Tag: trading

Sports Card Collectors Could Make This Stock A Buy (CLCT)

The holy grail of baseball card collecting is the 1952 Topps Mickey Mantle rookie card. If you were born before 1985, there’s a good chance you already knew this. Millennials are not baseball card collectors. It’s not a growing trend being picked up by the youth. Card makers have gone to extravagant lengths to keep the hobby alive, including fastening actual fragments of athletes jersey to cards, special sets of shiny refractor cards, rare one of a kind cards and special autographed cards. It’s not a booming industry, per se, but its still alive and well. Continue reading “Sports Card Collectors Could Make This Stock A Buy (CLCT)”

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Wework not working?

When Saudi Arabia and Abu Dhabi successfully dissuaded the SoftBank Vision Fund from buying a majority stake in WeWork for $16 billion, CEO Adam Neumann lobbed a Trump-style smoke bomb at the news cycle by subsequently announcing that the company was changing its name to “The We Company” in recognition of its expanded vision Continue reading “Wework not working?”

Deutsche Bank Woes Again

Bloomberg reports that Germany’s financial regulators would prefer for Deutsche Bank to merge with a European rival rather than a local, and just as troubled, competitor Commerzbank, setting them apart from forces in the government keen on an all-German deal. Either way, they are not thinking of insolvency.

According to Bloomberg, the ECB is favoring a cross-border combination to drive integration in the region’s financial markets, while analysis by German regulator BaFin suggests a preference for a European deal because the two domestic banks – surprise – are currently too weak to benefit sufficiently from a merger without government stimulus.

In other words, merging one Too Big To Fail bank with another would only result in a teetering behemoth that will need an even greater bailout when the next financial crisis hits, but that’s in the future readers not now! And by “sharing” the combined liabilities of the combined entity – which would likely inherit Deutsche Bank’s tens of trillions in gross notional derivatives – with another sovereign, would at least ensure that German taxpayers would enjoy some dilution of the upcoming bailout pain with another European nation at some point in the coming years.

This cross-border merger strategy is also more aligned with the position of Deutsche Bank CEO Christian Sewing, who has asked for patience with his turnaround plan before embarking on any deal. The European preference, meanwhile, is at odds with some German government officials who patriotically want a “national banking champion.” Both banks are key partners of the companies that make up Germany’s export-oriented economy.

Following the report, DBK shares, which have plunged 48% over the past 12 months, jumped as much as 8.2% and were up 6.6% at 7.98 euros at 4:48 p.m. in Frankfurt trading. Commerzbank, inexplicably, also climbed as much as 6.7% even though the news was decidedly negative for it as it would mean it wouldn’t be “even bigger to fail.”

Some more details from Bloomberg:

Late last year, the Finance Ministry asked BaFin for its data on how different merger scenarios could play out for the German banks, said people familiar with the matter.

During a strategy retreat in September, Deutsche Bank executives concluded that a merger with Swiss competitor UBS Group AG was the most favorable option among potential European partners, though they determined that the time isn’t right due to the German lender’s weak share price, people familiar with the matter have said. BaFin’s analysis came to a similar conclusion, the people said.

Meanwhile, the German regulator BaFin has insisted that it would prefer to see both German banking titans improve profitability if they are to pursue a combination. Still, some at the banking watchdog are concerned that mergers could end up working against efforts to ensure banks are no longer too big to fail, which of course is the whole point: with both banks teetering on the verge of collapse, at least according to their stock price, the whole point of the exercise is to make sure someone picks up the tabs when both eventually keel over.

What this means to us here at BTFDClub is Financial Stimulus is on its way and Central Bankers will be working overtime to keep this from failing. So Deutsche Bank may be a bargain at these prices…

Crude Oil Still Has Legs?

WTI has dropped and jumped since last night’s surprisingly small crude draw and major product builds from API, but remains around the $52 level ahead of DOE data this morning.

“The Chinese are throwing everything they can” at their economy, said John Kilduff, founding partner at hedge fund Again Capital LLC.

“That’s the big key to oil markets, especially when you have OPEC and Russia starting to rein in production.”

Saudi Arabia’s energy minister said he was sure inventories will start to “return to normal averages and this will increase confidence” in the market.

API

  • Crude -560k (-2.5mm exp)
  • Cushing -796k – biggest draw since Sept 2018
  • Gasoline +5.99mm
  • Distillates +3.214mm

DOE

  • Crude -2.683mm (-2.5mm exp)
  • Cushing -743k – biggest draw since Sept 2018
  • Gasoline +7.503mm
  • Distillates +2.967mm

For the 3rd week in a row, gasoline (and distillates) inventories soared. However, crude stockpiles slipped slightly more than expected and Cushing inventories dipped most since Sept 2018. With the backing of the Chinese liquidity injection the global demand should rise for the next few quarters.

Below chart using FIB Retracements shows there is a floor at $50.50 and this rally has legs until the $55-56 area. The algos will most likely interpret this as a positive number.

Balls to the Walls

A trader made a massive bullish trade on the S&P 500 on Monday, putting at risk hundreds of millions of dollars of capital. The trade is reminiscent of, and has drawn comparisons to, Warren Buffett’s giant bet on global stocks more than 10 years ago (The king of BTFD Fags.) 

On Monday, a trader sold 19,000 S&P 500 put options that would obligate him or her to buy the index at 2100 on expiration in December 2020, according to Reuters. The index would need to drop no more than 22% from Monday’s closing level of 2582 and the bettor stands to rake in $175 million in premiums.

The move is reminiscent of Berkshire Hathaway selling billions of dollars in index options premium between 2004 and 2008, before ultiamtely being bailed out by the Treasury and the Fed. It was a broad bet that the global market would rise over the next 15 to 20 years and, although initially the trade was made anonymously, it was eventually revealed to be Buffett’s Berkshire Hathaway.

Berkshire has netted over $4 billion in premium from the sale of these options, the final chunk of which is set to expire in 2026. And even though Monday’s bet was not nearly as big as Buffett’s, it still could wind up costing the trader hundreds of millions if the market moves lower than the trader expects: should the market drop by 34%, the trader stands to lose about $558 million.

A second lot of about 3600 of the same puts traded on Monday, putting the total volume for the contract at about 24,000 on the day. On Friday, 5500 of these contracts also changed hands.

One trader guessed that the option write was a hedge against another position by a large bank.

Benn Eifert, chief investment officer at QVR Advisors in San Francisco stated: “The natural sellers of long-term downside puts are structured products desks at banks, who are hedging exposure they get from retail clients who buy structured notes that have embedded short put options. That would be my default guess on this.” As anyone’s guess, this person is definitely counting on BUYING ON THE FUCKING DIP!