This Week in Exodus: Nothing to Fear; We’re Overbought

Part of the misconception with saying something is overbought is the negative connotation that comes with the word. Last week, Exodus flagged a systemwide overbought signal and that’s a good thing for stocks, historically speaking.

The rationale for this is simple. Strong stocks cause money on the sidelines to jump in and short squeezes occur. This initial push into an already overbought market tends to cause blow off tops, which could be incredibly profitable for advantageous bulls.

The stats over the past 12 mos are convincing.

Based upon these stats, markets should skate gently higher for the next week or so. But, bear in mind, this is the time of year for sharp and overtly dramatic market corrections, so be on guard for that.

Snore. No one wants to read about an impending Chinese banking crisis — because it’s chicken little. Events such as this occur once every 10-30 years, so why even bother talking about it. Well, under that context, someone worried about it might argue its been almost 9 years since the ’08 financial crisis and nothing has changed — things have gotten worse.

Chinese banks are tossing active hand grenades to one another, lending to and for to one another, buying wealth management products — having a grande olde time.

If the country could withstand a 321% debt to GDP debt burden by 2020, so be it. More power to them. Ten thousand blessings.

But in the event liquidity dries up and failures start to occur in the great wall’d land of dog eating savages, the details might begin to mean something.

So here it is.

China’s smaller banks have never been more reliant on each other for funding, prompting rating companies to warn of contagion risks in any crisis.

Wholesale funds, including those raised in the interbank market, accounted for a record 34 percent of small- and medium-sized bank financing as of June 30, compared with 29 percent on Jan. 31 last year, Moody’s Investors Service estimated in an Aug. 29 note that analyzed central bank data. Shanghai Pudong Development Bank Co.’s first-half earnings showed its short-term borrowings and repurchase agreements surged by 75 percent in the past three years, while its consumer deposits rose just 24 percent.

Policy makers have sought to sustain an economic recovery by keeping the seven-day repurchase rate at around 2.4 percent for the past year, a level that has encouraged borrowing for investment in property, corporate bonds or risky loans, often packaged as shadow banking products. CLSA Ltd. estimates total debt may reach 321 percent of gross domestic product in 2020 from 261 percent in the first half, while the Bank for International Settlements also warned lenders are at risk from surging leverage.
“Contagion risks are definitely rising,” said Liao Qiang, Beijing-based senior director for financial institution ratings at S&P Global Ratings. “The pace of the development is concerning. If this isn’t stopped in time, the central bank will lose some control and flexibility of its monetary policy.”

The higher the reliance on wholesale funds, the greater the risk of a liquidity crunch, said Christine Kuo, a Hong Kong-based senior vice president at Moody’s.

“When banks face fund withdrawals by other financial institutions, this will in turn prompt them to call back their own funds,” she said.

Banks are also buying each others’ wealth-management products and accounting for the transactions as investment receivables. A record 26.3 trillion yuan of WMPs were outstanding as of June 30, doubling over two years, China Banking Wealth Management Registration System data showed. Investment receivables at 25 listed Chinese banks grew 13.4 percent in the first half to 11 trillion yuan, earnings reports show.

China Minsheng Banking Corp.’s receivables surged 77 percent in the first half, while its short-term borrowings and repos more than doubled in the past two years, company filings show.

Industrial Bank declined to comment and China Minsheng didn’t reply to an e-mail seeking comment.

“Banks’ use of wholesale funds to buy WMPs only makes the contagion risks higher,” said He Xuanlai, a Singapore-based analyst at Commerzbank AG.

Arcan Cetin, not to be confused with cretin, is in custody for killing 5 in a shooting rampage at the Cascade shopping mall in Burlington, Washington. His Twitter account is still active (for now). In it, I found this little doozy to be interesting. I only document it for posterity purposes. God knows if he was a Trump supporter, the NY Slimes would run it as their lead story.

Based on his Twitter account, he seemed to be an ordinary boy of Turkish descent. Amongst the accounts he followed was the Wall Street Journal, CNN Money, Conan Obrien and a bunch of girls he must’ve trolled. He made Tweets to Xbox for support, basketball, paintball, Fox News, Ancient Aliens, Halo and other normal young people shit. Here is his Facebook page, all ordinary stuff.

He didn’t seem to be very bullish on the economy too.

He even took stupid bathroom selfies, like most of the morons in his age group.

Based off his Tweets, he might’ve been in the ROTC  or JrROTC in High School, representing our country in the most dreadful of ways.

Honestly, he doesn’t seem like the radical islam type. I am sure people will try to paint it that way, mainly due to all of the shit going on today. This kid just fucking snapped. No idea why people do the things they do. The one thing I can take away from all of this is he’s with her, not me — fuckers.

