ROFL!
It is so funny to see all the chickens we've been warning about come home to roost – especially when it happens WHEN we thought it would. As noted in our July Portfolio Review, we are well-positioned for a downturn, having just boosted our hedges during last week's "rally" and already this morning we're glad we did as the Dow is looking at a 100-point drop at the open which is NOTHING compared to Europe's 1.5% decline into lunch.
As you can see from the chart (despite it's awful choices of key colors), the Brexit dominoes are lining up already and the worst thing that can happen to the EU is for the UK to emerge from their exit with their economy intact. Fortunately for them, that doesn't seem to be a problem at the moment as economic confidence in the UK has fallen off a cliff as the Top 10%'ers who were betting a Brexit would never happen are now scrambling to cover their mistaken bets.
And I don't mean at the bookmakers, I mean the bets they made with their company's futures, hiring plans, capital allocation strategies, loan and investment portfolios – these idiots have been living in a bubble and that bubble has just popped all around them and now the Top 10% all over Europe have to wake up to the reality that the Proletariat still have a bit of power and are willing to use it – no matter how much you try to cower them into submission.
Nigel Farage has now joined Boris Johnson in stepping down now that they've won the UK vote and we had a discussion in our weekend chat as to whether it's a noble thing that shows they weren't in it for political gain or whether they just grabbed the wheel on the Titanic, steered it into an iceberg and are now grabbing the first lifeboat off the ship.
Morgan Stanley is assuring us that "Brexit is not a systemic risk" and the fact that they have to say that should terrify you. As I pointed out to our Members, people don't say "Remain calm, all is well" when things are calm and well, do they? Actually, here's a quick list of things that SHOULD worry you:
U.K. Business Expectations Fall ‘Off a Cliff’ After Brexit Vote
Barclays is already warning investors to take cover for the coming recession
Taking the money and running: Credit Suisse is tripling its bonuses
Bear Stearns 2.0? UK's Largest Property Fund Halts Redemptions, Fears "Vicious Circle"
Deutsche Bank is analogically equivalent to where Lehman was in August 2008
Italian Banks Tumble, Monte Paschi Plunges To Record Low After ECB Letter
Italian banks drop as bailout report shot down
PBOC Panel Says Don’t Underestimate Complexity of Economic Risks
There's a parasite in China sucking up money faster than the country can print it
Those are just the weekend highlights, folks! I'm not trying to scare you but — No wait, I AM trying to scare you if you are dumb enough not to be worried. If you are so complacent that you have a lot of money in equities and don't see the POSSIBILITY of a crash then, yes, I NEED to scare you only because I can't reach through your monitor and slap the crap out of you and ask you what the HELL is wrong with you that you've already forgotten the lessons of 2008???
THAT is A LOT of problems for one weekend and those are the ones I consider serious enough to read about – there's another few dozen relatively minor concerns and I'm not even up to next week, when Q2 earnings are going to slap you in the face and those are the BS non-GAAP earnings they've been feeding to us, not even the real ones!
Money is flowing into the markets because, if you put your money into bonds, you get NEGATIVE interest. That means they TAKE some of your money before giving it back to you. That's why there is constant deflation in Japan – you have an aging population who have been making effectively no interest on their retirement funds for 20 years.
Imagine you got no interest on your retirement account and let's say you put away $20,000 after-tax Dollars a year for 25 years because you waited until 70 to retire. That's $500,000 you have to live on for the next 10-20 years and that $500,000 pays you no interest either. Will your lifestyle and spending habits go up or down?
Well, that's what's happening in Japan, with the World's oldest population and the rest of the World is right behind them demographically and now, financially as we are all now accepting zero and even NEGATIVE rates of returns on our money. So of course people are putting money in the markets – especially as they SEEM so safe with the constant propping by the Central Banksters.
That's why we have switched our concentration in our Member Portfolios towards safe, well-hedged, steady returns. EVERYTHING is hedged and, whenever we make bullish money, if we're not taking it off the table then we're adding more hedges to lock in our gains. I've written extensively about hedging in the past month and I've given out a lot of free trade ideas to protect your portfolio but now it's earnings season and no more free trades for July for you cheapskate readers – you're on your own now – best of luck!
I hear Cramer will still be giving out free advice and that's great. After all, he was so helpful during the last crisis, wasn't he?
Please keep this in mind as we navigate the summer – the Media is full of crap, the people who speak on the Media are full of crap, the Government is full of crap and the Bankers are full of crap because they all said "Remain calm" as the markets fell yet somehow the Top 1% positioned themselves to get much, much richer during the crisis that almost wrecked our economy and took us 8 years and $8Tn (so far) to recover from.
Maybe we'll get through earnings season and August in China intact and maybe we won't but, as we've clearly proven with our outstanding portfolio performance over the past 10 weeks (since our 4/24 Review), we don't need to be "bullish" to make money using our "Be the House – NOT the Gambler" investing strategies. Not only does this strategy protect your portfolio from sudden downturns but it leaves plenty of CASH!!! on the side to make the occasional short-term bet.
In Friday morning's post, for example, we gave you a trade idea to go long on Gasoline Futures (/RB) into the 2:35 NYMEX close at $1.47 with a goal of $1.51 for a potential $1,680 per contract gain. Since a picture is worth 1,000 words, I even drew you a picture:
And here's where we ended up 6 hours later:
See how easy it is to make $1,680 per contract in a day? If that's your daily salary, then you certainly don't need our trade ideas so enjoy the month off – we'll still make macro posts – they just won't have trades in them! These are the kind of gravy trades you can learn to make when the rest of your portfolio is BALANCED and well-hedged.
If you don't want to learn how to do it from me – I implore you to learn how to do it from someone because the non-Members I spoke to this weekend were, on the whole, far too complacent about the Global Economy and that implies a significant amount of downside risk.
Please, be careful out there!
