Political Turmoil Rattles Italian, Spanish Markets — Risk Off Mode Relevant Again

Both Spanish and Italian markets are off by 2% and 1%, respectively, on political turmoil fears. In Spain, the government is corrupt and they got caught. This might lead to new election, which may bring forth a power who hates the EU and the institutionalized cronyism that is implicit with the bloc. In Italy, their new government are stacked with EU skeptics who might opt to leave the euro — all of this is wreaking havoc on confidence, a wholly necessary ingredient to keep the house of cards intact.

Spain. After Italy… Political Risk on the Rise

Bond Yields Soar, Ibex down. pic.twitter.com/BvInOjtePv

— Daniel Lacalle (@dlacalle_IA) May 25, 2018

Here is the news in the nutshell.

#BREAKING Spain’s Socialists file a no-confidence motion against Prime Minister Mariano Rajoy after his Popular Party were found guilty of benefiting from illegal funds in a mega graft trial

— AFP news agency (@AFP) May 25, 2018

Italy’s new pro-Italian gov is planning to deport 500,000 invaders over the EU’s objections. This would be a crucial first step in reclaiming the West, both from a practical and psychological standpoint. Hopefully the rest of Europe will find the courage to follow Italy’s lead pic.twitter.com/ga0nIzp4gZ

— Ciceros Son ?? (@CicerosSon) May 24, 2018

ITALY: Country potentially one step closer to leaving Euro as prominent Eurosceptic is favourite to become Finance Minister.

Paolo Savo said single currency is ‘historic error’.https://t.co/JqGjVquY4Z

— Westmonster (@WestmonsterUK) May 25, 2018

Stocks will eventually recover from this tumult. The bonds in Europe will stabilize — because they always do, and those left holding the bag will be penniless and homeless again. After a decade of seeing these panics come and go, I really can’t take them seriously anymore. It has a boy who cried wolf quality to it, so I’m going to assume this is all transient. Nevertheless, it’s worth reminding readers of how very delicate the EU is and how their debt structure is lopsided in favor of the weakest countries, who, at some point, might opt out of the EU in order to print money.

Bad timing: #EU unveils pooled sovereign-debt plan amid German resistance despite debt standoff w/ #Italy. https://t.co/8GJXWRMC7P pic.twitter.com/Y4h1PcgmYn

— Holger Zschaepitz (@Schuldensuehner) May 25, 2018

Across Europe and in America, bonds are rally — classic risk off. All are rallying, with exception to both Portugal, Italy, Greece, and Spain — classic PIGS action. Look at the divergence.

Another ‘red flag’ is the divergence between Spanish and Italian bonds.

The big story in Italian bond selloff isn't spread widening v Germany. It's v Spain. Italy/Spain yield spread now 103 bps, widest in over 6 years. Since euro launch, this is historically wide. HT @gusbaratta pic.twitter.com/t8fkx2gX31

— Jamie McGeever (@ReutersJamie) May 25, 2018

And let’s not ignore the spread between Italian and German, right now at 2013 levels.

Italian 2-year bonds are now yielding the most versus German bunds since 2013. The move has been dramatic. pic.twitter.com/fGy8ncK1W4

— Lisa Abramowicz (@lisaabramowicz1) May 25, 2018

But are we really scared? Come on.

If anything, the N. Korean summit cancelation is a bigger deal — because it could affect Trump’s negotiation tone with China. This very idea was floated by a fake news artist this morning.

I’m told there is an expectation inside the White House that President Trump will take a much harder line on China trade now that the NK summit is off. Aides believed that Trump was soft pedaling his natural instincts until June 12. Now that is gone.

— Eamon Javers (@EamonJavers) May 25, 2018

Last night futures were sharply higher — more than 35 NASDAQS; but now we’re looking at a negative open. More panic, more nothing, great.

Pre-market, several retail names are shooting higher on better than expected results.

FL +15%, SCVL +6% and DECK +5% after earnings, NVS +1% after upgrade: ZOES -28%, HIBB -16%, ADSK -5%, SPLK -2%

Lastly, crude is getting poleaxed, off by 2.6%. Perhaps the negative seasonal trends have begun and WTI has finally topped? The dollar is also +0.4% on this very busy Friday.

Oh, and Happy Bday to me. Now I’m going back to bed. Wake me up if my stocks break out.

ALERT: In honor of Le Fly’s magnificent impending birthday, we are handing out 7 day trials to Exodus. Email me a nice note and gain access: flybroker at gmail dot com.

One of the displeasures of working from home is having to do random chores, such as walk the coyote or hedge the bushes. Today, after coming back from a long walk with my coyote, who attacked 3 joggers, 2 rabbits, and 1 dog, I decided to take on the overgrown bushes in my fucking yard again.

So I went into the garage and dusted off the old electric hedger, attached a big old stupid blue extension cord to it and then proceeded to electrocute myself.

Just kidding.