Retrospectively cryptic, this was his first “like” on Twitter.

UPDATE: He might’ve been a bit of an Islamic evangelist, according to his Tumblr page.

God I love this Presidential contest. I don’t know why some of you shrink from it or get upset. It is the best comedy roadshow of all time.

Just the other day, the super asshole owner of the Dallas Mavericks — Mark Cuban — bragged about getting front row tickets to the Clinton-Trump debate on Monday. As many of you know, Mark is a huge Hillary dick sucker and gets really mad when Trump shoots up in the polls. He’s also promised to short the shit out of stocks, when D.J. Trump gets elected.

Look, see?

Hillary supporters got sexually aroused by the specter of this, thinking Cuban, a fellow billionaire, would get under Trump’s skin and make Donald cry or some shit, run home and give up his race for the Presidency. Cuban, in his smug and infantile demeanor, couldn’t intimidate an 8 year old out of his school lunch, let alone “The Donald” from the Presidency of the United States, a task forged in granite with the focus on making America great again and to also to build a gigantic, beautiful, southern border wall, courtesy of Mexico.

Today, Trump saw Hillary’s Cuban and raised her with GENNIFER ‘Fucking’ FLOWERS, spelled with a G for Gotcha.

For those of you who are either too young or stupid to know who she is, here is a brief excerpt from her Wikipedia page.

Gennifer Flowers came forward during Bill Clinton’s 1992 Presidential election campaign, stating that she had had a 12-year relationship with him.[2]

After Clinton denied having a relationship with Flowers on 60 Minutes, she held a press conference in which she played tape recordings she had secretly made of phone calls with Clinton.[3] Clinton subsequently apologized publicly to Mario Cuomo for remarks he made about the then-Governor of New York on the tapes. During the press conference, Flowers was famously asked several questions by “Stuttering John” Melendez of the Howard Stern Show if she was planning to sleep with any other candidates before the election, along with if Clinton used a condom and if there ever was a threesome. She responded by laughing at Stuttering John’s prank whereas her advisor wanted to ignore him by trying to answer other questions. News reports at the time speculated that the taped phone conversations between Flowers and Clinton could have been doctored;[3][4] Flowers had sold the original tapes to Star and they were never lab-tested.[5] Clinton aides James Carville and George Stephanopoulos backed this claim as well.[6] Stephanopoulos later claimed in a 2000 interview with journalist Tim Russert that “Oh, it was absolutely his voice, but they were selectively edited in a way to – to create some – some impression.”[7]

In December 1996, Flowers talked about her sexual relationship with Clinton on The Richard Bey Show. The show was canceled the following day. Bey later attributed a direct connection between the two consecutive events.[8]

In a deposition in January 1998, while denying Kathleen Willey’s sexual accusations against him, Clinton admitted that he had a sexual encounter with Flowers.[1] In 1998, Flowers admitted that she had made a total net profit of $500,000 by publicizing her alleged affair with Clinton to Penthouse, Star Magazine and other news sources.[9] In his 2004 autobiography My Life, Clinton acknowledged testifying under oath that he had a sexual encounter with Flowers. He stated it was only on one occasion in 1977.[1][9]

Flowers sued Stephanopoulos, Carville and others in 1999 for defamation (later amending the suit in 2000 to include Hillary Clinton as a defendant), claiming that they orchestrated a campaign to discredit her. Judicial Watch represented her in her defamation lawsuit against Hillary’s former aides, Stephanopoulos and Carville.[10] In her case, Flowers argued that the defendants ignored obvious warning signs that the television news reports did not conclusively determine that someone had interfered with the tapes.[11] Summary judgment dismissing the case was given by a US district court in 2004.[11] The dismissal was affirmed by the U.S. Court of Appeals for the 9th Circuit in 2006.[12]

Apparently, she accepted Trump’s offer.

Your move, Hillary.

On a very quiet and sneaky Friday afternoon, whilst the media was all in a frenzy trying to shame white people into submission, President Obama vetoed a bill that was passed which would give the families of 9/11 the power to sue Saudi Arabia — a country who is believed to be the principle players behind the 9/11 attacks.

Since this would cause a bad precedent for America’s war making ways, sashaying throughout the world, dropping daisey cutters into green fields of people covered with slime, this couldn’t be permitted under any circumstance.

Via the fuckheads at Politico:

In a three-page veto message outlining his objections, Obama again stressed those arguments and others made by his administration in recent days. Particularly problematic, in Obama’s view, was the possibility that courts could end up wading into terrorism issues best left to national security and foreign policy officials.

