Friday, August 21, 2015
Well, the China yuan story is bullshit, the China manufacturing story is old news and pretty inconsequential, the September Fed rate hike story is just childish, there's no fundamental reason for the US market to crash....
So why did the market really go down today? Why is $VIX at 28 to end the day?
Let's try to find some new narratives for Business Insider to frighten us with! Cos the old ones are stupid, and we need something new if we want to get $VIX up to the next level!
Yahoo Finance - Ford's Europe sales rise 5.3% yoy in July. Um... not much reason to sell, there.
Reuters - North Korea goes on war footing. There we go! Because I'm sure China will allow that to happen, and the North Korean army of starving peasants will just roll over the US armed forces... no, that doesn't work.
Bloomberg - Rob Ford says brother will run to replace Harper. Um... even if plausible, he'd first have to sit through 4 years of Mulcair as PM. No reason to sell US stocks. Plenty of reason, though, to mock Yahoo Fiance's smartphone app for including that in my news feed just cos I've followed Ford Motor Co.'s stock price.
CNN - NASA: earth definitely not facing imminent threat from asteroid. That's it! That must be it! Because if we're not facing imminent doom from an asteroid impact in September, then why would NASA go to the trouble of denying it? They've never felt the need to deny the possibility of imminent doom before!
Stock up your gold!
Er! Mah! Gerd!
As new readers might have noticed, if I hardly post at all, it's because there are no opportunities and I'm not interested in wasting your time; but when I suddenly start throwing charts at you one day, it's because there's an opportunity available.
So with all the gloom in the market, why hasn't your doomer buddy told you this:
The last candle there is white. That means (as of the moment I got this chart, anyway) IWM is green on the day.
If the world is so horrible, why is the IWM trading above yesterday's close?
I took some losses on HSU.to (2x SPY ETF) and XSU.to (IWM ETF), so I could buy $30K of HVI.to (short $VIX) when $VIX was at 23.74 and XIV was at $38.35. Seemed like a slam dunk, eventually at least, with SPY and QQQ down -3SD, and R2K showing what could be mistaken as relative strength.
If all goes well, I'll make back triple the booked XSU and HSU losses as HVI recovers.
Though it could be, if today sees continued puking into the close, that Monday starts the day with an even bigger heave to solidify a final bottom. Never mind, there's got to be a reversal of this silliness.
Other stupid opportunities, if you're looking, might be a Japan ETF (EWJ is about 8% down with utterly no good reason), Ford (-3SD and sure nobody's ever going to buy a car again yeah right), DIS (down 20% and yeah sure nobody's going to buy ESPN in the new cable TV world order that's so totally a 20% hit to earnings), SCHW (down 10% and god forbid nobody's going to be banking ever again), my god just looking at this silliness makes me shake my head.
And here's some Friday news:
Bespoke - bah god King the S&P's been chokeslammed straight to hell! Everything's -3SD, which is silly when you think about it. Consumer discretionary, financials - what, is it 2008 all over again?
Economist's View - Krugman says debt is good. This one's sure to provoke a foaming-mouth response from the patriot & bible crowd, but it makes perfect sense if you know anything at all about the market for loanable funds and how one person's savings has to be another person's debt.
FT Alphaville - of China's dirty peg and spreading EM pain. Gee... this sort of sounds like the kind of EM secular bear market that you get when the US is in a secular bull market, eh? Anyone ever read Jim Rogers or am I talking to nothing but crickets here?
BBC - Finland considers a basic income. Well, if it means you can completely eliminate old age security, old age pension, welfare, unemployment insurance, handicapped benefits and child benefits, and replace them all with one single living-wage benefit for everyone, which entails the complete elimination of huge bureaucracies, which also means existing income is now taxed at a higher bracket... FFS what's so bad about that, you small-government wackos? Personally, I like it from the "citizen's dividend" point of view - my country's government should be paying me to put up with their shit.
Mining.com - is this gold price jump the turning point? Well, if Shanghai Chaos has dumped its short, then yes. $1150/oz, eh? Wonder how that happened?
BI - the Fed is at risk of REPEATING ONE OF THE BIGGEST MISTAKES IN US HISTORY.
Mike Bird, you're a fucking idiot.
1. Yeah, you can certainly draw parallels between now and 1937. For instance, in 1937 the US didn't even have a measure of Gross National Income, and GNP wasn't even invented til 1942. Today, Janet Yellen actually has economic data that she can follow. Perfect fucking parallel you twat.
