Volatility Spikes, But No One is Really Scared

The VIX bounced off the all reliable $12 level and is now higher by 9% today, thanks to some early morning weakness, likely due to the Italian referendums, the Jill Stein recounts and dreadful brick and mortar Black Friday sales, which no one wants to discuss anymore. After all, Amazon is doing great.

Not before long, in our lifetime, you’ll bear witness to entire shopping malls being acquired by Amazon and converted into warehouses for their shit. All of the mall workers will be fired and robots will take their jobs. If you try to rise up against the robots, an automated uber will deliver robot security guards to cut your arms off — but do so in a way that you’ll live to tell the tale. Robots are all about precision.

VIX TITS is spiking, but no one is really scared. There’s a distinct smugness, an air of invincibility permeating the marketplace. The United States literally elected Hitler and the SPY ran higher by 8% because of it. Nothing can stop the market now. Not you, not a dead Fidel, not even Putin.

Everyone laughs at the VIX and throws popcorn at it. It’s all fun and games, fuckers, until your brokerage accounts hits zero and you’re pissing your fucking pants because you dropped your whole load inside of the market at the top.

You thought deleterious trade deals for China meant higher copper. But you were wrong and your face got fucked for it.

You thought building a 2,000 mile wall on the Mexican border was good news for Mexican stocks. But you were wrong about that too, as well as betting that the Fed could do whatever the fuck they wanted, and get away with it. Having $20t in debt was good news, until it wasn’t anymore. Rising rates into prospective fiscal stimulus and actual deflation proved to fuck your face, yet again.

BREXIT proved to be less than harmonious and the destruction of the EU and its currency wasn’t exactly news worthy of buying more shares. That too ended up drilling serious holes into your flotilla, sinking you to the bottom of the swamp, to be ravaged and eaten alive by cold blooded sharks.

Lucky for you, none of this has occurred yet. You can still enjoy the hedonistic gains, uninterrupted, as you donate residual funds to the Jill Stein recount effort.

For all of the hype of retail sales and holiday shopping, generally speaking, December is a big waste of time. Sure, maybe this year is different — but I doubt it.

Very soon, all of our beloved elite hedge fund managers will close shop for the year, leaving junior to run the trading turrets, with explicit instructions to not fuck up or die. Volatility will decrease and people will go to work drunk off morning egg nog.

Here are the returns for December, dating back to 1999 for the SPY.

The only major event taking place this year are the Italian referendums on 12/4. Even though this might lead to an Italian exit from the EU, I’m certain the globalist scum will figure out a way to minimize it and keep markets propped up. The Fed rate hike is already baked in and another hike isn’t expected until June of 2017, so all of the stars are aligned for a somewhat benign December, capping off a very good year.

Speaking of which, The Option Addict is hosting his final boot camp of 2016 in a few weeks. This one is a must attend event for all interested in trading for a living, or for those trying to figure out what to expect in 2017. Jeff has done a killer job in remaining calm and booking profits, all year long.

There may be another reason why the Euro has been so damned weak v the dollar: it might not exist for too much longer. With Le Pen from France surging in the polls and Prime Minister Renzi from Italy promising to fire himself should a drastic and very aggressive constitutional realignment fail to pass in a referendum on December the 4th, the anti EU five star movement might takeover and tell Germany to fuck off.

All of this is weighing heavily on Italian stocks, one of the worst performing indexes in the world this year, off by 23% — somewhat immune to the greatness of QE and all of its grandiose splendor.

To that end, Italian banks continue to slug lower, amidst acrimonious sentiment that a potential exit from the EU might lead to the ultimate destruction of an already comically overburdened and woefully undercapitalized Italian banking system.

Shares are hitting new recent lows, down from 2-4% this morning.

Barrons sums up the best and worst case scenarios. The best case scenario is something of a fantasy, sort of like a Hillary Clinton recount election win. Not that I’m a fan of the pollsters, but the people really want to see Renzi Fire himself, with the no’s leading by 5 points in the final poll before the referendum.

IN THE EVENT the reforms are rejected and Renzi resigns, the implications are much more complicated. It is possible that Renzi’s center-left Democratic Party-led government could form a new administration, headed by one of his cabinet members, with a short term and a narrow mandate, such as writing a new electoral law. Italian equity markets probably would underperform, and the political malaise could delay capital injections at the beleaguered banks. Spreads on the 10-year bonds could widen.

In a worst-case scenario, a new government couldn’t be formed and national elections would be held, paving the way for popular euro-skeptic parties led by the Five Star Movement to put together a new administration. They could push for a referendum on continuing membership in the euro zone, which would have a destabilizing effect on the entire area.

If that happens, the euro, whose decline against the dollar has accelerated in the past few months, could face more stress. “The systemic consequences for the whole area would be material,” maintains Deutsche Bank senior economist Marco Stringa. “So the euro would probably depreciate, although it is difficult to calibrate by how much.” On Friday, the European currency was worth $1.059.

Doom is just around the bend.

Very nice. A massive speculative bubble has shifted from bonds to zinc over the past 2 weeks. Due to an all of a sudden bullish wave of wanton optimism for China under a Trump administration, brainless idiot traders have bid up the price of lead and zinc to unbelievably stupid levels, for reasons unknown to everyone.

Industrial metals have climbed almost 30 percent in 2016 after three years of losses as demand growth stabilized in China, President-elect Donald Trump pledged to invest in infrastructure and revitalize the U.S. economy, and mine closures curbed supply. Chinese investors have added to the speculative binge.

