Monday, January 21, 2019

Davos 1929: In Greed We Trust

Martin Luther King Jr. Born January 15th, 1929: 


"Our lives begin to end the day we become silent about things that matter" 







On the ongoing subject of economic injustice, somehow the systematic milking and bilking of the general public is never discussed, despite the fact that it's the only thing that keeps this Ponzi scheme running. So here we go...

"Animal spirits is the term John Maynard Keynes used in his 1936 book The General Theory of Employment, Interest and Money to describe the instincts, proclivities and emotions that ostensibly influence and guide human behavior... It has since been argued that trust is also included in or produced by "animal spirits".

Say no more. Social mood peaked a year ago amid record inflows to the casino. Which is why the Ponzi mind trick is inconveniently wearing off...

Nevertheless, economists have an unbroken tradition of NEVER predicting recession ahead of time, to protect. It's clearly safer to be a member of a profession of known dunces than to assume the career risk of breaking from the pack. 

Which is why they still haven't learned that driving forward by looking in the rear view mirror never ends well.



The IMF just confirmed every risk I enumerated yesterday:


"DAVOS, Switzerland (Reuters) - The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020 due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilize a slowing global economy."

In its second downgrade in three months, the global lender also cited a bigger-than-expected slowdown in China’s economy and a possible “No Deal” Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets."

Deja vu of every other downturn, the IMF are chasing their tail. The one country I didn't mention yesterday was Japan, which is where the IMF is taking bong hits:

"The rare bright spot was Japan, with the IMF revising up its forecast by 0.2 percentage"



What I'm trying to say is that the market knows things, that serial idiots don't know.

Which is why anyone listening to economists is going to get duly monkey hammered. 



Economists are looking at old and stale data to predict the future. Getting even more stale due to the shutdown:



"What the heck is going on in the economy? It’s anyone’s guess"

“Growth is slowing everywhere, but it is far too soon to run for the exits” 

Too soon. Too late. What's the difference?








The one thing that no current market observers ever discuss other than Prechter, is Social Mood. Consumer confidence is the closest they get to discussing sentiment.


Sentiment predicted the fourth quarter selloff. And more importantly, predicts more selling:




Here we see the equity call/put ratio indicating the sentiment of high risk speculators, which peaked a year ago as well.

Along with their available capital.




Those using 2016 as the analog, have yet to reconcile the policy divergence.

Which is solely a function of misplaced "trust" in over-confident buffoons.





The Nasdaq shows us what we can expect in the near future - record volatility as the trading range continues to expand.

Until the wheels come off the bus and Skynet no longer offers a bid.



The Dow weekly is backtesting the 200 day moving average.

This has been the largest counter-trend rally since October 2008. It's the fourth lower high in this waterfall crash, since October.

Which can only mean one thing in Ponzi World.

"BTFD"






Sunday, January 20, 2019

Make The World Implode Again

Those worried that this senile gong show will continue indefinitely Japanese-style, can rest assured that American "exceptionalism" has taken that scenario entirely off the table. In the U.S., the burden of truth is always on reality, and never on the circus clowns assiduously ignoring it...

After all, what good is a circus without clowns?







Davos to Davos, what changed in the past year?

The tax cut was squandered on stock buybacks and insider cash outs, leaving the general public holding the bag.



“Poor people suffer twice from being deprived of basic services and also paying a higher burden of taxation,” Byanyima said in an interview.

Billionaire fortunes increased by 12 percent last year, or $2.5 billion a day, while the 3.8 billion poorest people saw their wealth drop $500 million every day, Byanyima added.



"KA-CHING!!!"





America's blindspot is the entire rest of the world. Which, in the zero sum game known as "Globalization", is not conducive to sound investing. Here we see why 2017 was the lowest volatility year on record, and then why 2018 imploded global markets. It was the U.S. dollar rally, which was a function of the tax cut exploding U.S. bond yields.

