Thursday, June 30, 2016

Another dumb uninformed article from CNBC / Wall Str Journal

CNBC claims machines had advantages over humans in Brexit trading because they are not "emotional" and that humans have "projection bias" and "hope" for a positive outcome.  Totally uninformed crap.  Here's the link:

http://www.cnbc.com/2016/06/29/machines-have-a-serious-advantage-over-human-investors.html


This article is total BS.  People weren't guided by "hope" for a positive outcome.  Most traders i know love chaos in the markets because there's the possibility of making money if the mkt collapses rather that melts up. There is no "projection" bias crap in this case, rather just a lot of polling propaganda that steered peoples' expectations into thinking bremain would win out.  Fact is that a lot traders thought there was no way brexit would win, that even in the small chance brex woulda won that they would've RIGGED the polls in favor of EU.  Also, no one thinks bremain was a positive outcome for anyone but the elites and stock markets.  And lastly i will add, this article is misleading, most algos actually lose money, they are programmed by losers in general, and the code has to be constantly tweaked.  

The big winner that keeps getting carted out in the media is Soros.  But they fail to mention that Soros trades on insider information and loves to capitalize on world destruction.

As far as CTA's winning because they have computers trading for them, ridiculous assertion.  Big CTA's put hedges on before a big binary event to balance out their deltas and hedge their long book.  The vix started spiking 2 weeks before the referendum, prior to that the S&P options had volatility premiums way in the low end of their spectrum.  Big hedge funds were buying OTM puts when they were cheap.  Doesn't take a computer / genius to figure that one out. 

Tuesday, June 28, 2016



Gotta love this rather Dickensian image that accompanied CNBC 's brexit article yesterday.

Alot of gloom out there, as conveyed through above illustration, with Frexit on tap and then of course you got Guixit and Spixit up on deck.

When the people have nothing left, they have nothing to lose, something the elites have not quite grasped.  So no matter what threats and bastille-like scare tactics the euro-loyalists proffer, they have yet to face the consequences that in a corporate welfare system where all the wealth gravitates to the privileged few, that the hungry masses are apt to rebel and will be trepidated no further by the establishment propaganda (which is always demoralizing and condescending to the proverbial "little guy").  These are Jacobin times upon us.

Of course, the only ones who are about to lose, and lose in a massive way, are the big financial institutions, the ultrarich, and the multinationals.  England, a feudal backward little mess of an island, the hallmark of the middle ages, is very important for the financial elite.  London is a portal.... a portal through which numerous offshore tax shelters are setup.  A nexus of nefarious banking activity. Command control center for the international banking mafia.

People may be celebrating now for the plebeian victory over the Eurofascist beurocracy tyranny, but the arena is large and this is just a small campaign in a much larger battle.

Behold the fourth reich, better know as the European Union

Thursday, June 23, 2016

GOLD FLASH CRASH?

Gold could take a hit tomorrow, post-brexit poles, and if it does, it could be potentially massive.

What we have have seen over the course of the past couple months in this gold consolidatory bull flag formation is the highest number of speculative buying since the 2011 gold highs, and the commercial hedgers have built up record short positions in gold.  That doesn't mean much on its own until you take into account that physical demand for gold has been falling in India and elsewhere and it's only the speculative paper demand that is rocketing higher. 

Early summer is a seasonally weak period for gold.  The speculative call option buying will be unwound if gold fails to rally which will exacerbate the gold selloff even further.

Gold is particularly vulnerable at this juncture to coordinated efforts by bullion banks to push the price down knowing it will trigger an avalanche of selling by the speculative dumb money.

In any event gold tends to rally for all the wrong reasons, as desperate fringe elites like jim rikards, james turk, etc etc and all the punters you find on sites like King World News, never up for a real challenge, try to make the case for $10,000 gold so that they can line their pockets in a frenzied bid for low hanging fruit.

Friday, December 25, 2015

Dec 18, 2015 - SHKRELI AINT NO SCROOGE

People are quite clueless, Shkreli is in fact one of the few last great CEO’s out there.  Sure he’s the world’s worst guitar player and even with all those guitar pedals he has he still gets the shittiest sounding tone.  However, people are easily swayed by the news media outlets, which are bought out by big corporate interests, that have all conspired to vilify Shkreli's character.  And the average person on youtube and twitter is too stupid to realize that Shkreli was actually lowering the price of Daraprim by making it free to anyone without insurance or who could not afford it.  He was sticking it to the insurance companies in an attempt to burst their massive profit bubble scheme and funnel that money away from hedge funds and into research for better drugs.

