We Know How This Ends - Part 1

Submitted by Jeffrey Snider via Alhambra Investment Partners,
Submitted by Jeffrey Snider via Alhambra Investment Partners,
The Fed may have officially tapered QE at the end of 2014 but that doesn't mean it is done buying Treasuries: since the Fed never ended rolling over maturing paper, it means that it will remain indefinitely active in the open market. And while there were no sizable maturities from the Fed's various QEs to date (only $474 million in 2014 and $3.5 billion in 2015) that will change dramatically this year, when Brian Sack's team will have to purchase about $216 billion to replace matured TSYs.
Earlier this month, even before China unleashed the end phase of its latest currency devaluation which since forced the PBOC to enforce even more capital controls to avoid accelerating capital outflows, Kyle Bass revealed that his best investment idea for 2016 was to short the Chinese currency:
The rest of the FANGs may be crashing and burning, but one "story stock" refuses to give up: Netflix.
Moments ago Reed Hastings ubiquitous streamer of videos right into your bedroom reported Q4 EPS of $0.10 (vs the $0.08 expected), on $1.82BN in revenue, a fractional miss to expectations, however as everyone "knows", Netflix does not trade on fundamentals.
What does it trade on?
With its stock in a relentless slide over the past 3 years, and hitting a new 5 years low earlier today, many had hoped that it can't get much worse for the one tech investment made in recent years by Warren Buffett. The wait for news was over moments ago when IBM released Q4 operating EPS, which at $4.84 beat sharply lowered expectations of a $4.81, and a 17% drop from a year ago. GAAP EPS was $4.59.