A Jedi Mind Trick For The Idiocracy

Central Bank Programs and American Idol Merely Conceal the Burgeoning Collapse...
Central Banks across the developed world have been attempting to use monetary liquidity to prevent the inevitable convergence of our standard of living with that of the Third World. Of course it's a futile task and suffice to say, that adjustment would have already taken place after 2008 if they hadn't intervened to prop up asset markets. Unfortunately, once the developed nations took the easy path of trading with countries that have no labour or environmental standards, the (downward) convergence in standards of living became inevitable. It didn't help that the developing nations suppressed their own currencies and otherwise recycled their profits back into developed world debt in order to sustain their competitive advantage, however artificially. All that strategy did was to temporarily subsidize our lifestyle gap while our nations' debt balances accumulated steadily. Of course, this strategy of using Central Banks to levitate the financial assets, even as workers and consumers fell ever further behind the solvency curve was a fool's errand of the highest order. It had no chance of ever fundamentally rebuilding the economy, much less generating inflation. All the money flowed straight into the stock market.

At this juncture it's important to see past all of these Central Bank interventions that are merely sound and fury signifying nothing. When viewed in the context of the long-term trend in wages and core inflation, it's overwhelmingly clear that Central Banks lost the real battle a long time ago...

Keeping Up With the Dow Jones's

EWI pointed out last night that the Dow made a new multi-year high of 14,100 yesterday - the highest level going back to 2007, albeit still slightly under that year's high of 14,200. The high was unconfirmed by all of the other major U.S. indexes. Apparently, at the last major top in 2011, the same situation occurred - the Dow was the last index to top out. So, to recap the current set-up, the Nasdaq outperformed through last September, then the Russell 2000 small cap took over and outperformed until last week, now the Dow is leading...This article said the exact same thing yesterday, that large cap dividend paying stocks (i.e. the safest) are now outperforming the rest of the market. Which means only one thing - that all other asset classes are exhausted, so investors are clinging to the least risky risk asset left - dividend stocks...

"Greedometer" flashing red (7900 out of 8000)

Meanwhile, from a guy named "Jeff Seymour" who has been studying all of the various factors that lead to market crashes, his "Greedometer" is flashing red. His factors are: the Vix, the economic leading indicators (WLI), insider selling, profit margins, # of selling climaxes (new highs/reversals), advisor sentiment, margin debt, and the put/call ratio. The maximum possible reading is 8000 and the index is currently at 7900 - the same level it hit in 2007. The bottom line is that contrary to CNBS and all of the other infotaintment spewers, there is no new bull market underway, just a new market for bullshit...Full story here.

Maximum Greed: History Will Not Be Impressed

Today Sheila Bair, a Republican and former chairwoman of the FDIC, penned her own albeit meek diatribe against crony capitalism (below). Upon reading it, I was left with only one question that apologists for "the system" that allowed greed to be taken to its full self-cannnibalizing extent, will be held to account for on the other side of this fiasco i.e. was this inevitable? Was it inevitable that the American middle class would be eventually marginalized into oblivion to the point of being derided as "socialist" for accepting food stamps to feed their children? Because if it wasn't inevitable, then the beneficiaries of this catastrophe need to cough up their ill gotten gains from pursuing the rent seeking "activities" that led the U.S. to this  economic dead end. If it was on the other hand inevitable, then capitalism itself has a lot to explain, as to whether any sane nation would want to pursue this model. And suffice to say, it would be a hell of a lot easier for the Lost Boys of the Idiocracy to defend their deluded fantasy that the country's economic malaise is due to the laziness at the bottom, if it wasn't for the fact that corporate profits as a % of GDP are at a 70 year high and wages as a % of GDP are at a 70 year low, and there is a distribution of wealth that would make John D. Rockefeller blush. Of all the "unsustainable" aspects of this Ponzi model, nothing is more unsustainable than these historically enormous profit margins, something Wall Street is going to learn the hard way. And I've heard some dunces on the right call food stamps a social program. Allow me to clarify - a social program gives people the comfort of knowing that their country is looking out for them. Food stamps by contrast, are merely tokens to keep the heavily armed and increasingly enraged masses at bay long enough for the wealthy to make alternative living arrangements...

