Sunday, February 7, 2016

From Manic to Panic aka. Ponzi Collapse

The world's largest (sovereign) wealth funds are all liquidating at the same time into an illiquid market that is already in RISK OFF mode. Selling the family jewels to pay the bills. Globalization's final chapter has arrived...

The hook is set. Social Mood shut down this week, as momentum traders got obliterated. Two years of internet stock gains gone - stocks making new highs just five weeks ago are now back in 2013. All of last year's leaders are now laggards. Momentum strategies that saved funds last year, just got them obliterated. As one would expect, the global Ponzi scheme is unwinding at lightning speed. Stoned zombies are too shocked to even react, so they pretend it's not happening. The speed and devastation of what comes next will exceed any possible description. 

Below, the All World stock index with China's foreign currency reserves. The World's biggest hedge fund aka. "China" is force liquidating:

Is global risk aversion accelerating the reserves decline, or is the reserves liquidation generating global risk aversion? Social Mood Theory (Elliot Wave) would posit the former, while Barron's posits the latter. But since I don't sell newsletters, I would say both. Meaning there is a feedback loop between risk aversion, lower prices, reserve liquidation, more risk aversion, even lower prices, liquidation...etc. In other words, last week's margin calls on momentum hedge funds are not any more conducive to higher prices than China's reserve desk entering the market every day.

Below, the Internet Fund with the fake economy, I mean what tools call the *new* economy. Two years of momentum stock gains gone in 5 weeks aka. Fifth wave overthrow reversal "bull trap"

Re-pricing of growth multiples visualized
Investors want their return NOW, they don't want Jeff Bezos selling dollar bills for 90 cents at a 450 P/E multiple, pretending he'll have a business one day, instead of the world's most overpriced charity: