Recent Share Buybacks Are Nothing Special to Behold

There’s an old urban legend that says the Dutch bought the island of Manhattan from the Lanapes for some beads and $24. Over the centuries, that $24 has remained constant, untouched by inflation and the possibility that the Lenapes could’ve taken that small sum of money and invested it wisely. As a point in fact, had the savage Lenape set up trust accounts and invested the $24 over 350 years, it’d be worth $64 billion–a decent sum of coin for the crime infested rat hole called Manhattan.

Fast forward to today and everyone is talking about how the level of share buybacks are indicative of a market top. I think there are lots of reasons why the market topped, none of which have anything to do with buybacks. Also, these morons aren’t factoring in massive earnings and revenues gains from the previous cycles.

Revenues and earnings are up huge since the last cycle top. The buybacks we’re seeing today are wasteful, idiotic, and completely devoid of rational thinking; but they’re nothing special when compared to previous cycles.

I bought more spy, delving into leverage–following the mandates dictated by Exodus.

It’s a dark world out there, as Brent crude breaks the backs of our friends in the Saudi fields, in real time. Everything is crashing, but stocks.

LISTEN TO ME: THERE ARE 10,000 REASONS TO CRASH THIS FUCKER INTO THE ROCKS; but we’re rallying instead. A tradeable bottom is in.

I still have a a full position in TLT, which is 25% of my assets. My only other position is SPY, as I prefer to eliminate stock specific risk for the entirety of 2016.

This is my 4th SPY purchase. My basis is a touch over $196.

God speed.

Don’t you love when analysts wait until a stock is down 80% to downgrade them to neutral? That’s exactly what the Australian investment bank did today with FCX. Being that Australia is a kangaroo and a copper mine, when analysts talk metals over there, the world tends to listen.

The research note did nothing but sing praises for Freeport’s “world class” mines and unique blend of awesomeness. If the company could get a better handle on its debt, well, they’d be inclined to be measurably more optimistic.

But for now: fucked.

Shares of FCX are off by almost 20% today.

Tough day in the markets? Fed’s Lockhart doesn’t give a shit. He’s only interested in higher rates, to push back against that tidal wave of inflation that’s beating against our doors.

Federal Reserve Bank of Atlanta President Dennis Lockhart said he favors continued tightening of monetary policy this year, and a global selloff in stock markets is unlikely to affect the U.S. economy.

“When such volatility develops, I think it’s helpful to look at the real economy of the United States as opposed to the financial economy and ask if something is fundamentally wrong,” Lockhart said in prepared remarks in Atlanta. “Are there serious imbalances that make the broad economy vulnerable to foreign shocks? I don’t see that kind of connection in current circumstances. ”

After talking all of that nonsense, he then threw out the boiler plate “we’re soooo data dependent, like OMG.”

“I’d like to be more definitive in predicting future rates, but the degree of uncertainty – particularly as regards global influences on our economy — affirms the wisdom, in my opinion, of letting the economic data do the talking,” Lockhart said.

Markets are soft again, led lower an insane drop in oil of 6%. Biotech is also cremated into skeleton dust, off by 5%.

If you’re looking for a god damned reason why FCX is down 20%, this is probably it.

The mining giant is in trouble again, prompting bond holders to take out insurance, which is causing all sorts of fuckery. It’s almost like a self fulfilling prophecy.

The cost of insuring Glencore Plc’s debt against default rose to a more than six-year high as the price of raw materials such as copper continued to tumble.

The trader and miner’s credit default swaps increased to as much as 946 basis points, the highest since April 2009 on a closing basis, according to data from S&P Capital IQ’s CMA.

Slumping commodity prices have battered Glencore, prompting it to scrap a dividend payment, sell new shares and outline asset sales as it seeks to curb debt to maintain its investment-grade rating. Copper dropped to a six-year low amid a rout in metals as muted Chinese inflation increased concern that demand from the world’s largest buyer of raw materials will slow.

“CDS levels are driven by commodity prices and in the case of Glencore, especially copper,” said Max Mihm, a Frankfurt-based portfolio manager at Union Investment, which holds Glencore bonds among assets totaling about $271 billion. “If prices fall further and stay low Glencore will need to do more to protect its IG ratings.”

No one actually knows how much debt Glencore has, believe it or not. Some say $45 billion, others say $100 billion. Either way, the whole thing is fucked and is spooking stocks.

Equities gave up the rally and have now plunged to extend the nightmare called 2016.

