18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,323 Blog Posts

Children, Prepare to Die

“The Fly” is coming and he’s after your money. Lock the doors and hide in the kitchen cabinets.


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Market Internals Look Weak

Without a doubt, the person who constructed both the [[FXP]] and [[SMN]] is an “Emissary of Satan.” In my mind, I know it is true.

What’s important for all of you to understand, is several things:

For one, “The Fly” is always at his best when faced with adversity, unlike many of you peasants who cry when ice cream melts from your cone.

Secondly, I have already plotted my revenge and it is most definitely pending.

And finally, “The Fly” always wins, even after severe losses.

During today’s tape, there is significant negative under currents. In case you are wondering, I am back to doing research.

Here is today’s winner/loser list:


[[FITB]], [[HCBK]], [[CEA]], [[SHI]], [[GSI]], [[YZC]], [[EAT]], [[CPO]], [[CHK]], [[FWLT]], [[XTO]], [[NS]], [[MHS]], [[ZRAN]], [[RMBS]], [[MXC]], [[FSLR]], [[ASTI]], [[BCSI]], [[LNN]], [[FCX]], [[SCHN]], [[TIE]], [[SA]], [[PCU]], [[WYNN]], [[GOOG]], [[ESRX]], [[EXM]], [[MICC]], [[DRYS]], [[GNK]] and [[LOGI]].


[[CME]], [[VISN]], [[GAP]], [[CMG]], [[COH]], [[UNH]], [[CI]], [[ISRG]], [[NVLS]], [[TXN]], [[WNR]], [[RES]], [[WHQ]], [[SAY]], [[PER]], [[NFLX]], [[SNCR]], [[TSCM]], [[TLAB]], [[LXK]], [[RS]], [[ZEUS]], [[X]], [[CENX]], [[PCAR]], [[CTSH]], [[RIMM]], [[AAPL]], [[GENZ]], [[NTAP]], [[PAY]], [[FORM]], [[LRCX]], [[VSEA]], [[KLAC]], [[AMZN]], [[DD]] and [[YRCW]].

My guess, the market closes down between 1-2% today. Aside from [[T]], there aren’t any Dow components  that can lead a rally today.

Top pick: [[SKF]]

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RBS is Fucked

I’m somewhat shocked by this one. They are pricing the biggest rights offering in European history, at a 46% discount to yesterday’s closing price. If you notice, all of the new offerings are getting priced 30-46% below closing quotes.

Somewhat odd, no?

Royal Bank of Scotland announced a record 12 billion pound ($24 billion) rights issue on Tuesday to cover a potential 5.9 billion pound writedown on the value of toxic assets and help rebuild a stretched balance sheet.

RBS said it expects disposals to generate 4 billion pounds in core capital by the end of this year and could sell all or part of its insurance business.

RBS will offer 11 new shares for every 18 existing shares at 200 pence per share in the rights issue, Europe’s biggest ever, representing a 46 percent discount to Monday’s closing price.

“It’s a reassuring discount, and investors will be pleased that it’s such a large amount and not 5 or 6 billion — they want RBS to raise some money so that the company can move forward,” said Mark Sartori, head of European trading at Fox-Pitt, Kelton.

The bank said it had assumed there will be additional hits to the value of assets, including the ABN wholesale business it bought last year, due to the impact of the U.S. subprime mortgage crisis and subsequent credit crunch. It estimated the effect of writedowns on core capital will be 4.3 billion pounds net of tax, or 5.9 billion pounds before tax.

Both the rights issue and writedown were no surprise after several days of widespread speculation, but they mark an abrupt U-turn for RBS after it said earlier this year it did not need to raise capital.

Britain’s second biggest bank said it plans to keep core tier 1 capital in excess of 6 percent, which would make it one of Europe’s best capitalised banks. The ratio stood at 4.5 percent at the end of 2007, one of the lowest in Europe.

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I Want Designer Oil

I just got back from one of my patented late night drives and I had a “vision,” as I watched some poor fool fill up my tank—while at some egregious New Jersey gas station.

“Designer gas.”

That’s right, you heard it here first.

Soon enough, gas will only be for the very wealthy. Normal folk, like most of you, will be forced to ride to work on horses or bicycles. So, in order to cater to the rich, why not have Prada or Gucci gas stations?

Better yet, why not commingle famous art galleries with gasoline stations?

“Sotheby’s Gas”

One could pick up a Picasso, while spending 2g’s for a full tank of “luxurious” grade fuel.

Aside from that, I was thinking of new “stylish” ways to heat homes.

How about this:

“Corn Cob Fireplaces or Furnaces”

Instead of fucking with the environment, by using filthy fossil fuels to heat our homes, do what the Government does: burn corn.

One would just shovel thousands of corn cobs into his fireplace, while watching the poor schmucks in Egypt scurry about—looking for rice.

As for Asian trading:

China is getting its lips punched off again. I’m sure the asshats here in the States will view that as a buying opportunity for chicom stocks, which have been on an unbelievable roll—compressing [[FXP]] to the lows of 2008.

