QUARTER FROM HELL COMES TO AN END — SHARPEST DROP SINCE 2008

The SPY was down 20%, but the story was much worse on a sector by sector basis. Although tech held up relatively well, posting a loss of only 22%, most stocks dropped by 40%. Some of the more severe industries hit hardest by the collapse in crude and quarantine dropped by 75%-90% of its value — teetering on bankruptcy.

Oil dropped 70% and the world as we knew it changed, seemingly overnight due to a BAT SOUP virus that has since gripped the world, plagued us with death and mayhem — pushing western nations to the brink and forcing central banks to intervene on a scale never seen before. The stimulus coming into the economy, as a result of this new born crisis, will likely top $10 trillion before it’s all said and done. The Fed has declared to have “unlimited money” to fight the deflationary scourge. One would surmise, seeing all of this printing, that gold would trend higher. Gold itself moved higher by 4.5% for the quarter, but the miners caught a battle-ax to the cranium, lower by 20% for the year.

Part of the reason is due to mine shut ins, which limits the profits and viability of miners. Retail foot traffic, according to Cowen, is down 97.6% year over year. Thus far, nearly 200k people in America have been afflicted with COVID-19. I lost my Uncle to it last night. More people have been lost to this than on 9/11, yet many still believe it to be a joke, since we’re living in an era of disbelief.

I have deep concerns about the future of the global economy and pecking order. These types of declines usually precede depressions. Goldman BallSachs is forecasting a staggering -34% decline in Q2 GDP, with 15% unemployment. They’re also projecting a +19% jump in GDP, largest on record, based upon the idea that everything will go back to normal. That’s the big bet here, isn’t it?

Leverage loans and high yield CLOs were blown the fuck out for the quarter. The S&P LSTA Index hit a low of -22% for the year before recovering half its losses in recent weeks. We’ve been on a nice roll the past week or so, up nearly 20% from the lows. Stocks like BA higher by 50% the past two weeks, but down 55% for the year. The chop has become untenable for some. The decline has dragged in all sorts of unsavory people into the market, persons of low information trying their hand at trading emboldened by the belief that what goes down must come back up. Dave Portnoy comes to mind with that, tossing $3m into the market for all to see him trading in real time, carelessly tossing millions of dollars into a single trade and declaring himself a genius after closing out a 1% return.

Life as we knew it changed. Since it happened so fast, we still believe it can go back to the way it used to be. But can it? Will people go back to cruises and PACK TIGHTLY into concerts anytime soon? I suspect it will take years to get back to January of 2020 and I am preparing for that eventuality. I cannot find a steady source of toilet paper and papered towels in North Carolina, a state with only 1,500 infections and a handful of deaths. These aren’t normal times and the damage done to the crude sector is bound to have deep and everlasting effects on many states dependent on oil money. Wyoming Asphalt Heavy Sour traded at NEGATIVE 19 cents a few days ago and is now worthless. Many landlocked crude prices in America are 50% below WTI spot. This is an industry that employs over 10 million Americans. We were the largest producer of crude in the world.

Bonds have been a safe haven, specifically treasuries, with the 10yr at 0.68%. But this drop hasn’t translated into a drop in mortgage rates, since the mortgage industry blew up amidst unprecedented margin calls. The corporate bond market has recently recovered since the Fed started to buy everything and we’ve seen RECORD issuance in recent days. But without the Fed, it was in free fall mode — with the LQD hitting a low of $105, presently trading above $124. High yield ETF HYG hit a low of $67, now trading at $77 — hasn’t done as well as LQD because the Fed can only buy IG.

I closed out the quarter +100% on my trading account, thanks to monstrous wins in virus stocks and a sundry of timely in and outs that pretty much marked the best trading in my career. I have recently struggled with some trades and have taken some losses. I am presently very long and in the worst sectors — hoping for a bounce. I say “hope” because  it’s an extension of my intuition. My retirement account is still 100% cash and I might’ve pulled the trigger too soon on that — but I feel more comfortable this way — being in complete control to make changes on the go.

Q1 is in the books. I hope you survived it. If you didn’t, you’ll be shining my shoes before long.

NO BOOZE, NO CARBS. NOTHING. STEEL YOURSELVES MEN for the fires are here and they’re burning bright. Be on point for we can turn lower or higher on a drop of a dime.

