FEAR IS IN THE AIR

Whenever the VIX enters ‘The Retard Zone‘, it’s time to concern yourself with booking profits and getting the hell out of dodge.

This week’s pullback, although small and insignificant, was coupled with an uptick in the fear index, better known as the VIX.

As you can see with the 5 year chart below, the fear, for lack of a better word, may just being getting started.

Heading into May, all eyes are on trends and seasonality factors. People are morons and like to throw out phrases that rhyme to sound cool, such as “go away in May.” Since I’ve been away the whole damned time, it’s a natural recommendation for me to tell anyone “go away.”

The numbers aren’t all that wearisome, from an empirical standpoint.

We may very well be repeating 2012 or 2010, all entirely possible. But for the past three years, during the month of May, the SPY has gone higher.

Gold was an outstanding performer today, higher by 2.2%. Crude was flat and stocks underperformed. There is a palatable fear in the air. I can smell it and sense that it’s growing with each and every day. The summer months are nearing and people don’t want to get on the other side of this mountain, should trouble reemerge.

The ark floats.

I really can’t call these people liberals. I know liberals. I grew up a democrat, amongst liberals who fought for the middle class. So I don’t want to insult any liberal out there by lumping you in with these uneducated, barbarous, anarchists.

It is the right of all Americans to express their opinions. It is the right of all Americans to vote.

Shockingly, both of these traditions and rights are being attacked by these miscreants. These mindless drones, disgracing themselves by parroting the former fascist regimes of South America and Europe, would have their heads cut off by the very people they seek to align themselves with. They are idiots of the first magnitude and it’s sickening to see free speech being denied by the same people, funded by the same sources, and the media not mentioning how awful these people are.

It looks like the American healthcare system is at a tipping point, both exhausted and fed up with extraneous costs associated with financing large r&d projects for big Pharma, which is geographically exclusive to a nation paying upwards of $1,700 per mo for family healthcare insurance.

Others might argue that America has the best healthcare in the world. While debatable, that doesn’t mean the standards at NYU Langone are the same at Brookdale in Brooklyn. There is a vast ocean in quality standards associated with socio economic backdrops in this country, with the elite getting consieur, cash only, services, while the middle class gets stuck with the ham and egger script writers.

Rant over.

GILD is feeling the bern. Pricing pressures are hitting them on every front.

Gilead’s total product sales rose 4 percent to $7.7 billion. Sales of hepatitis C drugs Sovaldi and Harvoni, the company’s second generation hepatitis treatment, totaled $4.29 billion, which was short of the $4.63 billion average Wall Street estimate, as compiled by ISI Evercore.

“The hep C numbers are a little light in the USA and that could be due to higher rebating and more competition,” said RBC Capital Markets analyst Michael Yee.

Gilead Chief Financial Officer Robin Washington said on a conference call that U.S. Harvoni sales declined due to an “increase in discounts required to open up access to patients with lower (liver) fibrosis scores,” as well as a modest shift in sales to deeply-discounted government payers, including the Department of Veterans Affairs.

As such, the stock is getting clown punched today.

We’re seeing this across the board in Pharma, from GILD to VRX to BMRN to VRTX to CELG. Gone are the days when ENDP or MNK can buy a drug and mark it up 500%.

Responding to recent data, the NY Fed lowered their GDP forecast for Q2 to 0.8% from 1.2%. My best guess, they’re responding to corporate earnings out of AAPL and MSFT and realizing what fools they been all along.

Almost simultaneously, Fed’s Kaplan is out saying he’d support a June or July rate hike. Serious question, what do you think is going on here?

Obama will be the only President to finish a term without enjoying at least a 3% GDP growth rate. At the same time, markets have soared.

But you’re looking at it all wrong.

Obama did great for the globalists, the oligarchs with slave factories in China and Vietnam. But he did almost nothing for the real America economy, measured by wages and cost of living crosses.

Markets have gone up with the profits realized by multinationals overseas.

Say what you want about China bottoming, oil bottoming, Europe picking up steam and the U.S. red fucking hot, so hot, we need to hike rates and fast. The world’s largest company, the crown jewel of capitalism and slave labor, Apple, is ripping through the floor boards, inexorably lower, forcing Tim ‘Gay as a $3 bill’ Cook to halt his ‘experience’ on Grindr.

