Futures Hammered to Pieces; I May Be HOOKED

I have no fucking idea why futures are lower tonight. The LSTA leveraged loan index was higher, oil is up 3% now, and Asian markets are garden variety down by 1.7%. Dow futures are lower by more than 600, absconding with more than HALF of today’s gains, extra Thanos.

Incidentally, I am 80% in on the long side, no virus stocks, loaded up with two 3x leveraged instruments. In other words, I may be HOOKED.

I do have a little leeway, since my basis on those positions are significantly lower, taken on today when markets were only +100. It’s the fucking nature of the market to always rape and pillage. It’s always like this during routs, dark clouds of uncertainty rip thru confidence and we get these widening trading ranges. In 2008-2009, policy makers LOST. Contrary to popular belief, they lost because markets went down 75% before rebounding. That’s game-set-match. Since then, they’ve learned to head off these bear runs with stimulus and/or central bank intervention. We are now at the point, down 20%, when their actions must work, otherwise we might find ourselves quickly swimming downstream — stacking up losses in the magnitude of 40-50%.

Lots of ways to trade this wrong today. Fortunately for me, everything I did was right. From short to long to ALL IN, Le Fly (as he’s popularly known in France) banked immeasurable amounts of coin. It’s important for you to understand this, no one fucks this market better than me.

I banged out TZA for +4.7% and swung around like a barbarian and ripped out nearly +18 in SOXL. I ended the session a supreme winner, led by a double dicked sized position in FRO. That’s right, +28% for the day. I told you, literally, told you.

I don’t fuck with you faggots on the free site anymore, out of respect for Exodus members. I used to cheapen my tightly honed skills by offering free advice to losers sloppily hanging out in my comments section and often felt like committing murder against many of you. Those days are long gone, as I cater to a sophisticated group of gentry, all like minded and who also wear top hats and swing around canes.

The market might go higher from here?

WILL GO HIGHER.

I didn’t want to FOMO with markets up 1,000. I felt like an oven was to cook me if I did that. But when I saw the Italian markets go negative, I got in — only short via TZA. After markets dumped out, I smartly closed out that position for +4.7%. See, at the time the cruisers were all halted and OXY too. But then the news came out that was positive, bailouts and divvy cuts. No bankruptcies. We have a fucking low bar of expectations going on here.

So then I went all in.

I SOPPED up my buy lists, a wishlist of stocks that I liked. I even bought TSLA.

The point here is that I cannot be wrong. I am ordained to bank coin in this market. I was born into the riots of NYC and I thrive in chaos.

I reserved 20% cash for eventualities. But I doubt I’ll need it.

Top pick: FRO

Spot VLCC rates doubled overnight.

TD3C (#VLCC AG/China) FFA for April now at $68k/d (vs spot at $30k/d on Friday). FFA for 2Q20 now at 60k/d vs our forecast of $20k/d. FFA 3Q20 at $44k/s vs our forecast at $23k/d. FFA 4Q20 at $56k/d vs $91k/d#oil #tanker #shipping #OOTT $FRO $ADSCME $DHT $EURN $OET $HUNT pic.twitter.com/oA6ecMMCSP

— Joakim Hannisdahl (@JHannisdahl) March 10, 2020

I spotted this divergence yesterday and bought FRO. I have a great memory and recall when crude dropped in 2016 tankers were floating at sea as storage facilities, as producers waited for Brent to recover. Well, look at crude now. Do you think producers want to make delivery now? Probably not. As a result, business is a booming for FRO, TK< EURN and many others. As a point in fact, the tankers are the best performing industry today. Oil is in CONTANGO. This was written yesterday. Spot rates fetched as high as $70k today.

Tanker rates to ship oil in very large crude carriers (VLCCs) are surging as oil traders hunt for ships to store cheap oil in as they take advantage of a 25% plunge in prices on Monday amid a price war between top oil producers Saudi Arabia and Russia.

Shipping rates from the Middle East to Asia, for instance, have risen by more than 25% since last Friday, while several traders are making enquiries to lease tankers to temporarily store oil offshore, traders and shipping sources told Reuters on Tuesday.

The cost of renting a VLCC, which can carry 2 million barrels of crude and can be used for floating storage, was assessed Tuesday at around $38,700 per day, compared with around $30,700 per day on Friday and $14,800 a month ago, ship broker sources said.

“Tanker offers are quite high today,” said a Singapore-based crude oil trader. “Now the contango market structure supports (oil storage), but ship owners are raising prices.”

The rise in tanker chartering rates are a boon for ship owners who have seen demand walloped recently by the fast-spreading coronavirus outbreak which choked commodity and semi-finished goods imports into top consumer China.

“We are seeing several deals being negotiated for short-term (6-12 months) charters, with one already concluded. The fall in oil prices has made floating storage more attractive, although the margins are still relatively thin,” energy ship broker and consultancy Poten & Partners said in a research note.

A Pareto Securities shipping note to clients said “while actual fixing activity was rather limited yesterday, the ‘floating storage’ interest has boosted shipowners’ sentiment and rate ideas have thus been increased substantially.”

