Classic October

Later on today I will do a post about long term positions. Over the years, a slew of clients have asked for ‘good’ names to “buy and hold”, for the kids, grandkids or what have you. I happen to have a fine list of stocks, thoroughly researched, that can be shared inside of these fine halls. But it all depends on how stocks behave today. If stocks bleed lower again, my mood might become violent, filled with rage, causing me to harbour a significant amount of animosity towards the world. Under that scenario, there isn’t a chance at seeing me behave in a charitable, distinguishable manner.

Earnings season is here, by the way. That means you need to sell non-core stocks before their earnings are reported. I have a feeling there is going to be a lot of blood drawn this quarter. Looking at retail, which is the US consumer, the economy is underperforming. If you don’t have an edge, get out of the way.

Speaking of which, Dry Bulk rates are lower this morning, due to a drop in Capesize rates. However, Supramax and Panamax rates were higher, once again–which might support some share appreciation in the bulkers today. Truth be told, I am flabbergasted by the weakness in the shippers. Isn’t anyone else paying attention to the god damned shipping rates?

JOSB is bidding for MW. This small deal should remind short sellers of the amount of cash on corporate books. It’s a very dangerous game to sell short, particularly heading into Q4.

Dark clouds are overhead, in classic October fashion. The goal should be to make it through in one piece, then prepare for an unrivaled, perverted, run heading into Turkey day (gobble, gobble) and into Xmas. Better times are ahead.

After the market closed, the Obama monarch announced they’d allow Janet Yellen to be the next Fed Chief, instead of some crazy eyed democratic operative. As a result, S&P futures are up 4. Under normal conditions, I suppose this would be good news. But if you really wanted good news, the press release would’ve read: Bernanke Agrees to Another Term.

Nonetheless, I am hoping to be able to sell into any rally. I’d like to up cash to 50% and throw on some hedges for the rest. I have no business playing in this cesspool, especially since I know the true depth of it.

Let me show you some of my charts.

US sovereign credit is freezing up, olde sport. From 1 month to 3 year treasuries, yields are blowing out. That’s what you need to watch because the short end of the stick is getting it and that’s not a good thing for liquidity.

The reason why stocks are correct for selling off is because of political instability. Just like you wouldn’t trust owning a Venezuelan oil company due to their government, investors do not trust our banana republic. Even though nothing has changed on paper, everything has changed in the country. Our political system is so corrupt, so dysfunctional, it has disrupted the normal flow of business; and as a result, multiple contraction is taking place.

At the very top of my buy list is YELP, TRLA, YY, and maybe ANGI. These are great names that enjoyed momentum to the upside when times were good. But if times have changed, and the mood decidedly dour, these names and many of the high beta plays are still woefully overvalued. YELP can trade down to 15x sales and still be considered rich. Hell, if they missed numbers, it can go to 10x.

Once this is behind us, stocks will rally, which makes taking on a net short position dangerous. But, odds are, these bozos, predictably, will wait until the very last minute to get it done. As such, stocks should be sold or hedged until then.

NOTE: I reserve the right, as a gentleman investor, to change my mind at any given moment in time.

There isn’t going to be a resolution to this crisis anytime soon. It’s tempting as hell to buy TRLA, YELP, YY and others into this dip, but there isn’t a catalyst in the world that can help stocks over the next two weeks.

The Treasury Sec will offer a retarded speech on Thursday, further exasperating this crisis to the point of absurdity.

I am absorbing losses and do not have hedges. I regret listening to the lot of you about going long VXX. That being said, I appreciate your candor, albeit wrong-headed stupidity.

The time to be brave and filled with rage is not today. Tomorrow the markets shall plunge lower, forcing smiles out of our elected officials for successfully causing crisis.

There is a silver lining.

The PPT is hard at work, spitting out some signals that should be looked at. Get your shopping lists ready and prepare to buy QUALITY once the market turns. I want to stress that last point. Many of you are saddled with garbage, because that’s what has run up over the past 2 months. You don’t chase garbage down the toilet, fools. You flush it and buy the toilet instead (whatever that means). You get my drift.