Data dump for Quarter

Market cap over $5b

Market cap over $100b

Up for quarter, market cap over $100b

Virus stocks

Corona Fears Index, Exodus

Best Industries

If I was short, I’d cover now. This has all of the hallmarks of a trap. The downside action is in fact too orderly and measured, coupled with a steady VIX. I suspect we will soon see a sharp upside reversal. I could be wrong and this is just a fucking bet, so relax your bras and quit getting your tits worked up.

I am long oil and semis, and lots of other shit. My best thesis trade now is to be tucked away, deep inside of the Jelly Jar and sealed.

Why get long oil here?

A trade, nothing more or less.

Regional oil prices in the US are virtually worthless now and ruin hasn’t been cast across the nation yet. There is always a small window of opportune between reality and figment. Right now we’re living in fantasy land, where Goldman suspects we’ll bounce back by +19% in GDP for Q3. This, of course, is sheer lunacy and far from what will actually occur. Nevertheless, the market is an emotional beast and retards are angling heavy for a quick and sharp decline — because recency bias. Those people are running into a fucking mobile guillotine and will soon lose their capstones.

If you’re shorting stocks now, you might need to wait a while to see a profit. The market is running on hope, the Federal Reserve fueled rally that is seemingly endless. They have a printing press that they operate every morning and with that printing press, they use the money to buy everything. If something goes down, they buy it. If you’re a bank and have shitty bonds you can’t sell, you call them and they’ll buy it from you. Since they’re the Fed, there is no margin call and no one can ever made them sell. They have UNLIMITED MONEY, quite literally and there’s nothing you can say that changes that.

Is it fair?

No, but life isn’t fair.

What does it mean?

It means markets will remain upward trending until we get a catalyst that causes a DELUGE of selling, the sort of selling even the Fed can’t control. Right now the market is running on hope that the coronavirus will subside and everything will go back to normal. So normalization is being priced in, sort of, and many stocks are still down 50% the past month — even after the recent melt up.

Sure, we’ve bounced 20% off the lows — but we’re still WAY down, so put that into perspective.

Am I bullish?

For now. Things are changing fast and we’re getting monthly moves inside of a day. I sense the fear subsiding and I see people drinking the Kool-Aid. I’ve tasted it and it’s quite delicious. I will ebb back into stocks quietly and try not to get too crazy — but we’ve probably got a few days of rally left before the rug is pulled.

Look at how fucking stupid the Empire State Building looks now, a giant fucking siren on top of building to induce panic.

The @EmpireStateBldg reminding us that the city is in the middle of an emergency. pic.twitter.com/50TjEjOogN

— Rita J. King (@RitaJKing) March 31, 2020

The Dow rose by 700 today and shorts who went into today got their fucking dicks cut off for them. It was ugly, brutal, and nothing can save them ever.

Ironically, I was long and betting for a continuation of the rally and got fucking FLOGGED and beaten around the face today. I had just one solid intra day trade, long APRN, and that’s it. Other than that, totally fucked trading day for me.

(VTR -7.7%)
(AIV -2.6%)
(NMIH -16.4%)
(NMIH -10.5%)
(BHR -23%)
BHR -wash
(NYMT -15.7%)
(ORC -11.5%)
FAS – wash
(RNG -4.5%)
APRN +8.5%
SOXL +0.6%
(DRIP -7.5%)

I got HARD FORKED long, short, every which way but loose. I did find some respite deep inside of the JELLY JAR, as I am long SEVERAL old man stocks of high esteem. SJM ripped, GIS ripped. Pretty much anything paying a solid dividend that wasn’t a REIT did great. Since we’re in a ZERO INTEREST RATE environ, I expect MULTIPLE EXPANSION to continue.

I closed out the session 45% cash, up a fuckload for the first quarter, +102% to be exact, and I pretty much shit on all other traders in my realm. I am presently long refiners, a tanker, and all old man stocks. After a few solid wins, I will resume my swashbuckling across this market place and catch SEVERAL 100% winners, as I am famous and widely known for doing so.

WYOMING HEAVY ASPHALT SOUR CRUDE BTFO, ETERNALLY. These land-locked fuckers are fucked for good. All of their crude is worthless, because to pipe that crude in — it costs at least $7 per barrel. If we’re talking about trucking it, forget about it. This is why WYOMING SOUR trades at a NEGATIVE value.

So who wins?

Overseas in the Brent market — foreign producers are storing crude in tankers.

I am long FRO. Other plays include EURN, STNG, and NAT.

Here in the states, crude is sent to refiners. Those refiners are now GODS and can pretty much set prices. If they don’t like it, fuck off and die. Refining margins had collapsed until recently and have since SOARED from $2 crack to $9. I suspect these margins might hold for some time, as domestic producers get BTFO until their crude is selling for $00.00.

