WE’VE JUMPED INTO THE DEEP FRYER

Good Sirs —

You thought you escaped the war trade and then the regional banking run. You celebrated with memes — after you had shilled for bailouts. You posited bailouts were bad prior to it effecting you. The moment if effected you — you started to suck government dick.

Let me describe my bearishness to you.

I am keeping my money in AT RISK banks because I want to lose it all. I want the banks to seize up and fail — the whole kit and caboodle plummet into the fiery oceans taking me with it. I do not endeavor to survive the great fires. Oh no, that would be cowardice. I’d like to perish in the fires alongside you — but only with an expression of utter happiness on my face as if Santa Claus just left me a tricycle for Xmas.

We went from inflation to DEBILITATING DEFLATION in an instant and let me tell you — DEFLATION IS WORSE.

Dollar shortages and PLUNGING commodity prices demands sharply lower stock prices. Whilst you might believe you will make it — you will not. A great tragedy is upon you and there isn’t enough money to bail out all the banks in addition to propping up the bastardized state of Ukraine.

As for me, I am +1.2% today and should be up a great deal more. However, since December I’ve forced myself into a 100% long book via the Stocklabs quant, so all of my hedging is what’s making me green now.

I am 20% FAZ, 20% SOXS and I might just leave it there — more than content with my pittance of a gain whilst getting to enjoy the plummeting of stocks and all of the other things which make up Pax Americana.

Shares of CS are down more than 25% this morning on basic fundamental math which says the company is at risk of default. The 5yr CDS are at RECOURD highs; but more importantly, the 6mo CDS are at 1500 — nearly a 1000bps inversion over the 5yr. In other words, it’s over.

Shares of nearly all European banks are HAMMERED to bits and pieces, whilst at the same time — Le Fly reigns supreme +210bps thanks to a very large overnight UVIX position.

Our regionals are getting SMASHED again with PACW and FRC down 15-18%. I’d like to offer you even worse news if I can — but that’s all I got for now.

Do not underestimate the asshole dip buyers. You saw those fucking retards out there on Twitter yesterday — jerking off to shares of FRC. Those animals are still on the loose.

As for me, I closed out UVIX and opened a small 10% position in FAZ — just for fun. Should we gander into another credit crisis, I’d be very sad if I did not profit from it in some sort of fashion.

My playbook is as follows:

Avoid morning nonsense. Re-enter heavily SHORT into the afternoon and hope for the very worst this evening.

I was hopeful heading into today we’d really see a banking collapse. Instead, I was offered a sword into my stomach via VIX collapse. I had a big UVIX position. I closed it out and then forayed into FAZ and made some coin there, as the banks COLLAPSED late in the session — reversing massive gains.

Into the last hour of trade I thought it’d be a swell idea to foray back into UVIX — for revenge and all. It started off ok and then I kept adding to it and adding to it and then in the last 15 mins news hit that the DEMONCRATS were offering a bill to REPEAL bank deregulation. Sounds like a double negative — but the CATAMITES in the market today took that fucking news and bet their grandmother’s estate on it and ramped it into my fucking face — causing me great pain and anguish.

In a 100% long book, I closed down 1.53% for the session — all thanks to UVIX. In total, I lost about $40k in UVIX today, meaning that without it I’d be up maybe 4%. Who the fuck cares? I am not in this for a day, “this” being whatever mission in the market I seem to be on.

Often times during times like this — CUNTS inside Stocklabs will level charges at me — proclaiming I be cold and “off” with my timing. Well, no man is perfect and I certainly have the bald head to prove it. NEVERTHELESS, I am a person with a vindictive soul — driven by both greed and an insatiable desire for revenge. I am exacting revenge at all times, on people who aren’t even aware of my existence. Without an enemy to fix my gaze upon, I am rudderless.

So keep betting against me. See where it gets you.

The market action was bullish. I regret to inform you of that. But the pin action in the banks was dreadful. We (the royal sense of course) are eagerly awaiting a renewed collapse — at which point I can validate my poor timing in UVIX as some sort of “plan” or scheme.