The tax cut didn't just rob the U.S. Treasury, it also robbed the entire world of liquidity. The tax cut came into effect at the end of January 2018, which is when the global rally ended:





Watch any American news station and you won't have the slightest clue what is going in the rest of the world. The entire planet could be imploding and all we hear about is who is going to win the election four years from now. No country is more obsessed with navel gazing than the U.S.A. No developed country has lower quality news and information. It's total infotainment shite. Non-stop clown circle jerk. Which is the country's inherent weakness - it's oblivious to what is going on at the frontiers of the Roman empire.

The reason I don't contemplate the bull case anymore, is because there literally isn't a bullish case anymore, aside from trusting perma-clowns. 2018 proved that fact in spades - featuring the best case everything is awesome scenario that imploded into bear market -20% on December 24th. The famous Santa Trump "BTFD" moment. But you can't tell that to today's bullshit-addled market observers. Somehow, amid record high global policy uncertainty, they prefer to sift the entrails of the algo-driven S&P futures for clues to the future, while global meltdown takes place in broad daylight. Unfortunately, multi-year trend-lines won't mean a fucking thing when the S&P futures explode limit down overnight. 

Speaking of which, since the beginning of January, there have been two flash crashes already - one in the USDJPY carry pair, and another spate of crashes in the Hong Kong markets this past week. Both assiduously ignored.




Instead of paying attention to global risk, U.S. gamblers were yet again believing the serial delusion that the U.S. is winning the trade war. Which was the primary catalyst for this week's rally.

And yet, sadly, Trump just confirmed that not only is it not ending, but it's about to escalate to include 5G telecom equipment companies. And possibly a military confrontation in the South China Sea. 







Last August, well-known hedge fund manager Kyle Bass asserted that Trump can "win" the trade war by forcing devaluation of the Yuan. Never mind the fact that Bass doubled down on his Yuan short in 2018 and never mind that it was Yuan devaluation in 2015 that caused global smash crash.

August, 2018:




"Bass also downplayed the currency fears, saying that the U.S. consumer isn't likely to see any major effect from the growing dispute."

Bass apparently doesn't have any problem with the fact that the trade war has completely backfired by weakening the currency:

January 13th, 2019:





Meanwhile, these over-crowded Chinese Tech companies annihilated U.S. hedge funds and other U.S. investors in 2018 due to Yuan devaluation. 







Meanwhile in Europe, talk of a "hard Brexit" escalated this week after the Theresa May gong show earlier in the week.




Deja vu of the Brexit vote itself, much ado about short-covering into the bad news:





All of which means that while the vertical BTFD rally into Davos got bought with both hands, per annual tradition, it appears that the assiduously ignored risks that blew up last year's rally, have inexorably multiplied in the meantime. 

Which means all this rally is running on now is perma-smiling circus clowns. Oblivious to the rest of the world.















Friday, January 18, 2019

White Man's Burden

"Rome seeks its own glory, wars against other peoples to subjugate them, revels in material existence, lives off the work of slave labor, allows many to die of poverty and starvation, and promotes entertaining circuses and gladiator spectacle. The Rabbis, picturing redemption, remark that the messianic age will be recognized when an end is brought to the rule of wickedness."






Which two countries were most responsible for spreading "free trade" economics globally - Britain and the United States. And which two are now trying hardest to blow up the system. Go figure. After 2008 proved that Globalization had failed from an economic perspective, leaving the populace with financial PTSD, both sides of the political spectrum agreed to just accept the de facto slave model as is, and focus instead on social issues. This entire past decade will only be remembered for its fentanyl-assisted suicides, extreme weather disasters, mass shootings, and non-stop political dysfunction. I finally understand Trumptopia. Better too late, than never...

What we face now is the sum total of all of the risks assiduously ignored from the past decade. No amount of warnings can overcome a false profit.

