Thursday, July 21, 2016

Cyclical Prosperity: Secular Entitlement

Like an old age home watching re-runs, they keep forgetting the ending. Bubbles burst when the fewest people expect them to...

The attention deficit Idiocracy has forgotten that Monetary Policy is cyclical and can in no way offset an imbalance of trade. As the Japanese have demonstrated for 25 years straight:

CasinoNomics was invented in Japan:
Nikkei with BOJ balance sheet (red):

Japan has had at least five bubbles and busts since 1990, each involving ever-more asinine Monetary expansion. Now featuring the BOJ balance sheet growing at $1 trillion per year, and a currency that's totally out of control.

For our part, the roller coaster ride to the deflationary abyss is *new*, since we've only experienced three bubbles in 18 years, each requiring ever-greater amounts of monetary dopium and each imploding with ever-greater dislocation.

A liquidity driven rally visualized
Earnings yield:

Speaking of cyclical unsustainability. Here are some well known cyclical stocks...

Car Max

Whirlpool appliances:

United Airlines

Avis Rental Car

Valero (refining):


This cycle hinges on 4x overvalued recession stocks now...