My refiner positions are DK and HFC.

Other plays include VLO, PBF and MPC.

There isn’t any end user demand because of quarantine and there isn’t any place to store the stuff, so the world has a huge problem on their hands now, when it comes to crude.

As ZH pointed out earlier, producers are essentially floating their inventory on giant tankers now, which is why day rates have exploded from $20k per day to as high as $300k.

“This is a once-in-a-generation type of event,” she said Thursday, quoted by OilandGas360.

As Bloomberg reported separately, citing Robert Hvide Macleod, CEO of tanker owner Frontline Management, “oil is going on ships at a speed never seen before,” as a result of the market’s glut; he added that vessels are being filled at five times the pace of 2015, when oil market was last heavily oversupplied. International Seaways, another owner, said on Thursday that the total volume of oil in floating storage may top 100 million barrels during this glut.

Because of this, I am long FRO — this time for good, or all least until comfortably profitable. The bigger story today is the price of regional crude supplies in the US — junk oil markets. Refiners would buy junk oil from places like Arkansas, Alabama, and Wyoming and made due with it. But with WTI trading at $20, there is zero demand for shit tier crude.

The following landlocked crude is trading minimum 50% discount to WTI, all under $10. I suspect the price to ship the crude makes it untenable.

Colorado Southeastern, North Central Colorado, Central Kansas Sweet, Eastern Kansas Common, Kansas Common, Michigan Sour, Mississippi Extra Heavy Asphaltic Sour, Central Montana, Nebraska Intermediate, Nebraska Western, North Dakota Light Sweet, Oklahoma Sour, South Texas Sour, Upper Texas Gulf Coast, Williston Basin Mixed Sweet, Eastern Wyoming Sweet, Wyoming Asphalt Sour, Wyoming Heavy Sour, Wyoming Sweet.

Wyoming Asphalt Sour trading at negative prices this month and is essentially worthless now.

I nailed the market, but was wrong on positioning. Had you told me on Friday that stocks would rise 500 today and mortgage plays would be down, I’d punch you in the face twice. But that’s exactly what happened. I sold out of my shit today that felt like the market was down a thousand. Could they rebound? Sure, but then I’d be emotionally attached to them and that’s fucked.

Here were the disastrous results.

(VTR -7.7%)
(AIV -2.6%)
(NMIH -16.4%)
(NMIH -10.5%)
(BHR -23%)
BHR -wash
(NYMT -15.7%)
(ORC -11.5%)
FAS – wash

Normally I stop out at 10%, but couldn’t because of the gap downs. My only other option was to TRIPLE DOWN and I don’t do that unless I am 100% sure of a directional shift. So here I am, a loser amongst losers, shooting the shit — talking losses.

The FAS trade didn’t look too bad, but I had no interest in owning it since it’s weak in an otherwise strong tape.

I have since acquired 4 or 5 new stocks and hope to report those losses to you shortly.

Markets are +215 and I am having a miserable day. The fucking Nasdaq is +152 and I sold my DRIP on Friday, which is flying today. In its stead, I have FAS — which is lower, a bunch of old man stocks and some fucked mortgage plays. I was angling for financial rigging and a run today and got it — but not in the way I expected. Today’s run is laser focused on tech, healthcare, and tankers — naturally. I was FIRST to the tanker trade and have now watched that ship sail right by my nose.

DECISION TIME: cut losses or press on stubbornly?

It’s never a good idea to press on — because that’s what losers do. The right thing to do is reset and move on — forget about the bad trades and look at Dave Portnoy making a mockery of finance. That makes everyone ok.

The US 10yr is down a staggering 12bps to 0.62%, whilst markets are up. This is not your typical correlation and suggests someone or something is fucking with the matrix. My guess is the Fed. If you’re wondering WHY stocks are up as the global economy is completely shut down, the answer is simple. Stocks trade on emotion, the delicate line between greed and fear. The fundamentals will matter, but at a time when they matter. Now everything is settling into place and traders don’t know what the true damage to GDP will be. This is similar to many other black box trades I’ve mentioned before.

Eventually, the fundies will matter and stocks will get fucking cremated. Until then, we have a short squeeze taking place in one area of the market while the area I happen to be long is getting poleaxed.

Oh, crude is down nearly 7% to $20. There’s no point in discussing it any further. It’s going to zero.

