iBankCoin
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
18,705 Blog Posts

GET ON THE FUCKING ARK LADS — THIS MARKET IS TOAST

Listen to me now.

Avoid buying dips like a fucking moron. Don’t you have eyes? Can’t you read the fucking news? You’re so accustomed to the news and facts not mattering, you’ve blocked it from your idiot brains.

Do yourselves a favor and explore the possibility of being long bonds now. Why bonds? Because when the shit hits the fan, mind you, US treasuries are safe harbor.

Why?

Because when FUCKERS like me sell stocks — they don’t go into checking accounts — because the FDIC doesn’t insure for large amounts. The proceeds head into treasuries. Plus, now we have a market rout and people view bonds, especially the long end, as a great alternative to getting fucked on a minute by minute basis.

I stepped in and bought TLT here — 10% position.

Also, I bought some SOXS — because the semis are woefully exposed to China.

Bear this in mind, this recent chop has created a FAGbox. Do you think we’ll hold this range, or break lower? Do you really believe we’re gonna break higher? REALLY?!

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Cramer: US-China Row Not About Trade, But Global Hegemony

Cramer nailed it here. This seemingly nonsensical trade row with China is much deeper than being projected on the surface. Beneath the pageantry, it appears the US is taking a stand against Chinese expansionism, both on a technological and physical stance.

How this fairs for stocks is almost secondary to the much greater picture.

The hardliners are winning, says Cramer.

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US Trade War With China Jeopardizes $158 Billion in Sales

Some of you will convince yourselves today that the arrest of the heir apparent to the Huawei tech giant is a non-event. You’re so embedded in your cognitive dissonance, spoiled from a decade’s long bull market, you’ll ignore actual happenings even though it’s as clear as day, in black and white, right in front of your fucking faces.

Last night’s revelation that Canadian authorities arrested the CFO of Huawei, daughter to the founder of China’s largest tech company, is a complete and utter game changer. What sort of force did the Canadian authorities use to arrest here in the heavily Asian enclave of Vancouver? She’s been in jail since December 1st and is due for a bail hearing on fucking Friday — treating her like a common thief. She is supposed to be extradited to the southern district of NY — aka Brooklyn. You’ve got to be kidding me.

With this news, coupled with the specter of the trade war getting even worse with China, how can you seriously consider US business in China secure? Think about that for a minute. Throw China out of your models and what do you get? What sort of numbers, fuckers? Who does the most business in China?

Kiss goodbye $158b in sales.

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FLASH: CHINA’S EMBASSY IN CANADA DEMANDS IMMEDIATE RELEASE OF MENG WANZHOU

World War 1 was started under similar circumstances, fucking with an elite. In this case, we’re talking about one of the richest and most powerful families in China, literally grabbing the daughter of the family scion and holding her captive in a cell, awaiting extradition to the US for our ‘as you go’ sanctions laws against Iran.

Dow futures are -333. I expect a lot more selling at the open and into the overnight session.

Separately, the US 10yr is lower in yield to 2.90, against the 2 yr at 2.80 — leaving a spread to inversion at just under .10%

UPDATE: From the Chinese Embassy in Canada.

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Futures McPlunge at Open, As Tariff Man Continues to Fuck Markets

I believe this has all to do with Canada arresting one of China’s elite, the CFO of Huawei, daughter to the founder of the company — a company with size and scale equal to Amazon. She is now sitting in a Canadian cell awaiting extradition to the US, where Trump is waiting to personally execute her for sending calculators to Iran.

Futures were very funky at the open. I truly hate the word — but found it to be useful to me here. We were down more than 500, which is a rather larger drop, considering we were +115 last night. Now we’re down 185 and I really do not know where this fucker is going next. Glad to be in a lot of cash.

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Leon Black: ‘Thirsty’ Yield Fuckers Have Created Bubble in Credit Markets

Here are the fucking highlights of Leon Black’s comments during today’s Goldman conference.