But after 5 minutes of sawing through random parts of my boxwoods, an allergic attack struck me. I was befallen by an odious affliction and sneezed for the next 10 minutes. Racing back into the house to grab a Claritin, my coyote chased me down and bit my foot. I told her to “fuck off” and then grabbed a bottle of water, opened it and some fell on my shirt, then went back outside to finish the job.

Like a creative genius, with Mozart playing in my head, I cut thru those fucking shrubs with extreme energy. Halfway through the job, my landscapers rolled up and parked in front of my house, looking at me sideways, amazed to see me outside doing their job. As I sawed thru the branches with indecorous qualities, I could feel them laughing at me, saying some shit like “Oye, look at gringo trying to hedge that shit. HAHAHAHA, cabron.”

I became a little distracted and instead of focusing on the art in front of me, I envisioned them stepping out of their truck and me throwing the saw at them and cutting them in half. But then I remembered I had an electric hedger and that shit would simply disconnect and barely knock anyone out from the blow.

I cut them shits so deep, barely any leaves were left. It was a complete massacre.

Then I moved onto the side of the house, where I have another dozen or so shrubs, trees, and other shit to cut. I laid into them like a UN resolution and banged out another boxwood, part of a tree, since I was too lazy to venture back into the garage for the ladder, then I got hungry and went back inside — shaking from the energy spent and lack of sustenance coursing thru my creatine laced veins.

I quickly grabbed a granola bar, a key lime La Croix, an energy shake, and blew out of HUYA for a +16% gain and then doubled up in BILI — because my urinal shadows said so and I can’t lose and the Stock Market Gods are dead, replaced by me. I cannot lose. Try to stop me. No one will be able to.

The SAAS business is being fueled by a crop of newcomers who make the industry more efficient. Back in the old days, CRM had to wing it and figure the shit out for themselves. Nowadays, there are software applications for just about everything. They A/B test the size of people’s cocks and cross reference that data against % chance of cross sells.

Essentially, it is growth hacking by manipulating the human psyche.

On the customer service front, no one is hotter than ZEN now. I bought the stock, not so much for a quick spin higher, but for the eventual acquisition.

I have three stocks in my active account that should be acquisition targets: SHAK, FIZZ, and ZEN.

All of the other shit is fleeting, gambler type positions designed to keep my degeneracy in check.

Real talk here. Goldman was 100% the 50 cent trader — I’d be both my testicles on it. Here I can prove it.

Who else made $200 million in retarded VIX contracts? I say ‘retarded’, in spite of the desk being praised now for its prowess, because who the fuck buys contracts simply based off price? That’s autistic. Moreover, this trading desk lost $200 million at its trough, then started to trade sideways and down, scrounging for 30 cent option contracts. It got to the point that people laughed at the 50 cent trader over cocktails and figured it was some mentally ill Saudi Prince with nothing better to do than get jerked in the options market.

“At one point, he was down $200 million, most of that permanently lost in expired option premium. At one point, ’50 Cent’ became ’30 Cent,’ scrimping on his usual VIX option purchases, unwilling to pay up for the 50 cent VIX options that were his namesake,” Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors, wrote in a note to clients Monday. “But in early February, when it seemed like Fiddy’s fortunes could go no lower, it came: redemption.”

This wasn’t a case of Goldman being gurus and forcing a liquidation of XIV. This was a desperate trading desk in ruins for nearly a year, thanks to a trade gone out and retarded, rinsed clean from the bull market of 2017.

Full discloser, people said it was Ruffer Capital who placed these bets, but for the sake of congruity, I am ignoring this old news clipping and chalking up the trades to Goldman. It suits my world view in this way.

He’s gonna need to wipe some egg off his face for this one. What eggs do I speak of?

HOW ABOUT THIS?

That’s right, he made a coin.

Here’s his letter to the now doomed Kim Jong Un.

BREAKING: Pres. Donald Trump cancels summit with N. Korea's Kim Jong Un pic.twitter.com/rxsT9D5LVf

— Josh Caplan (@joshdcaplan) May 24, 2018

Dow is off 135, Nasdaq 35 — but I’m up and that all that matters — me being in full narcissism mode and all.

ALERT: In honor of Le Fly’s magnificent impending birthday, we are handing out 7 day trials to Exodus. Email me a nice note and gain access: flybroker at gmail dot com.

Indeud folks.

Even though 10 out of 10 people surveyed in the midwest hate iBankCoin and would kill “The Fly” if provided a clean escape, the wins keep piling up and the corpses of my enemies catapulted into outer-fucking-space.

The stock Gods smiled upon me, in lieu of my birthday (tomorrow) and granted me a comical victory in the form of a $BILI-club.

Observe.

That’s my discretionary portfolio, up very sharply on better than expected results out of BILI. Immediately, HUYA chased it higher and so will IQ, all in due course. This my friends is what one might call ‘winship’. You’re entitled to hate all you want — become jealous of the man inside the time machine zipping throughout time with a very high $IQ — or you can do something about it and quit being such losers and maybe work hard, or hire a Voodoo magician to do sacrifices for you.