“This would invite consequential decisions to be made based upon incomplete information and risk having different courts reaching different conclusions about the culpability of individual foreign governments and their role in terrorist activities directed against the United States,” Obama said. That, the president added, “was neither an effective nor a coordinated way for us to respond to indications that a foreign government might have been behind a terrorist attacks.”

Yes, it would be a bad idea indeud, especially if you had something to hide. The whole point of being able to sue was to bring forth facts and attempt to uncover the truth behind the attacks. Why should members of a foreign government be immune to prosecution, if in fact they committed crimes against the people of the United States?

Obama again reiterated the White House’s view that the 9/11 bill could lead to retaliation — which could cause “potentially seriously financial consequences for the United States,” he warned — while arguing that the 9/11 bill “threatens to create complications in our relationships with even our closest partners.”

In other words, Hillary Clinton and others of her ilk could no longer tap Saudi Arabia for tens of millions in charitable donations. Or, maybe The House of Saud would get angered by this and withhold contracts to exploit their lands for crude oil? Unfortunately, we will never know the consequences.

“I have deep sympathy for the families of the victims of the terrorist attacks of September 11, 2001, who have suffered grievously,” Obama said in the veto message. “I also have a deep appreciation of these families’ desire to pursue justice and am strongly committed to assisting them in their efforts.”

But he added that the legislation “would neither protect Americans form terrorist attacks nor improve the effectiveness of our response to such attacks.” Those arguments have rung hollow for Congress, which passed the legislation unanimously through both chambers. The Senate passed the measure in May, and the House followed suit earlier this month on the eve of the 15th anniversary of the terrorist attacks.

This is lazy logic on behalf of the very learned Barrack. If exposing criminals to the crimes they’ve committed cannot serve as a deterrent for future crimes from said criminals, why do we even have prisons to begin with?

Interestingly, both democrats and republicans have united to fight Obama on this issue. They will attempt to override the vetoe, perhaps giving the United States with leverage over Saudi Arabia to make explicit demands. Perhaps they will send a note saying ‘give us a fuckload of oil, else this shit passes?

Cornyn called not only the veto “disappointing,” but also Obama’s “refusal to listen to the families of the victims taken from us on Sept. 11.” And Schumer called the veto a “disappointing decision” from Obama that will be “swiftly and soundly overturned in Congress.”
“If the Saudis did nothing wrong, they should not fear this legislation. If they were culpable in 9/11, they should be held accountable,” Schumer said after Obama officially vetoed the bill. “The families of the victims of 9/11 deserve their day in court, and justice for those families shouldn’t be thrown overboard because of diplomatic concerns.”

Bravo Chuck.

Stocks ended the week a little more than 1% higher, hardly an attestation of a great bull market. Year to date, the SPY is higher by 7.6%, while GLD is up 26% and TLT 16%. VNQ, the largest REIT ETF traded, is higher by 14% — not including the 3.3% yield it pays. On a micro level, there’ve been chockful of trading opportunities since the bottom, which far exceeds anything enjoyed in the aforementioned names above. However, I hardly know any bulls who missed out on the early 2016 drubbing. Do you?

The point I am making is that markets, as a whole, haven’t done all that much so far. If we were to closely monitor where the glacial, slow — but certain, money has been going, without question it has gone into bonds, gold and REITs.

For the week, stocks rejoiced after being harangued over a fortnight — due to unnecessary and unwarranted concerns over a Fed rate hike. Markets gave up the ghost today, and although losses were limited, I didn’t like the action in oil at all. My entire bear thesis hinges, mind you, on a precipitous drop in crude oil — which will then lead to the inevitable destruction of credit lines and subsequent equity positions. This deleterious effect on energy balance sheets will spill over into the banking sector, bringing with it a credit tightening that will tip the scales — placing America where it belongs — into an arduous recession.

I do not wish cast these events; I only know them to be our eventuality.

I remain steadfast, almost obstinate, long TLT, GLD, several miners, and cash.

I can appreciate a good yarn, just like the next man. All of the iPhone 7 hype of a few weeks ago, which provided the shares of AAPL with great succor, was apparently a fiction.

Upon the launch of the iPhone 7, Gene Munster, analyst at Pipe Jaffray, said the lines for the iPhone 7 were shockingly small — in comparison to previous launches. Gene literally goes out to the NYC flagship store and counts the people on line. He said there were only 400 people on line, compared to 650 for the iPhone 6s and 1,880 for the iPhone 6.

Then today a German research firm, GFK, said sales during the weekend launch for iPhone 7 and 7 Plus were down by 25% Y/Y — compared to the first weekend of the 6S and 6Plus.