Zinc, the best performer on the London Metal Exchange this year, climbed as much as 5.4 percent to $2,970 a metric ton and traded at $2,954 by 3:23 p.m. in Shanghai. Lead advanced as much as 7.2 percent before trading 3.4 percent higher. Both metals closed up the limit on the Shanghai Futures Exchange.
“We’re bullish on zinc and lead given the tightness in ore supply and potential production cuts at smelters in coming months, but the speed of the rally exceeds our expectations,” Dina Yu, an analyst with CRU Group, said by phone from Beijing. “There have been no big changes in fundamentals that can explain such a surge. The market is driven by bullish sentiment in all metals.”

Zinc is higher by 80% this year, while lead is up by 40%.

According to Exodus, $SSRI is the only stock in a database of more than 4,000 stocks that has both lead and zinc mining operations in its profile.

When the democratic party is in ashes, then you have my permission to die.

Prepare to lose twice, snowflake.

A reversion to the recent bullish gold trade is taking place tonight, with the dollar off by 0.8% v the dollar and shattered by 1.4% v the yen.

The yen is a little more than 10% lower v the dollar since Trump won the election. Maybe now, since Clinton and Stein have designed a scheme to try to steal it, people might feel less than enthused about the effervescent Trump trade.

Either way, Nasdaq futures are off by 11% and gold is spiking hard with the dollar weakness by 1.5% — with silver doing even better, up 2%.

Between the crazy run to the upside in stocks, coupled with the endless barrage of hawkish statements out of the Fed, gold has been beguiled by sellers for the better part of the past 3 months. Over the past month, however, losses have accelerated to the downside. Bear in mind, this outlier sector was the single best performing sector of the market, up until the recent and very dramatic in the steel and iron stocks (+86%ytd) — in anticipation of a glorious large southern border wall.

Here are the larger capped stocks in the gold sector and their wretched performance over the past month.

This is classic Trump at his best, trolling the left with opinions that aren’t backed up by facts — which in turn forces the media to discuss his ‘outrageous’ statements, which end up being true.

Does anyone seriously doubt there wasn’t some form of voter fraud in these states? I am sure if we looked closely at every state, we’d find some level of fraud.

Serious voter fraud in Virginia, New Hampshire and California – so why isn't the media reporting on this? Serious bias – big problem!

— Donald J. Trump (@realDonaldTrump) November 28, 2016

With the Jill Stein voter recount effort underway and Hillary Clinton team joining the effort, Trump is making it clear that he intends to fuck with them every step of the way.

How does this bode for markets? Thus far, futures are slightly lower, gold is higher by 0.8% and WTI is down by 1.2%. If this recount business picks up traction and seriousness, then the market is going to get lit on fire — burning down.

Trump triggered Clinton supporters by saying he won the popular vote after deducting all of the illegal votes that were cast for Hillary. In response to the tweet below are so many falling snowflakes by ‘journalists’ and celebrities, it’s simply too much to delve into.

In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally

— Donald J. Trump (@realDonaldTrump) November 27, 2016

But one of them stood out, a tweet by the former DNC Chair and prominent democrat, Howard Dean — suggesting Hillary might’ve won the electoral college after subtracting all of the illegal votes that were cast for Trump. This is an obvious poke at the Putin conspiracy theories that are running rampant in the minds of the left.

@realDonaldTrump @KattyKayBBC It's beginning to look like HRC won the electoral college if you "deducted the millions who voted illegally"

— Howard Dean (@GovHowardDean) November 27, 2016

BASED.

If you thought Trump was going to take it easy on Twitter, after becoming President of the United States, think again. He’s been going apeshit on Twitter over the Jill Stein recount scheme and is now trying to trigger Hillary Clinton and her supporters by suggesting he actually won the popular vote (latest data shows Clinton with a 2 million vote lead in the popular vote), when taking into account all of the illegal voters that participated in the elections — most of which voted for her.

In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally

— Donald J. Trump (@realDonaldTrump) November 27, 2016

The whole popular vote narrative the Clinton supporters are pushing is extremely flawed, since the rules of the game dictated an electoral college win is all that mattered. If the contest called for a popular vote win, Trump would’ve spent all of his time in Texas and other red states, ginning up votes for the win. The whole point of the electoral college is to ensure the states have a say in who the next President of the United States will be.

Here are some other tweets that are sure to infuriate the real news reading left.

It would have been much easier for me to win the so-called popular vote than the Electoral College in that I would only campaign in 3 or 4–

— Donald J. Trump (@realDonaldTrump) November 27, 2016

states instead of the 15 states that I visited. I would have won even more easily and convincingly (but smaller states are forgotten)!

— Donald J. Trump (@realDonaldTrump) November 27, 2016

The Democrats, when they incorrectly thought they were going to win, asked that the election night tabulation be accepted. Not so anymore!

— Donald J. Trump (@realDonaldTrump) November 27, 2016

The Green Party scam to fill up their coffers by asking for impossible recounts is now being joined by the badly defeated & demoralized Dems

— Donald J. Trump (@realDonaldTrump) November 27, 2016

Hillary Clinton conceded the election when she called me just prior to the victory speech and after the results were in. Nothing will change

— Donald J. Trump (@realDonaldTrump) November 27, 2016

And here’s Trump going in on Hillary’s hypocrisy.

Lastly, instead of praising the late Fidel Castro as a romantic figure, like the NY Times, Trump coldly tweeted “CASTRO IS DEAD.” OMG

Fidel Castro is dead!

— Donald J. Trump (@realDonaldTrump) November 26, 2016