For some of you reading this now, especially the gentle type, this is all very ‘off-putting’ and maybe I have a chip on my shoulder, or perhaps both are true in this case. Either way, you should go fuck yourselves — for Le Fly has bottles of champagne to devour, nice big fucking steaks to destroy, and 5gs of creatine to ingest — just before hitting the gym and lifting things until my arms can’t move.

ALERT: In honor of Le Fly’s magnificent impending birthday, we are handing out 7 day trials to Exodus. Email me a nice note and gain access: flybroker at gmail dot com.

How lovely. Remember a few months ago when Credit Suisse unceremoniously terminated XIV, depleted the accounts of millions in an after-hours session for the ages.

While all of that was happening, muppets getting muppetted, Goldman’s trading desk was raking in a fucking fortune — $200 million to be exact.

Equities sales & trading revenue $2.31 billion, estimate $1.85 billion, up 38% from $1.67 billion

As Zerohedge points out, Goldman warned of an impending XIV collapse in a note three weeks before it happened.

“VIX ETP rebalancing would be most impactful should there be a quick SPX selloff near the end of a trading day, pushing issuers to rebalance positions quickly to avoid unhedged overnight risk (ETN issuers) or excessive tracking error (ETF issuers). With the rebalancing need primarily driven by inverse products instead of levered long products, a multi-day volatility spike (e.g. VIX futures rise 1-3 points for several days in a row) would be less impactful than it would be with more levered long product open interest, since absent inflows the inverse products would shrink quickly on an initial vol spike (and their vega-buying is limited to the total position they are currently short).”

On February 5th, 2018, Goldman’s trading desk, led by Managing Director David Casner, made $200 million on its VIX trade. To put that into perspective, the trading desk typically makes $200m per annum and rarely does more than $100m for a day. Last year it happened just 4 times.

It’s must be good to be King.

Reminder, only ‘complete morons’ lost money in XIV.

Only morons who didn't read the prospectus thought $XIV would not trade to zero. Here is the CEO of @CreditSuisse explaining how it all worked. He read the prospectus and knew it would trade to zero. Did you @RampCapitalLLC ? Did you @howardlindzon ? pic.twitter.com/krteWmvjep

— The_Real_Fly (@The_Real_Fly) March 15, 2018

NEVER FORGET — it was 'complete moron' $XIV traders who didn't know the different between a stock and a bond who blew up and made stocks go down in February of 2018. pic.twitter.com/3E1BM3q30R

— The_Real_Fly (@The_Real_Fly) March 15, 2018

Eat the rich. Go ahead and do it.

Literally nothing can stop this ascension. At this point, anything I say is redundant. Markets want higher and that’s all there is to it.

Here are the top rated stocks in Exodus, sorted by technicals. Our technical algo is graded by Accumulation/Distribution, Price Performance, Relative Strength, Volatility, Volume, and sub rosa, which is a series of metrics that make up our secret sauce.

The week is halfway done and my birthday fast approaches. Email me for access, 1 week free trial: flybroker@gmail dot com.

Markets like anything. The Fed could’ve said they jerked off to cartoons this afternoon and EA would’ve popped on the news.

CNBC writer-slaves sum it up.

The Federal Reserve minutes from its May meeting said “a temporary period of inflation modestly above 2 percent would be consistent with the Committee’s symmetric inflation objective.”

The central bank also pointed to an interest rate hike at the June meeting.

“It would likely soon be appropriate for the Committee to take another step in removing policy accommodation,” the minutes said.

In a world of fantasy and delusion, the Fed sees inflation above 2%. What’s interesting about this sudden surge in inflation is that it coincides with the fact that we have HIGHER INTEREST RATES. Poor Erdogan from Turkey is mocked daily because of his belief that higher rates portends higher inflation. Truth of that matter is, does anyone really know the answer? For as long as I could remember, countries with heinous inflation rates have always hiked. Those hikes cause panic and that panic leads to a further run on the banks.

“A few participants commented that recent news on inflation, against a background of continued prospects for a solid pace of economic growth, supported the view that inflation on a 12-month basis would likely move slightly above the Committee’s 2 percent objective for a time,” the minutes said. “It was also noted that a temporary period of inflation modestly above 2 percent would be consistent with the Committee’s symmetric inflation objective and could be helpful in anchoring longer-run inflation expectations at a level consistent with that objective.”

For some odd reason, Ethereum and other cryptos are getting REKT even further on this news. I really don’t car enough to look it up. What is important, however, stocks are rising. The Nasdaq is now +15.

Erdogan believes if you lower rates it will lower inflation. What a crazy idea. Look at how well inflation is under control in Venezuela and Argentina. At the same time, in negative rate territory (Europe), inflation is simply exploding with vigor to the upside.

Nevertheless, Turkey’s central bank defied the rhetoric and hiked rates from 13.5% to 16.5% — an increase of 300bps.

The Lira had been down 4.5% and now it’s marginally higher v the dollar, a titanic move in FX terms.

The Nasdaq seems to like it, as it’s rallying hard off the lows.