Goldman: ‘Equities Offer Poor Asymmetry’; A Stark Drawdown Looms

Goldman has been talking shit for some time now, mainly from Kostin. But this is a new guy talking shit, who goes by the name of Mueller-Glissmann. I’m assuming this is a duo of two assholes talking shit, or some woman who enjoys to hyphenate her name in such a manner.

“With equities at the upper end of their recent range, we believe equities offer poor asymmetry with little return potential and potential for more frequent and larger drawdowns,” writes Mueller-Glissmann. “And while ‘buying the dip’ has worked since 2014 , investors are increasingly concerned about the recovery catalyst in the next drawdown as
central bank capacity is increasingly questioned and global growth and inflation remain stubbornly low.”

Yes, I agree, in spite of my bullishness on gold. A storm is coming.

Fearful of the deflationary vortex, which will usher the way towards popular revolt and the removal of our leading politicians, central banks have upped the ante on their interventionist activities.

I’ve been watching this very closely and feel that I have a good handle on how this will end.

The presiding theory is this is all a house of cards, ready to implode, leaving Tyler from Zerohedge as the only human being left alive in North America. Although I believe this all ends very badly, I’ve adopted a more sanguine outlook for asset prices in the interim–because of what’s taking place in corporate bonds in Japan and now Europe.

Both the BOJ and ECB are buying up corporate bonds with extreme vigor. The scale of the purchases have caused others to front run these trades, causing bonds to spike and yields to plummet. The net result, at least for now, will pave the way for these companies to borrow money without cost, which, in turn, will lead to greater buybacks and a much more prolific mergers and acquisitions environment.

This all sounds very bullish, when in fact we are creating the rope by which will be swing at the neck by.

I’ve never liked gold, silver or bitcoins. As a matter of fact, I’ve hated them. But, because of this new paradigm, an era of wanton manipulation on a scale never seen before, I believe responsible money managers will begin, in earnest, allocating into gold with increased vigor. For the year, the yellow metal is only up 18 or so percent. When managers begin to realize what I think will occur, a rapid race towards currency devaluation by virtually all major players, gold will soar.

As such, I’ve taken core positions in gold and various gold miners today, all outlined inside of Exodus. I’ll discuss this in greater detail later, as I am on a school trip with my son at the moment.

The ECB will do for their corporate yields what the BOJ have done for theirs.

Central banks are truly imposing their will on markets, hellbent on seeing inflation rise. In my opinion, this is all very bullish for gold.

Purchases included notes from Telecom Italia SpA, according to people familiar with the matter, even though Italy’s biggest phone company is rated as sub-investment grade by two ratings firms. The company’s bonds are in Bank of America Merrill Lynch’s Euro High Yield Index and credit-default swaps insuring the notes against losses are part of the Markit iTraxx Crossover Index linked to companies with mostly junk ratings.

Mario Draghi is showing he’s planning to make the biggest impact possible on the first day of corporate bond purchases by casting his net as wide as the program allows. While the ECB has said it would buy corporate bonds with a single investment-grade rating, some investors expected the central bank to start with the region’s highest-rated securities.

“This dispels any doubts investors may have had about the commitment of the ECB and the central banks to tackle lower-rated names,” said Alex Eventon, a Paris-based fund manager at Oddo Meriten Asset Management which oversees 46 billion euros ($52 billion) of assets. “Telecom Italia is firmly at the weak end of the spectrum the ECB can buy. It’s good for high-yield investors who might have bought these bonds to ride the rally the ECB created.”

Investors have snapped up investment-grade corporate bonds on the promise of central bank purchases, driving up prices and cutting borrowing costs. The average yield for euro notes tumbled to 0.98 percent on Tuesday, the lowest in more than a year, according to Bank of America Merrill Lynch index data. Junk bonds have also rallied, with the average yield falling to a one-year low at 4.64 percent, the index data show.

Telecom Italia’s bonds, which are ranked at the lowest investment grade by Fitch Ratings, have rallied along with other company securities since the ECB first announced it would buy corporate notes in March. The yield on its 1 billion euros of bonds due in January 2023 has fallen to 2.3 percent from 4.2 percent in February, according to data compiled by Bloomberg. Moody’s ranks Telecom Italia one level below investment grade at Ba1 and S&P Global Ratings an equivalent BB+.

“The ECB needs to signal that it means business,” said Stefan Isaacs, a London-based fund manager at M&G Investments, which oversees more than 245 billion pounds ($357 billion) of assets. “Maybe buying Telecom Italia bonds is just one of the ways it can do that. It’s not just starting with the highest-quality assets.”

The ECB bought other notes from Europe’s periphery, including 10-year bonds from Telefonica SA, the biggest phone carrier in Spain, and notes issued by Assicurazioni Generali SpA, Italy’s biggest insurer, said the people who aren’t authorized to speak about the matter and asked not to be identified.