Shkreli is a disruptor of the status quo and a MODERN DAY ROBIN HOOD.  He was setup as far as this bogus securities scandal goes.  He bought out KBIOS company which a lot of hedge funds were short.  The company's assets were deemed near worthless and Shrekli paid a huge premium to acquire it in an effort to steer pharmaceutical money towards better cures over profit.  This angered the hedge funds.  Notice, since Shkreli’s arrest, KBIOS stock has since crashed back down, allowing the hedge funds to make back their losses and at least one crybaby novice trader lost over 106 grand being short the stock.  Even Hillary and Donald want to shut Shkreli up since they both have big corporate interests in mind.

The fact that they even want to put Shkreli in jail is ludicrous. Everyone on wall street and on cnbc know that the penalty for securities fraud is never jail time.  Madoff went to jail because they needed to shut him up too, in the event that the machinations of Jamie Dimon and others of his accomplices come to light.  Jamie Dimon sits on the board of governors of the country, you know, the guys that direct the President.  Similar to how ex-godman sachs exec Robert Rubin was the unelected proxy for Clinton facilitating the repeal of glass-steagal or how ex-goldman sachs CEO Henry Paulson took over the reigns of the presidency from Bush after September 2008.

People just don't seem to realize that Shkreli represents.  Shrkreli’s ultimate goal in life is to become a great rapper, which is a far loftier goal in my opinion that what most people strive for, which is to be nothing more than rich assholes. Shkreli has already attained that and he's moving on to more respectable pastures.  Unlike most CEO’s and hedge fund people who live in palaces, Shkreli practically lives in a dorm room (just look at his videos).  He’s a simple down to earth guy who’s out to fuck over elites and help the common person.

This is why i’m making a film that will reveal the truth and unravel the conspiracy to SHUT SHKRELI UP.  Of course i’m eliminating the parts where he starts wailing pathetically on his guitar as i don’t want to drive people out of the movie theatre prematurely.  But otherwise, it’s true to form!

Saturday, August 22, 2015

The real reason market crashed this week is because the FED and central bankers of the world were too busy dealing with the ashley madison leak that they couldn’t step in to prop up markets

Monday, November 28, 2011

On Europe & The Euro

Futures are screaming higher this morning because....Surprise! Another Bailout...This time its Italy. Also The Federal Reserve will commence a half trillion $$ mortgage purchase plan which is the unofficial start of QE3. You got love backstops, backdoor bailouts, front door bailouts, overt in your face asset price manipulation, ZIRP, and Central Planning.

Somewhere in the afterlife (If It Exists) Engels and Marx are high fiving and chest bumping.

Who knows if this stems the vicious downdraft the markets had the last few weeks, for the time being its Risk On!

Keep in mind that the bailouts and Fed Mortgage buying are all rumors but looking at the 3% mark up this morning - does it really matter? I would actually choose to fade this rally once the actual news comes out.

As I have said the Italy bailouts are just another way of kicking the can down off the cliff. The Euro and the EU can not survive in its current state. Its inherently flawed and needs to be totally restructured.

As I have previously stated...

http://tradersutra.blogspot.com/2011/10/thoughts-on-europe-magical-thinking.html

http://tradersutra.blogspot.com/2011/09/not-mincing-words-on-greece.html

http://tradersutra.blogspot.com/2011/08/does-mr-market-have-glass-jaw.html

If Italy gets its bailout it still doesn't fix the Euro's problems. It's a temporary respite. I figure without this bit of news coming out of Europe over the weekend, Europe was headed towards a death "Lehman" like spiral.

Europe needs to do the following immediately:

1-The ECB needs to provide unlimited funding repo or otherwise. An unlimited backstop is needed.
2-The EFSF needs to expanded.
3-A definite time table for a Eurobond mechanism
4-Some sort of framework for fiscal union.

If German policy makers continue this "hyperinflation" talk I am sure that Italy/Greece will be printing out Lira's and Drachma's real soon.





Friday, October 28, 2011

More on MF GLOBAL

Well!
Now we know what MF stands for!

MF Global’s debt rating was cut last night by both Fitch & Moody’s. This begs a few questions:

Do we still listen to the ratings agencies?

The better question to ask is Why do we still listen to the ratings agencies?

I would think the only reason is because most investors just sit around all day with their hands in their pants waiting for someone else to do all of the hard analysis. The stock analysts do the same thing waiting and hoping that some other poor schmuck has done the work for them. Its an incredible circle jerk of idiocy.

What happened from the time MF Global blew up Tuesday till last night made Fitch & Moody’s wake up?

Does the fact that MF is an out of control debt and leverage machine just dawn on them while watching that riveting Game 6 of the World Series last night?