Forget about rate hikes. The decline in market cap for AAPL alone is a form of capital constraint or economic tightening. Over the past few month’s, hundreds of billions in market cap has disappeared. In the past two days, $50 billion in market cap has evaporated, along with it the legacy of a certain T. Cook.

There are two types of CEOs in this world–autocrats who manage/operate and innovators who create/take risk.

Apple is no longer run by an innovator, which is currently being priced into the stock for the very first time since Steve Jobs died.

It goes lower.

I’m actually a big fan of FCX. Many of my old clients still own the stock because of me, long from as low as $7. Had I been managing money when the stock collapsed to the $3’s, I probably would’ve bought it.

The price of copper is ripping higher again, to 6 month highs, as the whole commodity space lifts…because inflation (duh).

But remember this statement from the recent conference call on April the 26th, 2016.

FCX says recent improvement in stocks and bonds could mean it considers other types of capital raises.
Expects to meet Spring collateral test at the end of Q2; is extremely confident in meeting that goal;
If leverage is greater than 6x, lenders would get 100% of proceeds; says will have ability to repay term loans and other debt; Debt levels have improved which opens up opportunities; focused on absolute leverage reduction. Comfortable with current maturity schedule.
Says was extremely frustrated to see were stock and debt was trading at and not having the money to buy them.

There are two things to note from that.

1. The company is going to file a secondary offering to raise capital. I’d bet my fucking life on it.
2. The company is pissed the fuck off about selling core assets to deleverage and are equally pissed off that they could not buy stock or bonds when they collapsed back in February.

While a secondary offering might be the best thing for the company, long term, as they get to keep some valuable assets, it’s a risk to the share price in the interim.

Buyers beware.

This is an old school favorite of mine. For those of you who were readers back in the Fly on Wall St days, if you recall, I had Danny aka Spydercrusher do a video about Hansen Natural’s foray into the coffee beverage market.

Last night, the company destroyed earnings. This is one of the index members in my semi-annually managed portfolio inside Exodus. Also, I’m an avid drinker of Monster white and blue when I go to the gym.

Gross sales for the 2016 first quarter increased 9.5 percent to $777.5 million from $710.2 million in the same period last year. Excluding acceleration of deferred revenue, gross sales increased 16.0 percent for the 2016 first quarter. Net sales for the 2016 first quarter increased 8.5 percent to $680.2 million from $626.8 million in the same period last year. Excluding acceleration of deferred revenue, net sales increased 15.9 percent for the 2016 first quarter. Unfavorable currency exchange rates had the effect of reducing gross sales by approximately $15.1 million and net sales by approximately $12.3 million in the 2016 first quarter.

Lastly, there’s the partnership with Coca-Cola that seems to be bearing fruits.

“Additionally, we are pleased to note continued progress on the implementation of our strategic alignment with Coca-Cola bottlers internationally. In particular, we have concluded agreements with Coca-Cola Amatil and will be launching our Monster Energy® drinks in Australia and New Zealand in May 2016 with Coca-Cola Amatil. We are also pleased to report that we have reached agreements with a number of other international Coca-Cola bottlers for distribution of our Monster Energy® drinks. In the United States, the Coca-Cola bottlers have expanded the number of outlets in which Monster Energy® drinks are available, and we are seeing improvements in our levels of distribution.

My best guess, KO acquires MNST for upwards of $200 within two years.

Interestingly, shares of MDVN are slightly lower for the day. Clearly, by the statement issued by Sanofi, they intend to go straight to shareholders and make the case for their bid. Insiders hold a little more than 1% of the company, so they’re vulnerable to a shareholder revolt.

My best guess: SNY sweetens the bid and MDVN succumbs to the pressure and agrees to be acquired.

The co states that combining with Medivation represents a compelling strategic and financial opportunity to drive immediate and certain value for Medivation’s shareholders while benefiting patients and both companies’ respective stakeholders. Sanofi’s all-cash proposal represents over a 50 percent premium to Medivation’s two-month volume weighted average trading price (VWAP) prior to takeover rumors. Sanofi is a disciplined acquirer and has a strong acquisition track-record. While to date Medivation has chosen not to enter into discussions regarding this value-creating transaction, Sanofi remains committed to the combination and looks forward to engaging directly with Medivation shareholders with regard to our proposal.

