My Hopes and Dreams Crashed Against Rocks; Stocks Rise

Great, I thought markets were actually going to do something fun — trap door lower — maiming a whole crop of freshly minted traders. Instead, more nothing. I just had a headline up promising collapse with the Dunkirk soundtrack attached. Now I’m the laughing stock on Wall Street — fucking great.

I would say “the day is still young and anything could happen” but you know how this story ends. The fucking market and its big floppy tits are going to bounce all the way back up to record highs, cutting all of the dicks off who tried to fuck it on the way down. This is what the market always does and will continue to do for as long as you live.

Sure, I had some hedges that could’ve been sold for wanton profit, or at least small profit — but now I’ll probably have to sell at losses. That’s what this market is, a gigantic dick cutting device for bears. You cannot be a bear and live to tell the story.

On the agenda today, pick back up on the bull narrative. Get my shit in order. Forget about black smoke and chards of metal bustling throughout your city streets. Re-allocate the Exodus Quant for August and prepare to see prices walked higher.

If you want to know what the market will do tomorrow, listen to this soundtrack for clues.

Dunkirk, all day, wanton surrender in the face of adversity. Tuck tale and flee because the opposition army is too strong and big. Hope to God women with boats come to rescue you to safe harbor and the fucking Americans come to save the day.

A nation of cucks.

Time to get greasy.

Lots of cross-currents during today’s tape. Let’s start with the fact the Fed is making themselves look ridiculous, being dragged around by Trump. Also, the 2s and 10s tightening like a motherfucker today. In the past people cited bullshit treasury duration spreads as warnings. But listen to me pal, the only one worth paying attention to is the 2s and 10s and that’s only 14bps now.

Gold dropped. Bitcoin surged. Stocks dropped.

I won’t make any definite determinations here, however. It’s tempting to call for a collapse — but the market has proven to be resilient. That being said, this Master Ace Trade sold out BEFORE the Fed meeting and raised his cash to 40%. So I was already ahead of the curve.

Did I mention I bought SOXS too? No I did not — because free picks on the free site is illegal now. Sue me.

I’m only up 6.5% for the day, no big deal. Nothing to brag over.

The policymaking Federal Open Market Committee drops the target range for its overnight lending rate to 2% to 2.25%, or 25 basis points from the previous level.

The Fed cites “implications of global developments for the economic outlook as well as muted inflation pressures” in its first rate cut since December 2008.

The Fed also leaves the door open to future cuts, saying it will “act as appropriate to sustain the expansion.”
The central bank also ends its balance sheet reduction two months earlier than planned.

2nd biggest 2s30s flattening since Brexit pic.twitter.com/5d1lWtkKhM

— zerohedge (@zerohedge) July 31, 2019

POWELL: I DIDN'T SAY IT'S JUST ONE RATE CUT

this is an absolute disaster

— zerohedge (@zerohedge) July 31, 2019

yuge flattening on 2s10s pic.twitter.com/u5V3QKvEpm

— Alastair Williamson (@StockBoardAsset) July 31, 2019

I’m thinking we fucking plunge thru the floorboards and fuck everyone tomorrow. But I could be wrong. I also think gold is a steal here. Whenever it drops it pops the next day. But my best advice is to raise cash. We’re in a dangerous spot now, because of the bond market and because we’re doing something with rates that has never been done before — cutting while at record highs.

But get this statement out of Powell. What sort of shit is this?

Powell on not fearing the extension of this recovery: "There’s no sector that’s booming and therefore might bust."

Fed officials have also been comfortable with a continually tightening labor market that hasn't resulted in huge inflationary pressures

— Brian Cheung (@bcheungz) July 31, 2019

I took out a PINS overnighter trade yesterday and that worked just fine. 310% annualized return, fucked faces. But now I need to step aside, since many of my positions have grown old and stale. This is a trading account. The rules of said account demand that ALL POSITIONS be relevant for now, and not some fucking narrative that I yarn up in my attic. If the shit isn’t popping off now, I’m out.

As such, I sold a slew of stocks — a fucking slew — most for small gains and losses. The net result was me, this guy here, raising cash to 40%. Also, I took out a hedge. Also, I’m drinking black coffee now because I ran out of milk.

For now, “The Fly” is chilling, eye twitching, head throbbing with pain, body filled with aches from laborious labor (GRAMMAR ALERT!), eagerly awaiting a mean pullback.

It’s also fun to do, apparently.

Let’s examine the mechanism that helped propel Apple’s share price to new heights.

The company was and is generating a shit-tonne of free cash flow. Carl “fuck you, give me three seats on your board” Icahn demanding that Apple, incredulously, borrow money in order to buy back shares. Tim Apple acquiesces and a new era of financial engineering was born.

Fast forward 5 years and Apple isn’t making all that much more in FCF, but the shares are +125% — double the return of the SPY. How?

Well, because THEY FUCKING BORROWED $104 BILLION DOLLARS AND USED IT TO JIMMY RIG THEIR OWN FUCKING STOCK, reducing the amount of shares and artificially increasing earnings.

Is that a really good fucking idea?

You tell me? What if Samsung’s phones did not catch fire and instead poleaxed Tim Apple into a giga factory? Well, if that happened then business would sink, earning collapse, and then Apple would be out of $104 billion with nothing to show for it. This really is a shameful exhibition of journalism by CNBC, cherry picking Apple as a poster child for financial rigging, when in fact the exact opposite is true for 90% of companies doing share buybacks.

HOW MUCH DID LEHMAN WASTE ON BUYBACKS?

In present day, how much did GE waste buying back their own stock? Or how about old Valeant Pharma? Remember those fuckers? Companies desperate to get a rise in buybacks usually buy back shares in an attempt to assuage activist shareholders. Instead of using the FCF to build the business, they dick around with their brokers reducing shares and creating artificial EPS growth by this insidious fucking process.

My previous post was an outstanding example of good writing. It was quickly soiled by two physical goldFAGS, who will not be featured in this here blog. You fuckers collecting gold bricks and disastrous morons and I hope very soon you hang and strangled to death upon somebody’s gibbet.

I don’t care to give you explanation as to why I feel this way, only that I do.

With that said, I am going fucking crazy over here at House Fly with repairs and my mind is being racked by nonsense. I only ate a giant bowl of cocopuff cereal and a red bull (sugar free) for the day. In between trips to HD and working on home repairs, dealing with handymen, my life is in shambles. I exaggerate of course. But the fact still remains, my life is in shambles.

I do not have any insight for today. I took an L on yesterday’s overnighter and today’s overnighter is low conviction, lazy and sloppy, SAD! It’s just one of those days mate — a sojourn throughout the pits of hell, stepping on stones made from fire — doing great injury to myself of the mental sort. My eyes are twitching and my mind hurts with pain. I’m nearly there, the finish line. I can almost taste it.

When I say “gold is for men” I mean in the most gender neutral way possible. I realize some of you women out there, those without dicks and testicles, fashion yourselves to be men too; and that’s cool, bro. You grow beards and walk around slapping women on their asses for sport. So this post applies to you too. Also, many of you dick’d men prefer to be women, prancing around in dresses — doing catwalks and shit in the ghetto. This post is also for you — because you’re a man too. Everyone is a man, ultimately — because man is God. That’s not to say women cannot be God. You can. But first, you must fashion yourselves to be a man.

With that now said, I can tell you without equivocation, gold is, in fact, the single best asset class in the market today. If you happen upon someone who says otherwise, punch him in the nose. Get a good hard shot at it and try to bend the bridge until you hear a snap. After it snaps, you’ve broken the bone and will soon get to enjoy a stream of blood flowing from his face and his eyes might swell. I do not recommend doing this to women who are now men — because the non gender fluid justice system will punish you severely and your neighbors will think you’re a monster. If you hit a dick’d man, make sure he isn’t in a dress and is clad in burly clothing, preferably flannel shirts.

I’m getting off track here. Markets are weak, but gold is strong. Gold has been strong for a long time now and it’s still very undervalued. Do yourselves a favor and get long — hold into the idiotic rate cuts, and harvest your crops when they’re good and ripe.

Well, you live by the tweet, you die by it too. Here’s POTUS talking mad shit, extreme greasiness, over China being Chinese — always attempting to rip us off with their fucked up stuff and trickery ways. It’s also worth noting, I said from the beginning China would wait to see if Trump got reelected before etching a deal. After all, it makes sense — does it not?

China is doing very badly, worst year in 27 – was supposed to start buying our agricultural product now – no signs that they are doing so. That is the problem with China, they just don’t come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years….

— Donald J. Trump (@realDonaldTrump) July 30, 2019

…to ripoff the USA, even bigger and better than ever before. The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now…or no deal at all. We have all the cards, our past leaders never got it!

— Donald J. Trump (@realDonaldTrump) July 30, 2019

Nasdaq futs are -62. This is not conciliatory jargon, the type of diplomacy one would expect in the 11th hour of a major trade agreement.