Does anybody on this planet actually do any credit analysis other than skim the headlines on Twitter?
One only has to look at MF Globals financials and filings to show the incredibly stupid 33 to 1 leverage that MF and Corzine built up since his hiring.

All of the analysts had this puppy wrong. Every one of them even after Tuesday’s implosion had this wrong. The simple fact that counterparty risk was more of an issue then the European Sovereign Debt per the analyst community was ludicrous. The idea that $6.3B in ESD was not an issue in the implosion is bottomline lazy analysis. Its easy to say counterparty and ratings risk. Its not easy to analize. It takes hard work running the figures.

One of the reasons counterparties today are not trading with MF is the fact that they were downgraded last night. The other reason is that they are tapped out via the REPO Market.

When companies catch a ratings downgrade they immediately have higher cost of capital. Counterparties demand more capital via collateral calls and demand larger haircuts/funding in the REPO market. Both of these are major MF Global problems at the moment. This was exactly what happened to AIG.

Back to the downgrades.

Why the downgrade from Fitch & Moody’s?

EUROPEAN SOVEREIGN DEBT Exposure! This was and is the problem but listening to the analyst community it wasn’t a factor in MF’s problems. MF Global owned $6.3B in face value ESD. Most of this debt was probably held on margin - leveraged to the hilt via the over night Repo Market.

I can here it now. MF Global and Dexia are isolated cases Its not a big deal. Buy the banks! Buy the financials!

This is just one of many implosions we will likely see over the coming months as obviously the lessens from Lehman/Bear/AIG/Wamu/Wachovia were never learned. Why learn from mistakes when Socialism and bailouts are public policy in market circles?

First Rule: Dont listen to sell side analysts.

Second Rule: It’s always the debt that matters.

Third Rule:   Leverage is like sex. When its good its great. When its bad lets get out of town.

Fourth Rule: Lose Repo Funding - Call the undertaker.

Fifith Rule:   If you are stupid enough to forget/break the first four rules make sure you drag enough people into the abyss with you.

Thursday, October 27, 2011

Thoughts On Europe & Magical Thinking

As I read the news flow coming out of Europe this morning I see GREEN. Futures are up a whopping 34 handles from yesterdays Globex Session close. The markets tend to trade to the path of least resistance and of course we all know that resistance is futile when markets are dominated by government policy intervention.

Screw Diamonds! Socialism and tax payer flush funds are a traders/speculators/bankers best friend.

Look for this market to trade to at least 1280-1300 level  on the futures before reality sets in. What is that reality you may ask? Like my old man always says reality is not what you see in the mirror but how the next guy sees you looking in the mirror. Its really circular farcical logic, but that's what investors want and that is what they will get. Its Western Culture at its finest. The avoidance of pain is paramount to living in a Western Culture.

http://tradersutra.blogspot.com/2011/08/pain-avoidance.html

Kick the can down the road.
Buy some more time.
Extend and Pretend.

Yada...Yada...Yada

A few days ago European Policymakers couldn't even schedule a meeting to discuss the crisis. They actually were kicking the meeting down the road. Markets reacted violently by sending the SPX down by 2%. Silly Rabbits - Tricks/Bad Debts are for Kids but Socialism/Bailouts are for the elites.

Back on the subject of Rabbits. Did the Europeans pull one out of the hat? One would think they have when looking at the DAX which is flying up 5.35%. Like the CARS singing oh oh It's Magic, one would think by looking at the sea of green on the screen that all has been magically fixed. Maybe Joan Didion was right after all when she wrote the "The Year Of Magical Thinking." Magical thinking works until reality sets in. Steve Jobs thought he can beat Cancer by magically thinking it doesn't exist. I am pretty sure the Europeans have the same thinking pattern as the Apple founder.

Lets review.
The only agreement that was reached was what we were all aware of. 50% haircuts for Greek Debt was already figured. Bank Recapitalization was already needed. The agreement basically buys time for the banks to posture their governments for continued bailouts.

My questions are:

-Does Austerity continue for the weaker periphery nations?
-Are the inherent flaws within the single currency Euro still intact?
-Will trade deficit nations continue to consolidate their budgets?
-Will growth worsen for trade deficit nations?

As Marv Albert  says.....The answers are all a resounding YES!

What European policy makers achieved was an offering to the German Banks and citizens. They wanted bailouts and austerity and that is what was delivered.

Bottomline. THE ECB will use the EFSF to put a bid and floor under sovereign debt until it cant any longer. What was averted I must admit was a system wide bank panic - Lehman 2.0 doesn't look like its in the cards.
Substantial capital (Tax Payer Funds) has been set aside (Bonus Pool) in the case of widespread bank failures or recapitalization needs.

