1 Catastrophe Bonds The Buck Stops Here Fish Sandwich The

So make sure you have this right. The economy
is at breakaway speed, allegedly. Rates are
about to “liftoff” imminently, faster if we do
better…
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Because if he didn’t shoot that warning shot,
this morning you would see guys getting short
faster than a midget standing in quicksand.
The entire globe just got a 50% gas tax cut.
And an entire 7 days (of which 2 of those days
were on the weekend) and a Fed Boss has to
come out and Geese the market higher?
Today is Thursday January 8th, 2015:
Catastrophe Bonds
This morning stocks are popped for no good
reason I can decipher because a Fed official just
confirmed that if rates rise it was going to start
a depression.
The Buck Stops Here
Fish Sandwich
The Rainmaker Signature Trade®
Good Morning. This Thursday begins with the
first Fed bullet flying. Last night Charlie Evans
came out and said that raising rates would be a
“catasptrophe”. Well no shit Chuck.
Mainly because US housing prices would fall
5%, 3 seconds after the rate rise, but I didn’t
hear him say that in the speech.
Some kind of message the Fed was trying to
communicate because yesterday’s Fed minutes
were so clear to market participants that Yields
on the entire long end went DOWN.
It’s funny because as many of my readers know
we were lighting Twitter up with Battle Calls,
and while I sat in the Deathstar monitoring the
long bonds, a feeling came over me.
The one where you know to swing harder now.
Because they don’t have a pitch that can get
you out from here thought.
Most annoying to most of us is this mildly
inconveniencing backtracking in the /ZB 30 year
Long bond. The silver lining (of the tent) gives
newer readers a chance to get in the tent for
their first beer and high five.
10 year Treasury Popped all the way back to 2%
on the Evans Catastrophe call.
So we push.
Remember, we have said the whole time that
rates can’t go up. Did we have to wait to hear
some Fed official Flap his wings to find that out?
No.
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Just like we said it would.
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In other news, the Goddamn US Dollar is sitting
upon highs! 30 steps from 93rd street and just
about to make $hit very uncomfortable for stuff
priced in dollars, like S&P earnings estimates for
instance.
www.rainmakerinvestor.com
@sleevesrolled
The one thing about these charts is that they
don’t have some intra-day charts.
Perhaps more interesting is the idea that the
Euro has made an annual top/bottom in
January in 19 of the last 21 years.
There are going to be a lot of LIFOer’s out there
folks. And yesterday, we had the very first
event in the shale market, right on schedule.
Must have been what Charlie Evans meant by
Catastrophe, now that I think back.
WBH energy filed yesterday, something about
not having enough money to continue
operations. Weird.
Consequently this chart is going to need you to
use your imagination to think about if this chart
had the US Dollar trading at the $92.69 as a
level where it is trading as I write.
The one thing about the last 21 years, there
wasn’t an active currency war going on. So, very
nice charts, but if you are betting on 20 of 21,
we will be here to take your money hopefully.
Ben Franklin Trade® is kicking everybody’s ass!
And in an interesting article I read, apparently
the US Dollar has had its annual high in January
during 20 of the last 21 years.
This is the beginning folks. The banks are all
sitting around the conference table now in a
war room deciding how much leash they are
giving these shale players. And guess what. It is
only about one thing. Which company’s bonds
can stay in business.
Because the sharks are in the water now. They
cash and the firepower to knock out your lights,
especially with oil at 40 something bucks and
Mike Kelly’s Grandmother already out on the
street, it is going to be a blast.
Don’t be in the blast zone is what I mean.
I almost pissed when I saw this list on Zero
Hedge of the potential victims companies in
need of a cash infusion…
Moving onto the upcoming Depression in Shale
Jobs, a very nice chart by Lance Roberts
showing all the people who moved to Texas
when the getting was good. What is that
formula again?
Chart via Peter L Brandt
Last one in, first one out? LIFO?
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www.rainmakerinvestor.com
@sleevesrolled
Ok folks, now I am going to do something that I
don’t usually do. Question myself. Last night as
I rolled empty kegs out and swapped out CO2
tanks, I got to thinking about how we could
extract the most money out of Treasury Short
sellers.
