Bubble 2.0 (2008) monkey-hammered global trade, which stalled six years ago for the first time since WWII. This collapse will kill it for good.
"Stealth" Collapse in Broad Daylight
Early cycle casualties:
Gold/silver, Apple mania, Asian stocks (Shanghai, HK, Korea), Commodities - all peaked years ago.
Recent casualties, now trading well below their highs:
Global Macro, Municipal Bonds, Bitcoin, Solar, Biotech, Momentum, Emerging Markets, Chinese Internet, recent IPOs
In the past five years, only the U.S., Germany, Caracas Venezuela, Bombay Sensex ("hope and change at last !") firmly took out their highs from 2007, as the Global Dow constantly reminds us.
They Don't Wake You Up From a Stoned Coma at the Top
Now the U.S. Dow is partying alone at a 5 month straight all time high, sucking in as many self-absorbed ETraders as possible, before it shits them out on the way down...
"Stealth" Collapse in Broad Daylight
Early cycle casualties:
Gold/silver, Apple mania, Asian stocks (Shanghai, HK, Korea), Commodities - all peaked years ago.
Recent casualties, now trading well below their highs:
Global Macro, Municipal Bonds, Bitcoin, Solar, Biotech, Momentum, Emerging Markets, Chinese Internet, recent IPOs
In the past five years, only the U.S., Germany, Caracas Venezuela, Bombay Sensex ("hope and change at last !") firmly took out their highs from 2007, as the Global Dow constantly reminds us.
They Don't Wake You Up From a Stoned Coma at the Top
Now the U.S. Dow is partying alone at a 5 month straight all time high, sucking in as many self-absorbed ETraders as possible, before it shits them out on the way down...
For five years straight, liquidity and solvency have gone in opposite directions. Liquidity available to lenders increased (via 0% interest rates, monetization etc.) while the solvency of borrowers decreased (via increased liabilities, reduced incomes etc.). Now global liquidity is falling for the first time in five years.
The Bulls are Scared and Scarred:
"with many formerly highflying momentum stocks like Splunk, FireEye and others down 50%-75% or more in the last three months, the drawdowns for anybody with exposure to those kinds of stocks is big and ugly."
"We’re not quite to the summer yet, but the near-term weakness in the markets has the fear building and the bulls getting worn down."
"despite the broader indexes still being within a day’s move of new all-time highs...I’ll guarantee any fund manager reading this article who has to measure their performance against the indexes for their benchmark is gulping right now, scared to think of the recent underperformance they now need to make up. I’m glad I’m not a fund manager anymore."
Self-absorbed morons had five years to reduce their debtloads, but instead they used the "free" blood money to go ALL IN on the status quo. Now their balls are in a vise and the max pain trade has arrived. The hook is set and the pain is rising.
The only question left is who will blink first?
European nations with unemployment rates north of 25%, zero growth, and Ponzi-financed debts?
Chinese lenders to $0 down borrowers, to buy empty condos, houses, and entire cities?
Overleveraged global carry traders caught in the vise between strengthening funding currencies, higher interest rates, and lower Central Bank liquidity ?
Russian billionaires spending a quarter of a billion dollars for penthouse apartments in London ?
Corporatized Zombies caught in a lethal psychotic-inducing vise between maximum debt, lower employment, stagnant wages and ever-rising real cost of living ?
Clueless speculators paying $millions+, 5% down, for crack shacks in Vancouver?
Overleveraged corporations that paid out *special dividends* using junk "covenant-lite" loans?
U.S. College students owing over a trillion dollars and growing, in collective debt, with entry level job opportunities at an all time low ?
UnHedged funds reaching for every type of yield known to man to make up for continuing massive underperformance ?
HFT Bots front-running ETraders on millisecond boundaries on ever-decreasing volumes pretending to be "market makers" instead of "liquidity takers" ?
Minsky says the most likely scenario is all at the same time. Ponzi schemes don't go in reverse.