UPDATE: Chinese state media shill responds.

Whenever it's time to negotiate, the US side comes up with the trick of piling pressure. Really not a good habit. Americans need to change their negotiating style, show more sincerity, not just wield stick. The past one and half years have proved big stick is useless to China. https://t.co/T9xR9ryw4y

— Hu Xijin ??? (@HuXijin_GT) July 30, 2019

I read this shit and roll my eyes so hard — I feel like they’re going to fall out of my head. I used to give a shit about moral hazard and predict widespread panic and doom. But its been a fucking decade of this shit and I’m sick of waiting. On morons sit and wait for doom.

Now if this was a normal environment in a non-fucked up world, seeing share buybacks exceeds free cash flow would raise a tonne of fucking red flags. But not in this asshole environment. Guess what? We’re gonna lower rates again and produce a fresh crop of assholes doing buybacks. Fuck free cash flow. SAAS has proven all we need is growth.

U.S. companies are on pace to break another record for share repurchases in 2019, using a combination of cash and debt to push the total to close to $1 trillion.

For the first time since the financial crisis, companies have given back more to shareholders than they are making in cash net of capital expenditures and interest payments, or free cash flow, according to Goldman Sachs calculations.

The level of buybacks to free cash flow hit 104% for the 12 months ending in the first quarter of 2019, the first time that number has topped 100% during the economic recovery that started in 2009. In 2017, the level was 82%.

Goldman projects buybacks for S&P 500 companies to total $940 billion, a 13% increase over the previous year and a new high for a number that has continued to increase through much of the post-financial crisis period. Total buyback executions among all companies this year were up 26% through mid-July.

From a market perspective, investors have been moving to companies with more debt as they prepare for an expected interest rate cut later this week.

Burning cash, increasing debt

The buyback increase compares with a projected 8% gain in capital expenditures and 9% for research and development this year.

The rise in buybacks has had a twin effect on corporate balance sheets, both drawing down cash and increasing leverage. It also represents a more-of-the-same trend that has come despite the $1.5 trillion tax cut passed in late 2017. The record cut had spurred hopes that companies would eschew the buyback formula that has helped generate the longest bull market run in Wall Street history and instead lead to more investment in equipment and personnel.

“Although we expect growth in capex, R&D, and cash M&A, we expect companies will continue to increase cash return to shareholders as they have in recent years,” David Kostin, chief U.S. equity strategist at Goldman, said in a report for clients.

Over the past 12 months, nonfinancial companies have drained $272 billion in cash as part of the push to return still more money to shareholders. That represents a 15% decline and is the steepest drop since at least 1980, Kostin said.

At the same time, corporate leverage continues to rise as gross debt outstanding has climbed 8% over the past 12 months. That has come during a rough time for corporate profits, with S&P 500 earnings tracking for a 2.6% second-quarter decline, according to FactSet.

“Unless earnings growth accelerates materially, companies will likely continue to fund spending by drawing down cash balances and increasing leverage,” Kostin wrote.

For the record, Goldman’s David Kostin has a monkey’s brain and hasn’t been right since 1971.

If I told you all of the things that have been breaking in my house you’d think I was dramatizing it for homosexual flair. I am almost at the finish line, moving down south, and shit keeps breaking.

Hundred foot trees COLLAPSING unto large areas of fence and woodshed.

Dishwasher COLLAPSE.

Washer machine COLLAPSE.

Big Ass Benz COLLAPSE.

Just a sundry, a fucking sundry, if you will, of issues cropping up out of nowhere — the blue dust, out of the vapors, to fuck with me. This house is trying to kill me and I will not allow this to happen.

This issues, naturally spilled over and into Exodus today — whole fucking platform busted up and broke down. Giant error codes BOGGED out the platform and caused it to COLLAPSE. This is my life and it could be worse. I suppose it could be a lot better — such as summering in Newport over tall glasses of champagne and shrimp cocked tails. Instead, I find myself getting my hands muddied fixing a shattered irrigation like that COLLAPSED out of nowhere and gutters that dislocated from the side of my house — also COLLAPSED.

I made three trades today, one for a 2.5% loss, one for a 7.2% win and another for an overnight hold. Fortunately, my unbelievably spate of bad luck has not spilled over into the stock market. As a matter of fact, the more things break on me and go wrong in the physical world — the more I win with my picks. Well fuck me running sideways.

That is all. I have nothing more to say.

Goodbye.