"Welcome to Davos 2019, featuring record global policy uncertainty accumulated from the last nine meetings"

(Index data from: http://www.policyuncertainty.com/)





I have come to realize that Democrats and Trump zealots are not so much disagreeing on the issues, they are disagreeing on what are the issues. In addition, both sides have a totally different "approach". One side, the Democrats, are focused on legalities, moralities, and logic, specifically around the election and Trump's business affairs. The Trump side doesn't care about any of that, they are solely concerned about the changing demographics of the United States. And Trump proves every day to his base that he alone is the only thing standing between them and further demographic "dilution". And for that, they are eternally loyal. Brexit is the exact same thing.  

I get it. I've said myself that Globalization has generated tremendous cultural strife and turmoil, in the name of creating a global monoculture. Regional cultural sovereignty has been abandoned, in favour of a common market. The fact is however, that the ascendant global monoculture is more a product of corporate colonization than it is a "Libtard conspiracy". No one has benefited more from mass immigration than U.S. multinational corporations. No one has benefited more from the opening of borders than U.S. shareholders. De facto Ponzi economics is predicated upon the perpetual growth in global and U.S. population size. Meanwhile, U.S. demographic change is already baked into the cake. The function of prior decades of "pro-growth" economic policy. No wall of any magnitude is going to change that fact. The non-white walkers are already inside the wall.  

All of which explains why the Republican-controlled Senate won't lift a finger to aid and abet the "witch hunt". Which by any sane measure is not a witch hunt at all, it's a measured look at a man who has engaged in rampant fraud and illegality his entire life. But again, he alone is the bulwark against takeover by the brown horde - even against his own party. So the fact that Putin has his hand up Trump's ass, is wholly irrelevant. Because Putin is a nationalist himself. 

Of course, this blog is not primarily concerned with politics. It's primarily concerned with economic "efficacy", sustainability, and widespread prosperity. 

Which is the problem, because neither side of the political spectrum wants to address the underlying economic issues, preferring instead a power struggle over who gets to be the next Captain of the Titanic. Which means that regardless of legal outcomes, neither side has even the remotest chance of "winning" this battle.

They can talk past each other all they want. It's not going to affect the final outcome of Ponzi economics one bit. Quite apart from the Peter Pan fantasy Zerohedge would have us believe about "restoring Reagan's alt-white nirvana" - propagating theft is the only real reason why the Republican party tolerates Trump. Those who go along with it, are what Russian KGB agents call, "useful idiots".

Just like they were in the last cycle. 













The Crime Of The Century

Bilking the elderly out of their life savings. The price will be measured in sequestered carbon, not dollars.

The Banana Republican borrowed stolen tax cut for the ultra-wealthy, will be viewed as the largest theft in human history without any comparison. This Ponzi scheme is now record overbought: When the rally began in December, it was record oversold.

Two decades of data:




The "good news" is that this year is starting off identical to last year with a global vertical ramp. The bad news is that it's not last year.

What this era proves definitively, is that there is no lie these people won't believe. No liar too fraudulent.






I know why. 

Because the usual sociopaths have been lying for a year straight. And now time is up. 




Recall that last January  was the best start to a year since 1987. Now apparently, so is this year:


Deja vu of last year, the S&P is rallying into January's fourth quarter earnings reports, the only difference is that last year featured blowout earnings, whereas this year, so far earnings season has been a bust, with high profile misses by JP Morgan, Morgan Stanley, Citigroup, American Express, Wells Fargo, and now Netflix. This week alone. To say nothing of the myriad earnings warnings leading up to this season. 





Today's fake rally is compliments of yet more *news* about a trade deal between the U.S. and China. We've only seen this movie several times, but the old age home can't remember the ending.

Here we can see via China's largest consumer stock, the various trade deals and fake agreements that have been struck over the past year. Unfortunately for today's denialists, Trump isn't interested in a "deal" - his not so hidden agenda, is to implode China.

And it's working great.