2. Also, I'm sure Janet didn't watch Trichet fuck up Europe with a rate hike in 2011.
3. Also I'm sure you, Mike Bird, with your BA in history and politics, oh look you're still in school, well how's that working out for you, know so much more than Janet Yellen, with her Ph.D. and her husband who won a Nobel, so much so that you're able to predict what the Fed is about to do. That's why I'm very interested in your opinion of US housing strength, wage growth, international monetary flows and unemployment, not.
4. And finally, no the Fed isn't going to purposefully fuck up the US economy. Aside from the one idiot who worked at the IMF when they bungled the Asian banking crisis, these people actually know how economies work and stuff.
For the love of Christ bring back Wiesenthal, these other guys are pathetic.
BI - investors are stampeding out of stocks. Wow, I can tell. Like for example S&P 500 is 5% off its all-time high. That's totally a stampede and everything.
BI - markets are getting slammed again. Yeah, a 1% drop at the open is so titanic, it's like 2008 all over again oh wait no it's not.
BI - here are all the ways that China can blow up the world's economy. Yeah, a 4% drop in the yuan can really destroy the world, because 4% is such a big number and wow just look how much the economy was destroyed by the collapses in the Turkish lira and Brazilian real oh wait nobody even noticed did they.
BI - Rupert Murdoch warns we're on the brink of a major global crisis. And he should know because he can't even sell newspapers anymore and that's all he's ever been good at. Seems like what he really wants is the adulation that Peter Schiff and that German wackaloon doomer have been getting from the right wing survivalist crowd.
Humble Student of the Markets - OMGWEALLGONNADIE
It's a good summary of a lot of market sentiment indicators as they stand right now. Well, actually indicators as they stood yesterday. Which have probably gotten worse today as of this moment.
By way of illustration of the environment, here's some weekly candles for you:
The last time SPY broke below the SMA(50) was when Ebola exterminated America last fall.
Which one the one hand, psychologically, means that if either goes lower this time, there's really something broken and you could reasonably expect the indexes to fall real big this time... like maybe another 10% at least.
But on the other hand, both Shaoul and Rosie think housing construction and sales is about to really take off, and the US car fleet is still unsupportably old, and both of those are huge contributors to US GDP and employment, and unemployment is still low, so whatever happens you have to be an idiot to think the US economy is about to do anything that would demand a lower stock market.
And "be an idiot" includes thinking that Janet Yellen is going to do anything to destroy the US economy. Don't worry: she's heard of Jean-Claude Trichet, she's read the Fed research on the dislocation between unemployment and inflation, she knows enough currency theory to understand the yuan move. And you probably don't, mister Hedge Fund Clown.
The last time the $VIX spiked so much to end the week:
Was Sept-Oct 2014, when the Ebola virus had made it to the US and was going to kill millions of people, possibly all of us, leaving nothing but a smoking ruin where glorious America had once been, mainly because of Obama (he's black you know) and reasons.
QQQ is -3SD down with an RSI(14) of 30.
And SPY is -3SD down with an RSI(14) of 30.
My god people! Think of the children! Er mah gerd!
Steve Liesman said something sensible on CNBC this morning: that it's gotten silly how, every time the market goes up a few points it's a "bubble", and every time it goes down a few points it's a "crash", and it's been this stupid way since 2008.
And really that's true. Which is why I love playing $VIX shorts using idiot mainstream media as buy and sell points.
So let's look at the $VIX futures before the open (a few minutes out of date now):
And unfortunately the front end is backwardated, so no matter what happens today (with a -1% move indicated at the open) I'll have to wait a couple days before buying HVI.to, since otherwise I'll lose money on rollover. But with the first 4 months at ~17.5, and the probability that at some point in the next month it'll go back to 12-13, this is another chance to flip for a big win.
As long as everyone doesn't freak out and puke the S&P by 30%. For no particular reason.
Here's Lykke Li with "Never Gonna Invest in Shitty Junior Miners Again", which was inspired by her losing a fortune on B2Gold whose stock is worth less today than it was in early 2010 when all they had was a couple shitty mines in Nicaragua.
Thursday, August 20, 2015
Hey, you remember when gold was going to $1000?
Turns out one big dumbass Chinese idiot puking $3B notional into an empty book on a Japanese holiday is the sort of move that gets reversed. With a passion.
Shanghai Chaos has left the building, guys.
Wednesday, August 19, 2015
Bespoke - bullish housing thesis and yesterday's homebuilder breakout. Yeah, I wasn't watching homebuilders either, but apparently they're going gangbusters.
And housing has remained nonexistent since 2009, so a housing resurgence will be very significant, and housing is a huge part of the US economy, and Michael Shaoul was recently going on about the housing report too.