Sanofi affirms that while to date Medivation has chosen not to enter into discussions regarding this value-creating transaction, Sanofi remains committed to the combination and looks forward to engaging directly with Medivation shareholders with regard to our proposal.

The Hong Kong housing bubble is probably the biggest in the world right now, maybe second to London’s. But, unlike London, things are starting to fall apart, rather quickly, in Hong Kong now, as the economic woes from the mainland spread to its ancillary holdings.

craziest housing bubble ever

Over the past quarter, underwater mortgages in Hong Kong surged 15x to 1,432, up from 95 the previous quarter. Moreover, the value of said mortgages are in the area of $630 million.

Property sales are at 25 years lows and the price declines are staggering.

For the month of February, property prices are down 3.5% and -21% over the past year. Prices have dropped for 6 consecutive months and not a peep out of it from the media.

Production is essentially flat year over year. Let’s recap the current and apparent oversupply situation in the oil patch.

Russian production: all-time highs

Saudi and OPEC production: all-time highs

CVX oil production: all-time highs

The King of the Frackers, PXD’s oil production: all-time highs

etc., etc., etc.

Boy, this price decline has really hurt oil production, no? That’s how oil bottomed, right? All of the marginal players stopped producing and the supply/demand situation tipped the scales into the bulls favor, right?

None of that shit happened. These companies are drilling faster than ever. Supply is at record levels. The terminals at Cushing, OK are brimming with light sweet crude.

Highlights of the CVX quarter, courtesy of Briefing.com.

• Reports Q1 (Mar) loss of $0.39 per share, $0.23 worse than the Capital IQ Consensus of ($0.16); revenues fell 31.9% year/year to $23.53 bln vs the $22.74 bln two analyst estimate.
• Co said, “Our Upstream business was impacted by a more than 35% decline in crude oil prices. Our Downstream operations continued to perform well, although overall industry conditions and margins this quarter were weaker than a year ago. Our efforts are focused on improving free cash flow,” Watson stated. “We are controlling our spend and getting key projects under construction online, which will boost revenues. We announced first LNG production and first cargo shipment from Train 1 at the Gorgon Project in March. Production from the Angola LNG plant is imminent and a cargo shipment is expected in May. Earlier in the year, we started up production at the Chuandongbei Project in China, and we continue to ramp up production in the Permian Basin and elsewhere.”
• Upstream: Worldwide net oil-equivalent production was 2.67 mln barrels per day in first quarter 2016, compared with 2.68 mln barrels per day in the 2015 first quarter
  • Production increases from project ramp-ups in the United States, Nigeria and other areas, and production entitlement effects in several locations, were offset by the Partitioned Zone shut-in and normal field declines.
• International: International upstream operations incurred a loss of $609 mln in first quarter 2016 compared with earnings of $2.02 bln a year earlier.
  • The decrease was due to lower crude oil and natural gas realizations, the absence of a first quarter 2015 reduction in statutory tax rates in the United Kingdom, and lower gains on asset sales. Partially offsetting these effects were higher liftings and lower exploration expenses. Foreign currency effects decreased earnings by $298 mln in the 2016 quarter, compared with an increase of $522 mln a year earlier.
  • International downstream operations earned $488 mln in first quarter 2016 compared with $717 mln a year earlier. The decrease was primarily due to lower margins on refined product sales, partially offset by lower operating expenses and a favorable change in effects on derivative instruments. Foreign currency effects decreased earnings by $48 mln in first quarter 2016, compared with an increase of $54 mln a year earlier.
    Refinery crude oil input of 795,000 barrels per day in first quarter 2016 increased 13,000 barrels per day from the year-ago period, mainly due to lower turnaround activity, partially offset by the divestment of Caltex Australia Limited
• Downstream: U.S. downstream operations earned $247 mln in first quarter 2016 compared with earnings of $706 mln a year earlier
  • The decrease was primarily due to lower margins on refined products, an asset impairment, higher operating expenses primarily due to planned turnaround activity in first quarter 2016, and lower earnings from the 50%-owned Chevron Phillips Chemical Company LLC. Refinery crude oil input in first quarter 2016 increased 4% to 957,000 barrels per day from the year-ago period