You’re gonna have to make a long list. Lots of filings are coming, most of which are in that darn pesky commodity space that we all loved 5 years ago and went ahead and lent all of that money.

Here is a simple search inside Exodus of companies that Wall Street have declared dead. As you can see, ACI was in there.

By the way, ACI just fucked its bond holders, wiping away $4.5bill in debt.

Arch Coal, Inc. (NYSE: ACI) announced that it has reached an agreement with a majority of the lenders under its $1.9 billion first lien financing facility to significantly restructure the company’s debt load. Arch has entered into a restructuring support agreement with the members of an ad hoc group of lenders that hold more than 50% of the company’s first lien debt. Under the terms of the agreement, the lenders have agreed to support a restructuring transaction that will eliminate more than $4.5 billion in debt from Arch’s balance sheet and position the company for long-term success.

I love how these jackasses are always looking for ‘long term success’, after they lose everyone’s money. Why weren’t they positioning the company for long term success 2,4,6 years ago?

Back to my point. Here’s the list. I always keep a list. The amount of debt to get washed away is on the far right.

It’s the end of an era. Personally, I’m looking forward to PBR’s receivership. It should plunge Brazil into a headlong crisis, reminiscent of the dark ages.

Short and to the point. Copper is at new lows. No one is focused on it because bratty oil is hogging all of the attention. Look at the carnage in FCX–absolutely mesmerizing. I’m sure Carl Icahn would agree; the fuckery taking place in copper is of the black swan varietal.

That being said, there is no decoupling from China at this stage. Wall Street has invested itself, emotionally, to this story line, right or wrong. So, if we’re going to get a rally more than 3 hrs, we’re gonna need to see some China related commodities move higher, namely copper.

Also, we need to see some stability in oil, weakness in the dollar, yen and some leadership out of big tech.

I was once a pretty active investor in a few dry bulk stocks. Some of you might recall my adventures in OSG, FRO and BALT–utter disasters.

One of the CEOs that I’d speak to was a supreme asshole. He used to tell me “if you’re not bullish on China, don’t buy our stock.”

Dry bulk is a China play, especially iron ore. At the moment, China has zero interest in iron ore, with demand staggered to 20 yr lows. Look at the share prices of AKS, CLF and VALE as proof of this theme.

As such, the day rates to ship this stuff to China hit another record low today.

For a while, people ignored the BDI as some sort of oddity, more to do with an oversupply of ships than a China growth concern. However, it appears the BDI was right all along, in predicting a massive Chinese slowdown.

As this Chinese story develops, you should probably keep a closer eye on this, as one of many indicators of how fucked the great walled, dog eating, nation truly is.

Unlike Carl “Permanent Capital, Three Seats on Your Fucking Board” Icahn’s approach to pressuring management to make change, which entails taking a gigantic stake and then making a public mockery of his target, Starboard takes a more docile approach.

They own just 1% of Macy’s shares, yet still believe that stake gives them the right to speak on behalf of other shareholders, to let management know how awful they are and how spinning off the real estate arm could “unlock” secret and hidden shareholder value.

Starboard said spinning off Macy’s real-estate assets could “create meaningful and lasting value for shareholders,” the newspaper reported, citing the letter it reviewed.

The letter suggested two separate joint ventures, one for Macy’s landmark properties like Herald Square and a second for its hundreds of mall locations, the journal said.

Starboard added that Macy’s stock could trade as high as $70, nearly double its Friday closing price of $35.89, the Journal said.

Reuters could not immediately reach Macy’s Inc and Starboard Value for comment outside regular business hours.

Starboard owns a 1.04 percent stake in Macy’s, according to Thomson Reuters data.

In an email reply to the Journal, Macy’s said it is reviewing Starboard’s letter and views expressed by the investment firm are consistent with actions already underway at the company, the paper said.

How many fucking times do I have to see this movie? Shareholder value is never released…ever.

I can’t take any of these clowns seriously anymore. The only point in posting their opinions, which are no better than some random chap on Twitter, is because they tend to make small waves on the day in which they are spouted.

“Given the continued U.S. dollar appreciation, $20-$25 oil price scenarios are possible simply due to currency,” the analysts wrote in the report. “The U.S. dollar and non-fundamental factors continue to drive oil prices.”

All of these analysts were predicting $150 oil forever, just a few years ago. Now they’re all bearish, until they aren’t anymore.

My take is even more severe. I am hoping $15 crude will punch off the faces of every oil man in Saudi Arabia.