“The credit markets, unlike the equity markets, have gone to bubble status,” Black said Wednesday at the Goldman Sachs Financial Services Conference. “The amount of covenant-less debt is more than 2007. You have a thirst for yield that exists on a global basis. So there is true excess.”

“We try to play a more conservative, cautious role in a bubble environment,” said Black, who’s also chairman and chief executive of Apollo.

Black said the firm’s credit and insurance operations offer the most growth potential.

“We are still in the very early innings in both our credit and insurance businesses,” Black said. Credit could become a $300 billion to $400 billion business in the next three to four years, he added.

Black is the CEO of Apollo, one of America’s largest private equity firms. Who knows what this fat fuck is up to? I take what he says, and everyone else, with a grain of salt.

Here is the best contribution Leon Black has ever made to my life — via stand up comedy from the venerable Carl Icahn.

Enjoy.

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CANADA ARRESTS CFO OF HUAWEI AT US REQUEST; EXTRADITION TO OCCUR SHORTLY

Apparently, this happened on December 1st — the same day of Trump’s historic nothing-burger meeting with President Xi. Canadian police arrested Wanzou Meng, CFO and daughter of the Huawei’s founder — one of China’s largest technology companies, for allegedly violating US sanctions on Iran.

Really?

Canada has arrested the chief financial officer of China’s Huawei Technologies who is facing extradition to the United States on suspicion she violated U.S. trade sanctions against Iran.

Wanzhou Meng, who is also the deputy chair of Huawei’s board and the daughter of company founder Ren Zhengfei, was arrested in Vancouver at the request of U.S. authorities.

“Wanzhou Meng was arrested in Vancouver on December 1. She is sought for extradition by the United States, and a bail hearing has been set for Friday,” Justice department Ian McLeod said in a statement to The Globe and Mail. “As there is a publication ban in effect, we cannot provide any further detail at this time. The ban was sought by Ms. Meng.

U.S. prosecutors in New York have been investigating whether Huawei violated U.S. sanctions in relation to Iran. News of the probe broke in April 2018 when it was reported by the Wall Street Journal.

Since at least 2016, U.S. authorities have been reviewing Huawei’s alleged shipping of U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.

The Justice Department probe, first reported by the Wall Street Journal in April, follows a series of U.S. actions aimed at stopping or reducing access by Huawei and Chinese smartphone maker ZTE Corp to the U.S. economy amid allegations the companies could be using their technology to spy on Americans.

The probe is reportedly being run out of the U.S. attorney’s office in Brooklyn, the sources said. However, a spokesman for the prosecutor’s office in April 2018 declined to confirm nor deny the existence of the investigation.

Ms. Meng, a rising star at Shenzhen-based Huawei, now the world’s second-largest maker of telecommunications equipment. Reuters reported in 2013 that Ms. Meng served on the board of a Hong Kong-based Skycom Tech Co. Ltd. that later attempted to sell embargoed Hewitt Packard computer equipment to Iran’s largest mobile-phone operator.

At least 13 pages of the Skycom proposal were marked “Huawei confidential” and carried Huawei’s logo. Huawei has said neither it nor Skycom ultimately provided the HP equipment; HP said it prohibits the sale of its products to Iran.

Huawei does about the same amount in revenues as Amazon — $100b+ per annum. Could you imagine if the CFO of Amazon was arrested in Hong Kong and extradited to China, forced to rot in a cell until bail is set several days later? This brand of shotgun diplomacy is bound to get someone, or many people, killed.

Trade wars are fun, and also easy.

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When in Doubt — GO TO CASH

Your cost basis means nothing. Your YTD losses are irrelevant. If you’re having problems trading the market, go to cash. I’ve been investing since I was 10, and even I am having problems gauging the price action. Reason being: I’ve been programmed into believing the news to be irrelevant when it comes to stocks. For a decade, the Fed and the helping hand of the government have made sure stocks steadily increased in value. Now, all of a sudden, we’re in a spot where the Fed is tightening, while also REDUCING THE BALANCE SHEET by $80b per mo, and also dealing with the specter of a trade war and a slowing economy.

