That Rally Failed

It looked good, three different times throughout the day, only to fail miserably–leaving investors holding a flaming bag of shit.

I hate to say this, but the entire fate of the western world now lies in the wrinkled hands of Grandma Yellen tomorrow.

Crude was lower.

Oil stocks were cosmically fucked, down 5-10% across the board.

Breadth was at 38%

Airlines were the best performers on the day.

Oh, and yes, TLT was higher by 14 cents for the day, to $131.63.

The ark floats.

NOTE: I purchased SPY at $183.69 today. ***Limited Exodus free trials will begin at midnight…stay tuned***

WTI fell to $28 per barrel today, after an IAE report showed OPEC production has been INCREASING, like morons, into an apocalyptic decline in price.

Global oil glut worsening

No OPEC deal

Supply is rising; demand is waning.

OPEC is producing MOAR

#fuckery

Goldman Sachs’ COO, Gary Cohn, wonders out loud why stocks act so fucking retarded. He posits there have been such herky-jerky moves in stocks these days, pointing to a lack of liquidity in markets that will prohibit investors to exit stocks, if need be, ‘at reasonable clearing prices.’

This whole naivety is hilarious, really. Gary knows why liquidity is suspect. I’ll go out on a limb here and suggest that high frequency traders, coupled with a lack of retail investors in the market, have something to do with the lack of normalcy in the market these days, something Cohn and his band of grape-raping asshats at Goldman helped make the norm these days.

He opted for $10.25 instead.

In his absurd $4.1 trillion budget today, Obama shit on crude and anyone who’s been enjoying lower gasoline prices.

Obama wants the money to be steered towards “21st Century Clean Transportation Plan to upgrade the nation’s transportation system, improve resilience and reduce emissions.” Complete fuckery, global warming horseshit.

The White House Office of Management and Budget did not explain the higher fee or share details on the modeling and assumptions it used to estimate money it would raise — as much as $319 billion from fiscal 2017 to fiscal 2026.

The only problem with their idiot estimate is that it assumes we’ll be producing any oil at all. With the price of crude through the floor board and this idiot tax proposed, our oil industry will be washed away with the sands of time, before this abomination is made into law.

American Petroleum Institute President Jack Gerard said it was an “unprecedented tax hike.”

“We know that this tax hike could also have an impact on food prices and all sorts of consumer goods — everything that relies on transportation to get to consumers,” Gerard said in a teleconference. “Only extremists whose goals ignore the concerns of consumers and lower-income families could welcome such an approach.”

WTI trades down to 28, like a moron. Brent crude trades down by 7%. Stocks rally.

What the fuck? You must be wondering how the marker is rising when Brent got smashed into the rocks for 7% and WTI is embarrassing itself at $28. The simple fact of the matter is, we’ve gotten to a point of extreme apathy. Investors are so apathetic to the price of crude and stocks, they’re beginning to not give a shit, relying on pure animalistic instincts to guide their investments.

***AN INTERMISSION OF SORTS***
(look at this ridiculous shit, taking place in the ‘oil patch’ today)

I know you think I’m fucking with you, but I’m not. Man is a savage beast of an animal, incapable of harboring emotions for a prolonged period of time. Every so often, we wallow about the pub, bitching about this or that. But, eventually, our basest instincts take over and we start ripping heads off shoulders, pissing in the wind, attacking our neighbors with homemade trebuchets.

Ladies and gentlemen,

We’ve come to an end in these markets. They’ve annoyed people for too long. They’ve gone down and down some more. This is the part of the story when a short squeeze develops. The news flow changes, from horribly morbid, to crazily optimistic. The bad news becomes good and the good news becomes better. Janet Yellen will be viewed upon as a national hero, come tomorrow. The market will rejoice in the splendor of dead bears swinging from gibbets on Wall.

Prepare yourselves for the unthinkable: sharply higher stock prices.

In light of their share price decapitation, down 56% over the past 6 months, Deutsche Bank is considering buying back several billion dollars of its bonds. According to FT, they’ll buy senior bonds. There was no mention of the COCO bonds that everyone seems to be fixated on.

At the moment, the cost to insure against DB debt is at its highest point since the 2011 euro crisis.

Shares are off the lows, since this news was released.

Poor hedge fund managers are going to need to ease up on the construction of their mega mansions, if this keeps up.

AIG has had enough and won’t take the losses anymore. They’re pulling $5.5 billion or so from their hedge fund investments, rightfully so.

AIG had about $11 billion dedicated to hedge funds as of the third quarter, and returns on the holdings have slumped in recent months. Chief Executive Officer Peter Hancock said at a Jan. 26 investor presentation that the company intends to lower the allocation, but he didn’t say how many hedge fund managers the company would stick with or provide details on the planned amount of exits.

“We had a very negative experience in hedge funds,” Hancock said in the presentation. Shifting the allocations will “lead to a much better return on risk and especially return on capital.”

The company has investments in 100 funds. They’re selling in order to preparing for increased volatility and want to reduce “risk assets” in financial markets, as a period of limited liquidity might be around the bend.

What a stupid period of time we live in, when
each nation relishes in their national currency weakening. In the olden days, national currencies would fall victim to inflation and an entire nation of savers would be ruined.

Here we are now, happy to see dollars crushed.

TLT should be lower. But people still want a seat on the ark. These are dark, dark days.

I’m constructive.

China is shut down due to monkey celebrations (rolls eyes). Oil looks stable and the Fed enters center stage tomorrow.

Potentionally, these ingredients, if mixed right, will lead to the biggest rally in over 12 months, if not MOAR.

Shorts should be removed; long exposure added, in my opinion.

Can sentiment get worse?

Funny thing about the media: they seem to be harping on negative talking points. I posted a video interview of a Goldman Sachs oil analyst this morning who clearly was constructive on the oil debt and how it didn’t pose a systemic risk, in his opinion of course, and all of the headlines since then are “Goldman Analyst Sees crude below $20.”

That’s not the headline; but it’s the one you’ll click and read most.

Yesterday’s traffic at IBankcoin was the highest in a very long time. Our traffic during the month of January was up more than 50% from December.

In my experience with the site, since 2007, whenever markets are bottoming out, web traffic is at its highest. Aside from Exodus, it is the single best indicator of a market bottom that I know.

That being said, stocks gave up a sweet upside reversal. I suppose investors are waiting for Grandmother Yellen before committing to the long side–which has been nothing but pain.

Nevertheless, I’ll be buying dips based upon Exodus oversold signals.

The blood was to be purchased this morning, not sold. If you weren’t such misers with your business and possessed a membership hall pass for Exodus, you’d know that now.

The set up is straight forward. I am looking for a huge reversal in sentiment today, which might be spoiled by Yellen’s speech tomorrow. Or, if she’s clever, today’s gains will triple tomorrow, after a dovish outlook on rates is communicated to the markets.

Either way, Le Fly is a net buyer of SPY, having done so sub $184 at the open.