Asian Markets Have Destroyed Themselves; Europe is Next, Then Us

Stocks that trade in Hong Kong are lower by 727 points, like the fucking airplane, almost 4%. The NIKKEI is sliding another 500; crude is off by 3% to $27.56 and Dow futures are off by 250. The Yen is higher by 0.55% v the dollar, indicative of a carry-trade unwind. The very worst of the worst sentiments prevail this evening, an evening after U.S. markets failed to follow through on an early rally, collapsed, and then tepidly limped into the closing bell.

Markets are off by 10% in 11 trading days.

The last time stocks performed this poorly was in January of 2009, which led to an absolute raucous rout in February, lower by 10.74% for the SPY. To say the general economy isn’t affected by the destruction of wealth found in equity and bond markets is absolutely stupid. I recall these same sentiments being spewed by Steve Liesman and others in 2008, as the housing crisis gripped markets. Hindsight has a funny way of obfuscating the past. You hear people talk about 2008 as if it surprised everyone. Not fucking true. Anyone who was paying attention saw the signs and took measures to protect his/her portfolios. I hate to rain on your money gathering, asshole advisory business, ways– but simply waiting out the market and hoping it will cooperate over the next 30 years is asinine. Clients don’t want to draw down 40%, in order to build long term wealth.

Aside from my directional position in SPY, I have a large TLT position that will remain constant throughout 2016. I won’t even bother stock picking, as I view it to be fruitless escapades in degenerate gambling. Stocks should be traded now. This isn’t a time to build positions “for the long term.” I do not believe it is the duty of advisors, or self directed investors, to simply ignore category 5 tornadoes barreling into town–hoping the cows and cars in its vortex won’t smack you about the cheek and gums.

Get flexible, you tie wearing morons.

The noose is tightening around the Chinese necks. Credit is drying up. Equity markets are plunging. Their ghost cities are falling apart. The systemic culture of fraud is being laid bare, for all the world to see.

The nation’s foreign-exchange reserves dropped by a record last month, as the People’s Bank of China sold an unprecedented amount of foreign currency in an effort to stem a slide in the yuan. The monetary authority provided 410 billion yuan ($62 billion) to commercial lenders via its Medium-term Lending Facility on Tuesday and lowered the interest rates on the loans. It plans to inject more than 600 billion yuan into the financial system to meet demand before the week-long Chinese New Year holidays that start Feb. 8.

“The market is still tight, despite the injections,” said Yan Yan, a Shanghai-based analyst at China Guangfa Bank Co. “All the seasonal factors, plus the capital outflows and currency market-related liquidity drain, are tightening interbank liquidity.”

The overnight repurchase rate, a gauge of funding availability in the financial system, rose six basis points to 2.06 percent as of 10:07 a.m. in Shanghai, according to a weighted average price from the National Interbank Funding Center. It surged to 2.18 percent earlier, the highest since April 2015.

Tuesday’s MLF injections to 22 financial institutions came after 100 billion yuan of such three-month loans granted on Jan 15, and compare with 250 billion yuan of the credit that matured earlier this month. The loans will play a similar role to a reserve-requirement ratio cut, Ma Jun, chief economist at the PBOC’s research bureau, said in an interview with China Central Television on Wednesday.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, increased four basis points to 2.31 percent, data compiled by Bloomberg show. Sovereign bonds fell for a third day, pushing the yield on the notes due October 2025 up three basis points to 2.83 percent, according to National Interbank Funding Center prices.

This isn’t ‘blow out’ territory, but something to watch. The higher yields go, the more this topic will be talked about.

It’s all coming to a head now. The end of western finance is in the process of becoming a very stark and very real reality. Ironically, the end of western finance is beginning in China.

Aside from giving you my point of view, I feel it’s important to provide readers of the site with all sorts of views from a wide array of people. Information is power and iBankCoin is a powerhouse in financial content. That being said, I am about to pull out a relic from the banking crisis era: Dick Bove.

This is a guy who was widely derided by me back in 2008-2009 for apologizing for the banks, recommending purchase of them, JUST PRIOR TO THEIR COLLAPSE. He literally had no idea, whatsoever, of what he was doing back then, despite having all of the facts and information in front of his face. In other words, he’s a fucking moron.

Watch this video and you will hear him say the banks probably have DOUBLE the amount of energy exposure that is being reported. Off the back of this envelope I have in front of me now, the numbers get deep into the $100’s of billions in basic resource loan exposure. He then says investment banking will thrive, for reasons that escape me and that asset management will suck eggs. Despite all that, he likes banks and I don’t think he even knows why.

He did, however, draw a line when it came to Citigroup, pointing to the sheer fuckery on their balance sheet, from mining to China to energy. There are all sorts of splendid ways the sages at Citi have positioned the bank, since 2008, to lose. Funny thing, as evidenced by the CNBC caption under Bove’s face, they put “Bove: Citi is Severely Undervalued.” However, nowhere during this interview did he say that. As a matter of fact, he was somewhat sanguine over their prospects. More CNBC tomfoolery, I suppose.