It seems the GREAT BIG TITTED bank rally is melting the fuck down.

FRC caught a credit downgrade and the entire mood had shifted. Plus, Russia shot down an American drone over the Black Sea. I suppose things aren’t always what they seem.

I ended up closing out the UVIX position — but taking on a great big dicked FAZ position — now 40% of assets. I did so because, not so deep down, I really hate the banks and it would be one of the many highlights of my life to participate in the end of western finance as we know it.

I know what you’re thinking and it’s stupid.

“But Fly, you enjoy all of the comforts of western finance — you and your wine cellar (garage) and cigars and all of that other shit you buy for comfort.”

All true. But I am willing to sacrifice all of my Burgundy wines for just 1 got damned legit meltdown. And not some bullshit meltdown that is met with faggots on TV bailing out eachother and beating off to SPX futures rising as their schemes work their magic.

No, I am only interested in irretrievable loss — NON REVERSIBLE — the sort of drawdown that makes people shit their pantaloons.

Look, I am not an evil person. I want people to be happy and explore all of their sexual identities too. But I want it to end more and the visceral feeeeeeeling of cataclysm is quite the thing. NEVERTHELESS, I will once again do the responsible thing and follow the money, like all money rats do and go along for the ride once they win again and then pretend to love it all as we hit 52 weeks highs amidst pomp and glory and Pax Americana.

Unfortunately, I am DOWN 29bps today, even though I have a full long book. Let me explain the sequence of events that led me here.

It all has to do with ANTIFA FLY and me sleeping in. Suffice to say, he missed a plane — I had to run around at 4am to get him on a new one — I fell asleep without an alarm — and BAM next thing you know the market is ripping higher and I have 15% of my book in a UVIX hedge that is down 19%.

These things happen and I sure all of you will forgive ANTIFA Fly in time.

What’s important to know is I am here now. My health is most excellent and my mood very good.

As I write my fortunes increase, now down just 9bps. Hell, if I do one or two brilliant trades today, maybe I too will escape with more money today than yesterday.

Ladies and gentlemen — it appears the greatest banking crisis of our lifetimes has ended. The regionals have soared. The govt wins again. The CPI came in good — just like Joe Biden said it would last week. And now, all we have to worry about are deposits at banks that lose money every time the US 10yr increases in yield — which by the way is +11bps today. But that’s not important.

On the issue of UVIX — had it not been for my inadvertent “sleeping in” — I would have sold it at the open. Anyone who knows me knows I’d do it. I swear on a stack of bibles. But since I didn’t and the damage has been done, I might just buy more to average down. OR, maybe I’ll just sell it and be done with it.

Look at me — doing shit you only dream of doing.

You want to know what happens next? I will tell you.

The entire state of California will DETACH from the continent and run into N. Korea — where it will be RAPED and nuked in short order. All of the VCs who’ve been SCHEMING via SIVB will need to find a new scam bank. For decades SIVB had facilitated programs that permitted founders to gain access to capital, in exchange for shares in their WANTONLY overpriced companies. The net result had been — plebs bought into IPOs at 30x sales and got drummed to death down 75% before the stock caught its legs. Basically, the entire VC community is a criminal organization and SIVB was their bank.

Now that the mob boss is dead, the new boss will demand their $75b VC portfolio be MARKED THE FUCK DOWN.

Are you listening to me you fucking faggots?

Furthermore, it is my belief the market cannot and will not enter tomorrow without a massive cap raise or some sort of bailout. Something will happen tonight, OR the market nose dives the fuck lower in a panic tomorrow.

I had 40% of my assets in FAZ 20 mins to the close — but I decided to close it out because betting against America bailing out their banks is a suckers bet. My only hedge now is 15% UVIX — which should stem most of any losses that come as a result of some GOOD NEWS at the banks tonight.

