About Face Rave Reviews Scared Money

Transcription

This morning investors are digging out of their
foxholes as the assault continued into the night
with some lackluster earnings reports.
The Rainmaker Report is a high-level executive summary of global
financial markets. This daily dossier is written by a Wall St.
veteran with a unique perspective on markets. With actionable
information including specific trade recommendations, technical
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finance, politics, and your money.
First off, Walmart came out and guided down
on Full year 2015 revenue figures. They didn’t
blame Ebola. They just brought down the
revenue line.
Netflix (15 minute chart)
German 10 year yields plunged down to .71%!!!
Today is Thursday, October 16th ,2014:
About Face
It’s like the S&P has Ebola!!
Rave Reviews
And speaking of Ebola, Long Treasury bonds are
going to trade like Ebola Vaccines….in West
Africa today.
Scared Money
“Everyone Knows”
Good Morning. Well, that escalated quickly.
Yesterday was big. Stocks were beaten
mercilessly as the Dow plunged 470 sticks
before the authorities had to come in and break
up the party.
Next up Netflix was burnt down for 117 handles
in the aftermath of a guide down for Q4. That’s
why I call this Blockbuster Video Jr®.
Finally Ebay missed on top and bottom lines
with some tempering of expectations following
their latest data breach.
So, the bad news is that things are just as bad as
yesterday, with Europe actually being worse.
Way worse.
Bond yields had their wildest day in recent
memory, with the 10 year Treasury making an
unprecedented 30 bps rip, then dip. Same with
5’s – 30’s as the entire Treasury curve ripped
then dipped.
©Rainmaker Report, LLC | All rights reserved | Do Not Duplicate
This morning the S&P is bright red, with futures
trading down an entire percent to test 1825 and
falling fast.
So before we get into the post mortem from
yesterday’s wild action, let’s review what we
said first thing yesterday morning before the
bloodshed:
Let’s tighten up with a talk about the reality.
Things are moving much faster than you
probably ever thought they could. If you had
been doubting the Rainmaker, you are probably
thinking twice now.
1
www.rainmakerinvestor.com
@sleevesrolled
stock markets and declining bond yields
suggest the deflation risk hasn’t gone
away, particularly in the often-frenetic eyes
of investors. These emerging threats come
as the Federal Reserve is on track this
month to end a bond-buying program
that has been one of the main tools in
its fight against falling prices.
The move is going to get big now.
Investors are just about to come to the
realization that deflation is the risk, and has
been the risk all along.
When they find out they are wrong, there is
going to be a massive repositioning in the long
end of the Treasury Curve.
So just as I was sending out my paper yesterday
morning, the panic escalated and spilled over
into the short end of the curve, where more
than one report came in of Shoulder Tap Outs
for short Treasury traders.
The 10 year yield fell from 2.20 to 1.86% in 40
minutes. That is unprecedented! How many
dimwits are still short on the long bond? All the
money in TBT, (which we can take all of) if we
are smart.
Perhaps more important than the market action
is the new tone of the market. The word
deflation is part of every segment now. Ebola is
too, but Ebola is temporary, and Deflation is
permanent.
Now Fed officials are playing defense instead of
the snarky remarks about the market not
respecting the Fed’s bullshit interest rate path.
Rates are going down from here. That is the
reality. Get on board or get out of the way.
Ok, next we have to move onto a Jon Hilsenrath
piece with the Catchy Title:
Risk of Deflation
Feeds Global Fears
Behind the spate of market turmoil
lurks a worry that top policy makers
thought they’d beaten back a few
years ago: the specter of deflation.
A general fall in consumer prices emerged
as a big concern after the 2008 financial
crisis because it summoned memories of
deep and lingering downturns like the
Great Depression and two decades of lost
growth in Japan. The world’s central banks
in recent years have used a variety of easymoney policies to fight its debilitating
effects.
Now, fresh signs of slow global economic
growth, falling commodities prices, sagging
2
So let’s start at the beginning. Jon Hilsenrath is
finally admitting to the deflation we have
always pointed to. This is an about face for Jon,
because this is what he said just 4 weeks ago:
“I think They feel that they are past the
deflation scare.”
“Right now Deflation is Europe’s problem.
