Monday, March 11, 2019

Ponzi World Is Ending

The third false rally of the third false bubble. Only the most dedicated denialists don't see this coming aka. going. Having learned nothing from their last clown, this one was sent to finish the job...

Mass shootings, fentanyl suicides, industrial-scale human trafficking, biblical climate change, de facto global slavery. Life in a human toxic waste dump. One clown to rule them all. Looking back at past decades, Disney Trump was a step migration along America's journey from land of opportunity to land of opportunism:

"Opportunism is the conscious policy and practice of taking advantage of circumstances – with little regard for principles or with what the consequences are for others."

Judge not, lest ye not see what's coming...

Ponzinomics, Entropy, Fraud, Corruption, Denialism, Artificial Intelligence, Fake News, Globalization, Environmental desecration, Corporatism 

In order to keep my most recent posts near the top of the blog, this post will be an open-ended stream of consciousness. The most recent ramblings will be at the top. 

Date: May 18th, 2019
Label: What A Fool Believes. Is Always Better Than Nothing

I'm watching the end of this gong show, I don't know what the fuck you're doing. Anyone associated with this clown act should be ashamed of themselves. Remember shame?

There are only two kinds of people in this world, those who care about others and those who only care about themselves. Crossing that Rubicon, one becomes a responsible adult. At present, the refugee-class of humanoid are dragging us into the abyss. A bad idea if there ever was one, now led by Captain Dumbfuck - the Twinkified bimbo re-arranging the world based on Twitter likes, for Christ sake. Hell by any other name. 

The fact that no one sees this ending, is merely an indictment of the quality of society at this latent juncture.

In my lifetime watching failed U.S. misadventures in Vietnam, Iran, Iraq, Afghanistan, and throughout Latin America, one theme has remained consistent - the overwhelming compulsion to interfere in other countries' affairs, in order to deflect attention from problems at home.

At this latent juncture, Trump is "juggling" various potential interventions in every major theater, including Eastern Europe, all with the assumed belief, "this time will be different". The narrative is always the same, the good guys have to show the bad guys how it's done. Leave aside prior interventions that caused the conflicts in the first place. A clear eyed historian not enraptured by American mythology, and having a memory longer than :15 minutes, can draw a straight line between failed U.S. policies and every major foreign entanglement currently under consideration. The most obvious example being Central America where decades of failed attempts to impose Shock Doctrine capitalism has now backfired to the tune of 4,500 migrants per day at the U.S. border. The fantasy is always the same - solve all of the problems we helped create, and become the greatest president ever. Fuck it up however, and give the next clown a chance. 

"What doesn’t seem to be guiding Trump’s thinking and actions is a clearly articulated strategy of the sort that has driven previous administrations. Instead, he seems guided by “America First” instincts and hunches that put the interests of the nation-state first, to be advanced globally through the leverage of maximum demands"

As always, the "strategy" consists of only one overriding motivation:

What’s good for the United States – a foreign policy animated by the love of our unique way of life – is good for the world.

"All presidents have learned that if they don’t match their goals with the means to achieve them, the result is failure. And more than a few dropped balls."

Date: May 17th, 2019
Label: The Clown To End All Clowns

Trump's amateur negotiating gimmicks brought over from his reality TV show, have brought the China trade war to an impasse. 

Not impressed by TwitterTard diplomacy, the week of short-covering and BTFD ends with a threat from the Chinese to call off the talks:

China's nuclear option is to devalue the currency, which appears to be in play:

"...unlike other sessions, there was no sign Friday that the People’s Bank of China tried to stem the decline"

"...the largest weekly outflow since July 2015, the institute said Friday. That is when China’s equity markets were thrown into turmoil by the devaluation of the yuan. Investors weren’t just exiting Chinese equities, however, with total emerging market outflows totaling $13 billion"

The "TINA" trade is back 

The S&P ended the week right at the 50 dma compliments of monthly OPEX market manipulation:

Semiconductors lagged all week, ending at critical support:

In summary, everyone has skin in the game whether they know it or not

"U.S. farm exports have plummeted and prices are at 10-year lows"

Date: May 16th, 2019
Label: BTFD: Buy The Fucking Depression

How to retain global hegemony by shedding any semblance of global leadership? How to retain technology dominance by outsourcing manufacturing for maximum profit? How to keep stocks at a permanent plateau during the worst trade war since 1930? These are the problems preoccupying today's "No one saw it coming" Idiocracy, at this latent juncture.

"Consumer sentiment rocketed to its highest level in 15 years in early May as Americans grew more upbeat on the health of the economy and its path in 2019"

As I've said many times, hard to believe but economists can't predict the future by looking at the past. Far less so in the age of Ponzinomics. Now, instead of the economy driving asset prices, asset prices drive the economy. Which means that today's economic predictions have the veracity of a Magic 8 Ball.