“But If a fish died in the ocean and If Janet
Yellen were in charge of oceans, she would
put a moratorium on dead fish.”
So I dug in on my option chain, now that we are
not going to be getting any Millennium Falcon
Flybys from the Fed. So I start browsing the
Credit Spreads on the TLT weeklys and found
some interesting things.
-Rick Santelli
We have been early and often to the idea that
this is about flushing out weak junk bonds, not
stocks or anything else.
And I think we all knew this was coming….
I believe this move is with permission from the
Big Boys (CVX, XOM, etc) who will all sweatbox
these names above and get some to consolidate
when just a few months ago that is something
they would never have done.
Here is the fit up from Dough.com that shows
you what I am seeing.
No bank lends money for some half-ass driller
to drill with oil at $48 bucks, FYI.
With the most ignorant comment for
Wednesday January 7th the winner is Rick
Santelli.
“Mr. Santelli, what you’ve just said is one of the
most insanely idiotic things I have ever heard.
At no point in your rambling, incoherent
response were you even close to anything that
can be considered a rational thought.”
After I started snooping around, I almost got to
the point where I thought I was hallucinating. I
even had to send some emails out to a few
readers to make sure my computer had not
forgot how to calculate spreads mysteriously.
Rick has also punched his ticket to be in the
running for most ignorant comment of 2015 as
well. Good Luck Rick!
“Everyone in this room is now dumber for
having listened to it. I award you no points, and
may God have mercy on your soul.”
But it didn’t. And what I saw last night makes
me almost want to throw a giant beer party!!
Because this trade is going to make the Boot
trade look like a TBT out of the money Leap!
-The Rainmaker
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www.rainmakerinvestor.com
@sleevesrolled
TLT (Daily chart)
So what we are trying to do here is take
advantage of the elevated volatility in the TLT to
sell (idiots) puts. Now think about exactly who
it is that would be buying TLT puts.
Same folks who would be buying TBT Calls,
Treasury Short Sellers!
But we can’t sell naked puts or we would owe
crazy margin.
this guy is outrageous when it comes to his
business in the options game.
So his name is ThetaBound and that is where I
want to introduce you to this idea of Theta
(time) decay. He just posted “his favorite”
options trading video. IF you like money, check
it out sometime. And for this idea of Theta, here
is the literal definition:
So the key is always sell options when they are
expensive. Now this is not like the call spreads
that we put out where you set your stakes, pay
the cover charge (premium) and then high five
your friends.
Above you can see the bottom panels with
implied Vol (green) about to approach Moon
Landing Day on October 15th.
But this is more of an income play. I get people
all the time say, hey when should I buy TLT. I
don’t know, maybe 10 dollars ago?
But this strategy is allowing you to extract
money from Treasury short sellers. Think of it
as rent.
So let’s understand what we are trying to do. It
is a Credit Put Spread. We are “SELLING” a
131.5 Put and buying a 131 Put. Folks there is a
half a beer between these strikes.
Now let’s make sure we understand what we
are doing here. We are taking 50 cents of RISK
but the (idiots) put buyer is giving us 50 cents
up front.
So I have to stop everyone right here and direct
your attention to a Twitter feed that has been
knocking the lights out with good information,
and if what we are seeing on the screens is real,
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DEFINITION OF 'THETA'
A measure of the rate of decline in
the value of an option due to the
passage of time. Theta can also be
referred to as the time decay on the
value of an option. If everything is
held constant, then the option will
lose value as time moves closer to
the maturity of the option.
So everyone knows when you buy an option it
has a time component. As time to expiry comes
closer, the value of the option falls. Basic math.
Well usually we are over here Buying spreads.
But this time we are going to sell a Credit
Spread.
Instead of be a gambler, we are going to be an
insurance agent.
We are going to sell insurance at 131.50. We
are going to get paid 25 cents to protect against
a 50 cent fall in the security in question. But as
Theta (decays) the value of the option falls.
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@sleevesrolled
And here is the thing: you get your money on
day one. Goes in your account, and everything.