FRO isn’t even close to reflecting this new paradigm.

This is the part of the narrative that is hard to discern. I can see myself getting angry already, forced to consume content from CNBC — forced to sit thru grueling interviews of stockbrokers or “investment advisors” who go on there to tell people that “now is a good time to buy the Facebooks, the Apples, and the Amazons of the world. ” I sometimes feel those people are designed to just piss me off and keep me away from making rational decisions.

Hey, that obstacle might be me for you. You might fucking hate my guts and the service I “peddle” and come here just to wish for my downfall. I’m fine with that. Heck, reading thru some of my older posts, I hate me too and wished I could break that guys jaw for him. The point is, the market is LIMIT UP this morning and all of the jerkoffs are out and about telling you that long term cap growth works and how you’ll never time the market right because it’s not possible — especially for a moron, such as yourself. While contrived and tripe, I do believe there is some truth in that, especially how you’re a moron.

So do we step in and buy with WTI +10%, Dow futures 1,100+? I told you last night, you’d be voluntarily walking into an oven. That is a disgusting thing to do. But perhaps the Wuhan Batsoup virus is diminishing and perhaps the summer winds will bring virility back into the world, casting aside doubts and fears of contagion. I don’t know how we got here, but I refuse to believe this fucking virus is going to rule dominion over me for more than another month or so.

Sure, the ramifications of quarantine and fear have slowed growth, but eventually shit will get back to normal, except the oil sector. That is fucked.

I think I have a pretty firm handle on things and like to believe I am more student of the market than teacher. There is always a new trick to learn; but some shit is repetitive and human behavior awfully predictable. Such as, when people are in unison against the market and believe that a low probability outcome, such as total financial collapse, is about to happen — that there Sir is a fade. Admittedly, I did not have the eternal fortitude to hold onto my leveraged 3x dynamite sticks yesterday and would be completely elated this morning had I done so, but I am 100% long in my longer term accounts and will recover some of my lost coin today. My trading account doesn’t have any shorts, but is limited because of my 75% cash position.

I will actively ignore any person interviewed on CNBC who has a series 7 license, out of fear such a person might dissuade me from getting back into some long positions. Today is FOMO day. You will crave to get in and I will too. Try to remember the fires and the heat you felt from the burning attacks upon your portfolios and also remember that a V shaped recovery is an ridiculous notion. The last time markets endured this type of technical carnage, according to Exodus, was September 2011, and it took about 3 months for markets to break out, constantly offering traders false breakouts, ensnaring them in ovens designed to look like comfy mattresses that eventually roasted many to a blackened crisp.

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Here we go. Now is when it starts to get interesting. Do we FOMO into tomorrow’s tape and chase a +700 ripper or do we fade? Or, if we’re long, do we bless our intact cocks and sell and cash up? We all have different perspectives, but the one indelible fact is — everything has changed. We see Asian markets stable tonight, Korea up and Japan marginally down. Following Trump’s presser, where he announced targeted loans, payroll tax cuts, and a slew of stimulus items, futures are +600. Wonderful — but is it over?

Lots of data suggests NO.

Crude is up 5%, but at such a comically low level it does’t really matter unless we’re talking $40. The 10yr has bounced and is now 0.61%, but for the love of God — it’s 0.61%.

Consider the following.

S&P/LSTA U.S. Leveraged Loan Index, largest one day drop since 2008 pic.twitter.com/BEmdAybAoI

— The_Real_Fly (@The_Real_Fly) March 10, 2020

S&P/LSTA U.S. Leveraged Loan 100 Index -5.5% YTD

— The_Real_Fly (@The_Real_Fly) March 10, 2020

And let’s not forget about the $2 trillion + debt load of American oil companies and the 10 million jobs associated with the industry. The funny thing is, we’re talking oil now, but the central issue is the coronavirus. Nothing has been resolved and nothing has dissipated. For the love of God, Coachella has been delayed.

Ladies and gents, I stand before you with a double blue blazer on, fully prepared to oversee the apocalypse. The +600 tick in futures tonight is an invitation to an oven that will charr your ass black once you step inside of it. Do not buy +600. Do not FOMO your way into the apocalypse. We have RECORD collapses in the LSTA index, blowouts in CMBS spreads, and overall fuckery and chicanery that had only occurred once in my lifetime — 2008 financial rigging.

It goes without saying, Exodus is extremely OS. A snap back rally to rip some idle faces off is in order. A man of my stature would never pretend to be in a position to be caught off guard, let alone being off guard. I am 75% cash, the balance long. My Quant is 10% TLT and GLD from two months ago with a cost basis of $144 and $144, respectively. A rather odd occurrence that my basis is the same for both — but it’s true.

I will trade fast and furiously tomorrow — wind behind my sails as I smash my enemies into their soft skulls with my Bec de Corbin.

Indeed. It was a day that will live in infamy, Trump’s great big titted stock market ripped apart to shreds, as the oil wars heat up and credit markets seize. The sole sector that was higher was auto parts stores, which happened in the Financial Crisis of 2008, as investors priced in NO MORE AUTO LOANS and people fixing their jalopies.