Here we see consumer sentiment following the stock market. Asset momentum is a bong hit of speculative fervor that makes it impossible for the herd to see this coming:

As I said recently, the first quarter GDP "beat" was solely due to channel stuffing inventories to make the quarter. Now that con job is coming to light:

May 15th, 2019:

"WASHINGTON (Reuters) - U.S. retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, pointing to a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter"

Given this society's unhealthy addiction to technology, it's highly fitting that the trade war has yet again escalated this week around Tech domination. If corporations had their way, there would be no employees, just 100% automation funded with 0% free poverty capital. At which point, Mad Max would seem like utopia. All of this was fully predicted 20 years ago at the Seattle WTO ("World Take Over") protests in 1999, when (ignored) protesters warned that Globalization 2.0 would end in global mass poverty and environmental destruction. Voila. Now, President Camacho will magically unwind 20 years of profit-motivated blunder via semi-literate Twitter fiat, all while keeping the Dow pinned at all time highs.


To believe in this dystopian fantasy one must be either brain dead or fully bought in to the concept of virtual reality. A machine-fabricated Matrix wholly devoid of truth, reality, and nature. What is social media other than everyone's personal reality TV show? The ability to Photo Shop one's own life into some sort of virtual reality paradise. Through it all, the corporate-owned batteries are drained at an ever faster rate. We have what I call a disposable society, wherein everything is disposable, including the people. All of the detritus thrown off by this society gets hidden in the "landfill".  The "system" does not require us to care about the discards, the system is predicated on not caring. The day everyone starts caring is the day this exploitation scheme masquerading as an economy is 100% over. 

My prediction remains the same: when the zombies rudely awaken to the fact that while trading sandwich photos on Facebook, they were immersed in a toxic waste dump, they will no longer trust the machines nor the people operating them.

Which gets us back to the casino. As it is with this Potemkin society, one would have no idea what is going on in the global economy by reading lamestream headlines. Here we see last week's five wave trade war escalation bottomed with this week's China retaliation, now rallying in three waves.

If the rally stops here, this would be the 1987 waterfall crash scenario:

As we see above, volatility peaked with the third wave lower which is when recession stocks bottomed. Subsequently they have led the rebound higher, making a new all time high today, unconfirmed by every other sector and index on the planet. 

Which means that the volatility compression algos are working double overtime. 

Bond yields are elucidating the chasmic gap between fantasy and reality.

In 2018, the Idiocracy bought a tax cut with both hands, which unexpectedly plunged the casino -20%. Undeterred, this year they are buying a tax increase with both hands:

The bursting Tech bubble was temporarily saved by strong earnings from Cisco followed by manic short-covering.

What was the largest bubble of 2019 has now morphed into the largest short trade:

"Global equities have proven resilient after the Trump administration fired a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries”  

Largest U.S. Telecom equipment provider:

Date: May 14th, 2019
Label: Fully Invested In TrumpPlosion

The fact that Utilities and Bitcoin are now "leading" this rally is all anyone needs to know, it's over. Be that as it may, nowhere in the lamestream media will you see an acknowledgement that the party is over. Perma-bears are extinct, replaced by soon-to-be-extinct perma-bulls. The net effect of a central bank sponsored vacation from reality. The operating hypothesis via Zerohedge is that the under-hedged machines have taken massive losses and are primed for the next ride higher. My operating hypothesis is that aside from violent short-covering rallies the machines have lost control. 

This era is testament to the amount of lies a society will believe and remain fully invested. Despite the fact that we learned last week that Trump's attempted management of the Federal Reserve is what caused China to tear up the trade agreement, he is back at it again. Angling for a bailout. He knows that only the Federal Reserve can save the casino now.

Sadly, for Rotten Donny, there is no means of unpopping a bubble once it's burst. Even Central Banks don't have that power. We've learned that lesson myriad times via gold (2011), Crude oil (2014), China Tech (2015), Bitcoins (2017), FANG stocks (2018), they never return to the previous highs.

He should know that, because as he says, China has the spigots wide open:

So it is with this "everything" bubble. Too late.

What I'm trying to say is that Wall Street's last pump and dump is over, having served its purpose of dumping this era's least profitable company onto the public:

Monday was a 90% down day, meaning 90% of NYSE stocks declining. Only Utilities were up, as a sector. 

Selling pressure is rising, but no sign of panic, yet.

Wall Street has been monetizing their few remaining hedges into this decline, which has been slowing the descent. Yesterday the S&P took out the 50 day convincingly.

The 2800 level which was both support and resistance throughout this rally is now temporary support Tuesday morning:

The widely ignored NYSE composite which predicted October's reversal of fortune, and this latest one as well, is clinging to the 200 day.

Which means the wave count stands:

Instead of paying attention to facts and reality, gamblers have been listening to their trusted advisors.

The ones who no longer have fiduciary duty thanks to Trump. 

In summary, trade wars are not as "good and easy to win" as people have been led to believe.

AND, it's far too late for the masses to "prepare".

The Lies Get Larger At The End Of The Cycle

We're at that point in the cycle wherein the salesmen have to try that much harder to con the marginal dunce, to make the quarter. It's Ponzinomics, if you didn't buy your degree from Wharton, you wouldn't understand it. The biggest jobs miss since 2008 is the catalyst for a 50 point S&P short-covering rally, so far...

