UKRAINIAN-RUSSIAN PEACE TALKS FALTER — STOCKS COLLAPSE

It’s almost comical if the stakes weren’t so high.

UKRAINE’S FOREIGN MINISTER KULEBA: THE RUSSIAN POSITION CHANGES ALL THE TIME.
UKRAINE’S FOREIGN MINISTER KULEBA: THERE WAS NO PROGRESS IN TALKS WITH RUSSIA YESTERDAY
SEN. MURKOWSKI: US OIL PRODUCTION WILL NOT INCREASE WITHOUT BIDEN’S BACKING.

This is where we are now, totally dependent on rumors of peace and energy deals. Nothing has changed apparently, ergo, down we go.

The NASDAQ is now racing lower -137, WTI is +3%. The war trade is back on.

I’m going to show you some hourly returns for CRM for March. Tell me if you see a trend.

It certainly feels bad to see 200 NASDAQs wiped out in 35 mins. Then again, it’s almost par for the course.

CRASH ALL OPENS; CRASH ALL CLOSES.

Everything is getting hit even energy. I do suspect the energy complex will be bid soon however. I had some good fortune in LEU and sold when it was +16%, yet I’m still down 0.8% for the session.

I don’t feeeeeel like running thru the ringer today, but I’ll end up doing so nevertheless because I’m an addict.

We are not on the absurd point of watching each and every news headline out of Ukraine and reacting to them with fierce pops and drops, making it almost impossible to trade. Check out these dueling headlines.

PUTIN: CERTAIN POSITIVE SHIFTS IN TALKS WITH UKRAINE: IFX
UKRAINE PRESIDENT SAYS RUSSIA IS DEPLOYING SYRIAN MERCENARIES

Talks are going well — but in the meanwhile Putin is delaying 16,000 Syrians into Ukraine in order to help Donbass.

The DAX is higher by 3.4% and oil is about flat, with large selling in gold — down 1.7%. The highlight for me is the US 10yr now above 2%. Nevertheless, markets want to rally and have been bogged for months, so we are +150 on the NASDAQ

2008 Bear Market

2022 Bear Market

There are two ways to play this tape.

1. Fast intra-day rips, which is predicated on knowing the market well and having tools like Stocklabs to help you scout. It also requires a modicum of skill, which is either innate or taught over thousands of hours of toil.

2. Formulate a well reasoned and balanced approach to equities. If you’re in it for the long term and taking losses — you have no choice but to dollar cost average into a down tape. If you are retired and cannot add to your account — YOU MUST CHANGE YOUR HOLDINGS to reflect the current environment. If you’re long growth and down 50% waiting for them to come back — you are taking the wrong approach to this tape. From an economic standpoint, the Fed is now working against you. Thus, high growth is only reasonable in commodities now.

In the past I suggested a zero allocation into commodities. Now if I was putting together a portfolio my advice would be inverse — no tech, all in on commodities.

You will see volatility and if you’re micro-managing your account you might get shook and forced to sell during a bad tape. But ultimately, and until we see demand destruction reduce the price of oil, the only game in town is in commodities.

Having said that, I think we’re in a bear market so I am always always hedged for downside protection.

I finished the day +230bps and all of the lads inside the Pelican Room banked.

When I started the business in the late 90s, one thing was clear back then: ALL ISRAELI STOCKS WERE SCAMS. Over the years, Israeli companies become more mature and less scammy. Then entered China in the early 2000s and everyone jumped on the bandwagon — but I was not fooled. Inside my data platforms, now Stocklabs, I quarantine all Chinese stocks in a group called “Chinese Burritos.” It doesn’t matter what the fucking company does because I assume it’s all bullshit and their shares more or less trade as one.

Today Chinese stocks are down more than 6% in on top of losses of 50%+ the past 12 months. If you’re a China bull: you’ve been completely dispatched and much much more.

I almost wasn’t gonna look up the news, since it’s always the same story. Lo and behold, accounting issues. For those who’ve been around awhile will remember I once sold short all Chinese stocks that used this one accounting firm — since they were running a scam. I forget the name and this doesn’t help from a journalistic point of view — but if you’re really curious fuck off and search my archives.

Today’s bad news.

China watchers believe this is likely because the Securities and Exchange Commission has identified five U.S.-listed American depositary receipts of Chinese companies (Yum China, BeiGene, Zai Lab, ACM Research and HUTCHMED) for failing to adhere to the Holding Foreign Companies Accountable Act (HFCAA).

ADRs are securities that represent shares of non-U.S. companies, and they are traded on U.S. exchanges.

The act, which was passed in 2020, permits the SEC to ban companies from trading and be delisted from U.S. exchanges if American regulators are not able to review company audits for three consecutive years.

These are the first China ADRs to be identified as failing to adhere to the HFCAA. These five companies are on the list because they recently filed their annual reports with the SEC.

