nothing liberal about these people. If anything, I’m the liberal here, fully supportive of freedoms and the truth and rule of law. These devils in the media are just making shit up, out of thin air, and getting away with it. It’s subversive and also malicious, which is why I am somewhat fired up to point some of this stuff out.

Look at this idiot tweet by the demonic website dubbed “The Hill” just a few minutes ago.

Bear in mind, this absurdity was vehemently denied by the Trump campaign many, many hours ago. Trump isn’t interested in having a gay vampire tech guy on the supreme court, ok?

“As we told The Huffington Post, there is no truth to this whatsoever,” campaign spokeswoman Hope Hicks said. “Mr. Trump has already released a list of names that he would be considering.”

A spokesman for Thiel told CNBC the billionaire technology investor “hasn’t had any conversations about a Supreme Court nomination and has no interest in the job.”

“Huffington Post’s sources are lying,” Thiel spokesman Jeremiah Hall said.

It was the fuckers from the Huffington Post who first broke the onionesque story onto the internets.

This shit isn’t even a good lie. In addition to that, non-mentally deranged people don’t read HuffPo, so it’s doubtful that their target audience– the homophobic white male– would be alarmed by this ‘revelation’.

Look at how these imbeciles word the piece as if we’re all 2nd graders and don’t see what they’re trying to do here.

Trump “deeply loves Peter Thiel”…

Were Trump to actually nominate Thiel, he would be by far the richest Supreme Court nominee of the modern era, with an estimated net worth of $2.7 billion.

If nominated and confirmed, he would be the first openly gay member of the Court.

A gay tech billionaire who supports marriage equality, Thiel is a self-described libertarian and pursues quixotic projects like government-free sea colonies and infinite life extension. He would be a radical departure from the nominees on Trump’s list…

Thiel is deeply conservative, however, and his more fanciful ideas can sometimes obscure his support for broadly mainline Republican policies

In a 2009 essay, Thiel wrote: “I no longer believe that freedom and democracy are compatible.” Part of the reason for that incompatibility, Thiel argued, was that women had gained the right to vote and that the government sometimes helps poor people.

In his 2014 book Zero to One, Thiel praised monopolies, arguing that competition destroys value rather than creating it. He also wrote about applying for clerkships with Scalia and Justice Anthony Kennedy as a younger man. Both justices ultimately turned him down.

Yeah, if Kermit the Frog was nominated to the Supreme Court, he’d be the first muppet to serve it.

The author of this drivel is Cristian Farias.

The Huffington Post’s DC Bureau Chief Ryan Grim responded: “Our reporting stands for itself.”

Really? These people are comically fucked in the head.

In her first day back on the campaign trail, the bitch, Hillary Clinton, welcomed a mostly female press pool to toss some softball questions at her, regarding the seizure she endured at the 9/11 ceremony that was passed off as pneumonia by her PR team of devils.

Truth be told, I don’t know what to think about the optics of having an all girl team, clad in red–save Andrea Mitchell who leads the pack forward to her majesty–converge around Hillary to ask infantile questions–such as “why didn’t Timmy Kaine know that you were sick”?

Look at this absurdity. Where’s the catamite, John Harwood, to serve the girls cucumber water?

I was actually taken aback when I read this. About 80% of managers trail the indexes. The last time the industry has failed this poorly was in the late 90s, during the epic dot com melt up.

Over the past five years, as the market has risen to new record highs, investors have taken $422b out of actively managed funds and have contributed $480b to passively managed ETFs and indexes.

“Most active managers focus on companies, not macroeconomics,” said Michael Rosen, chief investment officer at Angeles Investment Advisors in Los Angeles, where he helps oversee $30 billion. “There has not been a lot of reward for making distinctions among stocks.”

In the year ended June 30, 85 percent of large-cap stock funds, 88 percent of mid-cap funds and 89 percent of small-cap funds failed to match the major stock indexes they track: S&P 500 Index, the S&P Midcap 400 Index and the S&P Smallcap 600 Index. The numbers for five and 10 years were slightly worse.

“The numbers are pretty appalling,” said Aye Soe, senior director of global research at the S&P unit that compiled the report. “Given the choppiness in the markets we would have expected the active managers to come out looking better.”

Mutual funds with an international tilt fared somewhat better. Over the past year, 75 percent of global funds, 55 percent of international funds and 42 percent of emerging market funds failed to match indexes. Over 10 years roughly 80 percent of the funds trailed indexes.

Active managers may take comfort by looking at the past. The last time they trailed indexes this badly was in the late 1990s. In 1998 and 1999, according to Morningstar numbers, fewer than 8 percent of large-cap domestic stock funds beat the S&P 500 over the trailing five years. When the tech bubble burst in 2000, stock pickers began to do better. By 2003, roughly half were beating the index over five years.

I dismiss the glib notion that all asset managers are fucking morons. I’ve worked with these people my entire life and most of them are smart, entrepreneurial people. I do think, however, that the inflexibility to hedge and/or take another position in the markets, other than 100% long all the time, has taken a toll. If you’re managing money for clients and want to protect client assets, in let’s say a retirement account, your only option is to move to bonds and/or cash, or maybe write some calls. Back in 2008-2009, I was able to position clients in a sundry of inverse ETFs, to hedge for downside risk in a deleterious tape, and it saved me. You can read the archives. It’s all there,  to the last trade. While most of my colleagues lost 30-60% of their assets, I made upwards of 60%.

Since then, the horrible lawyers at FINRA banned inverse ETFs from the industry, just because some idiots didn’t know how to use them.

Also, and I can speak to with first hand knowledge on the matter, having worked at a large mutual fund company at one point in my early career, much of the decision making is based off research reports and models that only assume the best. Rarely are these people modeling in volatility or draw downs of an onerous nature.

Essentially, investors are leaving actively managed funds because they’re woefully unprepared to deal with this new paradigm that is fueled by central bank over planning. It’s confusing and hard to adjust to. Having said that, people who can actually run money, and do it without incurring large draw-downs during periods of duress, are extremely valuable and in demand now. Throughout my career, my biggest detriment was working through volatility. My upside was massive when markets behaved well; but I often endured heart shattering losses during periods of fuckery.

This is precisely what I am seeking to remedy this year with my new, lower beta, method of management. I am unsure if I will stick to this model or adjust it as time goes on. I’ll find out by the end of 2016 and will be making a decision then.

It was an enjoyable day for the free money feudalists, as poor economic data dropped the chances of a Fed rate hike from a scary 15% to 12%.

Markets raged higher, taking with it a cadre of orangutans who’ve been blessed to traverse this earth without a brain.

Specifically speaking, markets should continue smacking the shit out of overzealous traders. When you short into the hole or buy into a riptide, don’t be surprised when you are unceremoniously removed from your cash.

A great man once told me “it’s all fun and games until your bullshit account goes to zero.” He was a curmudgeon fellow who walked around the boardroom with an unlit cigar in his mouth, old, cranky and brilliant. He’d offer these quips to me whenever we met at the Bloomberg terminal. Back then, I thought he was a stupid asshole, as I was younger, stronger, and making a dickload of money.

The dot com bubble was good to me. The bust caught me flat footed and left me in ruins for two years.

Right now, I’m the older guy chewing on a disgusting cigar, telling you that a storm is coming and the ebb tide is much closer than you know.