iBankCoin

Trading with The Fly

Dr. Fly
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,445 Blog Posts

Analyzing the Recent Rally: Commodities Win; Biotech and Tech Lose

Sun Mar 20, 2016 8:51pm EST 29

Out of more than 200 industries listed in Exodus, just 4 posted negative results over the past month. Those were all in the drug sector, tethered to the obtuse racking of the biotech sector. The selling has been unrelenting and has greatly diverged from the rest of the market.

Interestingly, the top performing sector, by far, year to date, are utilities–currently up more than 14%.

The highest returns over the past month were in energy related stocks, up on average 36%, followed by aluminum (+26%) and Iron/Steel (+26%). Without question, the best performing stocks were the ones down the most in January and February, indicative of a classic dead cat bounce unsupported by improving fundamentals.

It’s also worth noting, tech stocks have lagged the rest of the market during the recent rally, up just 8.3%, representing the lowest return ex-utilities, of all the principle sectors. The tech heavy NASDAQ was up just 5%, compared to the broader based SPY return of +7%.

In other words, tech and biotech have purposely lagged, as degenerates piled in, headlong, into commodities and soon to be bankrupt retail outlets.

Screening for stocks with market caps above $10 billion, these were the standouts over the past month.

PBR +77%
CLR +77%
FCX +55%
BBD +53%
DVN +49%
VALE +41%
TSLA +39%
CX +36%
WY +32%
FCAU +27%
ULTA +27%
WDAY +26%
HPE +26%
AA +26%
FDX +26%
WHR +25%

The average return for stocks with market caps above $10 billion, over the past month was +9.7%. The average return for stocks with caps ranging from $1-5 billion was 12.3%. Markets caps $5-10 billion returned 10.6%. In general, returns were similar in all market cap groupings. The principle divergences were abundant in the tech and biotech sectors.

My take: while the idea of reflation is an alluring one. It is entirely without fundamental backing, as the Chinese economy continues to weaken–hampered by a 260% debt to GDP ratio, slowing growth and account receivables at 16 year highs.

Comments »

China is Leveraging Up the Plebeians Again; Margin Restrictions Lifted

Sun Mar 20, 2016 8:07pm EST 1

Since the collapse of the Chinese stock market last year, margin lending plunged by 60%, partly thanks to a complete wipeout of the predominant retail oriented investor from the field of battle and also due to restrictions placed on margin lending by the Chinese government. Over the past month or so, things have settled down and a calm normality has replaced the frantic ‘jump out the window’ to meet a margin call trading action.

Obviously, it’s time to lever up the farmer again, by permitting him to margin out his trading accounts to reach ‘peak velocity’ to take full advantage of the coming renaissance.

chinamargin

The rate for 182-day loans will be cut to 3 percent, while that for 91 days will be lowered to 3.2 percent, the agency said. The 28-day lending rate will be reduced to 3.3 percent, while 14-day and 7-day costs will fall to 3.4 percent, it said. In a margin trade, investors use their own money for just a portion of a stock purchase and borrow the rest. The loans are backed by their investments, meaning that they may be forced to sell to repay the debt when prices fall.

China Securities Finance Corp., the state-backed agency that provides funding to brokerages for margin trading, will restart offering loans to securities firms for periods ranging from 7 days to 182 days, according to a statement posted on its website Friday. The agency will cut interest rates on the debt to as low as 3 percent, it said. China’s offshore equity-index futures rose.

“The loosening could reignite interest in the equity market, particularly as the regulators’ actions last year — to rein back private sector broker leverage — helped trigger the correction in equity prices,” said Koon Chow, senior macro and currency strategist at Union Bancaire Privee in London. “”It does look like they want a second chance at growing the equity market. We shall all be watching very closely whether leveraged buying of the equity market balloons again.”

Money is cheap in China and so are people.

Comments »

Dead Beats Are Rampant in China; Account Receivables Soar to $590 Billion

Sun Mar 20, 2016 7:55pm EST 3

Account receivable are roaring in China, up 23% over the past two year to an amazing $590 billion. In some heavy industrial sectors, the days to collect revenues have swelled to over 1,000. Overall, median collection days stand at 83, highest of all industrialized countries in the G-20, with exception to the deadbeat shoe shiners in Italy.

china

“It’s a big problem when you have rising insolvencies, a bad economic environment and less liquidity for small companies,” said Mahamoud Islam, the firm’s senior Asia economist in Hong Kong.