The Last Pump and Dump

Heavy Distribution - A Net Month's Worth of Selling Already...
Whatever conviction the market lacked on the upside, it is already more than making up for on the downside. Look at the lower volume pane where four up days with volumes below 100 million, including Feb. 12th's insanely low 65 million, have now been offset by four down days with volumes above 150 million, culminating in today's 245 million. As of today, total down volume exceeds total up volume on a daily cumulative basis going back to January 22nd - despite a ratio of 14:10 up versus down days. So even though it has only been four days since the market made a six year high going back to 2007, we've already seen a month's worth of selling camouflaged by the fact that the market rose more on its up days than it fell on its down days despite volume being higher on the down days. That's what professional traders politely refer to as "distribution" aka. institutional investors unloading large amounts of stock onto small investors after a big run-up...

Ceteris Non Paribus: Everything Is Not Equal...

Ceteris Paribus: Latin for "all else being equal". What it really means, in the context of an economics lesson, is that there are millions of variables, but ignore all of them except for these two... At that point, any independent thinker hunkers down for an hour lecture consisting of being showered with assumptions-based bullshit. Likewise, when our esteemed econo-leaders such as Paul Krugman speak with certainty about uncertain things, any amount of humility would require them to admit that there are an unknown number of factors that affect the global economy...

Living Large In the Third World

No developed country has greater concentration of income and wealth and yet constantly derides its working class as moochers and "takers", as the U.S. I can tell you how it works in the other developed countries, because I've lived in a few - no overfed RomneyBot at the top would dare disparage the working class and be fully intact by the end of the day much less run for office. People know who does the dirty work in the real economy. The days when the vulture capitalists can milk the U.S. middle class with impunity, are coming to an end...

http://en.wikipedia.org/wiki/Gini_coefficient

Buried Alive By The Globalized Ponzi

While we wait for this lurching clusterfuck, euphemistically called the "globalized economy", to collapse in on itself like a cheap tent, below I recapped the central themes of this blog. When the Idiocracy catapults itself into the brick wall known as reality yet again, my days of blogging will be over. Soon, even the Captains of the Idiocracy will be forced to acknowledge the overwhelming disaster they have created, at which point the only place they will be safe will be Antarctica...

A Village of Idiots

As we would expect at this juncture, the self-nominated "best and brightest" are providing great spectacle with their war of words and infotainment, all while the real risks simmer in the background, wholly unnoticed by the Idiocracy and the mental midgets running the U.S. and global economy. The latest diversion from reality, is a feud between Paul Krugman and Joe Scarborough that started when Krugman stated on "Morning Joe" that the Social Security\Medicare crisis should be ignored until the day the programs collapse around 2025. Brilliant !  Milk the system for all it's worth and then bury the grandchildren under a mountain of debt ! How did we get so lucky to have this kind of thought leadership?

The New Wall Street: Lipstick on a Pig...

I spent the evening in the local mega-bookstore. In additional to learning about every other subject under the sun, I searched high and low for any confirmation that the global economy was in the least bit of jeopardy. I found scant evidence that there is the least bit to be concerned about. Apparently, everything that wasn't done after 2008, is still working out just fine. Oh right, until I came across this article in The Atlantic informing us that Wall Street is doing the exact same things, only under a different name...

Peak Irresponsibility

I'm reading some pretty fucked up and mostly mutually conflicting global disaster "theories" these days. The wheels of motion are spinning so fast across their multitude of axes, that everyone and their dog who isn't fixated on American Idol is now grasping for theories as to how, why and when this entire shit show is going to come flying apart...