Last night, Digitimes reported chip orders for the new phone were down sharply — off by 20%.

Apple has requested its manufacturing partners stock ICs for a combined 50 million iPhone 7/7 Plus units in the third quarter of 2016, and another 45 million units in the fourth quarter, according to sources at analog chip firms. The estimated volume for the first quarter of 2017 has reduced to 35-37 million units, said the sources.

If it weren’t for the fact that Samsung’s new phone is literally blowing up and causing fires, Apple shareholders might’ve been a little worried following these reports.
As such, shares of Apple are off by a whole 1.5%. Whoa. Look at below, fuckers.

AAPL is higher by 4.4% over the past month — one giant circle jerk.

The lengths humans will go to troll is undeniably our greatest failures as a species.

The bedraggled drunkards from the perverted forum based website, 4Chan, have begun a campaign to force Google to censor itself, after the search engine giant announced a plan to censor out racism from its search results.

Via Craveonline

Members of 4chan’s “politically incorrect” board /pol/ have begun “Operation Google,” which aims to circumnavigate the search engine’s new AI program to remove bigoted and racist posts and comments from the internet by filling the search engine with more bigotry and racism.

Google recently announced Conversation AI, a new program created by Google subsidiary Jigsaw, which aims to help put an end to online harassment. As noted in a Wired feature detailing the program, thus far moderation on the internet has been conducted by humans, though this can often have a damaging effect on the individuals who are forced to sift through posts and comments sections often containing hateful and bigoted language. As such, Jigsaw hopes that its program will be able to swiftly and effectively conduct this moderation on the fly, granting websites the opportunity to utilize Conversation AI to moderate content posted to the site by their users for them. Wikipedia and The New York Times are already testing out the program, and while Wired noted issues with its ability to detect certain language, it is hoped that eventually the program will be able to successfully distinguish between “harmless banter and harassment” in order solve the problem of “making people be nicer on the internet.”

However, 4chan has taken umbrage with this program, with its members orchestrating the abhorrent “Operation Google” in an attempt to continue to spread hate speech across the internet. Operation Google was outlined by 4chan members as an effort to replace the “n-word” with the word “Google,” in order to “make it so Google would have to censor their own company by making them a racial slur towards blacks.” The Operation Google “manifesto” can be read below:

In other words, 4Chan users have begun creating memes, replacing the ‘N’ word with Google, in order to create a negative connotation around the word — forcing Google to censor itself into oblivion. lolz

Oh boy.

I posed this question in a recent Twitter poll. Feel free to vote.

Who will buy $TWTR?

— The_Real_Fly (@The_Real_Fly) September 23, 2016

Rumors are running rampant, courtesy of David Faber, regarding an imminent deal to purchase the piece of shit social media company. While Twitter is widely revered by those in the media as a place to distribute news and oppress those who fail to adhere to a specific social code, most shareholders fucking hate the company and would love nothing more than to see it sold.

The shares are higher by 18% on the news, still well below its IPO price of $26 from three years ago.

If we had a government that sought to protect against a monopoly forming in media, there’s no way they’d permit Google to buy them. Why in the world would CRM want to buy Twitter? That makes no fucking sense at all. They’re in the CRM business, not media. Should they purchase TWTR, expect the share price of CRM to get clown raped.

This leaves us with just one entity left to buy Twitter: The House of Saud, led by the affable and delightfully hedonistic, Prince Alwaleed bin Talal — who already owns 5% of the company. If Saudi Arabia bought Twitter, they could gain access to a treasure trove of infidels for rapid extermination. Think of all the synergies an evil empire like that could implement if given the keys to buy Twitter. Since our government is beholden to the Kingdom, I am certain it would get regulatory approval straight away. My only question is, should Saudi Arabia buy Twitter, will they permit women and gays to tweet anymore?

Then there’s always this to consider.

One of the interesting narratives about the Obama-Iranian alliance is that is has applied pressure to our friends, the Saudis. You know, the people who ‘demolitioned’ the World Trade Towers.

The House of Saud has offered to freeze production at an absurd 10.7m barrels per day, way above any historical level over the past decade.

Iran, fresh off of getting out of sanctions, was like ‘go fuck yourself,’ when asked to adhere to some sort of oil freeze. They’re just getting back in. Also, and bear in mind, Iran is capable of producing triple the current amount, which is only 3.6m bpd.

In other words, a deal that was never going to get done didn’t get done, so now oil is collapsing. Makes sense?

Look at this shit, utterly retarded.

WTI is cascading lower, off by 3.4%.