In short, we have a real crisis now and I am 100% sure there are many shoes to drop. This is the 1st inning of the gambit. However, as a trader, I like to dance between the rain drops and I’d much prefer to short into strength rather than shorting into 55% heart attack drops in the regionals.

For those curious, all of my trade and real time ideas are accessible inside Stocklabs.

The regional banking index was down 16% earlier this morning and is now off by “just 11%.” At the open of trade, I blew out of my UVIX and SQQQ positions, alongside my longs, for a net daily PNL of +1.81%

AMERICA WILL NEED TO BACKSTOP THEM ALL pic.twitter.com/ZZ5zEEXZ56

— The_Real_Fly (@The_Real_Fly) March 13, 2023

Oh nothing, just interbank liquidity totally frozen pic.twitter.com/YsVcRsmMjM

— zerohedge (@zerohedge) March 13, 2023

If you were to tell me the banking system would collapse at the same time tech stocks ran higher — I’d say you’re fucking crazy. But that’s exactly what we’re seeing today.

The good news — yields are crashing lower.

WE ARE SUPPOSED TO BE CRASHING LOWER NOW — but we aren’t. And it’s not just regionals getting hit.

SCHW -12%
USB -9%
C -5%
AIG -4.5%
CS -5.3%

It’s also worth noting we are seeing a tremendous run in gold, silver and cryptos. It has always been my belief that BTC-ETH-GLD-SLV would do very well under a bank panic or dollar panic scenario and that is exactly what we are seeing today — with BTC and ETH +5-8% and gold +2.2% and silver +6%.

To be continued.

All things being equal, what incentive do people have to remain at their regional bank? If the FDIC is gonna cover it all, might as well play it safe and transfer to JPM — no?

It appears an olde fashioned fucking bank run is underway and there is nothing the Federal Government can do to stop it.

We went from +3% in the Russell to down 0.5%. But more extremely, we are seeing a sundry of weak regional CRASH THRU THE FUCKING FLOORBOARDS. On top of that, banks are generally weak and the contagion seems to be spreading IN SPITE OF Biden’s great big fucking bailout plan.

BEHOLD THE PAGEANTRY.

Aside from that, SBNY traded at $70 on Friday is NOW ZERO today. Let me repeat that so you can fucking grasp it — SBNY IS A ZERO.

We have crisis underway and the VIX is responding in kind, sharply higher. It appears the new FDIC scheme to back all deposits will soon be put to the test as HUNDREDS OF BILLIONS MORE in deposits are called into question thanks to the collapse of FRC, PACW, ZION, WAL, and CMA. Let’s also not forget SCHW is barreling lower too. They have $7.3 TRILLION in assets.

The one silver lining in all this is bonds are SOARING. Ergo, the issue the banks have with losses are mitigated somewhere with the 10yr -22bps and losses well into -30bps all the way down the yield curve.

WTI is sharply lower -4.7% and Europe is down 2.5%.

On a somewhat positive note, President Xi is expected to meet with Putin next week and then later on Zelensky. Are we going to see a Chinese brokered peace agreement?

Sorry for the late post. But we all knew this was coming.

Fed: “…to support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.”

The Fed is starting out with a $25b fund to let banks exchange their underwater bonds for cash. Do not be fooled by the low number. They will scale it to a GORILLION dollars if they need to.

NASDAQ FUTS are +165. VCs will be bailed out. BIG TECH will have their way with your budget. There is no surprise here.

But what may complicate things is the inflation issue in conjunction with FOMC’s job to fight it — but at the same time attempting to stop bonds from dropping via rate hikes.

All eyes on the bond market. If we begin to see yields rising — markets might revoke this entire rally and begin to PRESS the faces of the Fed into the hot griddle of vengeance.

One issue is to monitor is the CASH SORTING issues at Schwab.

Maximum fucking happenings this weekend as the world tries to figure out the next bank to fail. We know now the most woke bank in America did many things wrong, one of which was not having a risk officer for 8 months prior to Jan 2023. By that time, the die had been cast and SVB was well on its way towards perdition.