Europe’s worry. They saw the very low
inflation rates last year near 1% as temporary
and distorted and they see inflation picking up
closer to 2% now. “
“So they are not so worried about deflation.”
“They do want to see inflation continue to rise
toward their 2% goal, it’s been below it for
more than 2 years. They want to see it
continue to increase.”
“But they are not worried about deflation.”
…
“They do not want to prematurely tighten
credit because they do not want to send the
economy back into recession.”
@sleevesrolled
“In part because they don’t have a lot of tools
to deal with an economy in recession. Interest
rates are so low you can’t cut them anymore.”
“If you went back into a recession they’d have
to get back into this whole QE drama, we’d be
on QE 5, 6, and 7.”
“Janet Yellen really doesn’t want to go there
and move the balance sheet to 7 trillion
dollars”
“She doesn’t want to have to make promises
that interest rates are going to stay near zero
until my kids get out of graduate school.”
You have a job to do now Jon. It is your DUTY
to get in front of this idea of deflation and give
your readers the proper tools to understand the
invisible economic force.
And if you see Chewy in the hallways, tell him I
said he was dead wrong too.
“So there’s an argument, a strong argument
inside the Fed, for really waiting until you are
sure you see serious traction in this economy
before you start raising rates.”
You could probably just reprint a bunch of old
Rainmaker Reports, if we had a licensing deal in
place…
“We’ve gotten past that discussion for the
most part whether we are in a deflation risk
right now.”
But really, it is time to stop this game of playing
stupid. Ok, deflation is the issue. Let’s get our
resources positioned properly and attack it,
instead of sit back and let it eat away at our
stack.
-Sudeep Reddy
“That is the late and fast approach, as opposed
to the soon and slow approach. And they
haven’t resolved it yet, they are talking about
it right now.”
So, 4 weeks later we can all return to this step
by step directions for the Fed to continue with
“QE 5, 6, and 7.”
Wrong.
I am going to be watching you close here Jon.
Don’t f@ck around.
You forgot 4 Jon.
But more importantly, you were wrong and the
Rainmaker was right.
This chart = Deflation, Chewy.
3
@sleevesrolled
Ok, so now it is time to talk about beer. We
have been hosting this giant beer party for 2
weeks now and it is starting to get rowdy. First,
we should remind readers about what we were
thinking on October 1st:
“I would also be setting up a Giant
Tent in the long end of the Treasury
Curve.”
“I would drink beer in that tent until
everyone finally shows up to the idea
that we are in deflation and that the
long end of the curve was always the
place to be.”
“Then I will buy everybody a beer, and
celebrate while I count the money
that used to be theirs.”
As far as the party, it was completely awesome.
Wall to Wall people paying us while we guzzled
beer and high fived each other.
So yesterday as the entire world rushed to buy
Treasury bonds at the same time, our beer tent
party filled to capacity.
I started thinking that the party might be
coming to an end soon since we hit our target
of 2% on the 10 year and 2.80% on the 30 year
yesterday morning.
10 year yields fell to a stunning 1.86% before
the authorities had to step in with the
defibrillator paddles and save a few market
participants from death by P/L asphyxiation.
People stepped in and (we) emptied their
pockets as they covered their short bets across
the long end.
The Plunge Protection Team DEFINITELY came
in yesterday to protect a complete free fall.
Make sure you understand that.
But it didn’t stop our beer party!
Maybe we can have an afterparty where we
keep dancing until the break of dawn….
-The Rainmaker
But I’m still not tired. Beer is almost kicked so
we are going to have to figure out how we can
keep this party going.
4
@sleevesrolled
Do you know how I feel when I hear that?
Remember, the party is far from over. We will
find out today that a hedge fund exploded
yesterday morning as yields spiked lower.
Could have saved your entire company if you
just listened to the Rainmaker.
Oh well. Maybe next time you will listen to me
instead of R2D2 and C3P0.
Or maybe you won’t.
Holy Shit!! Everyone Showed to the
Afterparty!!!
Yeah, just like this.
Remember, this party is going to go all night
long. Don’t get too tired out and forget to get
rich sticking it to the short sellers still
temporarily in business after yesterday’s back
breaking move.
It was the Literal definition of Break Dancing.