If you take that into consideration, and then look at the $3 trillion in BBB rated debt and $10 trillion in overall corporate debt, one starts to believe 2008 can happen again. But I know thinking that is my own mortality speaking to me, so I don’t believe it all the way. In other words, it might all be true and it might lead to a massive downturn — but it doesn’t have to happen now. Why not 2 months from now, or even 2 years, maybe 20. Nothing is etched in stone, which is why trading small or not trading at all is important during times of confusion.

The small caps are a key tell here. It looks like it topped out in this little range and might be heading back to fresh lows, in spite of what futures are saying this morning.

FYI: The Capstone Programme will be launching by this weekend.

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TRADERS KILLED EN ROUTE TO NATIONAL FUNERAL

It’s over, fuckers. I want you to repeat after me and keep saying it until you believe it.

This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.
This is NOT a bull market.

Got it?

High yield is an issue. With ~$3 trillion in BBB rated debt, about 10x what we had back in 2008, there is a distinct chance this crisis, once it gets going, will make 2008 look like a cake walk. No idea what a cake walk is — but it sounds easy. It’s important for you to understand, and listen to me very carefully, the infrastructure of the market and financial system HAS NOT IMPROVED since 2009. As a point in fact, at the lows of 2009, CALPers had 91% coverage on their pension. Today, post bull market, it’s at 68%.

If we get a persistent move lower, the already corrupt and bankrupted pension system will need to be bailed out. Corporate credit shrink and freeze up and anything high yield shattered to pieces. The negative feedback loop is the most important aspect of any market squall. Right now Quants are moving the market and I think it’s fair to say — they’re net sellers.

Trump had two magic bullets in his pistol: the Fed pause and China trade deal. Both have been shot and neutralized. Now the real danger is growth and lack thereof.

Heading into NATIONAL FUNERAL, I am 85% cash, 10% TZA.

In summary, we have ~$10 trillion in corporate debt that was borrowed during ZIRP period to do mergers and execute buybacks. Rates have gone up and now credit is tightening. HYG is more important than the SPY now.

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*** BEAR MARKET TRADING ***

Markets are closed tomorrow, so prepare for vapor lock pin action into the bell. Very thin and very furious. The market is angry, pissed the fuck off that Trump thinks he’s a ‘tariff man’ and only now coming to the conclusion that he, cannot, in fact, negotiate a deal with China. His support amongst fellow politicians is too weak and China knows it.

They’ll just wait it out for 2 years, buoy their economy using cash, and then annihilate us through increased shipments of fentanyl, cleverly disguised as those little silicon packets in sneaker boxes.

I sold all of my trading positions, sans CANG (too illiquid) and bought a 10% sized stake in TZA. I have high conviction that market is heading lower, for a variety of reasons.

We hit the top of the channel and failed. We’re now inside said channel, racing for new lows. Watch IWM closely.

The ark floats and I do indeed regret having sold out of TMF. This is what happens when you’re a trading monkey. You slip on banana peels left by others.

Rates are crashing lower because the perception is recession. All of the financial models are predicated upon PEs and now the E portion is uncertain, to perhaps heading lower. That means downside revisions and a total fresh look at where stocks belong to be priced.

How low can we go?

Look at this metric extracted from Exodus, the median PE ratios for the tech sector.

We’re at 21x now, based upon earnings that might weaken. Back in 2008, the median PE was 14x. Let’s not assume the worst, but it’s fair to say that stocks are fairly priced here and can fall in line with earnings revisions. If said revisions is 10%, so be it. Today, people are panicking and selling it all. Choose to be a better person.

My TZA position is a 10% holdings. My trading account has 85% cash and has been this way for a while. I’m rarely in cash for a long duration; but I had nothing to buy and the gains happened too suddenly for my trading style. I do not enjoy to buy into sharply lower tapes. My strength lies in buying into a repeatable trend. If you find yourself making mistakes, TRADE SMALLER or not at all.

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