Investing in Biotech Is a Bloodsport

Just this morning, three piece of shit biotech stocks got fucked by the FDA–all down upwards of 40%. The Obama administration has been very pro science, which has paved the way for gigantic rallies in biotech stocks. This wasn’t always the case under Bush, who regularly pandered to a psychotic religious right who detested science in favor of  Jesus cookies. Even with Obama’s Frankenstonian era of wanton experimentation and $500,000 aspirins, investing in the space can be a harrowing experience.

Case in point, today’s fucked face inverse lottery winners: ADMP, OCUL and DNAI.

We’ve all heard the success stories of people throwing all of their money into one biotech stock, making millions in the process. During last year’s iBC investors conference, I was entreated to such a tale. But, trust me when I tell you, many more men have taken to the flask, investing in this God foresaken industry than any other in the market.

Buy an ETF or at least screen for companies who already enjoy revenues. To invest in early stage R&D facilities is nothing short of gambling.

Raise your hands if you’re surprised. Goldman came up with a new way to measure the amount of debt in China’s banking system, measuring loans from banks to non-bank financials, and the results showed China has no idea what they’re doing.

Faced with an increasingly tangled system of financing and a money supply measure that doesn’t fully encapsulate new credit creation, the Goldman analysts opt to take a slightly different approach to gauge the strength of China’s recent credit boom. They look at the (adjusted) flow of money emanating from households and companies and going into various financial investments.

On that basis, China’s credit creation came in at 24.6 trillion yuan ($3.7 trillion) last year — far outstripping the 16 trillion yuan increase in money supply and the 19 trillion yuan of TSF.

“Such a scale of deterioration [in China’s leverage] certainly increases our concerns about China’s underlying credit problems and sustainability risk,” the Goldman analysts conclude. “The possibility that there is such a large amount of shadow lending going on in the system that is not captured in official statistics also points to [a] regulatory gap, and underscores the lack of visibility on where potential financial stress points may lie and how a possible contagion may play out.”

Nevermind all of this unpleasantness. Go about your busy days, drinking your fucking lattes, sopping up Chinese stocks because the charts look good.

You’re all a very visual, emotional people, unable to discern the difference between livestock and an equity stock. In case you’ve been interested in tapping into the old bank account to purchase some Chinese A shares, like our good friend Jim ‘Bow’d Tie Head’ Rogers, take a look at this video and BEHOLD the absurd valuations of a nation whose sole focus is to build islands in the middle of the sea, in order to control energy routes and fisheries.

Before this century is up, we will blow up their islands.

I grew up in Brooklyn at a time when it wasn’t cool. It was dangerous to walk around in today’s hipster neighborhoods, places where brownstones fetch $3 million, up from 250k, back in the 1990s. I’ve never seen shittier homes selling for such high prices. Broken down, piece of shit, houses are selling for a million dollars, in horrible neighborhoods filled with burglars and rapists. You have no idea.

Enter Dime Savings Bank of ‘Williamsburgh’. They’re offering exorbitant interest rates of 1.1% for deposits in order to lend into this bubble. What.can.go.wrong?

As of March, the bank, whose parent company, Dime Community Bancshares, has been publicly traded since 1996, had $5.5 billion in assets, up by $1 billion since the end of 2014. JPMorgan Chase & Co., the nation’s largest bank, is 439 times as big as Dime, with assets of $2.4 trillion.

Lending on apartment buildings used to be a tougher business. One in 10 New Yorkers left the city during the 1970s, and those who remained faced a surging crime rate. City neighborhoods were deteriorating. Mahon would sometimes arrive at the bank on a Monday to find burned-out cars smoldering on the corner.

Now the city’s 8.6 million residents face a housing shortage. The value of apartment buildings has soared, and owners have a steady stream of rent checks to borrow against. Dime lent out $1.3 billion last year, up 37 percent from 2014. It continued to step up real estate lending this year, originating $377 million in loans in the first quarter.

To keep up with the demand, Dime needs deposits, and the customers at its 25 New York-area branches have only so much cash to save. Plus, it’s difficult for any bank to win new clients, said Collyn Gilbert, an analyst with Keefe, Bruyette & Woods Inc. Changing banks can be a hassle. “To get deposits in the door, you really need to pay up for them,” Gilbert said.

Last year, Dime began touting its 1.1 percent rate on money market deposits, using banner ads, Bankrate, and other websites. Online customers came from all over the U.S., especially the Northeast, California, and Florida. Since the beginning of 2015, the bank’s deposits are up 30 percent, or $814 million, with most of the new cash in money market accounts. In the last quarter alone, Dime took in $305 million in deposits.

In a sickening gesture to lure bicycle riding hipsters into his banks, Mahon, its CEO, is catering to the younger generation through moronic design.

The new branch at Williamsburg’s Bedford Avenue will look more like a coffee shop than a bank, with big doors opening onto the sidewalk, welcoming pedestrians to stop in and charge their phones. Light fixtures made from mason jars will illuminate the coffee counter. The goal is to appeal to the neighborhood’s young, new residents in a way that Dime’s 1908 headquarters does not.

Why is he doing this? Well, the answer is very obvious.

For millennials, Mahon said, “It’s a little bit of an obstacle to come into a big limestone building.”

The next generation is one rife with fucking imbeciles.

El-Erian weighs in on a sundry of things that you should be paying attention to. He covered the yen, jobs, the Fed and the status of the bond market.