Unmitigated disaster.

He spent 1 hour antagonizing Boehner and the GOP. He offered nothing but a stiff arm, admonishing all those who oppose his will. With the GOP firmly backed by the Cock (sic) brothers and a belligerent Tea Party, I view the chances of us defaulting or going over the 10/31 funding deadline at a 100% certainty.

There is nothing redeeming about Obama during this crisis. He’s demonstrated a type of stubbornness that you’d expect from a child, or a retard.

Expect the market to be atom bombed because we have a government that is disconnected from reality.

I am about 30% cash, waiting for a reason to buy. Sad.

Oh, by the way…

So who wants to get long before the 2:00pm Obama speech, when he is sure to re-declare war on those pesky GOPers?

Imagine the US was a corporation and the President was the CEO. Congress was the board of directors and the company they jointly managed was in crisis. The share price was plunging because its CEO and board refused to meet with one another and discuss strategy. Imagine this corporation had loads of cash, but unilaterally refused, on principle, to meet its debt obligations until an agreement was reached.

In the private sector, such a company would be smoked out within days. Activist shareholders, like Icahn, would swoop in and fire everyone, restoring value and balance to the company. However, in the public sector, no one is held accountable. These guys are like convicted rapists who are let out to roam college campuses while drunk.

At the very minimum, this demonstration of ineptitude shows the stark contrast between the public and private sectors, where one is held to the fire, forced to perform, and the other is encouraged to rot from within, like the city of Detroit.

This is the moment you’ve been clamouring for, at least the people with ample lots of cash on the sidelines. The market is in the midst of being routed, led by high beta names. Although it’s painful for me to see my positions getting lit, I look forward to allocating my cash and making up the difference on the next upside inflection point.

If you’re fully invested, leveraged into this maelstrom: beware.

One month treasury bills continue to scare people to death, with yields rising from 0.18% to 0.30% overnight.

Congratulations to Congress and the Presizent of the United Steaks of America: you’ve got your panic.

I stepped away and returned to see the NASDAQ and many high beta stocks getting lit.

A major flush out in the NASDAQ just occurred.

No one is talking about this phenomenon. Analysts aren’t calling these companies because “they missed the move,” something that was voiced to me by the CFO of a prominent Dry Bulker.

The BDI is up again this morning. Have a look at the 6 mo chart.

The market is barely off its highs, but you can feel the sentiment change, can’t you? It’s also worth noting, we are receiving this pain under the administration of an anesthetic, which is “temporary govt shut down.” In other words, we’re not taking the sell off seriously because it’s widely viewed to be a knee-jerk reaction to something that is fixable, and plainly silly.

Is it possible that the real costs of Obamacare are starting to get priced in? What if the anemic, pathetic, economic recovery is the root cause of the sentiment shift and not the all-to-convenient Washington impasse? I am dead serious. There is distribution taking place and this Washington scandal is the perfect cover to blow out of stocks.

Retail sales have been weak and the markets are up huge. The Fed have done all of the heavy lifting, while the government makes life difficult for businesses to thrive.

I have faith in Benjamin Bernanke, but he isn’t going to stay on for another term, is he?

I’m just jotting some thoughts down as they materialize inside of my brain.

Back to your regularly scheduled bull market.

NOTE: Just today, it was announced that John Melloy from CNBC will take over the role of CEO at StockTwits, replacing Howard Lindzon. I’m somewhat sentimental over hearing this news, especially since Howard was a very early supporter of “The Fly”, way back in 2006. I remember the day he told me about the crazy idea called Stocktwits. He was excited about Twitter back then, wayyy before anyone else even knew about the site, and wanted to carve out a niche for finance. I recall thinking Twitter was something of a homosexual medium and that it would go by the wayside of time. Boy was I wrong. Howard did a phenomenal job taking StockTwits from nothing to the epicenter of online finance, and certainly did carve out a nice niche for the company. I am sure he’s thrilled to abscond with the day to day duties and get back to doing what he loves most: investing and porn.

Good luck Mr. Melloy. If you mess up Stocktwits, I will have your body parts strewn across whatever land you descend from.