Keep Calm and Short Silver

The miners are underperforming the base metal by almost 20x today. We are getting to the pain threshold for many long term precious metal holders. These are the Tea Party people, distraught over Obama part II, now being dispatched by Bernanke part 1.

The Rick Santelli crowd has been annihilated, amidst black plumes of toxic smoke, chards of metal zipping through the air, unbelievably hot ovens melting their faces off to the bone.

I am +10% on my AG short and would short more, if I didn’t respect the specter of a mean reversion rally. On any meaningful spike, I am a net seller of AG, until it hits $12.

I also want to sell short some steel names with insurmountable debt loads, like MT. Providing I sell one of my longs to free up buying power, I will take on another short in the basic material space. The bear argument lies in China, so you might as well press the underwater longs there, in any name that is weak and dependent on the Chinese audit frauds.

CLF, MT, MTL and FCX come to mind.

I added a little bit to my DSS position. It’s very small cap and not for the faint of heart, another Devil pick–alongside PAMT.

I’d like to add to my HLF and APO positions. However, I am completely and utterly at my limit, with zero cash reserves.

In case you’re wondering if I’m worried about the market trading down: my answer is positively no.

This story always fascinated me, so I had to close it out.

SCMR announced it will be liquidating the company.

Sycamore announces intent to proceed with Dissolution; Certificate of Dissolution expected to be filed on March 7, 2013  (0.56)

Co announced today that its Board of Directors has determined that, for the reasons stated in the Definitive Proxy Statement filed with the Securities and Exchange Commission in connection with the Special Meeting of Stockholders of the Company held on January 29, 2013, and after reviewing strategic alternatives for all of the Company’s assets and available options for providing value to the Company’s stockholders, it is advisable and in the best interest of the stockholders for the Company to proceed with its previously announced liquidation and dissolution in accordance with the plan of complete liquidation and dissolution that the stockholders approved at the Special Meeting, effective as of the close of business on March 7, 2013.

After paying more than $14.00 in special dividends, the last remnant from the dot come bubble is calling it quits. If you are not aware of the story, in a nut shell, this is what happened.

Just before the dot com bubble bursted in 2000, SCMR was a high flying stock. They did a secondary offering when the stock was around $1,400 (split adjusted), netting them more than a billion dollars. Hell, the market cap of SCMR, at its peak, was $44 billion.

When the bubble popped, the stock plummeted so hard and fast, due to their business falling to drill bits. However, because they had a billion dollars sitting in US treasuries (they never had a chance to spend it), the interest alone on the bonds kept them alive. It offset the losses from the operating business, after they slimmed down to survive the new, new economy. One could argue that management milked SCMR just to draw 13 years of salary. They tried to reinvigorate the business several years ago, through an acquisition–but it fell flat.

Today marks the end of the dot com bubble, the very last remnant of an era of excitement, excess and legendary stock runs.

60 minutes did a hit piece on China last night. They’ve must’ve collaborated with Muddy Waters for the material.

Futures are lower and the American economy is on the cusp of ending, or suffering from a 0.5% annual drawdown thanks to sequestration.

Do we really care?

Come on. You people make me sick already, timing tops and running away from bottoms.

Retail and restaurants, R n R you pikers–remember that.

I am sure all of the experts will be “cashing out” tomorrow, following an early morning gap lower. I flick my cigar ashes in your general direction and hold the course.

We’re buyers of stocks in March. I don’t see the global push for higher stock prices ending because the librarians from 60 minutes said so.

To hedge, I am keeping my CCL and AG shorts and may initiate new ones in the basic material space.

The housing thesis is still on track, with new homes sales at the highest levels since 2008. Moreover, the 16% gain in January was the best in over two decades.

Japanese Prime Minister, Abe, is still fixed on “creating” inflation. While many view this as reckless economic policy, I believe it is bullish for equity valuations in Japan, as pressure mounts on the Yen, exporters benefit.

So let’s examine these two core thesis trades and see what’s working.

The PPT‘s Housing Resurgence index is chugging ahead, once again.

Within the index, over the past week, the following stocks were the best performers.

MTG +38%

PATK +15.8%

PGTI +11.5%

Z +10.6%

TPX +9.7%

My core holdings in the housing industry are USG and BZH, +1% and down 1.7% respectively.

Over the past month, the following housing related stocks performed best.

ANGI +36%

MTG +32%

Z +22%

CSTE +20%

PGTI +16%

Most of the bigger winners are speculative small cap names. Moving up the market cap ladder we can get a better feel for what’s working.

Month to date returns for housing stocks with market caps over $5 billion.

CBG +11%

MSM +6%

MHK +3.8%

FBHS +3.8%

MAS +3.5%

1 week returns

CX +6.2%

HD +5.2%

WHR +4.9%

RLGY +4.2%

SHW +3%

As you can see, the gains are still very robust. Albeit, my positions have yet to yield spectacular results, I am comforted by the fact the industry is still in a sharp upward mode. Both USG and BZH are “battle ground” stocks with huge short positions. In USG, 22% of the float is sold short and in BZH 27%. Many of the shorts are “legacy”, remnants from the 2008 housing crisis meltdown. It is my belief, as the housing market improves, these shorts will be forced to cover, allowing the shares of  both USG and BZH to run wild, like a naked man inside of a Japanese brothel.

