Closing Out the Week with Hope

Market early going looks solid, with risk on in all of the alpha areas of the market. Whilst yesterday looked grim and foreboding, today looks more of the same — a continuation of the recent rally.

Chips, internet, biotech etc — all bid higher.

Since it’s a Friday, expect a slow and methodical market, like hot molasses dripping slowing out of a jar placed on top of a picnic table.

I will be hedging the close, however. Even during this recent rally, Mondays have been a layup for downside action.

Show me the deflation here you son of a bitch.

I had a good day, +3.85% — only to be beset with 100bps worth of AHs losses on this fucking son of a bitch loss in ILMN post earnings miss. I was gambling on purpose and had two choices: TOST or ILMN. I chose ILMN due to the large capped nature of it and the fact that it is a high quality company.

TOST is +15% in AHs and ILMN is going to zero.

I can’t even boast about my gains today and my inflation is coming back to ball and chains your portfolios anymore. I am livid over this last minute earnings gambit that I took at 3:58pm.

I was going to rant about the inflation narrative coming back. See graphic above and come to the conclusion that any reflation will also be met with inflation, a circular fuckery that leads us to only higher rates and a complete destruction of the global economic order.

Before you declare victory over the bulls, consider this chart you fucking morons.

Yes stocks are SHARPLY off the highs, especially in the really high risk areas. But if we’re being honest here, and you all know “The Fly” is unable to lie, this pullback looks like consolidation following a mammoth run higher. WE WANT STOCKS LOWER. WE WANT A FULL COLLAPSE. But we don’t always get what we want, do we?

I wanted a full head of hair and a nice wife.

Into the final hours, I will maintain a 70%+ cash position with a 10% UVIX position. I like the VIX sub 20 for a potential gorilla move down. Again, WE WANT THE GORILLA MOVE down, full bananas. We will hope and pray it happens. But with our money, and when I saw “we” I mean it in the royal terms, we will be cautious because we are +51% for the year and we do not squander elaborate gains.

It’s 2020 all over again. Cathy ARK names are shooting higher. Any stock with 15% of its float short is absolutely lit. Nothing can stop the cocaine party.

All of the nonsense is higher: ME, BFLY, SKLZ, GDRX etc.

I’m presently 10% UVIX, and 5% each of LMND, RKT and YALA, +460bps for the session. Had I held and not sold at the open, my gains would’ve been 7-8% for the day.

Truly egregious.

On a separate note, Stocklabs is now 12mo OB, first 12 mo OB since late 2020. The data is bullish for a continued run.

I got lucky last night with MTTR earnings. Absolute chads smacked it out of the ballpark and now the incel shorts are in trouble.

HUBS is surging by 11%, adding petrol to an already smoking hot software space. The NASDAQ is +20% from the lows and technically we are now in a new bull market.

But before you begin to celebrate, consider this.

Those are themes or custom indices inside Stocklabs. See how “market meltdown 2022” is ripping for August and how in the big scheme of things, if the end of year data was read 10 yrs in the future, this rally wouldn’t even register?

The grave has already been excavated. Losses are in the ballpark of 40% even after this terrific rally. To break even for most stocks we’d need to lift 60% from current levels. Should the rally dissipate and we leg down another 10%, this rally will be forgotten and considered a blip on the chart.

Back in 2008, a year most understand to be terrible, the best rallies were blips. After the dot coms blew up in 2000, I recall that August feeling as if the bill market had come back.

So enjoy your summer of SAAS and pretend the bull market is back; I know it’s fun. But come autumn when the leaves are browning and your stocks are flailing, don’t say I didn’t warn you.

I want to be part of the club now. I put my brain in a jar and just bought whatever the cool kids are buying and have accepted the fact that up is down and down is up and my cynicism is unwarranted. As a matter of fact, cynicism has been unwarranted since 2009. Each and every time the world ended, it only got fatter and bigger and more grandiose.

Back in 2000 the aggregate revenues of publicly traded companies were around $5t. Today we approach $25t.

The cabal always wins. Their power is unstoppable. DIS beat estimates and hiked rates on their retarded streaming service by 38%.

Nothing stop the winship.

I closed the session only +15bps, due to hedges and defensive stocks. My Quant was +450bps. I closed out my hedges and ride into tomorrow without a harness.

Courtesy of Stocklabs, these are the best performing industries the past month. Much to my surprise nuclear is #3. Solar is #1 thanks to government tit and the rest of them are semis, industrials and plays on par with the world not ending.

