1 Splinter Sell Taylor Made Munich The Lufthansa Heist Good

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Today is Wednesday January 14, 2015:
JP Morgan came out and missed on top and
bottom lines. Something about not making
enough revenues. 10 year Treasuries are
plumbing new depths for yields, but it is
Wednesday, so what did you expect?
I am not sure, but it could have been the premarket flash crash for Lumber. Name is down
over 5% ytd. Which is a half a percent a day
while the market has been open, for people
who like money.
Yesterday we had a 400 point pop in the Dow. I
had more than one reader think to themselves
that was off my rocker telling you to bet against
people who were betting against the highest
quality security on earth The US Treasury Bond.
This morning the delusion is as thick as ever,
with people still not putting 2 and two together
to understand what they are dealing with.
But then something happened.
Moving onto news, KB Homes dropped an
atomic bomb on the housing market yesterday
after guiding down for full year estimates and
lowering gross margins.
Splinter Sell
Taylor Made
Oh well, more beer for us.
Munich
Name fell 16%. Used to be the lead ETF going
into yesterday before everyone getting their
money taken.
The Lufthansa Heist
Remember: Losers can’t be winners.
Good Morning. Copper is crashing. Halted after
going down 8% yesterday. Remember a few
weeks ago when Red Kite LP tried to “corner”
the Copper market? That was 25% ago. The
commodity with the PhD in economics is
currently about to flunk out of school.
Which is only still a mild inconvenience for
people who are preparing for liftoff (<sarc off).
S&P futures are trading at 2010 as I write after
touching down to 1996 in the overnight session.
Stocks fell from grace to go negative. An outside
reversal day and an ugly a$$ candle as the
S&P’s failure to launch was evident to everyone
yesterday.
Now we are hooked up for a death cross, which
is bullish….for long bonds as you know.
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@sleevesrolled
Here is the chart. Thing looks like the chart of
the 30 year Long Bond Yield.
Perhaps we should return to our playbook to
read some words of wisdom:
says “disinformation from US Financial Press
that America is at risk of toppling back into a
crisis partly to blame for low quit rate and wage
settlements.
From Rainmaker Top Trades of 2015:
So it should be clear that this guy reads Ian
Shepherdson, hard.
Everybody is so worried about liftoff they
forgot that you don’t build houses in the
middle of a Balance Sheet Recession!!!
All the people in London think it is fun and
games because they read Jon Hilsenrath like it is
Carl Icahn’s personal diary.
14 days into the year and Lumber is getting
splintered and housing is cratering. Go for a
ride with the Rainmaker because he knows
housing.
Jon Hilsenrath is the DIS informer that is
keeping people bullish.
Moving onto Europe, they surprised nobody
with a legal ruling on QE. No shit.
And last time I checked I am not US Financial
press and I am really the only person warning of
a catastrophe.
Not the Rainmaker.
Me, Charlie Evans, Narayana Kocherlakota, Jim
Bullard, and Richard Koo. Just the 5 of us.
But everyone else, especially Steve Liesman and
Jon Hilsenrath are loading dumbasses onto the
Poorwagon™ as we speak.
When they unload, we will be there.
Ok now it is time to review some more clues
that very few folks know what is really going on
still. Case in point @econhedge’s tweet that
In other news, a wife cut her husband’s penis
off not once, but twice after finding out about
his cheating.
Busted into his hospital room and cut off the
surgically repaired piece again!!!
Moving onto news, here is the Morgan Stanley
Treasury Confusion Index. As this chart rises, so
does the money in your account and the beer in
your mug.
And speaking of your mug, did you know that
Mikhail Prokhorov is exploring a sale of the New
Jersey Nets. Now the Russian Billionaire bought
the team in 2010, and his stake has risen
multiple fold since then. But my question is a
few houses down the block from this issue.
Do you think other wealth Russian Oligarchs
might find this to be the time to divest
themselves of their US assets?
I sure hope not for the NYC housing market’s
sake. Because shit is about to get medieval for
prices.
But I have been saying this the whole time!! So
if you lose money the next time you withdraw
from your ATM With a view, you will be
reminded of the Rainmaker who told you how
big the hit you were going to take was going to
be.
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You know, if you would all do, what I ask you to
do, you might have more money than you have
now.
But really, if you could see the dumbfoundery™
of the people on television as Raoul laid out
what the next year or two it was astounding.
Which brings me to the best trade reco of 2015.
It is not a Rainmaker Top Pick, although those
are hot. But this one is the short Copper Play.
Melissa Lee was texting her agent to sell all her
stocks from the desk!!