Keep in mind, part of the driver in housing is the emergence of  private equity and REITs in the residential space. As of today, Blackstone (BX) (my top position) and Public Storage (PSA) are the number 1 and 2 owners of US households in the country, from a corporate position. I suspect these trends will continue, effectively drying up inventory and pushing home prices higher.

Japanese equities have traded sideways over the past month, after huge gains. However, last week, they surged again.

SNE +8.1%

ATE +4%

IX +4%

CAJ +2.2%

Both TM and HMC are about flat for the past month. It’s only a matter of time before the weakness in the Yen (-16% over 6 mos) allows the big auto makers to peels the skin off their idiot competitors. I am long term bullish on both.

At the moment, my only long Japanese position is MTU (+1% for the week), but have an interest in reacquiring shares of SNE and HMC for a longer term duration.

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News

Target: stealth
Galaxy: Milky’d Way
Time: 16:00

With the market at new highs, it’s important to watch the underperformers and sell them short. Bear in mind, if a stock cannot rise in this environment, something is wrong with it. This isn’t technical or fundamental analysis. Simply put, I am a servant of trends. On occasion, I become obsessed with a thesis and will fixate my energies on it. But for the most part, I am buying and selling whatever the market is rewarding and punishing.

Steel and Iron should be avoided, especially AKS, GGB, SID, MTL and CLF.

Their balanced sheets are dreadful and people are fleeing the shares.

Small cap oil drillers are death. Avoid them.

Metals and mining are heading lower. Avoid names like WLT, ACI, BTU, MCP, EC and GTI.

Once again, gold and silver miners are heading lower, on their way to fresh 52 week lows.

Stocks that look especially bad are NEM, ANV, IAG, AG, EXK, HMY, ABX and NG.

Copper and aluminum should also be avoided. There will be the temptation to buy into these sectors, hoping for a bounce. But these are bad sectors and really bad companies. The market has discarded them in the same way and fashion that the warrior spartan class tossed deformed babies off mountaintops.

Do not let these bottom feeders taint your rich portfolios with their disgrace.

Ignore them or sell them short.

Have a nice weekend and enjoy the sequestration galas being held throughout NYC this evening.
[youtube:http://www.youtube.com/watch?v=N_lVOTPRGnw 603 500]

You can try to stop the economy through silly ploys of sequestration; but nothing will ever stop this market from going higher, providing the Fed continues its path of glorious explosion.

We need men like Bernanke, scholars, to lead the path to prosperity.

I, myself, in my own scholarly way have taken the distinct honor to withdraw funds from the brokerage accounts of both Pershing Square, through my HLF long, and silver longs, through my AG short.

That being said, for the moment, I am about flat for the day. I do, however, have the taste of blood in my mouth, which is usually a precursor of great things to come. I know it to be true. It’s only a matter of time before my prophecies morph into reality.

Top picks: long HLF, short AG, long PAMT (it’s gonna go again)

I have a very high-end, powerful source in the US government who has told me the economy is about to end. I kid you not. This very distinguished woman is trying to alert everyone to something no one is aware of, not even the Prezident himself. Which is: the entire working class of the United States is employed by the government and they’re about to lose their jobs.

Hang on a second, as I explain.

Do you know that hedge fund that you run, the money you manage for others?

That’s gone. Don’t bother showing up for work. Your offices will be shuttered.

Do you work on the television, telling great pornographic tales to the blue collared folk?

Work for free, else don’t work at all.

A mind numbing 170 million people will become unemployed at midnight, tonight. How’s that for starting the weekend on a good note?

On this mind boggling display of government malfeasance, expect the ratings agencies to smirk and tell you “I told you the government was retarded.”

Back to the 170 million, soon-to-be-unemployed: may God grant you the courage to carry on. Use the barter system to acquired canned goods and hope that your leaders, the men on drugs who vote on things in DC, will put you out of your misery and detonate nuclear devices over your respective cities.

Here is my source.

Time’s up. After the elections for interim tabbed blogger were held, back in December, I said “you have three months to keep your position.”

One of you have moved onto the next phase of “Tabbed Bloggerdom” and the others are fired. My advice to those who were fired is simple: don’t give up. Use the blogger network to build a loyal reader base. Should you decide to degrade yourself by leaving iBC for your own hovel, you will be making an extraordinary mistake.

Nevertheless, mistakes are owned by their idiot masters.

My mandate was for the interim blogger to seize 3% traffic from the other bloggers on the site, making it their own. None of you were able to accomplish this task. However, one of you came close and I’ve decided to grant leniency, giving that person another chance (the generosity of The Fly has no bounds).

Content wise, you were all superb. Everyone wore their hearts on their dirty sleeves and gave it 110%. I know, being the Blogfather and all, that none of you mailed it in–unlike some of my former tabbed blogger bastards.

Here are the stats for February, compared to January.

Rhino wins.

Both Elizamae and Raul3 have until Saturday to pack up their things and get the hell out of here. Please don’t make a mess on your way out. You will be prosecuted.

New elections will be held next Friday. Depending on the amount of interest, elections may last for two weeks. If you want to write for iBankCoin and compete to become an interim tabbed blogger, announce your candidacy in the Blogger Network. If you do not have a blog in the blogger network and would like an invite, email Vincenzo Illuminati at [email protected].

As for Rhino: you have 3 months to get 3% of the site’s traffic, else you will join your filthy sleeved brothers back in the Blogger Network ghetto.

Congratulations, goodbye and good luck.

Fly
Manager