Friday, July 20, 2018

In The Manchurian Candidate We Trust

This week the Manchurian Candidate was summoned to Helsinki to receive new directives and hand over the nuclear codes for safekeeping. There's no "Deep State" in Russia, so we can all breathe a sigh of relief. Those who don't believe that Trump can implode this gong show, evince way too little faith in Bozo the Clown. He was hand-picked by the KGB for a reason. Having been forced to recant his view on Russian election interference ten times this week, you could count the minutes until he went ALL IN on China, to appease his bloodthirsty base. The world's second largest economy is on the ropes, which means we're #Winning!!! The term clueless dunce is a vast understatement...

Dumb and dumber:

Kernen posed the only economic policy question that ever matters to the casino class:

“What if the stock market were to go down?”

“If it does, it does,” Trump responded

The key level every short-term speculator is watching right now is 2800 on the S&P 500. A close below that level would mean that this week's breakout was a fakeout. 

Setting up Shanghai Surprise for next week:

Tech's two largest point-setters rolled over this week, and the third (Microsoft) reported earnings last night, indicating a potential blow-off top today.

A break of the upper trend-line augurs for fakeout on Amazon as well:

Oil staged three failed rallies this week on heavy volume:

This pattern is now identical to 2016.

But on the plus side, Go Daddy made a new high:

The bond market called the Fed's bluff this week, and Trump's comments criticizing higher interest rates was the last nail in the coffin. Which means record shorts are about to get final pole axed:

Banks led this week, but will follow yields lower:

Safe havens are final imploding

It was one hell of a week, but nothing compared to what bodes for next week:

In summary, what America needs more than anything is this quaint concept called "shared sacrifice". And it looks like that day is coming...

And, what the world needs more than anything is also shared sacrifice. Which by sheer coincidence will arrive on the same day, via overnight delivery. 

Free of charge of course. 

Beware Hazardous Immorality

Nothing was learned in 2008. Why? Because Idiocracy's don't learn...

Ten years from the Global Financial Crisis, and risks have increased astronomically. The delusion of the day is that we successfully borrowed our way out of a debt crisis. The policy response to 2008, which featured a free-money bailout for Wall Street, a doubling in the U.S. debt to bailout corporate profit, and $4.5 trillion in printed money to bailout the casino, set-up the inevitability of a far worse crash...

mor·al haz·ard
lack of incentive to guard against risk where one is protected from its consequences

"A decade after the 2008 recession, the policymakers who countered it on its front lines are worried that the U.S. may not be adequately armed for the next economic crisis."

“We let the financial system outgrow the protections we put in place in the Great Depressions and... made the system very fragile and vulnerable to panic.”

Current efforts are underway by Congressional Republicans and President Donald Trump to dismantle parts of the Dodd-Frank Act

Geithner expressed concern that the emergency powers they were able to draw on in 2008 are “somewhat weaker” today

Thursday, July 19, 2018

What A Fool Believes

Sadly, there's no such thing as unicorns, leprechauns, or free money. The truth is the exact opposite of what the Idiocracy believes. Trump's tax cut is not reflationary, it's deflationary: a giveaway to the ultra-wealthy paid for by the middle class via higher costs and higher interest rates. It won't work, other criminals have tried it already...

"Get Me Roger Stone"

"Only Richard Nixon ever sought to overtly influence the direction of monetary policy while in office"

Trump's newfound efforts to bring Fed policy into the Executive branch so as not to offset the impacts of his end-of-cycle tax cuts paid for with 100% borrowed money, are futile. It's abundantly clear that the dunces in charge of successive Republican economic administrations never passed Econ 101. Sadly, there is no such thing as "Free" money. Trump's tax cut for the ultra-wealthy is crowding out consumption, real investment, housing, and of course, Emerging Markets:

"Crowding out takes place when a large government, like that of the United States, increases its borrowing. The sheer scale of this borrowing can lead to substantial rises in the real interest rate, which has the effect of absorbing the economy's lending capacity"

Here are some examples of crowding out:

“We’re seeing pressure on both sides of the market, from increasingly expensive inputs on the supply side to prices that are charging ahead of wage growth on the demand side, and the result is that neither builders nor buyers can keep up”

And of course crowding out by Uncle Sam is far from a U.S. phenomenon. The impacts are felt across global real estate markets, with an obvious feedback loop to global banks: 

Not to mention, the dollar rally due to higher U.S. interest rates, monkey hammering Emerging Markets:

With a feedback loop to global growth and commodities:

Which means that ironically, instead of delivering reflation, Trump's reflationary tax cut is delivering deflation. 

The EXACT opposite of what every Wall Street dunce believes right now:

With a few exceptions:

The crash of October 1987 sensitized investors to the potential for stock market crashes and forever changed their view of S&P 500® returns. Investors now realize that S&P 500 tail risk - the risk of outlier returns two or more standard deviations below the mean - is significantly greater than under a lognormal distribution. The Cboe SKEW Index ("SKEW") is an index derived from the price of S&P 500 tail risk. 

The Greatest Con Job In Human History

The current U.S. administration is the least competent, least honest, least moral, least intelligent in the history of the entire developed world without any comparison. It's as if the presidency was won, against all odds, by a fraudulent Manchurian Candidate picked by Russia. Nevertheless, for how spectacularly this all ends, whether that is actually true or not, is totally irrelevant...

Because for all of that non-stop lying and corruption, on the economic side this administration has nevertheless managed to con America's "Best and brightest" - Which will amply prove my long-standing theory that they are neither. The erstwhile "left" reserves all of their outrage for social issues while being as equally mesmerized by Supply Side lunacy as the right.  