Markets are reacting for good reason as the short term looks good. The Europeans were able to remove the absolute worst case debt crisis scenario, but what we have is just a muddle through scenario. This is not as plan. Markets need to grow out of this debt mess. My thinking is that austerity will continue to put pressure on budgets which will lead to massive protest movements across Europe.

If budgets worsen on the periphery we should expect to revisit this issue in the coming quarters and the crisis will once again ripple through the market forcing Euro leaders into greater action.

Magical thinking helped Joan Didion out of her deep depression. Good for her. It didn't work for Steve Jobs and it won't work for Europe.

Wednesday, October 26, 2011

MF GLOBAL

We all saw the effects of poor risk management and excessive leverage in full force in the plunge of MF Global Holdings. The stock lost 47% in yesterday’s trading.

Do we really need to go over the results?
Can’t we just look at the facts?
Do we really need to spin the same broken record day after day?

The words excessive leverage, inadequate capital requirements, poor risk talking and management, and potential ratings downgrades should not be new to anyone who lived through the 2008 credit crisis.

Yet….

People are still shocked that companies are run into the ground following the above meme.  I am truly shocked to find out there is gambling going on at the World Series Of Poker.

Just reading the research reports describing MF Global is downright tiring. How many times do we need to read the same thing over and over again

Let’s see.

1- Excessive Leverage – CHECK!

2- Not Enough Capital – CHECK!

3- Zero Risk Managment – CHECK!

4- Counterparty Risk - CHECK!

5- Potential Ratings Downgrade – CHECK!

What is truly troubling here is that MF Global’s European Sovereign Debt exposure is totally being discounted. The company has exposure to $6.3B in ESD, which is being supported by $1.2B in shareholder equity as of yesterdays close.

Why do you think most analysts and investors are pushing this to the side? Well of course – Bailouts! Tax Payer Funded Slush Funds. The thinking here is that this is non issue. Doesn’t matter if they have $1 or $100B in exposure as long as the EFSF/IMF/ECB are backstopping the losses. If this is not moral hazard I don’t know what is.

I am not saying that MF Global will be bailed out. They probably will be forced into a miserable death just because Jon Corzine didn't leverage the company enough. If Jon Corzine wants to save his company he should get on the horn with the guys at GS and be on the other side of say a couple trillion in derivatives.

Doing the same thing over and over again in the real world leads to insanity, but in the financial services world it just leads to more bailouts.

Monday, September 19, 2011

Not Mincing Words On Greece

I have long since stated that Greece will default.

http://tradersutra.blogspot.com/2010/04/greece-will-default.html

I didn't mince words back then and I am not mincing them now.

Greece has really three options to cut their debt.

1-Pay it off
2-The Kramer Method - Write It Off
3-The British/US Method - Inflate it away

Option 1 would be the best method for autocrats/technocrats/policymakers everywhere. The Cubs would win the World Series before this happens however. This on the surface looks to be the most healthiest form of paying it off for market participants. But its not happening for Greece as the debt load plus austerity is crushing.

Option 2 would be to write it off. This looks to be the most efficient plan for the Greeks. This is a default. Pure and simple. We will have to figure how the market reacts to this. How would bilateral CDS contracts be settled, etc. This would be incredibly painful but would be a cathartic revelation. How they handle the haircuts and what that amounts to will be important.

Option 3 would be in my opinion the most dangerous. The Greeks would have to exit the Euro and then reissue Drachmas. The currency would immediately drop, this would allow the Greeks to export more Gyro's but inflation and falling output would create problems.

All things aside, the markets are weak again this morning. Its become a broken record. The failure of European Policymakers to deal with this issue is flabbergasting. They will continue to muddle through this crisis, making the crisis more and more of a problem. Bailouts, USD Swaps, EFSF talks are all about kicking the can down the road. The current policy is extend and pretend till Wile E. Coyote stays in suspended animation. If and only when the Euro is about to totally collapse and it threatens the entire European Continent will the European Autocrats do the right things and demand 50-60% haircuts and fiscal consolidation.

Yes. Eurobonds. It wont be pretty and it wont be easy. Europe needs a common treasury. This needs to be done first. I understand that Eurobonds have some inherent problems, most notably the lack of a political union but a Brady Bond mechanism needs to be installed.

The markets are again weak coming off additional negative news flow out of Greece, but I fully expect the EU, ECB, and IMF to come up with the money for Greece. I might as well toss in the Fed as well. I fully expect Greece will get her money in a few weeks. The EFSF will then be passed by all European parliaments. Markets will cheer leading into these actions, but then I also expect an orderly Greek restructuring in the area of 50% haircuts which in the grander scheme of things is not enough.