Cramer: Ignore Bernie Sanders; Look For Possible Upside to Earnings

In this clip, Cramer dismisses the ‘protest’ candidacy of B. Sanders, likening it to a joke compared to the business friendly Hillary campaign. Moreover, he doesn’t think Sanders stands a chance, especially since the superdelegates will hand Hillary the win, in what Cramer calls a ‘coronation’, as opposed to the advertised ‘nomination.’

Taking a contrarian viewpoint to what has been hitherto a castigation of earnings expectations for the first quarter of 2016, James Cramer cites a marked improvement in the Chinese indices, as well as the dry fucking bulk index, as evidence that doom might not be the prescribed analysis needed heading into earnings.

He sees upside, when everyone else is expecting black flags and carcasses strewn out across the investment landscape.

I’ve gotten over these elections. I’ve come to grips with the indelible facts, for the millionth time during my life, that my opinion means nothing, as well as my vote. All that I can do to allay the brutishness of it all is to express scorn and deride the mockery that we call democracy. These trolls keep citing so called laws that were put in place, which negate common sense and decency. Last I checked, the democratic process should count the votes of all men, as a right, not just a select few ham and eggers who are bought and sold by the establishment elite.

These elections are a great success for one reason only: it is laying bare the corruptness and illegitimacy of a system that praises itself as being fair and equitable. I believe the Sanders-Trump candidacies, if anything, have awoken the masses to these grave injustices.

This is the very worst case scenario for feverish bulls, but the best for me. At the open of trade, I led a faction of top hatted gentlemen into another tranche of short XLE, close to $63.

For the second time in as many days, the market was robbed and beaten for an otherwise genteel 150 point advance.

Oil stocks reversed under the weight of their own hubris.

The ark, gentlemen. It floats.

Any questions?

Median returns for both sectors are higher by 7%–based on a mere 1.1% return in the physical metal. Wholly and without question, these moves are of the nonsensical varietal.

Markets are flagging here, giving up a 150 point gain, reminiscent to what occurred on Friday. This is, without question, a very ominous development for the morale of this market. The buyers of this late stage rally are of the cheapest cloth. Their loyalties lie only with their account balances.

Offer them a hard tape, and subsequent losses, and watch them flee the field of battle, en masse, paving the way for a Kool-Aid guy breaking through to the downside.

The rally in gold is more likely due to these mercenarial traders, floundering to find new opportunities, rather than a solid fundamental reason backed by strong asset reallocation.

A storm is coming.

Everything is skewed to the downside, according to David Kostin–War Chief of U.S. Equity Strategy, Goldman Sachs.

These are the three principle reasons for you to fear the coming ice’d-berg.

1. Energy and banks
“Our analysts have highlighted a laundry list of headwinds including energy counter-party risk, a slowdown in capital markets activity, and a bruising quarter for asset managers,” Kostin & Co. said. “We believe financials earnings per share [EPS}could fall by as much as 25 percent.”

2. Negative guidance
“Since 2006, roughly 20 percent of firms have provided ‘next-quarter’ guidance during earnings season and 73 percent of firms typically guided below consensus,” Goldman found. “Following the depths of the global financial crisis, guidance has grown increasingly negative, and has been worse-than-average since 2012.”

3.Corporate buybacks
Kostin believes the gravy train of equity buybacks is ending: “a meaningful reduction in what is currently the only source of net demand for U.S. shares.”

In summary, the outlook for over 30% of the market is bleak and very dark, and also very dire. With regard to the financials, they’re diving–headlong–into cement pools, with earnings expected to be reduced by 25%. Moreover, this isn’t going to be a one-off event and companies are expected to guide lower, in droves, for next quarter. Lastly, corporate buybacks have run its course. They’ve been maintained at a pace that is unsustainable. The succor the markets have enjoyed with this seemingly endless support of prices has all but come to an end.

BEHOLD the earnings season to come. David Kostin believes you will enjoy it, immensely, similar to a horror movie or something much, much worse–a lifetime of Presidential campaign speeches.

A new aristocracy is forming in the marketplace, as the new born investors in distressed commodities express themselves through higher prices.

These new men of industry are above all stations in society. Their milieux is one of extreme wealth and substance. Stocks like CHK and BBG are in their portfolios from the lows. They feel oil will double from here and their new Greenwich mansions will be completed by next fall, should everything go according to plan.

“Isn’t it wonderful?”, asked the wife of one of these illustrious investors.

I cannot begin to describe how wrong this rally in commodity related stocks is. I do not pretend to hold all of the answers to life and I’ve had my fair share of failures throughout the years. But this will not be one of them.

This perversion of reality, this melt up in commodity related stocks, will end. When it does, it will end very badly indeed.