Europe Leading The Way Down (Again)

Macro Economic Collapse

Of course my over-arching premise is one of inevitable economic collapse - now occurring in real-time, albeit entirely ignored by the lamestream media and policy-makers; a collapse merely delayed and obscured by HFT bots using cheap leverage supplied by Central Banks attempting to levitate global asset markets with a valuation north of $200 trillion, indefinitely. Just yesterday, Walmart, grand purveyor of cheap junk, indicated that monthly sales for February are off to the worst start since "2006". They blamed the shortfall on the payroll tax increase which reduced pay by $15 per week for a worker making $40k/year. Suffice to say that if the solvency of the economy can be impacted by a $15 pay reduction, then this system is not what we might call systemically resilient. We used to say that the average American was one paycheck away from bankruptcy, now it appears they are one work hour away...

Volume Collapse

Recently, I showed several posts indicating that as we would expect in a dying bull market, stock market volumes are dwindling to nothing as real buyers are pushed out of the market due to 1) over-valuation 2) recurring short squeezes 3) depleted capital, as mutual fund cash balances reach multi-year lows.

Portends Market Collapse...

Pampered Fucking Pricks

This society is overrun by pampered, entitled fucking pricks. So much so, that we have all just gotten used to dealing with them. Every day we come into contact with these over demanding assholes, yet we just put up with it, because apparently societal order would collapse if we didn't have an entrenched hierarchy, no matter how phony or superficial. This is one of the most egregious aspects of any Ponzi Scheme - the fact that it pushes the worst people to the very top, facilitated by their sociopathic ability to control, manipulate and otherwise do whatever it takes to fuck everyone else over on their way up the ladder...

We've Seen This Movie Before, We Know How It Ends...

I just read a technically oriented financial pundit who was asked if this was a triple top. She quickly dismissed the idea, on the basis that such a formation would imply a next move that would take the S&P 500 below the 666 low of March 2009. In other words, it could be, but since such an event is unthinkable, it can't be...that's the thought process of the Idiocracy in a nutshell at this juncture.

Even on this very long-term chart, the latest spike to a high is vertically ludicrous. And for Macleans (Canada's version of Time magazine) to tell us this week that now is a great time to buy stocks, is beyond insane. We see how well buying at these levels worked out the last two times. In fact I lost a chunk of change of my own atop that first spike back in 2000. All I thought afterwards, was what a fucking chump. How did I not see that coming. Of course the signs of unsustainable excess at that time were lined up the same as they are now. So the real question on the table at this juncture, for the "buy now"/new bull market dunces - who is going to stump the next $8 trillion of combined fiscal and monetary stimulus that it took to levitate global markets this far?

Only At The Top

And from my home country, no less. This will be the gift that keeps on giving for the dunces who wrote this timely story...

h/t: Elliot Wave International (STU: Feb. 13, 2013)

Congestive Market Failure

[Updated February 12th, 2013]

Recently I showed that stock market volumes have fallen in half since 2008. Seventy percent of the remaining volume is now accounted for by HFT Bots churning on millisecond boundaries. Now, just in the past couple of days, volumes on the most actively traded market ETFs (SPY, QQQ), have fallen in half again, relative to their 90 day moving averages.  Yesterday, I showed that SPY volume was lower (on an hourly basis) than Christmas Eve which was a half day of trading. Today's volume was even lower at 64 million, which is 57% lower than Dec. 24th volume, on an hourly basis. 

Contrast these collapsing volumes with the daily pollyanna bullshit being spewed by the lamestream business media. Conviction, in market terms, is measured by volume, and by that objective standard this Central Bank levitated market has a quarter of the conviction towards this bogus economy as it did at the prior top in 2007. In what will be history's largest pump and dump, these prices we see now on ludicrously low and manipulated volumes are merely an illusion. These will not be the prices obtained by motivated sellers all trying to get out the same door at the same time as HFT Bots conveniently decide they don't want to be on the other side of the market anymore...

SPY (S&P 500 ETF, Volumes):

Fool's Gold

The arguments to own gold right now are so intuitively obvious that one feels a fool not to own it. In past history, there has never been a case where "money printing" didn't eventually lead to runaway inflation.