Yesterday as I monitored the Treasury complex
and drank beers I saw a teaser come on for Fast
Money. The guy who called the oil crash is
back, Raoul Pal.
Folks I wake up this morning to see this
headline on Zerohedge:
Raoul is going to be on at 5 pm!!!
So I get my dvr ready to tape because I think he
is going to be there in NY. Well he calls in and
sends every single fast money player to school.
Copper Halted After
Crashing 8% On LME
So it just reminded me that what seems very
normal to people we know, other less informed
folks seem to have some crazy mental insanity
in their head that they think rates are going to
go up at some point soon.
Which brings me to a question I have for
everyone who is short. What will make rates
rise?
All the time I try and wonder what it is that
people see when they try and short Treasury
Bonds. And I think I found it.
Melissa Lee almost fell off her chair as Raoul
calmly told the entire world that oil could and
would go lower. He called a recession for 2015.
Then said GDP was going negative in 2016.
But then he dropped the hammer. Told
everyone to short Copper.
Holy Shit!!!!
Raoul Crashed the Copper Market!!!!
If it is not apparently clear to you, Raoul Pal is
THE MAN!!!!
Raoul, go short the Russell AND the S&P.
Please!!!
Ok so now I want to review the source of our
riches. This is the Bloomberg screengrab of the
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@sleevesrolled
Taylor Rule Estimate. For those of you who
don’t know what the Taylor Rule is, it is a
formula (which you can see in the bottom
panel) that decides what the Fed Funds rate
“should” be. Well as you can see it is
“supposed” to be 3.02%.
Well usually you are supposed to believe stuff
that comes out of a Bloomberg Machine, but
this 3.02% is completely off. And so I want to
ask you WHY do you think that is?
Perhaps because one of these numbers might
be erroneous or maybe it could be something
that the Taylor Rule never expected before.
So this idea that people have really been
focused on fixing their balance sheet goes right
out the window when you consider the 9.5
million homes that are still in some level of
negative equity (underwater).
This is 6 years later. If you paid your mortgage
every month since then AND ARE STILL
UNDERWATER, well you were pretty goddamn
deep in the first place.
And so this idea that people have finished
deleveraging BEFORE everyone is out from
under water level is completely deluded to the
point of being dead wrong.
10 million people are underwater with current
prices.
If prices fall there will be LESS equity, and more
people under the surface. So what is very
important now is reviewing Richard Koo’s idea
that if it is 5% of the people who get in trouble,
then it can be fixed quickly. The private sector
will pick up the slack and the economy can
repair itself rather quickly.
Because it was never written in a textbook. The
idea that a balance sheet recession prevents
people from maximizing profits, instead of
paying down debt like they have been doing in
Japan for 20 years.
You see, fixing a balance sheet is hard to do for
a company. But for a family? It is much harder.
Now it is going to be the 5% (shale drillers) that
get soaked.
So this will continue to be a bifurcated recovery.
For those who have made it to the top of the
hill and can take advantage of putting all their
money in long bonds and shorting the $hit out
of TMV every second of the day, well you are
going to be just fine.
But for those folks who are still paying Ocwen
Mortgage money on their payment option arm,
well they are deeper in the $hit.
And that brings me to the California banning of
Ocwen. Folks, you know it is way past time for
mortgage trouble from 2008, right?
That you are hearing some mortgage talk must
make you say “geez, the rainmaker has been
shooting off at the mouth about something
about housing this whole time. Could he have
something here?”
Yes, I have the answer. This is it.
Housing is the reason for:
But if the balance sheet problems hit the 95%,
then all bets are off in terms of a quick
recovery.
So what I want to note is that last time around
it was the little people who borrowed all the
money and got submerged.
The Deflation & The Balance Sheet Recession.
In fact I saw some Bull$hit Steve Liesman post
about what is stopping the Fed from raising
rates.
So I gave him a little business…
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@sleevesrolled
RATES ARE NOT GOING UP!!!!!!
End of story case closed. There is not going to
be liftoff. That is a 100% FACT.
Here is the 5 year forward chart that we are
always showing. I just wanted to see what it
looked like on the Bloomberg to make sure it
looked just as bad. Because people who are
using this chart and betting on liftoff are
completely deranged and about to be broke.
I figured, WTF? Guy is always ducking me. Oh
the data is spoiling the Fed?
Yeah, rates are going up.
Hmmm, I wonder who said that was going to
happen 20 dollars ago in TLT?
There will be a depression 5 minutes later. For
stocks, commodities, home prices, jobs, GDP.
Should I continue?
The Rainmaker.