Those headwinds are increasingly visible in Chinese financial statements, where the accounts receivable and sales entries allow analysts to calculate “days sales outstanding,” or how long it takes a firm to get paid. The median collection time of 83 days, compiled by Bloomberg from the most-recent filings of mainland-domiciled firms, has climbed from 79 days in 2014 and 55 days in 2010. It’s higher than in any of the world’s 20 biggest economies except Italy, and compares with the 44-day median for companies in the MSCI Emerging Markets Index.

Chinese industrial firms take longest to convert sales into cash, at 131 days, followed by 120 days for technology companies and 118 days for telecommunications firms. While it varies by sector, a reading of more than 100 days is typically a “red flag,” said Amy Sunderland, a money manager at Grandeur Peak Global Advisors in Salt Lake City, Utah. She’s been avoiding companies in the infrastructure and environmental-protection industries in part because they’re taking too long to collect payments.

“It could indicate future cash flow problems” or that a company is booking revenues too aggressively, said Sunderland, whose Global Opportunities Fund has gained an annualized 9.4 percent over the past three years, beating 94 percent of peers tracked by Bloomberg.

The trend of longer collection periods isn’t going to end anytime soon, according to Chen Xingdong, chief China economist at BNP Paribas SA. The former World Bank official sees at least two more years of delayed payments as companies struggle to reap better terms from their customers.
“The hard time is still ahead,” he said.

china2

Year to date, the Chinese markets are down by a mere 6%, as bullish spirits persist amidst a litany of impending bankruptcies, which are on track to jump by 20% in 2016.

Comments »

Sherwin Williams Acquires Valspar at 41% Premium

Sun Mar 20, 2016 3:22pm EST 13

I love monopolies. Just like the good folks at House DuPont patented the color white, these two combined giants will crush the purses of Home Depot shoppers everywhere.

Ok, I’m exaggerating a bit. But this deal does combine two giant manufacturers of paint, something that is bound to provide them with the subtle, yet indelible, comforts of “pricing power.”

Sherwin-Williams will pay $113 a share in an all-cash transaction, the companies said Sunday in a statement. The price is about 41 percent higher than Valspar’s volume-weighted average price for the 30 days through March 18, according to the statement. Valspar closed on Friday at $83.83.

John Morikis, chief executive officer of Sherwin-Williams, is forging the company’s biggest deal ever less than three months after succeeding longtime CEO Christopher Conner. With Valspar, the company adds $4.39 billion of paint sales to its 2015 total of $11.3 billion

I can’t think of any ancillary winners from this deal, just an overall bullish statement for the home improvement market.

Comments »

BARBARIAN HORDES DESCEND UPON TRUMP; BLOCKS ROAD TO RALLY, PROTESTS IN NYC

Sat Mar 19, 2016 2:53pm EST 61

Fascist mobs, funded by a deranged globalist, lizard eating, cabal, have taken to the streets today–some with heroin needles stuck in their arms–to protest the right of assembly and speech of D. Trump. It is not acceptable that he be permitted to ‘hate’ on foreign entities whose sole goal is to fleece the American public of its honor, dignity and of course money.

Apparently, building a wall to keep out illegal narcotics and migrants is synonymous with racism. These bedragggled microbes do not realize they are pawns for the globalist agenda, one that endeavors to strip them from their very own jobs. All very ironic.

Here are some of the classic moments.

Baby

trump

Comments »

Saturday Cinema with Le Fly: Office Space

Sat Mar 19, 2016 12:40pm EST 5

I can’t believe I never reviewed this movie here. This is an absolute must see in the comedy genre. Anyone who has worked in a corporate setting understands how accurate the movie is, when depicting the oppressively absurd culture of a bureaucratic corporation.

The classic fax machine scene. The TPS reports and the asshole boss who wants you to come in on Saturday, and also Sunday. The cubicles, red swingline stapler, the taking of pennies from the tip tray.

An absolute classic.

Comments »

Faber: Hillary Clinton Will Destroy the World

Fri Mar 18, 2016 6:41pm EST 41

Before Mr. M. Faber got into politics, he said Brazil and Russia were relatively cheap, compared to the US. Perennially and without pause, M. Faber hates American stocks. That being said, when he broached the subject of investing in Singapore, he had nothing but good things to say about the old British crown colony–compared to the bedraggled nature by which America is run.

Then the Trump-Hillary dialogue took over. That male host wearing lipstick, speaking in the most incorrigible tones possible, acridly queried as to why Faber could support Trump over Clinton. Faber began to laugh, almost uncontrollably, suggesting he revisit Hillary’s middle east nation-building strategy, the ‘Arab Spring’, which has cosmically fucked that part of the world for the next 500 years.