This is the sort of meaningless horseshit that makes me throw my teevee dinners at the television set. Cramer went “off the charts” tonight and featured the work of some Fibonacci princess who likes to draw meaningless mathematical lines on paper and then deduce them to be predictive of future stock prices. Since she was right on her last go around, Cramer pulled her out of his side table drawer to discuss the utter nonsense she’s spewing out now.

After consulting with the occult and exercising her black magic powers, she’s deduced that if the market doesn’t bounce this week it will then fall to pieces, clown-raping itself, all the way down to (get this) SPY 1,225 aka a 35% WANTON DROP from current levels.

Nothing irresponsible about this financial advise, on a nationally watched teevee show, whatsoever.

I truly don’t give a shit about any of these issues, people complaining about their lives, lack of awards being thrusted upon them and the like. But after I read the shade that Aunt Viv from The Fresh Prince of Bel Aire tossed at Jada Pinkett over her Oscar tantrum, I felt it was incumbent upon me to share this internet greatness.

First of all, Miss Thing, does your man not have a mouth of his own with which to speak? Second thing is, girlfriend, there’s a lot of sh*t going on in the world that you all don’t seem to recognize. People are dying, our boys are being shot left and right, people are hungry, people are trying to pay bills, and you’re talking about some … actors and Oscars. It just ain’t that deep.”

Hubert went on to call out the Smiths for making money from the same system (and with their own production company) they want to boycott. And she turned her attentions to Will:

“Maybe you didn’t deserve a nomination. I frankly didn’t think you deserved a Golden Globe nomination with that accent, but you got one. Just because the world doesn’t go the way you wanted it to go doesn’t mean you can go out and then start asking people to start singing ‘We Shall Overcome’ for you. You ain’t Barack and Michelle Obama, and you need to get over yourselves.”

Apparently, the Oscars is “too white.” Even so, Will Smith is still a super shitty actor.

Shares of NFLX are surging in the after hours on better than expected results, with regard to subscription adds. The reason for the beat is fairly simple: international adds. For the quarter, Netflix added almost 6 million subscribers, 4 million which came from international shores. The loafers and the loungers have made Netflix a massive success, as they squirrel away in their log cabins or huts made from adobe, hiding from the ISIS head choppers roaming about the neighborhoods outside.

With all of the violence and perversion taking place in the real world, people are opting to stay indoors and watch President “fuck You” Frank Underwood take executive action.

This is precisely what bear market rallies look like. The bulls were so depressed this afternoon, after witnessing a huge rally dissipate and dive into the rocks–with the NASDAQIRI lower by 1%; they started to write blogs about the ‘seals from hell’ being removed and centaurs visiting the NYSE to kick in the faces of its traders.

I digress.

The market dove into really deep waters and resurfaced with the courage of 10,000 lions trapped inside of a room with 10,000 circus clowns. We are in a bear market and stock prices will likely be appreciably lower in 12 months from now. However, along the way, we will have rallies. At the very minimum, we are overdue a charitable giving from our benevolent bear cousins who are likely to cover their shorts and start spending the proceeds on Lamborghinis, pear shaped catamites, and diamond wallets.

After the bell, NFLX and IBM are due to report earnings. Overall, considering the market didn’t completely wipe itself out today, I consider today to be a constructive step towards stabilization, something to build upon in the days to come.

The Dow finished up 25, giving up 50 points since I began writing this post.

Good luck.

Since the beginning of 2016, all stocks have traded lower. Inside Exodus, I keep an array of portfolios to help me assess risk. My old man portfolio is down almost 6% for the year, while my super risky bubble basket is lower by a staggering 20%. But today’s divergence is between the two is meaningful.

For the day, the bubble basket is down more than 4%, while the old man portfolio is up. To me, this is a positive development, as it means cash isn’t just being stored in treasuries or under the mattress, but also in counter-cyclical names. This could possibly be the very first sign of stability in this fucking livewire of a market in 2016.

Look for managers to start buying bargains next, which then might lead to a full fledged melt up.

I realize it’d a little unfair to place all of the blame on @Jack when @Dick was busy at Twitter, readily destroying the place for the past few years. Nonetheless, I find it amusing that he’s now CEO of two (count ’em) publicly traded companies whose share prices are broadly underperforming the market, both down about 30%.

If I were to take out my calculator, I’d find that the market value destruction, under a certain Mr. Jackard Dorsey, is in the range of $5 billion. In other words, he’s the Ron Johnson of tech CEOs.

Should @Jack be fired from both companies? Probably not. Is it appropriate for him to be the CEO of Square, whose market value is 1/10th of Twitter’s? Only an orangutan would do that.

Jack should quit being an orangutan and focus all of his efforts on trying to pull Twitter out from the grave it’s currently domiciled in.