These things happen when confidence is lost. It can quite honestly happen to any bank. If people lose confidence they pull money out and if enough people do it at the same time — IT’S OVER.

A few bullet points until I give some ideas.

Joseph Gentile is batting 1000 in major bank blow ups — current Chief Admin Officer at SVB and was CFO at Lehman at time of its collapse pic.twitter.com/02YKtcvWGG

— The_Real_Fly (@The_Real_Fly) March 11, 2023

SVB POLITICAL DONATIONS LEAN HEAVILY DEMOCRAT pic.twitter.com/X7NNdVN4Ws

— The_Real_Fly (@The_Real_Fly) March 11, 2023

Don’t look now, but the 2 year Treasury is down almost 50 bp in two days. Last two times this happened: 2001 and 2008.

Uh oh.

— Jeffrey Gundlach (@TruthGundlach) March 10, 2023

HELLO $C pic.twitter.com/jL5Ja7NJ6u

— The_Real_Fly (@The_Real_Fly) March 11, 2023

On the issue of bailout — many prominent businessmen are coming out in favor of it. I am not surprised, since SVB is an integral part of the fucking VC scheme that has been perpetuating absurd valuations in Silicon Valley for decades and without that scheme running — the scum in DC would be woefully undercapitalized.

But let’s platy devil’s advocate here and pretend it’s a good idea to bail them out. Here is Bill Ackman’s long form tweet, which I will mildly edit to make it more readable, on the matter.

The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank. Absent @jpmorgan @citi or @BankofAmerica acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the gov’t guaranteeing all of SVB’s deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs).

These funds will be transferred to the SIBs, US Treasury (UST) money market funds and short-term UST. There is already pressure to transfer cash to short-term UST and UST money market accounts due to the substantially higher yields available on risk-free UST vs. bank deposits. These withdrawals will drain liquidity from community, regional and other banks and begin the destruction of these important institutions. The increased demand for short-term UST will drive short rates lower complicating the @federalreserve’s efforts to raise rates to slow the economy.

Already thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week. Had the gov’t stepped in on Friday to guarantee SVB’s deposits (in exchange for penny warrants which would have wiped out the substantial majority of its equity value) this could have been avoided and SVB’s 40-year franchise value could have been preserved and transferred to a new owner in exchange for an equity injection. We would have been open to participating. This approach would have minimized the risk of any gov’t losses, and created the potential for substantial profits from the rescue. Instead, I think it is now unlikely any buyer will emerge to acquire the failed bank. The gov’t’s approach has guaranteed that more risk will be concentrated in the SIBs at the expense of other banks, which itself creates more systemic risk. For those who make the case that depositors be damned as it would create moral hazard to save them, consider the feasibility of a world where each depositor must do their own credit assessment of the bank they choose to bank with.

I am a pretty sophisticated financial analyst and I find most banks to be a black box despite the 1,000s of pages of
@SECGov filings available on each bank. SVB’s senior management made a basic mistake. They invested short-term deposits in longer-term, fixed-rate assets. Thereafter short-term rates went up and a bank run ensued. Senior management screwed up and they should lose their jobs.

The @FDIC gov and OCC also screwed up.

It is their job to monitor our banking system for risk and SVB should have been high on their watch list with more than $200B of assets and $170B of deposits from business borrowers in effectively the same industry. The FDIC’s and OCC’s failure to do their jobs should not be allowed to cause the destruction of 1,000s of our nation’s highest potential and highest growth businesses (and the resulting losses of 10s of 1,000s of jobs for some of our most talented younger generation) while also permanently impairing our community and regional banks’ access to low-cost deposits. This administration is particularly opposed to concentrations of power. Ironically, its approach to SVB’s failure guarantees duopolistic banking risk concentration in a handful of SIBs.