Classic.

Comments »

Markets Rally For a 5th Consecutive Week; Crude Closes Under $40

Fri Mar 18, 2016 6:01pm EST 12

There is going to be hell to pay for all of this depravity in about 4 weeks hence. I know what you’re thinking. I’ve been dealing with audiences like you since my political blogging days, dating back to 2001. Many of my peers in the finance blogging racket are losers (extra Trump). These are people who I wouldn’t trust giving a tip at dinner, let alone offer me financial advice online. I hope you can appreciate and understand what I am trying to do with iBankCoin for 2016. It’s a complicated, multi-layered, strategy, which is aimed at training you to think analytically–from news to taking down positions.

By the end of 2016, you and I both will be better traders, decoders of financial subterfuge aka ‘news’, and have bountiful gains to show for it. Hopefully, all of this extra effort I am putting forth, publishing upwards of 15 blogs per day, parsing through the muck for a benefit of the ‘reader class’, will net the intended results: low beta,high-octane returns.

Markets rallied for the 5th consecutive week. But bonds rallied too. As a point in fact, the Japanese 10yr has never been lower, which is anchoring all bonds from selling off. We have a problem deep in the crevasse. Its been buried under 5 weeks worth of shit. In due time, all of the refuse will wash away from the tears of debilitated short sellers. At such a point in time, by my gameplan in late April, markets will reverse–in earnest–offering no quarter or respite for investors scrambling to avoid loss.

Everything will burn. Everything will be destroyed. Everything will be torn from foot to crown.

Have a great weekend!

Comments »

Goldman Lies: Fed Hiking Two Times is Most Dovish Ever

Fri Mar 18, 2016 12:48pm EST 9

This is Orwellian doublespeak. Goldman is out with new research, trying to help reflate assets, and lying. The suggestion that a doubling of the Federal funds rate over the next 8 months as being the most dovish of this century is not only laughable, but insulting.

Words cannot describe the utter horseshit that is forthcoming.

Excluding two meetings during the depths of the financial crisis in late 2008 and early 2009, the shock of Wednesday’s slash to the so-called “dot plot” was only exceeded by introduction of calendar-based forward guidance in 2011, the decision to forego “Septaper” in 2013, and last March’s markdown, according to Goldman:

“Markets had little doubt that the FOMC would leave the funds rate unchanged at yesterday’s meeting—futures markets implied only about a 5 percent chance of an increase before the announcement,” wrote Pandl and Struyven. “Yet the decision was clearly a major dovish surprise for markets, with interest rates declining across the curve and the dollar falling against other developed market currencies.”

“If the central bank unexpectedly tightens monetary policy, nominal interest rates will tend to rise, but breakeven inflation and stock prices will tend to fall,” the economists write, providing a theoretical example. “We can therefore infer something about the underlying macroeconomic shocks from the correlation pattern in markets.”

“The meaningful policy surprises in recent years are a puzzle in light of the large amount of information Fed officials now provide about their reaction function,” write the economists. “One might have thought that the details provided in the summary of economic projections and through the press conference would have made it easier for investors to anticipate the committee’s response to incoming data.”

In summary, war is peace. Up is down. Higher rates is dovish. Lower crude is bearish. Higher Trump polls is fascism.

Comments »

S&P Pushes into Positive Territory for 2016; Bonds Continue to Advance Higher

Fri Mar 18, 2016 11:08am EST 9

As market participants splash around the market, yields continue to collapse–because the Fed is only going to hike rates by 100% over the next 8 months.

This is risk aversion.

image

The S&P 500 has erased all of its early 2016 losses and now relish in the black. Crude oil has formed a bridgehead at $40, which poses as a significant annoyance to those whom are short. Fundamental concerns aren’t abated at $40 crude; but the market is bidding up oil stocks anyway.

Seeing a great divergence between reality and perception, I doubled my XLE short today, with a basis of $63.32.

Comments »

© Copyright 2007-2024 iBankCoin All rights reserved under penalty of bodily harm. DISCLAIMER: This is a personal web site, reflecting the opinions of its author(s). It is not a production of my employer, and it is unaffiliated with any FINRA broker/dealer. Statements on this site do not represent the views or policies of anyone other than myself. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities. DATA INFORMATION IS PROVIDED TO THE USERS "AS IS." NEITHER iBankCoin, NOR ITS AFFILIATES, NOR ANY THIRD PARTY DATA PROVIDER MAKE ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND REGARDING THE DATA INFORMATION, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. Privacy Policy