Kim Jong-un in China, FB Continues to Implode & what is FNGU?

  
Tech tumbles – XLK – 3.2% as increased regulation takes a toll on THAT sector........High profile investors beginning to sour a bit on the group……. FB – 4.5% and the data breach issues now enveloping some of the other ‘data gatherers’……TWTR – 12%, NFLX – 6%, P – 2.25%., AMZN – 3.7%, BABA – 6.5%, VIPS – 6.5% GOOG – 4.5%.... Nasdaq takes it between the eyeballs - falling 211pts (3%) as the angst drags the broader mkt lower!
 
It appears that the Tech Trade – is OVERWEIGHTED in so many portfolio’s as it led the mkt higher over the past 5 yrs…. and now it’s time to reconsider that trade.  Yesterday’s action is suggesting that large asset managers do not want to show these outsized positions in the sector as we approach qtr end and with two trading days left before we sign off – I suspect that we will see some more downside pressure.  ……. Dow had a 738 pt swing from hi to low - ending the day down 344 pts while the S&P had a 78-pts swing from hi to low tumbling 46 pts at 4 pm.   10 yr treasuries surge causing yields to fall as investor rush into the ‘safe haven’ trade ahead of qtr end! 
 
So, let’s revisit the LEVERED ETN’S that are adding fuel to this sell off fire…. FNGU (yeah, that’s right FUN – GU) is the BMO REX Microsectors FANG + Index 3X leveraged ETN.  Sounds all very sexy – I think – but is anything but….it is an exchange traded note that tracks the NYSE FANG Index on a daily 3X compounded leverage basis.  So as discussed in prior notes – this product – like the short vol product – cuts both ways…on the way UP you get 3X the bang for your buck – and you feel like the smartest guy in the room…and when it implodes you get cut up at 3X the pace as well…. the only thing is – You ain’t so smart any more….and this is absolutely adding to the exaggerated swings and moves in the space….  But that’s another story….
 
Chubby (Kim Jung On) goes to China in a Choo Choo train that ‘daddy’ used as satellite imagery captures the whole thing on tape.... This is Chubby’s first trip beyond his borders as he tries to make nice with his neighbors.  I gotta tell you something…. Chinese President Xi Jingping looks like a really good guy – right?  I mean look at how he conducts himself – pictures of him and his wife welcoming Chubby to China’s “White House”. 
 
[BTW – how funny is this…do you know that the Chinese have a nick name for Chubby?  You know what it is?  ““FATTY THE THIRD”.  It is a name commonly used in China to refer to the North Korean leader Kim Jung On, who represents the third phase of succession in this isolated regime” Just to be clear – I had no idea of that when I gave him my pet name of “Chubby”]
 
Facebook FALLS again as whistleblower Chris Wylie suggests that the data breach affected much MORE than the suggested 50 mil profiles as ‘Zuck’ is due to testify before congress (on a date TBD) to explain how they ‘exploit’ user’s data.... (he’ll suggest that he and Sheryl ‘protect’ the data - I’ll suggest that they ‘exploit’ the data.) -  FB is now down 22% since the January highs and has broken all levels of technical support  - it is trading at levels last seen in June of 2017….now a look at the chart suggests that it might find support in the $148/$152 range – BUT if the news continues to implicate FB in the breach then all bets are off…..if it fails here then the next stop is most likely $120/sh….Zuck is going to have to put on the performance of his life if he wants to stop the bleed…….Let’s just see how congress handles it….will they coddle him or will they hold his feet to the fire? 
 
Tesla tanks as the NTSB (national Transportation Safety Board) investigates a fatal crash involving another driverless vehicle. NVDA crashes…falling 7.7% on the news…. Nividia Corp designs and develops 3D graphics processors and software that is being used in all this autonomous vehicle stuff….and with all the bad news lately about driverless cars crashing and killing innocent people – the industry clearly has some work to do…. AMD – 4.2%, INTC – 2.4%, CY – 5.1%.  The IShares PHLX Semiconductor ETF – SOXX falling 3.8%
 
GE soars +4.2% on the idea that Uncle Warren (Buffet) is taking a bigger stake in this American Icon......Make America Great Again….
 
And in a bid to be ‘re-born’ Remember Yanis Varoufakis? He was the flamboyant, dashing, handsome, turtleneck wearing Greek Finance Minister back in 2015 - when Greece was on the verge of circling the drain.... Well....HE’S BAAAACCCKKK! This time he is launching a new disruptive political party - the European Realistic Disobedient Front (ERDF) - that is aimed at taking on the establishment - the EU, the ECB, the IMF (Int’l Monetary Fund) and anyone else that they owe money too. He wants to show them who’s the BOSS.  If elected he promises to
 
‘run looser budgets, shore up Greek banks with public money, he will swap current Greek bonds for new ones whose payments depend on economic growth – to “end Greece’s debt colony status” ‘.
 
This morning US futs have been all over the place – in the middle of the night they were 16 pts but have since rallied back to + 1 at 6:55 am……as the mkt and investors/traders thrash around trying to find some level of support……and this would be the 200 dma at 2585…..and with the end of the qtr upon us – I suspect that ‘ before the cock crows’  the mkt will test that key level 3 times…..we have already tested it twice….just sayin…..
 
ECO data today includes 4^th GDP final revision…. exp is for it to show a +2.7% reading vs. the prior 2.5%.  Pers Consumption of 3.8%, Advance Goods Trade Balance of -$74.4 bil, Retail Inv, Pending Home Sales of +2% m/m.
 
Asian & European mkts are under pressure as the global rout in TECH continued overnight.   Japan – 1.3%, Hong Kong – 2.5%, China – 1.8%, ASX – 0.73%. 
 
FTSE -0.19%, CAC 40 -0.92%, DAX -0.86%, EUROSTOXX -0.70%, SPAIN -0.42%, and ITALY -0.32%. 
 
The VIX (fear index) surged by 7% yesterday as the mkt came under pressure….and is DOWN 33 cts this morning as the tone calms down.         
 
Oil –  is down 39 cts/ barrel as US inventories rise….and this is a surprise – WHY???  The API (American Petroleum Institute) reported a rise of 5.3 mil barrels last week bringing the total to 430.6 mil barrels of black gold.  
 
The dollar index – DXY – is trading at 89.51 – up 14 cts. as she struggles with resistance at 89.79.  And Gold is down $5 at $1,341 as the trade war talks subside….  Support is at $1,338 on the chart….