My biggest mistake over the past ten years was not realizing that post-2008 the entire developed world had become Japanified: an aging denialistic Idiocracy that will believe literally anything except the truth. Outside of that context, nothing makes sense, inside of that context everything makes perfect sense. Even to the point of being predictable, in the way one can predict what a degenerate geezer will say and do next. Had I realized that Japanification was large and in charge, I would have reached the conclusion that all of "this" would last long enough to convince "everyone" that it could go on forever. And then, only THEN would it implode spectacularly.

My bad.

At this late juncture, the gap between fantasy and reality has never been wider nor more lethal. Listening to an extremely liberal commentator on TV today, she asked Elizabeth Warren why she is so far to the left on economic issues given that the Trump economy is booming. How can she draw voters when the economy is doing so well. Which serves to prove that there is no "left" anymore, except on social issues. The 38 year Republican Voodoo Economic mythology which has continually reinvented Supply Side Ponzinomic failure as success, has been bought hook, line, and sinker by the entire political spectrum this side of Bernie Sanders. Therefore, on economic issues the masses have been near universally conned by human history's biggest fraud, solely because expectations for what constitutes a "good" economy have been lowered for nearly forty years straight. 

Japanification 101. 

Where it all gets interesting however, is in the level of Trumptopian arrogance. Because not only does Trump have Kudlow pushing Supply Side fiscal profligacy to level '11' of historically unprecedented irresponsibility, on the other side he has the Powell Fed hawkishly tightening to offset the tax cut profligacy. Japan NEVER attempted to unwind their balance sheet, whereas now the U.S. is doing so at the fastest rate in Fed history.

The Fiscal side is ushering capital into risk, while the Monetary side is locking the door behind them.

Why? Because there is no one "left" to warn them. And perma-bears have been "wrong" for ten years straight, which is apparently the time it takes to con everyone.

This just in:

"He said he's "not thrilled" with rate hikes and worries that the work the administration has done will be nullified."

I rest my case

Wednesday, July 18, 2018

The 1929 Set-Up aka. "Spontaneous Combustion"

There are exceptional EconoDunces, and then there's Larry Kudlow...

Way back in 1929, the stock market crashed and then rallied weakly for several months. Then it rolled over and declined -90% in two years. As of this week, this has been the longest "correction" in 34 years. Now longer than 2008 DURING the recession, just prior to the Lehman crash. I think we all see where I'm going with this - as long as Amazon never rolls over, this will all be fine...

Aside from the Nasdaq/Tech, every other segment of global risk markets made their all time highs weeks, months, or years ago. 

Even within Tech, most stocks made their highs weeks or months ago...

This level in the equal weighted NDX has stalled the S&P 500 twice this year, while new highs (lower pane) diverges massively:

The broadest equally-weighted measure of all U.S. stocks is the Value Line Geometric index which has yet to make a new high:

While small cap stocks have been bolstered by trade wars, large cap stocks are particularly weak:

Where this gets interesting is that in Y2K the Nasdaq tanked before the Dow. Whereas this time the Dow peaked six months ago. Meaning there will be no "hand-off" from junk to quality this time:

We've seen this movie before:

What the tools believe right now, compliments of Larry Kudlow:

"What if all of the action since the January high turns out to morph into a seven-month accumulation period? As Larry Kudlow intimated this morning in his Delivering Alpha interview, he remains open minded to the idea that after eight years of subdued business activity and growth, just maybe the US economy is only starting to shift into a faster gear precipitated by the unleashing of regulations, tax benefits and pent-up demand from shelved capex from the Obama years."

The yield curve is open to the idea that Larry Kudlow is a mega dunce. Along with everyone who believes him...

"We're shifting into a faster gear of 'extreme implosion'"

Tuesday, July 17, 2018

Human History's Largest Bubble. Is In Exceptional Bullshit.

Those worried that today's buffoons don't possess the prerequisite ignorance and arrogance to explode this bubble, are not giving them enough credit. They have it in spades. Those of us skeptics of asinine lunacy are just getting in the way. All while RussiaGate preoccupies weak-minded fools on both sides of the aisle. Of course Russia hacked the election, the U.S. does it to other countries all the time. And everyone knows that two wrongs always make a right Manchurian Candidate for president. Don't worry, there will be more than enough hard lesson to go around...

July is running hotter than expected. The Fed is hell bent on tightening until everything implodes. Trump's team of Supply-Side retards are keeping the heat on the Fed from the Fiscal side. Human history's biggest bubble is set to explode:

The short bond trade just ended, as the bond market just called the Fed's bluff...

Powell's first testimony to Congress was back in February, as shown below, this week was his second attempt to bullshit yields higher.

Any questions?

Stay tuned, more rapacious plundering is coming, by way of proving that this is the most morally bankrupt generation in U.S. history:

"Bear in mind, we can only continue this asinine level of borrowing for a couple of quarters. At most..."

Tuesday's casino bid was sponsored by volatility compression:

Banks are also not impressed by Fed b.s., now wrapping up a three wave retracement off of last week's weak earnings and this week's Fed meeting:

The oil bubble is now imploding:

So it will be interesting to see how this bubble gets unwound:

Netflix handed the world's greatest bubble baton to Amazon which bounced off the upper trend line:

Which means that the casino is operating on all one cylinder:

Casino weakness biased towards the latter part of each month is correlated with Fed quantitative tightening which is also biased towards the end of the month.

A bad time for a buyback blackout.

China is in full 2016 mode. Likely far worse...

"Confirmation that China’s economy is slowing amid an escalating trade war is a worrying omen for global growth"