On the other side of that trade are Chinese stocks, healthcare, and defensive areas of the market. In short, it’s a fucking risk on trade.

The best news wasn’t the CPI data, but the internet advertising data out of TTD last night. It actually conflicted with prior reports of SNAP and PINS, but suggests business has not dropped off a cliff, providing reasons to be long META.

Do you remain long after today’s rally?

Nothing has changed from yesterday to today, other than a rigged CPI number and oil drawdown number that was fixed by Biden’s drawing down of the strategic reserves. There is a very important war being waged now and it’s not only against Russia and China’s influence in Asia — but against inflation here at home — because the monsters need to perform pretend democracy this November and would prefer if the economy weren’t in complete shambles.

The Fed is still gonna hike by 50bps next meeting and this still means slower growth, not faster, and all of the things that go wrong are as plain as day with incompetents running the west. So no, I don’t think the market is a good value here  — but I’m not net shorting it either because the bulls are retarded and running rampant now.

By Fall, all of this will be in a smoking cinders and the memory of the summer rally will be nothing more than a dream that came and went and barely could be remembered.

Does it really matter at this point? The market hasn’t been an accurate portrayal of the economy since 2001, if we’re being honest. All crises are papered over and when that doesn’t work, the numbers are rigged.

Crude build +5.5MM
SPR drain -5.3MM pic.twitter.com/mfXEqpQ3wZ

— zerohedge (@zerohedge) August 10, 2022

This is the final salvo of PAX AMERICANA. Desperate times calls for desperate measures. Hence the government is doubling the size of the IRS to collect more of your money.

The government is poor; but the people are very rich. The net result of a globalized hegemony has created an Uber upper class in America with wealth beyond anyone’s comprehension. These people aren’t going quietly into the dark and they’d prefer to kill you before letting it all end with a wimper.

The euro is flying +1.3% vs the dollar. Oil is crushed lower thanks to rigged numbers above. And SAAS is now +11% for August. Presciently the Stocklabs quant rotated out of oils and into healthcare and tech. The net result is +2.5% for the month vs would have been down 3-5% for oils.

The rotation continues.

Look at the success.

US CPI (Y/Y) Jul: 8.5% (est 8.7%; prev 9.1)
– US CPI (M/M) Jul: 0.0% (est 0.2%; prev 1.3)
– US CPI Core (M/M) Jul: 0.5% (est 0.5%; prev 0.7)
– US CPI Core (Y/Y) Jul: 5.9% (est 6.1%; prev 5.9)

As a result of this lower than expected CPI print, futures have predictably exploded.

NASDAQ +340

COPPER +1.6%

EUR/USD +1.2%

SHITCOINS BID HIGHER

US 10 YR -11BPS to 2.68%

What these moves are suggesting is a cessation of Fed hikes because inflation, for all intents and purposes, has been defeated. The most dedicated and mindless bulls will point to these numbers as evidence that markets deserve to go back to all time highs, which means all of your favorite stocks have another 30% higher from here. These are not the opinions of The Fly, but instead the scattered brained logic of those who dominate the country.

Nothing would surprise me and nothing should surprise you. If the cattle want to run in a certain direction, there is very little you can do to stop them as they stampede towards their panicked direction.

Inflation dropped to 8.5% in July (down from 9.1% in June).

Big declines in gas prices (-7.7% in July) and airfares (-7.8% in July) helped a lot.

But…grocery prices, rent and electricity continue to rise pic.twitter.com/sVO5dr6eco

— Heather Long (@byHeatherLong) August 10, 2022

Used car prices pic.twitter.com/EKzr9A36MJ

— zerohedge (@zerohedge) August 10, 2022

… is a day wasted.

The NASDAQ jumped 50 off the lows and closed ambiguous. Bulls bought the dip for the “big run” and bears shorted the hole because of everything else.

I am net long, 30% cash, 10% hedged via TZA. I gained 35bps for the session and didn’t trade much because I am waiting for a better tape.

To trade in an environment that switches back and forth between reflation and end of world is difficult. We have CPI data coming out tomorrow and I cannot remember the last time any economic data, bad or good, resulted in down stocks.

If the data is hot and stocks collapse the open: buy the dip.

If the data is cool, this means the Fed is winning: buy into the rally.

Either way, it’s rigged to go higher tomorrow.