The casino was reaching prior oversold levels, and bounced at the 200 day. Both open gaps above the market just got closed, leaving multiple open gaps below the market, going back to December.

The Transports were multi-decade oversold at the end of last week:

Some bimbo on CNBC last week, it doesn't matter which one, was advising not to worry about the Transports, because the Railroads just made a new high.

Which is what happened in October 2008:

The long awaited Boeing crash has arrived compliments of 737s falling from the sky. Somehow the news always corresponds with parabolic speculation coming to a screeching halt. 

The largest weight Dow component was down -17% from recent highs at the open. Volume is ~8x average at midday.

Chinese stocks are driving this short-covering rally back into the weekly island:

Oil is back-testing the broken trend-line deja vu of December

Retail sales in January "beat" expectations, but December was revised lower still. The fake wealth effect took a heavy toll. This latest (delayed) data will revise down Q4 GDP and Q1 GDP, as GDPNow just fell back to .2%

Don't worry, it's only retail apocalypse:

"...just two months into 2019, it sure looks like the U.S. retail scene will continued to be plagued by a stunning number of store closures — and perhaps quite a few retailers going out of business for good."

In a single 24-hour period last week, Gap, J.C. Penney, and Victoria’s Secret announced they would be closing more than 300 stores combined"

Retail short-covering another last leg of the stool:

I had an epiphany today that one of the drawbacks with Ponzinomics, among a few others, is that the downside of the Ponzi cycle takes its toll on certain professions - realtors, investment advisors for example that rely upon steady asset price inflation. And when that goes in reverse, it feeds back into 'Conomy in the form of lower commissions.

Of course then the reasons to buy must become more urgent and hence more specious. 

Which is where we are in the "cycle"

I call this the crash ratio because it shows that the casino is held aloft by fewer and fewer very large stocks

This chart shows that last year's 10% and 20% decline have not deterred Skynet from shorting volatility

This should do the trick...

Sunday, March 10, 2019

An Inconvenient Con Job aka. "No One Saw That Coming"

Fortunately, everyone has a good excuse, they can just say they believed Trump...

For several years after 2008, skeptics of printing money to inflate asset values described the policy as "Extend and pretend". However, after the 2016 election it was reinvented as "Greatest 'Conomy ever". It was the exact same con job, under new management featuring higher interest rates and reduced casino liquidity. A bigger circus and no safety net. 

Here we see U.S. homebuilders with rest of world (ROW) stocks. I knew I had seen that chart somewhere. 

There are several reasons why Larry Kudlow still predicts 3% GDP in 2019, all data to the contrary. First off, because he's a dunce and a con man. Although that's strictly my opinion based upon listening to him for thirty years. Secondly, the government shutdown has obfuscated and further delayed already delayed backwards looking data. Third, economists right now uniformly believe that the impact of laying off 800,000 Federal workers for a month and forcing them to use local food banks, will "rebound" in the second quarter once they pay off their payday loans at 400% annualized. Fourth, they assume that tax refunds absconded from the middle class to the wealthy won't impact 2019 GDP, because they ignore the fact that the marginal propensity to spend is far higher at lower incomes. Fifth, they assume that the critical December holiday sales collapse was a "fluke", as was Friday's payroll collapse. But most importantly, they are all ignoring the collapsing fake wealth effect which is what the past ten year "expansion" was predicated upon. Which I will now discuss next...

The reason why economists can't predict recession is because economic data is lagged. It's impossible to predict the future by looking in the rear view mirror. Markets usually lead the economy, however, in this cycle the relationship between markets and the economy was inverted via the trickle down "fake wealth effect". The operational gimmick during this entire cycle was the well known "quantitative easing" policy of buying up government bonds in order to force investors further out onto the risk curve. Global policy-makers expressly pursued this policy to generate an artificial sense of economic wealth and well-being. The long-term net effect was to drive a chasmic gap between market valuations and long-term earnings potential while wholly desensitizing speculators to risk. On top of that shit pile add in record stock buybacks which are also highly cyclical. Billions in fraudulent Chinese IPOs. A tax cut for the rich paid for with higher interest rates for everyone else. A year long trade war. Cap it off with a reversal in Fed balance sheet liquidity now into the second year. 

All of which means that the new "leading indicator" is speculative appetite, best indicated by pot stocks:

Meanwhile, the fake wealth effect is going in reverse.

Here we see that household (total) wealth as % of GDP (red line) reached a new record high in 2018 and then rolled over in the fourth quarter. The blue line is the median sales price for homes:

If we look at the rate of change of home prices on a longer-term view, we see that there was never a time when a negative decline did not lead to or precede a recession.

Going back sixty years:

Going back to the household net worth graph and this time overlaying the Fed balance sheet, the question on the table for anyone who can fog a mirror, isn't why this is happening, it's why do they assume it's not happening?

What matters is that this time around everyone 100% agrees with my opinion on Larry Kudlow.