Add that together and hey, there is indeed a reason to stay long this market instead of puking stocks and going to what, cash? You fucking sissies!
Tuesday, August 18, 2015
Ezra Klein - Donald Trump is winning because he's a true Republican. Yup! Quote:
The gap between the rigid agendas followed by the party establishments and the more diverse opinions of loyal partisans leaves both parties vulnerable to a candidate like Trump who has the money, and the star power, to campaign on a platform that party elites would normally suppress.
Take spending cuts. It's table stakes in a Republican primary to talk about how you'll cut spending on Social Security and Medicare. The GOP's policy apparatus loathes both programs and considers their long-term cost to be among the most pressing economic threats facing the nation. Any Republican candidate who wants to be taken seriously by Republican Party elites needs to show they understand the urgency of cutting Social Security and Medicare spending.
One problem? Republican voters don't understand the urgency of cutting entitlement spending. In fact, they oppose cutting entitlement spending. More Republicans want to increase spending on Social Security and Medicare than decrease it. They think keeping entitlement benefits at current levels is more important than reducing the deficit.
This puts Republican voters at odds with the Republican establishment and conservative interest groups. But since Republican candidates can't get very far without some level of support from the GOP establishment, conservative interest groups, or both, the Republican Party's elected officials are basically united on cutting Social Security and Medicare, even though Republican voters hold the opposite view.
Trump is the only Republican running who actually agrees with the GOP base on this one. "They're gonna cut Social Security. They're gonna cut Medicare. They're gonna cut Medicaid," he said on Fox & Friends. "I'm the one saying that's saying I'm not gonna do that!"
And that's what makes a candidate like Trump potentially dangerous. On immigration, Trump holds a hard-line position that the Republican Party establishment has tried to mute, and so far Republican voters are loving it. On Social Security and Medicare, Trump — who opposes cuts — is closer to Republican voters than the party establishment is. On free trade deals, Trump shares a skepticism held by about half of Republican voters, but that's usually suppressed by the party's powerful business wing.
Most candidates who tried to stack this many heterodoxies would be quickly squelched by the party establishment. But Trump isn't beholden to the GOP for money, staff, power, or press attention. That frees him to take positions that Republican voters like but Republican Party elites loathe. keeping entitlement benefits at current levels is more important than reducing the deficit.
The question over the next few months will be whether the Republican party whips at Fox, Focus on the Family, and neo-Nazi talk radio will ultimately be able to crush him, or whether Trump has the Teflon to beat back all comers.
I'd laugh even more if Trump managed to motivate enough of the base to beat Clinton and win the presidency.
Hey, we're going to need some reason for either an explosive secular bull market or a devastating crash, right?
BI - our clients' surprising question. Wow, this is just plain sad:
"One surprising question that clients have asked recently is the prospect for a US recession in 2016," Goldman Sachs' David Kostin wrote in a new research note. "An economic contraction is decidedly NOT in our forecast."
That's probably why the market has been weak. Everyone expects another 2008. That's why a 200% advance in the S&P 500 is still met by the blogosphere with childish Peter Schiff/Albert Edwards bullshit about global deflation and high yield collapse and that sort of crap.
This isn't the first time we've heard that recoveries don't die of old age. Perhaps the most popular leading indicator of recessions is the inverted yield curve, which is when long-term interest rates are lower than short-term interest rates. But as you can see below in the chart taking the difference between the 10-year yield (long-term) and the two-year yield (short-term), rates have a long way to go before the yield curve inverts.
Go there for the chart, I won't bother reprinting it here.
Suffice to say this is why I'm still long US and waiting patiently. Eventually people will stop being stupid.
$BPSPX weekly candles:
If you'll remember, that downspike last October occurred when the Ebola virus had killed 50 million Americans oh wait that didn't happen did it.
We're almost as bearish right now, which has usually been a great time to go super-long.
We're still rangebound, but here are two hopeful pictures:
Story #1 these past few weeks in the gutter press has been the decline in US market breadth. Well, turns out that decline might have stopped in late July, about when BI got interested in the topic.
And transports have actually looked bottomed-out for a while.
This is a good solid base for an advance, but we'll have to see if it actually happens. There was a good note from Goldman recently that throws light on this, I'll post a link to that next.
Sunday, August 16, 2015
Two Sunday news reads for you:
New Deal Demoncrat - weekly indicators. Again with the calling this "the late stages of the expansion", which makes you wonder which other expansions were in late stages with negative real interest rates.
IKN - Ollachea will never be a mine. Oh good. I mean, Ollachea was the only reason to bother owning Minera IRL, wasn't it?