In last week’s Exodus recap, I talked about how an overbought condition in Exodus was actually a good thing, which typically precedes higher prices with highly impressive backtest data. If you recall, I predicted the markets would remain firm through last week and fade towards the end, when the overbought condition had worn off.  Judging by Friday’s trade, that’s exactly what happened.

First things first, I was paid a dividend in my TLT position–reducing my coast basis to $119.37–putting me ahead by 11.6% for the year. That’s on a government bond lads. Pay attention.

Next, the semis are showing signs of being in an overbought condition, as well as the MSCI index, which is essentially Asia, ex-Japan.

In addition to that, we’re getting OB signals in coffee, XLB, URE, IGN and EGPT, and about 25 stocks. It’s worth noting, this isn’t a vast amount of names in an overbought condition. Friday’s sell off reduced the technical rating by about 5% for all the stocks in the system.

On the oversold side, there are 55 stocks and ETFs. Most of the OS ETFs are downside bearish ones, except for TAN.  Of the bearish ETFs, the most impressive and alarming of the group is QID, downside NASDAQ.

If we’re to form an opinion based on the data alone, then expect a sharp pullback in the NASDAQ to the tune of 1-1.5% early next week, followed by a rally to end the week flat. However, in almost all of the algorithms I am reading, this should be the last week of malaise, as the week after next points to be a harrowing one for those positioned long.

In short, books profits, buy the dips early this week, but get the hell out before the close on Friday.

Post money management career has been an interesting adjustment period for me. In the past, I’d wake up to harrowing news and lament over outsized losses and go about my day servicing clients who thought the world was ending. Now I view the news as an outlet to express myself on the bloggery. If it weren’t for the site, I’d probably play chess all day in the park with homeless people.

A little more than a year ago, one of my top picks was SLCA. I liked the idea of playing the fracking revolution and ripping off drillers, charging them exorbitant amounts of coin for cheap sand. When oil topped out, the sand companies got shredded to pieces–based on the sentiment that fracking was dead and the sand companies were entirely fucked.

Lo and behold, oil has climbed by 100% this year and sand companies are some of the best performers for 2016.

There are 4 companies of note for the space.

FMSA +185%

HCLP +80%

SLCA +70%

EMES +25%

Last week, the Baker Hughes oil rig count reported a net increase of 9 to 325, the largest increase in a year. These numbers are still woefully depressed, coming down from a peak of 1,600 rigs back in 2008. However, the market viewed this as a potential bottom in drilling activity and bid up the shares of sand companies to no end. Putting skepticism aside, these are some of the most heavily shorted stocks in the market. If, indeed, the rig count continues to climb and drilling activity ramps up, with the support of higher oil prices, you won’t find a better sector to invest in.

Naturally, the other side of this story is the fact that a whole slew of drillers will likely go bust inside two years and that the recent 100% increase in crude is unsustainable, considering the fact that supply hasn’t really been destroyed and demand isn’t really increasing. If the global economy is about to slow, like many people believe, you will rue the day you went long sand stocks, post 100% increase in share price.

My favorite of the group is SLCA–but I’d rather drive a stake through my own heart than buy it up here.

One ancillary group of stocks who benefit from an increase in sand activity are the rails. If you’re bullish on sand, you’ve got to like the rails here too. The top rated rail stocks, according to Exodus, are UNP, CSX and GWR. It’s also worth noting that a Trump administration will be lenient on frackers, possibly paving the way for wanton exploration in all sorts of environmentally sensitive areas. Prepare to light your tap water on fire.

A former civil war veteran sheds his identity and adopts the American Indian culture, just before their extinction. This guy’s life truly sucked, having to fight those crazy as batshit southerners and then a sundry of new enemies in the western front.

This is a very atmospheric period drama, one that illustrated the warrior spirit of the American Indians, but also, tragically, their inability to survive as a society.

The systematic extermination of the American Indian was one of the worst cases of genocide over the past two hundred years. Actually, it started way before that with the Dutch and British having their way in the northeast, circa 17th century. It has been a very long and arduous experience for natives.

A few years ago, on a road trip to New England, I stopped by the Plymouth Rock and was surprised to learn, up until this day, every Thanksgiving natives travel to the Rock to lament about ceding America to Europeans. It’s a holiday of great sorrow for them and they, generally, hate the fucking rock and its symbolism.

Democrats= less freedom.

In spite of the fact that our good friend, Ramp Capital LLC, has dedicated his life’s work towards the purchase of SPY contracts between the minutes of 3:30-4pm, every single day, one only has to gaze into the mirror to know that this is a plan forged in an asylum, destined for failure.

While some of us traverse handicap ramps, hoping to sneak into the DMV before 4pm, others are Captain’s of gigantic arks, festooned with zebra, giraffe and other African wild-life, even humans!

Ladies and gentlemen, the ramp that you so slavishly adored, caressed like a retarded monkey on its death-bed, has been shattered to pieces by marauding bandits, globalists who’d love to see your investment banking gig ‘transcend’ into a 9-5 at Walmart. All of your monies are theirs, thrust into digital accounts by which interest is drawn from and not granted. It’s an Orwellian nightmare come true, a cashless society of transvestite, gunless, cowards, protesting for freedom to urinate in gender neutral lavatories, whilst every God given freedom, every decent thing about mankind, is left in ruins.

BEHOLD, the catamite economy, as you transfix yourselves into a state of abhorrent intoxication, destined for extinction.

Happy Friday!