NOTE: Larry Kudlow pimp smacked Dennis Kneale this evening, when Dennis tried to applaud the drop in the dollar and exclaim a 50% drop in the Shanghai was “good news.” Dennis also went on to say the 100% spike in flour was no biggie, since the price of bread has “only risen by 8%.” Apparently Dennis believes the additional cost to the producer of bread will just be subsidized by the Government or something.

Not a bad idea for Captain Treasury.

If one of you fuckers has that video clip, please share it.

Confederate UPDATE: Woodshedder on a “job interview”:

[youtube:http://www.youtube.com/watch?v=atleFRhrJlQ&feature=related 450 300]

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iBankCoin is Back!

As you know by now, iBC has been offline for much of today’s trading session. The reason was IT related.

Jeremy, iBC’s IT guy, went on vacation and left his underling, Vincenzo, in charge of the iBC server farm. In an unbelievable series of events, Vincenzo spilled his bullshit wine and olive oil all over our servers. He then re-doubled the problem by trying to repair the damage himself, using a wrench and bowl of tomato sauce.

Long story short, Vincenzo has been discharged, without honour [sic].

As for today’s trade:

I sold out of most of my [[SMN]]. I can no longer fight this price action. Apparently, inflation is out of control, causing “ag plays” to go dot com on my ass. Shocker.

During the day, I tripled my [[SKF]] positions and raised a significant amount of cash.

[[FXP]] shit the bed, thanks to large gains in [[SNP]] and [[PTR]].

Oil is out of control. Do not bet against it. It is on a bee-line for $125.

Didn’t Bernanke say oil would “moderate” at $100?

Finally, I am tempted to go long [[TSO]] or [[VLO]]. However, it is hard to do so when the crack spread is so tight.

After the close, [[TXN]] disappointed, yet again. They always miss. Fuck them.

It’s important tot note the overwhelming bullishness of market participants. Trading against them has always made me money. Timing, of course, is everything.

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Some Long Ideas

I promise you the market will swan dive into an empty pool, filled with rat traps, sometime soon. However, in the event some of you enjoy buying into lunacy, I have a few long ideas.

Contrary to popular belief, “The Fly” does have some long positions.

My favorite financial is [[AIZ]]. These pencil pushers sell home insurance, amongst other things, to banks taking possession of foreclosed homes. In this environment, you have to love that business. I’m long from the low 60’s.

In tech, I am long [[AAPL]]. That’s it. I had a monster position in [[RIMM]], but sold it out last quarter. I do not believe there is much upside to AAPL, at these levels. Nonetheless, I will not sell it, since it’s the last great American hope.

A la Cajun, I am long [[GU]]—just because he’s been “space alien-like” with his picks.

In consumer staples, I like [[WBD]]. It’s a Russian dairy company, who phonetically named the company after a tennis tournament. Nonetheless, they are buzzing along. I am a big believer in the theory that says to go long beverage companies, when a country’s standard of living is raised. When indigenous get a few pesos in their pocket, they buy soda, milk, etc. There is a lot of data to support this theory. Go look it up.

At these levels, by the way, I am tempted to start buying [[HANS]] again.

At the moment, I am not long any retail names. I sold [[GME]] two months ago. However, I am looking for entry points into [[ZUMZ]], [[BEBE]], [[AEO]] and [[JCG]].

Within energy, I am long [[UPL]] and [[VLO]]. I love the growth of UPL and the cheapness of VLO. Should basic material expenses subside and prices of oil stabilize, VLO and other refiners will start to rip, once again. If it’s going to happen, it will happen during the summer.

In the drug sector, I am long [[GILD]]. They are the only viable play on Aids, terrible but true. Frankly, I hate the drug sector, but have kept this one because of my ridiculously low cost basis.

I am not long any internet companies, aside from iBankCoin. However, it’s worth mentioning, I am short [[TSCM]].

Finally, I sold out most of my gold holdings. I believe gold will moderate here. Furthermore, I have better places to invest the money. Going forward, the earnings will dictate the direction of the markets, not CNBC breaking news alerts or internet rumors.

Three earnings plays to watch very closely, coming up, are [[AAPL]], [[VMW]] and [[RACK]].

On a pullback, I want to buy [[VMI]], and Vestas Wind Systems.

NOTE: “The Fly” is also long Vestas.

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NCC Gets a Knuckle Sandwich

[[NCC]] got some financing, 40% below Friday’s closing price.

The plan calls for the investors to pay about $5 a share, according to people familiar with the situation. As a result of the injection, Corsair will hold a 9.9% stake in National City. In 4 p.m. New York Stock Exchange composite trading Friday, National City shares fell 16 cents to $8.33.

Read full article here.

I can’t wait to get my clean hands on some of these fascinating bank shares. Kind of sweet seeing deals get done so far below closing trading prices. Makes you feel all warm and fuzzy about our wonderful banking system, doesn’t it?

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