Chinese Exports Plunge by 25% in February

These numbers were so bad the Ghost of Christmas past will be visiting the Chinese premier this evening.

Things are getting real greasy down in doggie hell, as the piece of shit, nefarious, goods out from China get rejected around the globe.

Overseas shipments tumbled 25.4 percent in U.S. dollar terms from a year earlier, the customs administration said on Tuesday, compared with a 11.2 percent drop in January. Imports extended a streak of declines to 16 months, slumping 13.8 percent, leaving a trade surplus of $32.6 billion.

A slowdown in global trade is making it harder for China’s leaders, who are gathered in Beijing this week to set the nation’s economic plans, to keep growth at the targeted 6.5 percent to 7 percent range. Reflecting the uncertainties, the government didn’t set a specific target for trade at the annual congress meeting after it failed to meet the goal last year.

“The government has formally recognized that foreign trade growth rate is not something the government can and should control,” analysts at Goldman Sachs Group Inc. including Song Yu wrote in a note ahead of the trade release.

I know, I know. H. Clinton is gonna make America whole again and the crazy fucking Mexicans are going to lead America to the promise land, one rogue vagrant at a time.

Meanwhile, the world burns.

S&P futures are off 10.

Both China and Japan: sharply lower.

Good evening.

Cramer touched upon what I’ve been predicting will happen, now that energy stocks have rallied: they’re gonna start issuing superfluous amounts of stock in dilutive share offerings in order to save themselves from bankruptcy.

Cramer likens this action to the financial crisis of 2008, when all of the banks diluted with massive offerings in order to raise capital.

“Just like the banks did massive equity offerings in the bad old days of the Great Recession, they too got saved. This is the same thing.”
-Jim Cramer

For instance, Marathon Oil was once one of the top players in the oil patch. In 2015, it lost a striking $3.26 per share, and investors turned the stock into a pariah over concerns with its debt. Oil roared up to $33 at the end of February, which brought Marathon back to $8.23

But on Feb. 29, 2016, the company announced an equity offering of 135 million shares at a substantial discount to its last sale. The discount was so big that institutions flocked to it, and the company was able to sell an extra 10 million shares.

The stock has not looked back since.
“That is phenomenal,” Cramer said.

“The former is why the stocks can pop so much — consider it an instant steroid that makes them better. The latter is why the banks can rally as they have,” Cramer said.

With the success of oil companies issuing equity and so many buyers making money from the deals, Cramer suspects it could happen to pretty much any player in the oil patch. He compared the success of these secondary offerings to an IPO.

He could even see a company like Chesapeake, which owes billions in debt, could pull a Marathon and raise money to cover its debt that could come due in the next few years.

These extraordinary moves are not just limited to oil. Cramer has seen big moves happening in other commodities such as iron ore, which rallied 19 percent in one session following the Chinese government’s announcement of aggressive goals for growth over the weekend.

“I bet Freeport could easily sell 100 million shares and eliminate any near-term liquidity concerns, which would, again, allow the stock to climb ever higher. The virtuous circle at work,” Cramer said.

Cramer does have concerns with the recent run in commodities, though. It is based on commodity prices rising, and he does not think that is going to happen.

However, considering the way these companies have managed to stay afloat with the secondaries, it could mean that the worst is over for commodity stocks that have moved above the $2 to $3 range.

“Just like the banks did massive equity offerings in the bad old days of the Great Recession, they, too, got saved. This is the same thing,” Cramer said.

The only problem with comparing the real fundamental impediments of the oil patch to the crisis of confidence which caused banks to raise capital in 2008, is that the former cannot paper over losses and then get back to business as usual. For the most part, after banks raised capital in 2008-2009, and the panic has passed, it was business as usual for them.

The fucking oil companies are beholden to a commodity that is going to give them fits for years. While CHK might take this opportunity to raise capital via secondary to pay down some debt, the quarterly losses will still mount, henceforth, and the stock will still languish because there won’t be any meaningful growth or free cash flow present to buttress the stocks.

This is an apples to oranges comparison. However, should the major debt traps successfully raise much needed capital, regardless of whether their businesses have improved or not, I suspect the shares will eventually rally– celebrating survival over assured destruction.

I told you those little weasel investment bankers were working long hours this weekend to price deals.

PDCE is one of the few companies who smartly hedged most of their production before the collapse. As such, the pricing of this deal was nothing short of a dunk shot. Even so, and especially after today’s rally in energy stocks, I’d be shocked if the market was not flooded with spate of offerings this week.

If you run an energy company with lots of debt and do not price a secondary this week, you should be fired.

Via Briefing.com as per PDCE’s statement:

The net proceeds from this offering will be used to repay the principal amounts owed upon the maturity of the Company’s 3.25% convertible senior notes due in May 2016 and for general corporate purposes, which may include repaying amounts borrowed under the Company’s revolving credit facility.

These are hamburger assholes. You cannot trust anyone who sells wares designed to cause cardiac events in its customers.

“Come eat at our restaurant. Increase your weight, while decreasing your life expectancy.”

SHAK is my sole common stock position in my personal account, but the size is small like Marco Rubio’s vote total.

SHAK is getting its face pressed to the griddle in the after hours, following an earnings beat and reporting same store sales of +11%, which is outrageously great.

Nevertheless, people don’t give a shit.

Reports Q4 (Dec) earnings of $0.08 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.07; revenues rose 46.8% year/year to $51.1 mln vs the $50.09 mln Capital IQ Consensus.

Same-Shack sales increased 11.0% for Q4 vs. ests near +7%, on a calendar basis, versus 7.2% growth in the fourth quarter last year.