“Draghi is not being shy buying peripheral debt, which is positive given the ECB can’t afford to be too picky if it wants to make a big impact,” said Agustin Martin, head of European credit research at Banco Bilbao Vizcaya Argentaria SA. “The expectation was that the ECB would focus mainly on French and German bonds so today’s purchases could bode well for peripheral credits if this trend continues.”

Hey, I have an idea. Why don’t Chip Wilson, former CEO and founder of LULU, get some financing to takeover LULU and bring it private? It’d make for great theatre, wouldn’t it?

Chip has been very outspoken as of late, regarding how LULU is being managed. These numbers that were just released will not make him a happy golfer.

Reports Q1 (Apr) earnings of $0.33 per share, $0.02 better than the Capital IQ Consensus of $0.31; revenues rose 17.0% year/year to $495.5 mln vs the $487.82 mln Capital IQ Consensus.
Total comparable sales, which includes comparable store sales and direct to consumer, increased by 6%, or by 8% on a constant dollar basis.
Comparable store sales increased by 3%, or by 5% on a constant dollar basis.
Direct to consumer net revenue increased by 17% to $97.6 million, or by 18% on a constant dollar basis.
Outlook

Co issues downside guidance for Q2, sees EPS of $0.36-0.38 vs. $0.39 Capital IQ Consensus Estimate; sees Q2 revs of $505-515 mln vs. $513.59 mln Capital IQ Consensus Estimate.
Q2 total comparable sales in the mid-single digits on a constant dollar basis
Co issues in-line guidance for FY17, sees EPS of $2.08.2.18 vs. $2.15 Capital IQ Consensus Estimate; sees FY17 revs of $2.305-2.345 bln vs. $2.33 bln Capital IQ Consensus Estimate and compared to $2.285-2.335 bln prior

The stock isn’t getting hammered to small little pieces, as you would expect. It’s down just 2% in the pre market.

Update: LULU reversed and is now trading higher by 3%.

After reading this, I was immediately delighted by its virtues.

Imagine yourself driving on the highway and being pulled over by a patrolman. For some reason, he doesn’t like the way you look, you and your smug grin. He asks to see your leather wallet, which was given to you as a gift from your caring wife. He then takes out your credit cards and bank cards and scans them into his ELECTRONIC RECOVERY AND ACCESS TO DATA (ERAD) machine, provided by the good folks at the ERAD Group Inc.

You ponder to yourself that something is awry. So you quiz the nice young man, clad in asshole highway patrolman boots and sunglasses.

“Good Sir, why are you scanning my cards?”

The officer replies “it’s because I have reason to believe you’re earning income from a criminal enterprise. All of your assets have been seized. If you want your assets back, you will have to provide evidence to the contrary.”

“The fuck, good Sir. I demand to speak to your supervisor.”

“Sir, under the law, I have the right to seize your assets, if I suspect you’re a party to a crime, even without a conviction.”

“Well then, can I at least use my credit cards to get some gas?”

“No sir, your credit cards have been frozen, until you can provide proof that you’re not a criminal.”

“Wait, one second. Where does the money go?”

“It goes to the State of Oklahoma, aside from the 7.7% royalty that goes to the provider of this freedom loving technology machine (ERAD). Have a nice day now.”

Here’s how it works. If a trooper suspects you may have money tied to some type of crime, the highway patrol can scan any cards you have and seize the money.

“We’re gonna look for different factors in the way that you’re acting,” Oklahoma Highway Patrol Lt. John Vincent said. “We’re gonna look for if there’s a difference in your story. If there’s someway that we can prove that you’re falsifying information to us about your business.”

Troopers insist this isn’t just about seizing cash.

“I know that a lot of people are just going to focus on the seizing money. That’s a very small thing that’ s happening now. The largest part that we have found … the biggest benefit has been the identity theft,” Vincent said.

“If you can prove can prove that you have a legitimate reason to have that money it will be given back to you. And we’ve done that in the past,” Vincent said about any money seized.

State Sen. Kyle Loveless, R-Oklahoma City, said that removes due process and the belief that a suspect is presumed innocent until proven guilty. He said we’ve already seen cases in Oklahoma where police are abusing the system.

“We’ve seen single mom’s stuff be taken, a cancer survivor his drugs taken, we saw a Christian band being taken. We’ve seen innocent people’s stuff being taken. We’ve seen where the money goes and how it’s been misspent,” Loveless said.

Loveless plans to introduce legislation next session that would require a conviction before any assets could be seized.

Not even North Korea can fuck with this.

Multiple states are now using this ‘technology’ to seize assets, FOR PROFIT, on the spot.