“All the Chinese listed ADRs will likely end up on the list, because none of them will be able to comply with requests to have their audits reviewed,” said Brendan Ahern, chief investment officer at KraneShares, told me. This is “because Chinese law prohibits the auditor to provide their review to U.S. regulatory authorities,” he added.

Needless to say, I won’t be buying this dip.

UPDATE: Deloitte was rigging books in 2011 in China. I had some ideas.

Everyone is talking about oil and gas, which are fine and I am sure you’ll make some money in them. To date, Russia hasn’t weaponized their exports — still permitting sales of oil and gas to unfriendly nations. If they really wanted scorched earth, they’d simply turn off the spigots and let Europe fend for themselves.

Lost in all of that dialogue is the specter of a trump card being played with uranium. Russia is by far the largest producer of enriched uranium and unlike gas or oil — if they cut supplies of uranium to unfriendly nations — said nations can’t simply ask their utilities to make more.

As such, a conviction trade arises with uranium stocks. At this point there are several ways to win: expansion of nuclear power plants replacing oil/gas and also massive supply disruptions causing the price for U308 to skyrocket. We are still 50% off from the 2007 highs for uranium and to be honest – I cannot think of a better trade the next month.

My uranium longs are DNN, UUUU, LEU, UEC and NXE.

We’re going fucking nuclear — armed to the teeth with weapons of mass destruction. Who’s gonna stop me?

After news that Russia was halting wheat shipments into the EU, we saw an immediate spike in fertilizer stocks like MOS, NTR and LXU. But then it took on a far more ribald nature, as Wall Street always tends to do. Any company in the Ag science business is now popping off to the upside, as if there is famine right around the corner.

Courtesy of Stocklabs, I made a list.

I had traded in and out of several of them and stood handsomely and proudly across from my monitor at session highs of +210bps until I went to walk the fucking dogs. As I write this I am barely up 1.1%. This is standard stuff for those who monitor these things.

There aren’t many safe havens today aside from refiners, ag, and select oils. Rails are strong too, only because they ship grain. The whole market is no obsessed with the food supply.

Oil is in between spaces now, unsure which way to go. But this recent headline out of Iran is helping bid it higher — now +1.5% for the session.

IRAN’S FOREIGN MINISTER AMIRABDOLLAHIAN EU’S FOREIGN MIN. BORRELL: NEW US DEMANDS IN NUCLEAR TALKS ARE UNREASONABLE AND CONTRADICT THE US’ AIM FOR A QUICK AGREEMENT.

The cancellation of Russian crude is predicated on the notion we can gather supply elsewhere. Without Iranian crude, they will have an increasingly hard time keeping the price of WTI down.

In other news:

PUTIN SAYS ON FERTILIZER MARKETS: THE SITUATION IS GETTING WORSE

Remember, Russia-Belarus-Ukraine are chief suppliers of fertilizer. As such, we are seeing the entire complex move higher from ADM to MOS even down to some Ag science stocks like YTEN, VIVK, RKDA and AGRI.

The NASDAQ is -200 but stable, likely pausing before a total fucking collapse into the close.

For a long time vulture capitalists have enjoyed an environment of free money and soaring asset valuations — leading to big dicked paydays and exalted net worths. We can see it in almost every new IPO since 2009 — price to sales rations north of 30 was/is commonplace. That era is 100% over, as inflation grips our throats and threatens to suffocate the economy.

The CPI came in hot at 7.9% and that’s rather conservative. I imagine next month’s number will be north of 10%. How does a central bank fight hyperinflation? Simple — it crashes the economy.

Last time CPI was here, the Fed Funds rate was 13% pic.twitter.com/OIS56gCDK0

— zerohedge (@zerohedge) March 10, 2022

Here’s a price to sales table, courtesy of Stocklabs, for the tech sector. That’s right we have at least 50% of downside to get down to 2008 levels.

Even if we do not smash lower to 2008 levels, at 2.9x sales — we are still extremely overvalued on a historical basis. I know — the average stock is down 40% from their highs and you’re sick of losses. SIR — that was a bubble. What you are seeing now is a correction. To properly correct in an environment where money isn’t free, you will begin to see companies in search of capital. Those who cannot raise dilutive offerings will go bankrupt and see their shares swim all the way to zero. Back in the dot com days, I recall seeing innumerable stocks crash to zero and just 6-12 months prior were viewed by most traders as really great companies.  If you’re company isn’t free cash flow positive, its share price is in danger.

If gas is too high, get an electric car pleb.

WHITE HOUSE: IF YOU DRIVE AN ELECTRIC CAR, HIGH GAS PRICES ARENT AFFECTING YOUpic.twitter.com/n2nPvW7j81

— The_Real_Fly (@The_Real_Fly) March 10, 2022

On the war front, peace talks have failed and Russia is committed to attacking until their terms are met.

NASDAQ futs are -200, WTI is +3.6%, and the US 10yr fast approaches 2%. Stagflation is here.