Co issues in-line guidance for FY16, sees FY16 revs of $237-242 mln vs. $240.54 mln Capital IQ Consensus; same shack sales +2.5-3.0% vs. estimates just above +3%; 13 new domestic Shacks and seven new licensed Shacks.

Short sellers were entreated to another squeeze towards the end of the day. The Dow closed higher by more than 60, the SPY was flat and the Nasdaq rebounded from a -40 deficit to close down just 8.

Timing tops is a mind numbingly difficult chore.

Oil continued to soar throughout the day, up 5.5%–paving the way for an astounding rally in oil related stocks, many of which roared higher by 20%.

For the month, the commodity sector has been a prime performer in the market. The CRB index has been powering forward with relentless fervor.

Bottom line: markets should avoid cataclysm until May, at which point the gates of hell will be opened and stocks will suffer immeasurably horrible fates.

Have you ever heard of the phrase ‘blow off top?’

In terrific fashion, markets reversed higher this morning following moderate losses. After the rogue degeneracy of small capped traders was laid bare in front of the world to see, the muppet masters pulled the rug and we’re now descending into hell.

I will reiterate my position that the correct trade is to sell here. Timing tops is a very hard thing to do, much more than bottoms. Despair and fear are actionable against because they dissipate and are counter to the basic human emotion that is optimism. Trying to time tops, however, is equal to knowing when a sociopath with stop making friends, a whore pulling new tricks or a savage army of zealots deciding to make peace. Betting against human excess and their right to MOAR is hard. That’s my point.

Nevertheless, and I hate to sound cliche here, but no one ever got hurt taking profits or leaving the party early. You can, however, find yourselves in grave danger waiting until the end of the party, when all of the drunkards quarrel with one another, trying to shoot each other in the face for stepping on each other’s shoes.

I’d be a net seller here in every way imaginable, save treasuries.

Note to self number 398:

It’s always bleakest just before the sun rises.

It’s always easy to see these things in hindsight, naturally. Heretofore, these stocks couldn’t catch a bid; now there impervious to selling.

Brent crude has broken through the mystical and all unimportant barrier of $40.

There isn’t much else to say, other than congratulations to all of the expert traders on the internets who bought the bottom and will assuredly sell the top.

How wonderfully glib of all of these people comparing a real estate mogul to a fucking man who was responsible for 100 million people dying. The liberal mantra to decry each and every republican as Hitler is fantastically hysterical, dripping with ignorance, and at its worst, woefully disrespectful to both Trump and of course the veterans and innocent civilians who died because of Hitler.

Nevertheless, nothing gets the media going like Bush-Hitler or Trump-Hitler comparisons.

I wonder why nobody ever compares Trump to Pol Pot? They have way more in common.

Enter Mexico’s shithead of a President.

Asked by Excelsior whether there was a “scenario” under which Mexico would pay if Trump won the presidency, Pena Nieto was clear. “There is no scenario,” he said. “I have to say that I regret (the plan), and of course, I can’t agree with this American politician’s position.”

“And there have been episodes in human history, unfortunately, where these expressions of this strident rhetoric have only led to very ominous situations in the history of humanity,” the Mexican president added.

“That’s how Mussolini got in, that’s how Hitler got in, they took advantage of a situation, a problem perhaps, which humanity was going through at the time, after an economic crisis.

“And I think what (they) put forward ended up at what we know today from history, in global conflagration. We don’t want that happening anywhere in the world,” Pena Nieto said.

Just in case the Mexican President hasn’t already figured it out: Trump will get Mexico to pay for the wall, not by signing a check, but through levies on goods imported into the United States. With a trade surplus of $58 billion, Mexico holds very little leverage to retaliate in this regard.

Micron is in an insane business. Just a few years ago, they were the toast of every hedge fund’s strategy room. Today they are the unwanted feces on the bottom of a shoe.

Nomura attempted to decapitate MU today, following an already harrowing start to 2016, by cutting the target to single digits.

“This particular factor affects Micron substantially,” said Anand Srinivasan, an analyst at Bloomberg Intelligence. “If the information coming from Asia is true and supply is not slowing down, that’s bad for the DRAM industry and particularly bad for Micron,” given that about 58 percent of its sales come from that business, he said.

“Memory suppliers are characterizing the environment as a perfect storm,” the note said. “While demand is weak, DRAM suppliers are also facing what we perceive as a prisoner’s dilemma. Rationally, it is in their best interest to cooperate, but Micron, Hynix and Samsung have no intention of bringing down utilization.”

Another ‘perfect storm’, eh? Enough with the fucking references to that stupid shithead movie where all of those asshole fishermen drowned because they were too ignorant to adhere to the laws of nature, and also weather forcasts.

Shares of MU have recovered much of its early morning drop, but still lower. More importantly, if what Nomura says is true, this stock, as well as many others in the semi space, are in for further downside.

The stock is now up 11% for the year and 13% over the past two weeks. This stock was left for dead in early February, when everyone was freaking out over China and the specter of their ghost cities not needing anymore of CAT’s tractors.

Apparently, rumors of Caterpillars demise have been greatly exaggerated.

The share price action of CAT has been synonymous with Chinese growth. In recent weeks, much of this rally has revolved around the idea that the Chinese economy wasn’t doing as poorly as people suspected. Couple that with the statements from the Fed, who, at the moment, are sounding more dovish, and you have a recipe in place for a sharp rally for stocks.

The only problem with all of this is that it’s 100% horseshit. The Fed are still very much interested in jacking rates until your brain spills out from your ears. China is a fantastic fraud and definitely slowing. Moreover, demand for coal and steel are waning and do not support the share price appreciation for CAT.