In the meantime, the market is running higher again, save biotechs. I don’t expect the rug to be pulled just yet. I do expect said rug to be completely gone, however, come May.

Enjoy the rally while it lasts.

The ECB and the EU are gargantuan failures unraveling in real time. To think that the conservative Bundesbank gents are forced to cede power and control to some Italian lunatic, who thinks it’s ‘very interesting’ to send free money to people directly, as a method of enacting central bank policy, is fucking hilarious.

Germany is besides itself with rage, whilst eating oversized pretzels and swigging down excess quantities of swill, as Draghi makes a mockery of their Austrian school of economics.

A storm of protest erupted in thrifty Germany after Draghi last month described the idea of “helicopter money” – sending money directly to citizens – as a “very interesting” – if unexamined – concept.

Late last week, top ECB officials, including the ECB’s chief economist and its vice president, backpedalled, saying the idea was not on the table. But the damage had already been done.
“The ECB’s policy was already unpopular in Germany and the idea of helicopter money was the straw that broke the camel’s back,” said Joerg Kraemer, an economist with Commerzbank in Frankfurt. “People feel that ideas like this are dangerous.”

German analysts see the idea as an excessive ramping up of a loose money policy that is already fuelling rising property prices in their country, and also because it would undermine the euro by printing money and giving it away for free.

It marked a new low in the often fraught relations between the euro zone’s biggest country and the central bank’s Italian chief, who has recently bemoaned what he described as the “nein zu allem” (“no to everything”) approach – a swipe at Germany.

The ECB is scheduled to meet later this month. I would pay to be a fly on the wall to see the expressions on the German faces when Draghi reveals his Italian ‘bad bank’ fund scheme.

Look for rebels to make miraculous strides towards toppling the government, should this tone continue.

First S. Korea, now Nigeria. The banking system is owned by Anglo-American interests. The Chinese interfering in the affairs of the King makers cannot be a good development for world peace.

The West African nation may shun the Eurobond market, opting instead for renminbi or yen bonds, according to Finance Minister Kemi Adeosun. The government wants to raise as much as $1 billion in international capital markets to finance a deficit that’s forecast to be about 2.2 trillion naira ($11.1 billion) this year, she said April 9.

“We are finding that, indicatively, the renminbi market may be cheaper than the Eurobond market,” Adeosun told reporters in Lagos, the commercial capital. “We are shopping around for the best deals.”

This is very interesting to me. I don’t know why, truth be told.

The credit facility remains undrawn, so this isn’t a big deal. However, it does lessen the companies ability to weather very turbulent storms, should they present themselves.

Co announced that it has successfully completed the semi-annual borrowing base redetermination of its revolving credit facility maturing in April 2020.

The bank group has set a borrowing base of $335 million, an 11% reduction from the previous borrowing base of $375 million.
There were no changes to the terms or conditions of the Facility.

“We remain financially well-positioned with an undrawn credit facility, over $100 million of cash on hand, and nearly two-thirds of our 2016 oil hedged at approximately $80 per barrel.”
The next regularly scheduled borrowing base redetermination will occur on or about October 1, 2016.

If I owned this stock, I’d be very interested to find out when those $80 crude hedges expire. Many oil companies took these hedges when the bottom dropped out of crude. But many of said hedges are set to expire soon, FYI.

Nothing to raise an eyebrow at here. The trustworthy lads at Barclay’s are merely “testing the appetite” of the market, by disposing of its ENTIRE portfolio of performing and non-performing assets.

They will be out of the Italian retail business within 1-2 years, probably sooner.

“Barclays is starting the disposal of its portfolio of performing and non-performing loans, the last step of the bank’s exit plan from the Italian retail business,” country chief Alessandra Perrazzelli said in an interview in Cernobbio, Italy on Friday. “We are selling the complete portfolio of loans and we aim at closing the disposal of the whole portfolio in one or two years, depending on market conditions. We are now testing investors’ appetite.”

Barclays is refocusing on the lender’s most profitable units in the U.K. and U.S. and selling consumer operations in continental Europe that it doesn’t consider central to its business. Britain’s second-largest bank sold its operations in Portugal to Spain’s Bankinter SA in September, while Mediobanca SpA agreed to absorb Barclays’s consumer-banking operations in Italy in December.

“Barclays has been working to simplify its business and to concentrate on those businesses where it can make sustainable returns and compete with the big American players,” said Perrazzelli. “This process is also involving Italy, where our investment and corporate banking businesses perform very well.”

First Portugal and now Italy. Perhaps the Barclay’s folks are being prescient by withdrawing from the weaker EU countries while the bids are strong.