History's Longest (and most expensive) Vacation From Reality

The S&P 500 - Wall Street's primary benchmark, finally joined the Dow at a new all time (closing and intraday) high today. All it took was $6 trillion of OECD debt and $9 trillion of central bank monetizations. The truly pathetic fact of course is that the S&P is now only 2% above the peak it reached in March of 2000. However, the Idiocracy at large is willing to ignore all risk, all costs, all warning signs, as long as they can pretend that retirement and mall shopping can continue as normal...

The past 40 years of ponzi-style globalization was the longest vacation from reality in human history. It was fueled by computers, central banks, mass outsourcing, derivatives and greed - all of which were relatively recent inventions (except greed). Of course, the resulting historically unprecedented excesses culminated in the 2008 meltdown which would have put an end to the entire scheme. However, policy-makers saved the day by extending the vacation another four years. Basically we are now in a vacation within a vacation - from reality. This extension of course is costing orders of magnitude more per day than the original multi-decade boondoggle. And the bill has not yet come due; but when it does, the vacation will end and reality will come back with an uncontrolled vengeance. Granted, there are many who have lived the good life for so long they don't think it can end. Or at minimum, they think it's a fool's errand to try to predict when it will end. Suffice to say, the same imbalances and leveraged risks that led to 2008, are back again - because they never went away. So the real fool's errand is believing this can all continue, when everyone knows it can't...



Wal-Mart, king of all globalization stocks, making a new all-time high. Demand for cheap junk made by foreign slaves has never been higher.

Walmart, being the world's largest purveyor of cheap junk, is always outperforming the market when the market starts to stall out. Back in 2008, when Walmart peaked, the market crashed. Fast forward to this past October 2012, when Walmart peaked, the market rolled over, yet recovered to the recent new high. This was the headfake. This was the non-confirmation that made me think that the Walmart economic indicator was broken. But then look what happened. Walmart underperformed the market for several months all the way into mid-February. And now, in just the past 8 weeks it has ramped 15%, stealthily catching back up to the market. (The black line is the market (SPX)):

Utility Stocks Now Leading

As I said before, market leadership is rotating sector by sector towards greater and greater safety. Last week the consumer non-cyclicals made highs - J&J and Kimberly Clark. Now we see the Utility stocks. This is where large investors go, right before they head to Treasuries...

Small Caps Lagging Badly - Jeff Cooper's Waterfall Decline Still In Play

Cooper said watch the 932 level for a right shoulder preceding a waterfall decline. Today, the R2K traded through 932, but closed under. Game On...

In summary, the only people who don't see risk right now are those who have their eyes wide shut, or are watching basketball tournaments 24x7. Unfortunately, the market is a cruel mistress with a never ending ability to devour the greedy and complacent. Perma-bearish bloggers, like this one, are just another part of the headfake - tasked with repeating the same bearish concerns over and over again until investors assume these risks no longer matter. It took four long years for investor sentiment to morph from fear to greed. But of course, the trip from greed back to fear will be much briefer. At that point, the phony over-confidence supporting this ever-more tenuous market will melt like a snowball in the sun.