But now we wait for someone to try and get
smart and say:
“Hey, rates can’t go up, can they?”
Well no shit Sherlock.
So I said that to @DavidSchawel to get his
opinion. Guy favorited my tweet. Although I
think he is still not convinced on drinking beer,
it is people like this that we are going to get to
pay us.
But there is one place. A single safe place that
you can put your family money.
It is in the HIGHEST QUALITY SECURITY ON
EARTH: The US Treasury Bond. Which in turn is
priced in the HIGHEST QUALITY CURRENCY ON
EARTH. Making it doubly awesome, especially
for families.
And I don’t say this lightly. We are taking some
very rich very smart people’s money. It’s true. I
love it when I think of how mad they must get.
Because I routinely get folks who write me off
like a crackpot newsletter salesman.
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I have to admit, I really like it. Beating very
smart people at their own game because they
don’t have the good information.
than pictures of girls and beer. Is girls, beer AND
US.
And you know what? I take pride in rolling them
up every day to bring you the charts and the
thesis that is ROCK SOLID, coming into this very
important turning point for the market.
Did you know that the Boot® trade is up over
16.5% in 10 trading days? I want you to look
through your little computer over there and tell
me the truth.
How many trades do you have that are up 16%?
Probably not a lot if you are not in this trade.
Kim Jong Un’s Beer Tent in the Long End (live image)
And imagine the pictures??
Real pictures of us high fiving? OMFNG. We
could do this. And what if we all had matching
Rainmaker Boots?
Ok. Now I have to get serious for a second. As I
wrote yesterday I got to exchanging emails with
readers. Well one email comes across and I had
to share it:
Let’s not get too excited. In fact, maybe you can
take some money and put it into the Boot®
Trade to save up!!
Here is a copy of the 2 and 5 year breakevens.
Look like the 5 minute chart of Copper 5
minutes after Raoul got off TV last night.
There is absolutely no way the Fed can raise
rates!!
I've been to Munich, but not during
October fest
So then I thought to myself. Wait. Neither have
I. But what if we somehow (definitely) got rich
buying long Treasury Bonds?
Could we go to Octoberfest for real?
Because I got to thinking. You know all those
pictures we always post? The only thing better
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Here is probably one of the most interesting
charts I will share today. This is a Goldman
Sachs chart of kids living with their parents.
Here is the Homeownership rate. Back to 1980
levels. Folks, in 1980 the 30 year fixed was
something like 15%!!
They are just “off the highs”.
It’s 3% and nobody is buying!!!!
Please tell me you are getting it now.
And here is a chart for Diana Olick and
President Obama. We should get a really big
pop from that new program you just put out,
huh?
Folks do you see how the index was at 800 and
now it is at 100? That is less than 15%.
Here is another money chart via Logan
Mohatshami. Folks, we are just about to get
crushed in prices.
Or, it is 800% harder to get a loan now.
Which brings me to the most epic short position
in the 10 year Treasury Market.
Wait, we forgot the 3% help from the FHA.
797% harder....
I just heard Diana Olick with some bull$hit
about the big new loan apps for the first week
of January.
Whoopee. If you are not aware of how it works,
people delay refinancing until after the
holidays. The first week of mortgage apps is
like the first week of the gym. Imposters
everywhere.
I still see Tweets like this one going off. That is
why this is such a great trade!!!
Because we are the only ones who know WTF is
going on!!!
Just wait a week and they will be gone, like the
mortgage applicants.
When guys like the above get unwound, we are
going to be there to get paid.
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@sleevesrolled
“It’s immoral to let a sucker keep his money”
-Mike McDermott
And speaking of getting paid. Here is the TMV.
Which is the preferred tax loss vehicle for stupid
people.
So I wanted to reproduce this Tweet convo.
This guy Shadow Trader trades stocks. Shocker.
He has some kind of feeling that stocks are
down 8 of 10 days and that people who are
good at math say to buy today.
2 days down and right on schedule. The stock
bulls must have been very confused yesterday.
I say that all the time, about Treasury Bonds.
But nobody ever listens to me. Almost nobody.
Now, even the most season traders must be
wondering if they are being set up.
We have them right where we want them folks.
Right now they are all:
“And in my club I will splash the pot whenever
the f@ck I please”
And soon, when the cards turn over, you will
see that we have been playing you the whole
time.
Remember,
-Teddy KGB
“The rule is this, you spot a man’s tell, you don’t
say a f@cking word”
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Soon there will only be one thing left to do…
Thanks for taking the time this morning. Let’s
get after it today.
Alejandro Reyes
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