One of the bimbos on CNBC commented that it's odd to see both high-end jewelry (Tiffany's) and mid-range (Signet) jewelry implode at the same time.

Her conclusion: this is clearly a "jewelry"-specific consumer issue.




Clearly it can't be because the con job is ending.



"The University of Michigan said its consumer sentiment index in January skidded to a reading of 90.7 in January from 98.3, which is the worst reading since October 2016...Economists polled by MarketWatch forecast a 97.5 reading"





This chart shows all we need to know about the state of growth/momentum stocks.

The left and right shoulders began and ended with identical breadth thrusts (lower pane). This current breadth thrust is multi-year overbought and yet the index is at a lower level:



The fake Trumpflation trade (cyclicals), ready to final implode




Speaking of non-stop lying, this is the chart of Financial Asset management stocks, which retraced ALL of their Trumptopian gains in 2018.

All while financial used-car-salesmen were telling sheeple to buy this gong show with both hands. 





Here we see that the zombies are stoned again. Although they seem to be coming down off their high:




The crime of the century:

Bilking the elderly out of their life savings














Thursday, January 17, 2019

Trumptopia Is Circling The Toilet

Sadly, and somehow unexpectedly, Circus Maximus is ending, badly. No clowns will be laughing when their beloved reality TV gong show blows up in their face...

This historically unprecedented farce exists solely by and for the amusement of the senile Idiocracy. And anyone else who can be conned into believing anything. 

 MAGA 2020:




The last (G20) rally ended when Trump and Xi agreed to a three month trade war truce. At that same moment, the Huawei CFO was being detained in Vancouver at the behest of the Trump administration. In other words, the "truce" had the shelf life of a weak handshake.

Now this timely bit of market manipulation:





This has been the biggest bull trap since the 1930 counter-trend rally ending in -90% collapse.





Speaking of rallies ending, I've been looking around for a viable wave count and finally found one, in the most obvious place: Recession stocks.

Safe haven (recession) stocks peaked last in this rally (~Dec. 3rd), and then imploded lower. The crash really started however, when the news broke about asbestos in J&J baby powder. The only problem is that it wasn't news, it was just a made up excuse for the crash in the pre-eminent safe haven stock: Denialistic Crash Mode. Now, these "safe havens" have enjoyed a three wave rally off of those December lows amid declining volume, impaired breadth (bottom pane), a moving average death cross, a tag back to the 200 dma, and a .618 fibo retracement.

What else could you want? 




Brexit somehow turned into an even bigger clusterfuck this week. The "good news" was that Theresa May survived a non-confidence vote. 


Which leaves Europe hanging in the balance:



The PBOC injected record stimulus this week, which has been accurately interpreted by markets as a late stage failing act of desperation. 


"a raft of measures last year from big rail projects to tax cuts seem to have had little impact so far, with recent data suggesting activity is cooling more quickly than expected."


Some people in Asia couldn't wait for Davos, to begin the panic. Which portends badly for the U.S. casino ahead of the long weekend. 




"A string of Hong Kong-listed stocks plunged without warning in afternoon trading, the latest shock losses to sideswipe investors in the world’s fourth-largest equity market."

“It’s likely more similar stock crashes could happen this year. A lot of share pledges in Hong Kong are underwater, and as soon as the positions are liquidated it triggers an avalanche.”

Which aligns well with the ending of a three wave rally in Emerging Markets which began in October.

One full year of bullshit later:




One year ago this month global carry trades warned that the RISK ON party was ending.

That warning was ignored. Just like this one:




Global Economic policy uncertainty just reached a record high this week:




Why?

Because global central banks (ex-China) are tightening into deflation for the first time this decade:

The term "policy error" is an asinine understatement:






Here we see Y2K 2.0 imploding in real time via small cap momentum stocks: 




And to top it all off, Goldman Sachs had its biggest short-covering rally since the TARP bailout rally in October 2008. 

Which was right before final implosion.



"Best day since the last crash"
"Awesome, bro"