Rolling With My Bronies

So it's come down to this. It's not new but it's new for me; grown men watching My Little Pony on the Hub network. Not because their children love it, not because it's nostalgic for their wives, but because it lets them escape reality for 30 minutes once a week. When my wife told me about this I thought it was a joke, but I see multiple websites and blogs dedicated to this "phenomenon." 

I've occasionally seen my four-year-old watching the show and thought hey, there's a cute little show about horses.  I never thought that instead of talking about football or even playing a war game online, some grown men would see this and say, "let's talk about fantasy unicorns and how that allows us to not be men or husbands or earthlings for half an hour."  I see this on an everyday basis; people who are just out of touch and want to check out.  "Friendship may be magic," but there's nothing magical about what this says about the state of our society.

Coin Toss

China slowing (really slowing), Germany slowing, and the U.S. has slowed to half the predicted growth of our finest economist.  Market down 8 out of last 11 days, money outflows continue to be the trend (no volume), and yet, we remain near the highs of the year.  We have to look no further than the next 6 days where Draghi and BB will spew the promises of prosperity that can only come with more money.  Sorry, Greece, you're out.  But the rest of the kids can put $2 in the iTunes box for 3 more songs.  Yeah, it used to be 3 for a $1 but remember, we don't have inflation.

Never mind warnings from little companies like Caterpillar and FedEx about the world coming to an end, pre-announcing after 1 more earnings pump.  No, it's out of our hands now.  We'll know soon enough whether or not we should only own shiny stuff and companies named Apple.

In the meantime, football is back to save us from the Orioles once-a-decade success and the inversely correlated Tiger Woods hate-o-meter/golf score ramblings.  Living in South Florida and having seen Hard Knocks, you can safely bet against the Dolphins every week and with The Pack after week 6.  These events, fortunately, have no correlation with the Fed.

James

"That day in Chicago, why did you stand up?"
"Because I didn't want to see you fail."
Glenn Close to Robert Redford in The Natural


I dislike basketball, especially professional basketball, almost in its entirety.  But I am oddly drawn to the recent playoffs for one reason, Lebron James.  Much of the reason I root for James is because he's from my hometown (almost, Akron is close enough) and because he single handedly reinvigorated sports in Cleveland at a time when C-town was (and still is) in perpetual decline.  But there's something else.  Game 6 aside, I am continually amazed that we are confronted with an obvious situation of someone being clearly the best at something in the entire world without its recognition and even a disdain that we haven't seen for another in sports since Barry Sanders.

The measuring stick that haunts them both is team success.  Odd, considering their peers consider them without peer across the board.  But we are relegated to the opinions of beer-gutted, balding pseudo-ESPN personalities who deem themselves final arbiters of greatness.  So in the way the we ignored Sanders perpetually making a 3-win team a playoff contender, we ignore James making first a 30-win team a finals contender, and now, the Heat perpetual championship contenders.  Maybe that's why, as with Sanders' comparisons to Jim Brown, that Lebron's performance is compared to Wilt, because nothing in between has been as good.

Ain't No Way

It's harder to tell these days what's more fixed, the NBA playoffs or the market.  It's as if Tim Donaghy or Bruno Iksil are the real villains.  Sure, they're both criminals, but they served much more evil masters.  Donaghy admitted to fixing games but said you're crazy if you think I'm the only one.  As L. Jon Wertheim and Tobias Moskowitz mentioned in their book, Scorecasting, one NBA assistant coach told the broadcasters before a game, "ain't no way we're winning this motherfucker."

Its' not hard to see that in Miami the same intentional foul on Lebron James gets two shots and the ball and the next game in Boston it's not even called a foul.  The same goes for the likes of Jamie Dimon and "old Wall St." as Hedgeye is fond of calling them.  CDS trades are alive and well and earnings and growth forecasts remain unchanged while entire countries are literally collapsing.  We are again at zero for the year after Friday's collapse.

My advice? Either stay away entirely or embrace the horror because the casino is open for business.  If short, stay very short through etfs or weekly options because the day will come, and it will come after the market closes, where global money printing is announced.  This may not pre-date Greek elections, but that's only 2 weeks away.  If you were to avoid this market altogether, no one would fault you.

Nah, More Like 1999

Perhaps the JPM fiasco and London Whale patsy is reminiscent of the Soc Gen "rogue trader"from a few years ago.  On Tuesday Dimon was telling analysts all is well, and on Thursday, we find out that he has been giving the finger to Congress, the SEC, and his own shareholders by running CDS trades (hedge would be kind) on European debt.  Don't be shocked by what will amount to an $800 million dollar loss (for now, after selling other assets against the loss but before the trade is unwound).  Don't be shocked that JPM and the never ending BS we have to hear about its "fortress balance sheet" could have a London office trading hundreds of billions of dollars.  Only be shocked that it took this long for a major bank to blow itself up or if you were dumb enough to believe that any of these fuckers had learned their lesson.

No, what I think is more important to realize is the massive fluctuations we're seeing in individual stock prices, particularly to the downside, after enormous gains the last few years.  Just last week Green Mountain (GMCR) fell 50% in a day after an already 60% decline over the last few months.  And this is a company that actually makes money.  First Solar (which we shorted at $175 and $125 for gains but didn't have the courage of Chanos to ride all the way) is now a $16 stock.  Pick your internet IPO loser from last year, Groupon and Pandora quickly come to mind.  Thanks to Apple, RIMM is now an $11 stock and Nokia is threatening $3.  Nothing like waking up and finding out the stock you bought was overvalued by 50% when you went to bed last night.

This shouldn't happen in a healthy market, this only happens in the casino.  The big difference is the ever looming possibility of QE infinity (Bill Gross said yesterday expect QEs 3&4 in short order), which says the worse things are, the better the market will do.  Hmm, sure feels like 1999 in here though.  Is JDSU $700 still?  I better get in before it's too late.  

Purple Drank and The Fat Chef

You may be wondering what a rapper's idea of a cocktail (http://en.wikipedia.org/wiki/Purple_drank) and a horrifying new reality show have to do with Mohammad El-Erian's "new normal" and investing successfully.  I think that unfortunately, they are grossly correlated.  I have 16 year-old, Iphone glazed robots requesting narcotic cough medicine in front of their equally naive and tuned out parents.  Meanwhile, Fat Chef combines America's new reality obsessions of cooking shows and life-saving weight loss drama; fat pastry chefs who are dying because they can't resist the chocolate in front of them.  The fact that these two things exist scare me to death but are consistent with the glorification of gluttony that has plagued global financial systems.

Headlines lately have been absent Greek and European debt woes while pushing world QE as the only viable solution.  Markets have gone up, but the problems remain.  I am not willing to ignore what I know should be true, but I am not willing to get skinned to the short side while the rest of the world cozies up to to a cocktail and a croissant.  I am waiting for the VIX to hit 15 and TVIX to retreat towards 10 again.  Then I think I'll enjoy a cocktail myself.