Now you are in control of this spread.
Slightly less idiotic is buying the 131’s and
selling the 131.5’s. But folks, I have to warn
you. ANY 50 cent spread above the money pays
more than 25 cent!!!!
If vol falls, which it will at some point we are
sure, you can BUY that spread back for a
fraction of what you sold it for, if not let it ride
out to zero.
If you have some safe money, looking for
friends, I think this is a nice way to get it on the
table with winning cards in your hands.
Remember, almost nobody still knows about
the balance sheet recession and resultant
depression we are going to get if rates rise. I
think it is Rainmaker Readers and Charlie Evans
who knows right now.
But soon, everyone will know. And when they
find out, they are going to bumrush the beer
tent.
Why not charge cover?
Because you must remember, we are taking this
money from the pockets of the short sellers.
Who else buys 131.5 puts for this week?
Can they really be handing out free cash like
this?
Now the one big problem I have been having is
on what to name this trade. I was thinking of
calling it the ATM® trade, but I don’t want to
get into a beef with the licensing down the
road. So I am thinking of calling it the
Rainmaker Signature® Trade.
Remember, if TLT closes anywhere north of
131.50 you get paid and nothing else happens.
The dead worst case scenario is you get TLT put
to you or pay the 25 cent toll if it falls below
131. But this is a game we are going to play
week in and week out folks.
because we need more information on this
thing.
Here is the one that expires tomorrow and at
the risk of sounding excited, we are going to
have some fun with these!!
Trying to make it easy to explain: You are taking
50 cents of risk, but the buyer pays you 25 cents
of that up front. You either owe (up to) 25 cents
or you keep the premium and do it again.
Probably because the Drink beer and High Five
while We count short seller cover charge
money™ is too long.
So don’t get all out in front of your skis on this
thing folks. Just dip a toe to see if you like the
water.
I don’t need new readers emailing me because
they bet their whole tent on the thing. This is a
toll booth.
But what is most important is that over 4 days
you can find a place to nibble these back for
pennies. So this is an income play.
Pay us a little bit, a lot. That makes sense
hopefully.
We just started on this concept and I am not
ashamed to say I am doing everything I can do
to understand why this free money exists in the
world today.
If you want to have the ignorant opinion that
rates are about to liftoff, I am going to take your
lunch money, slowly, via theta decay and good
information.
I could care less. Losers can’t be winners. The
most aggressive Rainmaker Readers are already
tinkering with the strikes and doing back tests.
IF you find something good, send it to me
Idiots!!
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5
www.rainmakerinvestor.com
@sleevesrolled
To that end, we will not play against the S&P
just yet. But if you are all in a twist about being
out of S&P, remember, the Fed had to come in
with DOVE talk, when it should be HAWK time.
That should tell you what you need to know,
that liftoff is cancelled, along with everybody
else’s battle plans.
Ok so here is the TLT. When I heard Charlie
Evans with that Catastrophe gibberish I high
fived my wife.
Still to this day nobody is figuring out what we
(you and I) know. That regardless of rates rising
or not rising in the front end of the tent, the
long end is going to stay packed.
And when all the protestors (short sellers)
finally come in for a beer, it is going to be way
lower from here in yield. Remember folks. The
US Dollar is seeing through all the subterfuge. It
is going to cause the recession that the Fed is
counting on to use as cover to launch QE4.
When that happens we are going to be
wealthier than we are now.
Things are getting very serious very fast now,
and someone is going to start putting the pieces
together. I know I said on the video that I was
going to have a play from here back to 1810 on
the S&P, but Chuck Evans bought a few more
days for stocks. ]]
“Thus, what is of supreme
importance in war is to
attack the enemy's strategy.”
-Sun Tzu
The Art of War
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If you are going to be playing with these credit
spreads, please wait until 10 am or later. All
these charts are interactive, so click and sip.
I will be in the navigator’s seat monitoring our
interests.
Thanks for taking the time to catch up on my
thinking and reading The Rainmaker Investor
Report.
Alejandro Reyes
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@sleevesrolled