Sunday, January 17, 2016

No Way Out: The Dumb Money Is Gone

Central Banksters are out of ammo. The dumb money is ALL IN. Institutions are selling every rally. And hedging costs are at crisis levels. 

Blogging about collapse now is like describing a 400 pound fat man shitting his pants while having a heart attack. It's unseemly and redundant. 

The Japan Nikkei just entered a new bear market defined as down -20% from the highs. 

Bear markets:
Japan Nikkei: -20%
MS World ex-U.S.: -23%
Emerging Market composite: -34%
EuroStoxx Composite: -21%
Toronto Stock Exchange: -23%
Shanghai Composite: -44%
Chinese small caps: -57%
Hang Seng (Hong Kong): -32%
Russell 2000 Small Cap: -24%
Dow Energy Sector: -47%
Dow Transports: -28%
Biotech: -30%
Wilshire total market index: -15%

The monthly VIX is at levels associated with prior crises and bear markets. The cost of hedging in size, is already prohibitive. So either investors onboard MORE risk or the cost of hedging skyrockets from here as markets bleed lower...

To illustrate how sad and pathetic, this entire charade has become, I play a game called "What year is it?".

Here are the rules...

Japan Nikkei: 1986

France CAC: 1998

FTSE Italy: 1997

WTI Crude oil: 1982 is how much data I have...

MS World ex-U.S.: 1998

CRB Commodity composite: 1972

London FTSE: 1998

U.S. Employment/Population ratio: 1977

U.S. Household Income: 1996

U.S. Home prices: 2005

Wealth inequality: 1929

Housing starts: 1960

Absolute # of Manufacturing Jobs: 1940

"Those who speak of economic decline are peddling fiction"

Those who don't acknowledge economic decline are about to get buried.