You know, if we keep throwing parties like this,
I might have to get my own hand signal, like Jay
Z’s Hov symbol.
My DJ name could be:
DJ MakeRain®
The greatest chart I ever saw was this one of 10
year Treasury short positions being the highest
since 2006!!!
Soon Rick Santelli will be eating a big $hit
sandwich when he slowly accepts the facts that
Deflation is the most important financial term
you can learn about over the next 5 to 10 years.
But for now he is content to look idiotic, trying
to explain the 30 bps move in the 5 year bond
today with some kind of Ebola talk or
something about Europe.
Wow this is fun.
And we are getting a number of new riders to
our bandwagon. I even heard Sarah Eisen “pay
up” to Guy Adami for being right about
deflation.
5
@sleevesrolled
Let me give you all a little free advice:
It must be!!!
I’ve heard them all now.
Ebola has not stopped a single person from
spending a single dollar in this economy yet.
Because we got the perfect bounce from that
level.
But for now, the wagon (band) is filling to
capacity with the late money crowd that we
always knew would be coming late to the party.
More people died today from Peanut Butter
than from Ebola, so shut the f@ck up about
Ebola having anything to do with anything!!!
Do you know what I get a kick out of?
VIX (weekly chart)
Hearing people say the move in Treasuries was
technical.
30 year Treasury Yield (weekly chart)
Oh, yeah right.
We give FUNDAMENTAL REASONS for the TLT
to go higher EVERY SINGLE DAY for the past $25
DOLLARS (or 10 months whichever stat you like
best)!!
Do you want to hear something miraculous? I
know Ebola is the reason why the 30 year
Treasury plumbed down to 2.67% early this
morning.
Everyone knows that.
But for some reason the 8 dollar move
yesterday was “technical”.
You are technically an asshole if you believe
that.
The F@cking technical excuse…
Well forget about 19.51. Blew through that
thing like Netflix blew through 4th avenue last
night.
But for all the Ebola conspiracy theorists, can
you tell me why the chart that we drew up 6
months ago with the bottom channel edge right
at…2.67%
But here is what we said last week which should
explain what is happening in the VIX:
From Rainmaker Report 10.10.14:
Do you think this means….
That the Rainmaker can predict infectious
diseases!!?
Ok, now it is time to follow up on the VIX. Here
is the very long term chart we have been
working from, and for new readers we set this
line in the sand at 19.51. That is the top of all
the red candles, where there always seems to
be a sell signal that triggers over that level and
it usually falls back to earth over that level.
“Every time I start talking about boxing”….
6
@sleevesrolled
Let’s tighten up the week with a look at the VIX.
getting rewarded for hitting your hurdles. They
are supposed to be trying to hype you up on
getting rich, so they consequently shower gifts
on your hotel bed almost every day you are
there.
We talk often about this idea of trying to
submerge a beach ball deep under water. As
you try and push it lower, it gains strength.
When it slips from your grip, it explodes higher,
and if you are not careful, you might get your
teeth knocked out when it emerges.
I guess that is dead now, and the ML brass can’t
be happy about it.
The beachball has slipped from the grip of the
collective market participants. We cannot keep
it down without SIGNIFICANT support by the
Fed.
That support has pledged to leave forever, but
that is just a temporary development. Just a
small drop through support here, and you will
see plenty of yapping from the Fed officials
trying to flap their dove wings and undo the
mess they are digging for the rest of us.
Here we are less than a week later, and Jon
Hilsenrath, Steve Liesman, and the entire Fed is
trying to walk back this idea of #liftoff.
They are trying to explain this idea of Deflation
to you. But you don’t need their stinking
excuses, because you have me. Who has been
unimpressed with the mis-informative nature of
recent reporting by certain well read journalists.
Go for a ride with the Rainmaker, because he
was destined to be your definitive guide to
defeating deflation.
Ok now we are going to follow up on the Bank
of America earnings from yesterday. I was
going back through some old papers yesterday
and found this gem, amongst the gems:
Will the rest of the street follow?
From 10.6.14:
So I am going to call bullshit on this entire
excuse right now. I bet green money that Bank
of America is looking at year over year deposit
data across all their businesses and seeing a
wide delta.
I hope this is not the first step in rightsizing
their business in advance of the storm on the
horizon.
So I guess the point is that Merrill usually leads
the street, as far as retail brokerage is
concerned.
Everyone who goes to those meetings knows it
is not about learning something, it is about
So, some folks will dismiss this
article. I will call it a warning sign.
My read is that Bank of America sees
the slowdown, and is tightening the
belt now in advance of their earnings
on October 15th.
7
You can bet on it.
So yesterday as we saw B of A earn (lose)
money due to a 5 billion dollar litigation charge,
I laughed at being right in this prediction.
Remember, I used to work at Merrill Lynch. We
know they worry about “optics” more than your
local Optometrist.
I would also point out that Bank of America has
tremendously powerful analytical abilities,
sensing the slowdown based on banking
forensics including (late) mortgage payments,
insufficient funds fees, average daily balances,
and so on and so forth.
@sleevesrolled
With 1 of every 2 US citizens with an account,
Bank of America can predict a recession with
99% accuracy as far as I am concerned. Even
better than that if we are honest.
Make sure you understand that you just saw
the 5 year note trade down 28 bps in yield in
one morning. I did not expect that. Nobody
did.
That they are cleaning their glasses now means
they see some trouble on the horizon.
Apparently there were some hedge funds who
were shorting the Treasury market?
So when they get on tv, all those little boys and
girls (clients of the firm) are watching to make
sure their chief strategist has a consistent
storyline.
Who knew?
Imagine if Josh Brown said sell it all?
So now I want to talk about professional money
managers television appearances. Yesterday as
I watched the Sandwichtime Special ®I saw the
two Najarian brothers, Steve Liesman, and Josh
Brown was on simulcast from underneath his
desk.
His phone would blow up before he even took
his mic off!!
So I found this really fun table showing the
largest TLT gaps in history. Not much else to
say except I would love to see largest intraday
move ever. Because this would probably be
number one.
I was waiting to see his feet move on this idea
of “holding” stocks whilst the DOW melt/ed
down almost 500 points in 30 minutes.
have a well polished “story” they are selling.
3% growth, Rah Rah, earnings, liftoff, et cetera.
And after selling people for 2 days to stay in
their seat, you are locked into being bullish.
Well consequently Josh Brown gets asked about
what viewers should do, and he gets painted
into this corner.
But he didn’t.
That’s because he has been on the phone with
almost every client he has in the past 3 days,
and he has told them to hold.
He didn’t say anything actually. But what he did
say was what I imagined every person who
manages money worries about.
How can he get on tv and say sell?
You see, if you are good enough to make it onto
CNBC (with a single exclusion of course) then
you are the person your firm “goes to” to talk to
the clients and make the case for investing their
money whichever way they recommend.
That person has sold every single high net
worth account in your book, and so they must
8
His phone would light up harder than Rudolph
the Red Nosed Reindeer… on Christmas.
So he tells you to hold.
Because his family money is dependent on
keeping everyone on the ride.
@sleevesrolled
I even heard some idiot say Stay Calm and Carry
on yesterday. I almost puked. Is this the kind of
advice you have for people getting their asses
handed to them CNBC?
You know you had a lot of people on there
yesterday that had no f@cking clue what they
were talking about.
Excuses like:
When you don’t go to the mall one day for fear
of seeing a client, you know WTF I am talking
about.
So, consequently you are getting this weak ass
advice despite this being the time to really take
charge and protect your assets.
Remember, taking advice from the person who
gets paid on that advice is similar to taking
betting advice…from your bookie.
Ebola.
The smartest of players are analyzing the tape
from today’s 30 year Treasury /ZB trade to find
the max pain points so they can exploit them in
less than 30 minutes from now.
If you think yields (10y) spiked down under 2%
and are now going to rise into the atmosphere,
well you are going to get carried out like the
rest of the bandwagoneers.
You know yesterday’s early action was the Back
Tap Police®.
Quite convenient, yet wildly unprofitable.
Europe.
Earnings.
No. No. No.
It is Deflation. Deflation. Deflation.
The point is that these people on tv are getting
paid to keep you on the ride. If you get off,
their paycheck goes down. And that is a fact.
There is no worse feeling in the world than
loading your friends and family into an
investment and then watch it fall into the earth.
You get this sick feeling like you just got
punched in the stomach while a giant bright
light shines in your eyes.
It doesn’t feel good, and it is the kryptonite of
asset gatherers.
Final point: when guys like Josh Brown Finally
tell you to get a transfer off the bus, it will be
way lower than here. It will only be once the
bus with the sign: “EVERYONE KNOWS” pulls
into the station.
You know, there are still hedge funds right now
planning out their attack/s to come in and short
long bonds still?
Which got me to thinking. Do you know how
Zero Hedge is always talking about the best
strategy for stocks is to buy the Most Shorted
list of names in hopes of squeezing the
shortsellers while shorting the S&P to reduce
risk.
Well isn’t the same idea what we have been
doing in the bond market the whole time?
They didn’t learn.
Maybe made some money later in the day on
the back of the Plunge Protection Teams’
wings?
Ok. Congrats. Remember this one thing. All
those algos who read charts now have this
massive downside print that they will
recalibrate their machines toward.
9
We are setting up a beer tent in the “most
shorted” position on the Treasury Curve,
instead of stocks.
@sleevesrolled
Like this trade:
And I found this very interesting chart of money
flows into equities.
How funny is it that the Retail Investors had it
right and the “smart” money is getting soaked?
And did you know there are all these Long Junk
Bonds/Short Treasury Bond spread trades out
there?
Did you know this thing was up over 10% at one
point yesterday!!!
Yesterday you saw just a small taste of the
unwind. Wait till stocks are melting down and
Ma and Pa Feebase are selling out of stocks and
going to money market, outside the paywall.
The Fun police had to come in and break up the
party, but don’t worry, we still have some beer
in the keg for later…
So you know we like Treasuries for so many
more reasons than to squeeze the short sellers’
nuts. But isn’t short nut squeezing an added
bonus?
You wanna laugh, they had Tom Lee on again
yesterday! Less than one day before the largest
crash in the history of the last 30 days, Tom Lee
was on Squawk Box saying he was bullish.
Isn’t it the max pain trade that actually has a
higher percentage chance of occurring because
of so many people thinking it can never
happen?
Whoever pays this guy actual money still is so
delusional, they should go down to the local
hospital and get their temperature checked.
Less than one week (7 days) later, the chances
are up to 26.6%.
They are starting to find out slowly. Soon
“everyone” will know. But for now, let us
dance.
Remember, this party is just getting started.
Don’t forget to drink lots of water, and double
knot your sneakers, because we are going
dance our asses off soon.
I think so.
How about this chart from the CME Fedwatch
website. Do you remember when I told you to
bet on the September 2015 Fed Funds futures
due to the 2% chance they were giving the 0%
rate.
10
@sleevesrolled
recommendations to you to buy or sell specific securities. Please
consult your own advisor before acting on any of the information
in this document or any other document received from Rainmaker
Investor, LLC and its affiliates. Mr. Reyes and/or his employees
may have a financial interest in securities or derivatives described
I will be here spinning records all night long.
Thanks for taking the time to come to my party.
Keep your eyes open today. It could get
dangerous.
This publication is protected by U.S. and International Copyright
laws. All rights reserved.
This publication is a proprietary document and intended strictly
for the use of subscribers. No additional license is granted to any
subscriber to copy, reproduce, distribute or download without
written consent of Rainmaker Report LLC. Violators will be
prosecuted. Investors should verify all claims and perform due
diligence on any strategy or investment before investing.
Investing in derivative securities including futures and options are
speculative in nature and carry substantial risk.
Alejandro Reyes
The Rainmaker Investor Report is prepared by and is the property
of Rainmaker Report, LLC and is distributed for informational and
educational purposes only. There is no consideration given to the
specific investment need, objectives, or risk tolerances of any of
the recipients. This report is not an offer to sell or the solicitation
of an offer to buy or sell any securities or financial instrument its
mentioned. Each recipient should consult their own counsel,
including tax advice before making any investment decision. Any
performance figures do not include transactional costs and are
presented as estimates only. The information, views, statements,
and opinions are based on sources, public and private considered
to be reliable, however no warranty is made to their accuracy. Mr.
Reyes is not an investment advisor and cannot make
11
@sleevesrolled

About Face Rave Reviews Scared Money

Transcription

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