My brother in law got COVID-19. In NYC, apparently, they do not look at you unless you need a ventilator. He remained home, enduring 105 degree temperatures, for 8 consecutive days. I found that hard to believe — but it’s true. They didn’t give him any meds, just Tylenol. Doesn’t seem promising.

The head of the NIH, Fauci, said we should expect 100k-200k deaths in America before this is all done with. I find this virus to be the most incredible thing I’ve ever seen. My friends in Brooklyn tell tales of youngsters throwing giant house parties, dubbed “QUARANTINE PARTIES”, and others are holed up with thousand of dollars worth of food and materials. I cannot find papered towels and was lucky enough to find a hidden resource of toilet paper in NC, otherwise I’d be hard pressed for it.

Food is scarce, with roaming bands of hoarding animals sopping up all protein inventory within hours of being restocked. There is a barrier between customers and cashiers now, with a little hand sanitizer pump just adjacent for everyone’s safety. People walk around casually with masks and I walk around with my plastic black cooking gloves.

Neighbors wave at you, but not in an inviting way — more like “hi there, keep your distance you COVID-19 having bastard.”

How does this all play out? By the time GDP recovers in Q4, will it be time for COVID-20? Is the world completely BOGGED? What is this thing mutates?

IS IT A NATURAL OCCURRING VIRUS OR WAS THIS SHIT CREATED? Out of nowhere, this fucking bat out of hell escapes China and blankets the entire globe — even the most remote areas of the world?! How?

I guess those questions are pointless, since it solves nothing. But one thing is for certain, this shit isn’t done wreaking havoc on global economies. Italy announced for the second day in a row, dissipation in the amount of deaths caused by the virus. I suspect markets will want to trade higher on Monday. I suspect many of you will hate markets trading higher because “it makes no sense.”

That’s how it works.

Until we get another downside catalyst, markets will be rigged higher. Once that catalyst presents itself — WATCH OUT — the rope will be cut and the elevator smashed at the bottom of floor.

April marks 1 year since we started working on Exodus 2.0, an exponentially massive project that I thought could never get done. IT estimates were anywhere from 1yr to 2yr the annual revenues of the platform and the MILLION lines of code, more than the total beachfront of the coast of California, seemed like a task that was insurmountable. Like aways, fate reached out to me and made it happen.

I was updated today on the progress and have been micro-managing the project from day 1, presently using the services of some trustworthy people in Germany, I found a new partner to help me take Exodus into the next phase of its evolution.

All data will stream, this includes our overbought/oversold algorithms, industry data, valuation data etc. We’ll have tangible price target estimates based on historical valuation data and future sales/earnings running in real time. The Pelican Room, which is probably the most important feature to upgrade, will be slack-like, giving users the ability to upload images etc. User profile pages will come with alert settings, users to follow, baskets to follow, screens to follow — and an array of things one would expect from a project Le Fly put his heart and soul into.

Presently, and due to the stock market refugees coming to iBankCoin and Exodus, I am overloaded with beta trial requests, which can be requested at Stocklabs — presently being graced with our newswire. I suspect completion by mid-May and beta trials around the same time with a full blown lunch by Summer.

Here are some pics of the new features. My favorite new feature is the OBOS for intra-day, which uses my mean reversion algorithms, but modified for day trading. So far, so good.

New Market overview page will look something like this. We have our own indices now (LC =large cap, MC= midcap)

Share buybacks now measured, along with innumerable data points — revs, eps, FCF, EBITDA etc.

Real time algos provides RT insights into stock performance, based on the history of a stock, over a determined time frame. For example, AAPL has an algorithmic score of 3.45 out of 5 and in its history this has translated into a 1.6% return within 5 days over 300 data points.

This is our upgraded seasonality tool, which now measures months, days of the week, and hours. This is AAPL from 3/1/20 thru now. You can see the best times to buy and sell AAPL, or any stock, industry, sector, market, using this tool.

The OBOS (overbought/oversold) algorithm applied using 15min tick data, attempts to provide mean reversion, actionable, trades on an intra day scale. This is actual data for AAPL. We will upgrade this to have better user interface to clearly define the data and also make it screenable.

Things on the front burner include an Advanced Algorithm which will score stocks on a longer time frame so you can see what has been strong on say a monthly scale. Also, we have a volume alert tool that takes volume of a stock and pro-rates it by the minutes to provide alerts. If volume spikes on a 1min, 5min, 15min, 30min scale, you’ll know about. We can couple keyword searches, such as “COVID-19” with the volume tool in order to be a degenerate.