My back-of-the envelope review of SVB’s balance sheet suggests that even in a liquidation, depositors should eventually get back about 98% of their deposits, but eventually is too long when you have payroll to meet next week. So even without assigning any franchise value to SVB, the cost of a gov’t guarantee of SVB deposits would be minimal. On the other hand, the unintended consequences of the gov’t’s failure to guarantee SVB deposits are vast and profound and need to be considered and addressed before Monday.

Otherwise, watch out below.

My take on how we got here:

TIMELINE OF EVENTS

Markets rewarded post 2008 credit crisis via ZIRP and QE

2020 COVID scare shuts down entire economy. No problem — more QE and this time direct payments to everyone as compensation for staying at home

That works out and the market is rewarded.

The $5 trillion in free money coupled with shutting down of economy causes supply chain issues.

The scarcity of goods and increases of asset prices and minimum wage causes runaway inflation.

They blamed Putin for this.

The Fed is forced to fight inflation since traditionally fucking with the cost of food topples governments.

The sharp increase in rates slows the economy and causes job cuts at vulnerable companies.

Persistent inflation, thanks to non stop govt spending (hello Ukraine) forces Fed to remain hawkish in the face of slowing economy.

Since 2008, corporations have stored money in treasuries. Since last yr, rates have gone up from 0 to over 5%, sending the price of those bonds spiraling lower.

Now those corporations are sitting on mammoth losses — all thanks to the credit crisis of 2008 and COVID era policies of free money and plant closures.

We are here now.

The big question everyone is asking is — who is next?

For starters let’s look at some of the companies who have big deposits at SVB. Reminder: $200b in deposits and 98% of them uninsured.

1. Circle: $3.3 billion
2. Roku: $487 million (26% of cash) (ROKU)
3. BlockFi: $227 million
4. Roblox: $150 million (RBLX)
5. Ginkgo Bio: $74 million (DNA)
6. iRhythm: $55 million (IRTC)
7. Rocket Lab: $38 million (RKLB)
8. Sangamo Therapeutics: $34 million (SGMO)
9. Lending Club: $21 million (LC)
10. Payoneer: $20 million (PAYO)
11. Noventa $65 million (NVTA)

Here are the banks Wall Street is saying is in trouble now.
(1 WEEK RETURN)

PACW -55%
SBNY -39%
WAL -35%
FRC -34%
SCHW -25%
AX -21%
STEP -21%
ZION -18%
LNC -18%
PNFP -18%
APO -18%
SOFI -18%
WBS -18%
OZK -17%
BKU -17%
LOB -17%
COLB -17%
BHF -17%
EWBC -17%
NTB -16%
FITB -16%
CFG -16%
SNV -16%
TFC -16%
ALLY -16%
CMA -15%

For anyone who traded the 2008 crisis, you’re having dejavu now looking at the list above. All we need to make the list match perfectly is C and AIG to enter the fray, and perhaps see the autos fail too.

The issue at hand here is interest rates and the losses the banks have as a DIRECT RESULT of Fed hiking. We aren’t even game planning an economic malady yet. This is bank stress due to rates, not a poor economy. If these fucking banks start to get hit with delinquencies — it is 100% over — game.set.match.

Here are the banks with the lowest FDIC protection as a percentage of accounts less than $250k.

ALMOST ALL OF $SVIB’s CASH DEPOSITS ARE UNINSURED — HIGH NET WORTH ACCOUNTS

ALL EYES ON $SBNY pic.twitter.com/dO5qbuHk9j

— The_Real_Fly (@The_Real_Fly) March 10, 2023

Should we bail them out? If you enjoy this version of capitalism yes. If we do not bail them out — many other banks will fail. Look at the plight of CHARLES FUCKING SCHWAB — dealing with an issue called “CASH SORTING” which is basically a run on the bank due to people transferring out of Schwab money markets in favor of higher yielding ones.

HEY — they wanted to give us free trades.

Since Biden is in office, a person who voted for every bailout he has ever seen, we are likely to get some form of government intervention before the market opens on Monday. If not, to quote a once great man “watch out below.”