Wednesday, August 24, 2016

Capital MegaPlosion Is Underway

Seven years of slow motion labour implosion will now culminate in the spectacular capital implosion singularity know, what happened under the last sock puppet...

Nasdaq 100 with Cash Balances (red):

Today, gold/silver, Emerging Markets, Biotech and Oil got whacked. FANG is weak, and yield is rolling over...

As I showed last week, commitment of futures to the long side has never been higher as well:

Oil gamblers are ALL IN on record inventories...

Silver got shellacked. That recurring fantasy is over...

Biotech hammered -4% on the daily, this is the weekly view:

The Emerging Markets corrective bounce is over...

Yield is rolling over, VIX is rising:


FANG (Facebook, Amazon, Netflix, Google), played out:

JPY is clinging to the 100 level. All eyes on the Fed Jackson Hole circle jerk on Friday:

Tuesday, August 23, 2016

The U.S. Is Already In Recession

Counting debt accumulation as "GDP" is Terminal Idiocracy, because it merely papers over a recession already in progress...

For 2016, the government projects a -3.3% deficit while first half GDP was 1%. On a debt-adjusted basis, the Obama wreckovery was 100% fake:

GDP growth - Deficit as % of GDP:

Manufacturing orders:

Capacity Utilization with 0%:

Inventories - Sales:

Profits (year over year change, $billions):

Labor Market Conditions

Yields (10 year, 2 year):




Consumer staples with global GDP:

Small Cap Growth stocks:

Monday, August 22, 2016

Globalization: The Pyrrhic Triumph of Capital Over Labour

Here is an excerpt from the new book I'm writing called "Sustainable Economy: Why Globalization Failed And What To Do About It":

The concept of Shock Doctrine was coined by Canadian Author Naomi Klein by way of describing Milton Friedman’s belief that “a good crisis should never go to waste”. Throughout the 1970s and 1980s, Friedman’s doctrine was used to impose Capital friendly “Structural Reforms” upon Latin American populaces in the throes of major crises. The most notable example being Chile, which to this day has a GDP per capita one third of the U.S. and income inequality worse than Zimbabwe (Gini Coefficient). Likewise, the political cover for U.S.-domestic corporate Shock Doctrine was provided by 9/11, during the Bush Administration. In conjunction with China’s accession to the WTO, U.S. export bans on technology that had been in place through the 1990s were lifted, setting off rampant outsourcing of factories and technology at the rate of 17 per day on average between 2000 and 2012. High paying jobs were swapped out for low paying jobs using 1% “Patriot Loans” and home equity lines of credit to paper over the difference. Once the 2008 Financial crisis struck however, the eight years of Bush era temporary and part-time jobs vanished in a matter of months. Mostly in the areas of construction, bartending, and retail. Sadly, 2008 which was a direct result of 9/11 Shock Doctrine led to yet another round of corporate Shock Doctrine, this time at 0%. The nascent Occupy Wall Street movement, which gained brief prominence in 2011 during the U.S. debt downgrade was a vain attempt to stir the aging masses from the fetal position. However, as we’ve learned over two decades in Japan, a populace above a certain average age has a strong preference for return on capital over return on labour. So the bubble blowing and economic carnage were given the green light to go into Quantitative Easing overdrive. QE being the Central Bank purchases of long-term bonds to drive down their yields and encourage stock market speculation. QE overwhelmingly represents Central Bank bias towards capital over labour... 

ZH: August 22nd, 2016
Bill Gates Now Worth Over $90 Billion

Microsoft has laid off over 20,000 employees since 2009 and according to this article, 18,000 more layoffs are coming...

Microsoft: Total Employees 118,000: ~15 percent layoffs = 18,000 (The company is letting go about 200 to 250 people every week, but none of these are ever announced.)

This is Microsoft stock with TOTAL Operating Profit Available to Common shareholders (red line). In other words, mass layoffs are funding stock buybacks which bolster per share profit, while the company is essentially at the same level of business it was at in 2007. You could hire a fucking chimp to run this company into the ground and yet Wall Street is loving the liquidation sale:

All compliments of the Federal Reserve: 
Microsoft with Fed balance sheet:

The Seven Year Fake Rally

"They traded worthless pieces of paper back and forth for seven years straight while the global economy imploded in real-time..."

ZH: August 22nd, 2016
Complete Chaos In Equity Markets
One trader described the swings in stocks as "complete chaos" saying that machines were clearly in charge..."There's no humans playing anymore." 

Barron's August 20th, 2016
Second Longest Rally In U.S. History On No Volume
"This current month has experienced particularly weak volumes, even for a period that is traditionally the quietest of the year."

Activity is a market factor that gets a lot of attention from technicians. A central tenet among them is that volume should confirm price, so that if a market rallies then volume should expand with it.

During this bull market, daily volume in the SPY ETF was below its 50-day moving average 60% of the time. In other words, the entire bull market has been “low volume,”

Who benefits from this charade?

Skynet aka. NYSE and HFT

Who loses? Active management:
aka. Anyone who owns individual stocks versus S&P 500...

Who gets out when Oil, yield, JPY, CNY, mega caps, ETFs, junk bonds, FANG, IPOs, Emerging Markets, Europe, Japan, Energy, Retail, Transports, Financials all trade as one to the downside?

No one

Total market volume:

Volume moving averages:

Breadth momentum

Price momentum

NYSE highs - lows:

The Last Mega Bubble

What happens when every risk asset class on the planet implodes at the exact same time? Hang tight...

Apologists for money printing claim that there has been no "irrational exuberance" in this cycle. Never mind that cash balances are at an all time low, they point to the fact that there was no one asset class that defined this cycle unlike the DotCom and Housing bubbles.

Of course, that lie couldn't be farther from the truth. In this cycle there has been one serial bubble and bust after another, now culminating in a blow-off echo bubble across all asset classes at the same time.

These are the echo bubbles below their prior highs...

Gold and gold stocks peaked back in 2011, and a lower peak now:

Bitcoin peaked in late 2013:

Fracking peaked in mid-2014

Transports peaked in 2014:

Apple peaked in 2015

Alibaba was the biggest IPO in history:

Chinese stocks were the story of 2015:

Revenueless Biotech also peaked in 2015:

IPOs peaked in 2015:

Exxon is the last profitable oil company:

These are the last bubbles just finishing up their all time highs:

Facebook and the FANG stocks (Amazon, Netflix, Google):

The high yield stocks such as JnJ:

Semiconductor companies such as Texas Instruments:

Nvidia and the video game sector:

Smith & Wesson:

All extremely bullish of course.

Sunday, August 21, 2016

OPEC Bullshit Deja Vu

ZH: August 21, 2016
"well-timed" OPEC talk of a potential deal to freeze output, has "forced bears" into a historic squeeze and helped push oil close to $50 a barrel, prompting West Texas Intermediate from a bear to a bull market in less than three weeks.

"They’ve been successful over the last year in jawboning the market, and this is the latest example."