SRLN new lows.
HYG thrashed.

High yield fucked.

The Dow ended lower by 2,000 and all you heard on CNBC was “OFF THE LOWS” and how terrifically wonderful the circuit breakers worked. They should fuck themselves. Global markets cracked asunder as well, led by Italy off by 11%.

I walked into this tape a man, but was quickly courrected and dispatched in a series of poorly thought out trades gone SEVERELY wrong.

My day.

COCP +47%
BCRX +5.2%
(TRIB -20%)
(MRNA -6.8%)
(AAL -3.4%)
(NCLH -23%)
(WYNN -11%)
(SIX -7%)
(IMAX -6.66%)
(URBN -11%)
(VXRT -13%)
SOXS +4.6%
(COCP -27%)
(GUSH -8%)
FAS +3.1%
TNA +3.9%
(TMV -9.3%)
TMV +4.8%
SOXS +1.95%

My trading account was down more than 3.5%, in spite of all the cash — because of these exogenous losses. I tried to trade effectively and was doing ok. But like I said, a series of unfortunate events bogged me. I closed out the day 80% cash and my head screwed on right, so I think I’ll be ok. My longer term Quant account was lower by 5%+, thanks to everything lower. Market breadth was -95% lower and Exodus oversold levels hit unprecedented levels. We are most certainly in an time and a place that is unchartered.

I do have one actionable trade that may or may not gain traction. Tankers. With WTI and Brent in the shit-box, look for producers to STORE CRUDE AT SEA in these tankers. I went long FRO.

Rough day. If I still drank booze, I’d have several today. I was bearish and positioned defensively, yet still lost a bundle. My sixth sense is for the Fed to intervene, but don’t expect markets to respond favorably. The oil sector carnage is real and there are state in America that will fall into depression. Nevertheless, we press on.

I closed out my TMV trade for a marginal loss, after averaging down today. Although I think yields will rally, my risk appetite is nil.

Steve Liesman interrupted an interview with Chris Whalen to report on liquidity issues in treasury markets, causing 50 cent spreads and unprecedented lack of offers, as people enter the funnel and board the ark. While this might be humorous to you and I, markets are having a fucking heart attack over this — barreling back towards the lows, off by 7%.

Margin calls are going to happen and fuckers like in the video below will be WIPED CLEAN from the surface.

For most readers here on the site, this sell off is a blessing — the great equalizer is upon you. If you play your cards right and exert some patience, you can, in fact, make a fortune off of the misery of others.

I am not buying dips. In fact, I am expecting a retest of the lows and perhaps lower.

The knee-jerk reaction here is to buy. But what are you buying? You’re getting long into the teeth of a virus that has forced commerce to halt around the world. Moreover, this decline is crude is tangible and means your oil company is now losing money. I get why you trade for a trade, but I do think this decline has been too orderly and would expect a RETEST of the days lows.

As such, I sold out of my plays that I put on Friday, all but one, and now have a 70% cash position.

COCP +47%
BCRX +5.2%
(TRIB -20%)
(MRNA -6.8%)
(AAL -3.4%)
(NCLH -23%)
(WYNN -11%)
(SIX -7%)
(IMAX -6.66%)
(URBN -11%)

Each position was equal weighted. I am bearish on bonds here and feel that if anything happens to the upside it will include the complete evisceration of bonds. This is not an easy market to be long and I feel for anyone who is losing money today. But don’t be fucking retards and believe in MAGA STEEL and the idea that the Coronavirus is less than the flu.

So last year 37,000 Americans died from the common Flu. It averages between 27,000 and 70,000 per year. Nothing is shut down, life & the economy go on. At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!

— Donald J. Trump (@realDonaldTrump) March 9, 2020

Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!

— Donald J. Trump (@realDonaldTrump) March 9, 2020

Looks like HYG is at 2018 lows and leveraged loan ETF SRLN new lows.

There is a much larger picture to consider here — the ramifications of $30 WTI and how it affects the 10 million crude jobs in America — 8% of GDP, and the states that are completely dependent upon them.

It started with the Coronavirus and now that panic spread into the oil markets and a price war broke out between Russia and Saudi Arabia. The result is sharply lower oil prices, presently down over 18% to $33. Oil had been trading $28 until it rebounded. Due to the 7% decline in stocks, the market halted trading and re-opened down over 2,000 points.

The carnage is surreal. Here is a list of stocks down 20% now, with caps over $5b.

All eyes are on the Fed now, due to our reliance upon this organization for just about everything since 2008. The unprecedented nature of this Black Swan has forced the entire yield curve under 1%. The 30yr is 0.94% and the 10yr is under 0.5%. Unreal.

As for me, I sold off my plague stocks, and then bought 1 more, for net gains. I am now 45% cash, tempted to go long but also tense by the violent trading action causing me to be cautious.

COCP +47%
BCRX +5.2%
(TRIB -20%)
(MRNA -6.8%)

Have we bottomed? I have no fucking idea.