For anyone who isn't watching the Kardashians 24x7 or otherwise searching for missing airliners, it's a widely acknowledged fact that in addition to the Fed printing money to buy stocks, this "cycle" has been all about financial gimmickry, pretty much anything and everything a totally corrupt society could come up with: Tax inversions, leveraged buyouts, debt-funded dividends, debt funded stock buybacks. These gimmicks are all of course public knowledge, but don't take my word for it, listen to the "Mad Man":
Gains and gimmicks
"We're losing cycles and trying to make them up with one-off gimmicks"
"If I were a politician, I would do everything possible to close loopholes that let U.S. companies move and lower their taxes. But, I'm not a politician, and I salute any company that's making money for you..."
"Something Problematic Has Occurred"
Within the same clip above, Cramer goes on to say that these gimmicks have artificially boosted the market, but now it appears that multiple sectors are reaching the "end of cycle" at the same time: housing, energy, automotive, health care, banking, aerospace, airlines, transports etc.
For all of these sectors to be peaking at the same time, is highly unusual. However, it's to be fully expected in a massively manipulated, financially engineered business cycle such as this one. For five years straight, there has been relentless sector rotation causing all stock sectors to become overbought at the exact same time.
Correlation is Annihilation
Sector correlation for the past 10 years:
The correlation pane in the bottom shows the correlation between Semiconductors and Energy. Usually semiconductors rally early in the business cycle whereas energy usually rallies late in the cycle, so generally these sectors are relatively non-correlated.
Sector correlation from 2003-2007
In case you think that the chart above is an optical illusion, this chart narrows the range to the last market cycle:
The stock market peaked in 2007, when GDP peaked. Today, not so much:
The red line is GDP growth. GDP growth went negative in the first quarter of 2008, and the market peaked in the fourth quarter of 2007 i.e. before GDP. Today, as we see, the turndown in first quarter GDP was ignored, even though it's looking like 2nd quarter GDP may be negative as well:
In 2007, margin leverage peaked six months before GDP peaked. Currently, margin debt is at all time highs:
Fascism Openly Acknowledged (via ZeroHedge):
Speaking of widely ignored corruption, the U.S. Congress last week told the SEC that it did not have the authority to subpoena trading records for members of the U.S. House. This pertains to possible irregular trading activity emanating from various legislation that moved markets, specifically around Health Care. It's a widely known fact that members of Congress use the information they gain from their various subcommittees to trade stocks. And now they just decided that it's in no way illegal nor even allowed to be investigated. Business as usual.
The Stunned Dunces are blundering towards financial meltdown
The Stunned Dunces are blundering towards financial meltdown
Let's add even more risk to this equation. What are today's dumbfucks in leadership doing? With the U.S. and Europe heading into recession and Russia already in recession, they are adding ever more sanctions against Russia. Unfortunately, the Globalized clusterfuck is so intertwined that no one country can sanction its trading partners without experiencing economic blowback to their own economy. Therefore, these dunces in leadership are merely blundering their way into an economic mine field that is already primed for detonation.
The only chart you will need to trade Russian sanctions:
The only chart you will need to trade Russian sanctions:
Needless to say, that having the stock market and margin debt peaking concurrent with every single sector is a totally unprecedented situation. The only thing not peaking right now is GDP, which likely peaked six months ago.
"Something problematic has occurred"