Unfortunately, for the gold thesis, we don't have an economy based on cash, we have an economy based on debt...

Burned Out On The Race To Nowhere

We've all come across burnouts. Most of us have a few (or more) in our own families. You know the type - they were once the life of the party - the fun ones to be around. Not anymore.  Now they are sanctimonious teetotalers and "Easy Does It" types. Whereas they used to do everything, now they won't do anything...

Lie to Me, Please ?

I took a week off from blogging so I could step back and gain some perspective on this lurching catastrophe known as the global economy, swaying back and forth under the overwhelming weight of its own stagnant excess; all while global bureaucrats scurry hither and amok down the crack of the ass of their elephantine monstrosity, doing whatever it is that they do. So while we wait for this illusion-formerly-known-as-the-economy to come to its inevitable sudden and unexpected heart attack, amid the stifled screams of esteemed economists watching as their retirement plans are refactored down to numbers of bags of dog food, I stumbled across another overwhelmingly pathetic attempt by the Idiocracy to magically repackage bad news into good news:

"Stocks Up...Best Close For the Nasdaq Since 2000" !  

This really got my attention; I had to see what all the excitement was about, since the younger me still has a lot of money buried somewhere atop the Nasdaq circa 2000...

Occupy Wall Street Was Right (Oh Well, Too Late Now)

The media, government and general public ignored Occupy Wall Street, choosing to deride them as "lazy hippies". The commonsense OWS message was that Wall Street needs to be reformed immediately, to avoid a repeat of 2008. Unfortunately, the dunces at large will believe a lot of things - anything really -  but reality is not one of them. So by taking their usual path of least resistance and willful ignorance, the soon-to-be-bankrupt Idiocracy has unwittingly sealed its own fate.

Below I lay out my comprehensive thesis as to why an epic global markets collapse is inevitable and imminent...

Why Wall Street Lies...Constantly

The chart that stains Bernankenstein's underwear: 

The Velocity of Money is collapsing. More money in the monetary base, but less is making it into the real economy... 

I just read this article on Zerohedge about mega-investor Kyle Bass who is telling us in very cogent terms that inflation is inevitable, therefore (unspoken) everyone needs to buy gold now to protect themselves. In my naive younger days, before having been tricked a few times - ok more than a few times - I would have surely jumped onboard the gold bandwagon and bought as much as possible, or until my wife realized what I was doing (again)...

Buried Alive

For anyone who was the least bit curious as to what it feels like to be buried alive, well now you know. Apart from the escalating sound of gun fire in the ever-closer distance, for the most part this society remains comfortably numb, even as shovels of dirt are being thrown on its face...

Dislocations

The headline yesterday was that the U.S. stock market had its best January since 1997. Given that risk assets have been almost 100% correlated these past several years, it's no surprise that the pollyannas "forgot" to mention that several risk assets are already trading below their January 2nd "fiscal cliff" gap open:

Apple - most overowned stock of this era

Gold - most overloved, over-advertised and overowned asset of this bubble cycle

Spanish stocks - canary in the coal mine for European stock markets

Junk bonds - gave back four weeks of gains in about three hours earlier this week

Other than that, everything is A-ok...

Banzai !!!

[Updated:  Feb. 1st, 2013] Updated yet again...still insane...

[Original Post: Jan. 17, 2013]
When Japanese Kamikaze pilots went into battle, their explosives-laden aircraft only had enough fuel for a one way trip - for obvious reasons. The same can be said for this liquidity propelled rocket ride we call a market. When Bernankenstein started adding liquidity to the markets at the bottom in 2009, he knew he would have to continually add ever-more monetary rocket fuel to keep assets levitated - which he has done, every stage along the way.  Whenever it looked like the rocket ride was stalling, he stepped in with yet more dopium.  The result is what we see below, a parabolic rocket ride with no exit strategy whatsoever...The Idiocracy at large hasn't cared about this ludicrous strategy, because stock prices have generally been going up; however, they will be rudely awakened from their narcoleptic food coma when they find out that they only paid for a one-way ticket...