Those of you partaking in the After Hours with Option Addict free trials were entreated to life changing events, as energy stocks spiraled higher these past two days. However, as the very basic of laws presiding over life dictate, all good things must come to an end. Stocks crested mid-day, as the presumptive Presidential nominee, Hillary Clinton, made HERstory today–locking in the democratic nomination over the old seahag, Bernard Sanders.

Whether stocks topped today, or will continue to run for the next 10,000 years, is irrelevant to me. Viewing the landscape from a very high perch, I find it very notable that the BOJ are moving towards tossing out helicopter money onto its robot loving citizens. Bear in mind, their companies are now able to borrow, seemingly, unlimited amounts of money for nothing at all. If we are to assume central banks will continue the path to undermine their own currencies, we must assume alternative currencies, like gold and silver and maybe Bitcoins, will continue to attract asset allocators.

This isn’t even about being bullish on gold or bitcoins. It’s about trying to determine where money managers will place money, in light of these new developments.

As such, I am exploring the idea of adding gold and gold stocks to my core holdings, which, at the moment, holds nothing but TLT and cash. If and when I decide to build a portfolio of gold stocks, I will do so in Exodus first.

According to Reuters, ‘people familiar with the matter’ (fucking rats) said the company hired Goldman Ball Sachs to explore a sale of the company. The stock had been halted on upside volume, as fiends with cocaine on the brain bid up the stock. The stock reopened and is higher by more than 12%.

The only other networking stock responding is ACIA, higher by 4.7%.

With crude topping $50, traders are bidding up oil stocks, like bums vying for the last bottle of Georgi vodka. The gains, quite frankly, are monumental.

I was watching an interview with the CEO of SPN earlier today. He’s indelibly bullish on crude and thinks it trades up to $60 by year end. His thesis is the same lie being shopped around Wall Street since February. Production declines will lead to an equilibrium of supply v demand. Meanwhile, back in the real world, global oil production is at new highs. Sure, many of the marginal players are folding up tent. But these are small little shits, in a vast reservoir of feces.

According to Exodus, the energy sector has never been this overbought. Have a look.

In fairness to the crude bulls out there, recently, overbought conditions beget more overbought conditions, as prices worked their way higher.

I read this article and viewed the clip below and was most astounded by the fact that neither the author of the piece or reporters covering the story felt there was an extreme wrong done here. I guess the statutes of limitations are up for these sort of crimes, so the rats are showing everyone all of the cheese they had stolen over the years.

If you recall, during the grimmest days of the financial crisis, Citi, who was bogged down with billions in bad CDO exposure, received a $300 billion bailout from the government. They didn’t go bankrupt, or in receivership, just bailed out. At the time of the bailout, I assumed they were using the fresh liquidity to sell toxic assets and take writedowns. Instead, they were starting up a new CDO desk to buy these assets from the Fed. Fast forward until now, that desk was the most profitable at the bank, making billions off the toxic crap they bought.

Good news, right?

The fuck out of here.

“It’s impossible to imagine. You’re being bailed out with one hand, and you’re pouring money into the very same assets that precipitated the bailout with the other.”

Citi rose from the ashes, like the Phoenix, to become the biggest player in the CDO market. In some cases, they were 80% of the market–all thanks and praise to the government dollars that bailed them out.

Has anyone uses this thing? What’s with the K spelling of ‘cold’ anyway? It’s very KLAN-like. It’s funny how the Keurig craze came and went. When it first came out, I went bonkers for it. I used it 5 times per day, until I realized I was brewing algae into my coffee. Now I just use freshly ground beans and a french press. It does not get better. Some people like the pour over technique, which is fine too. Either way, the whole K-cup, Nazified version of coffee frenzy– that swept America off her feet, is gone.

Keurig Kold, released last year, was the company’s big bet that it could duplicate the success it had with single-serve coffee machines. The idea was to let customers make their own soda at home, providing an alternative to SodaStream machines. Coca-Cola Co. threw itself behind the effort, agreeing to buy a stake in the company. Coca-Cola Chief Executive Officer Muhtar Kent said last year that the Keurig Kold might be a bigger hit than the company’s original coffee machine.

Instead, reaction to the device was underwhelming, according to Stifel Financial Corp. That raised concerns that it would become at best a niche product. JAB and other investors then stepped in to acquire the company for about $14 billion and brought in a new CEO. Coca-Cola, which at one point had a Keurig stake of about 17 percent, was bought out by JAB and made a small profit on the investment.

“We are grateful to all of our consumers who have supported our company in the innovation of single-serve beverages,” Suzanne DuLong, a spokeswoman for Keurig, said in an e-mail. “Reimagining how beverages can be created, personalized and enjoyed will continue to guide Keurig’s strategy into the future.”

This cancelation is good news for SODA, who still makes believe Americans are interested in drinking soda pop.