Friday, December 9, 2016

"Thank You End Of Cycle Ponzi Melt-Up"

In summary, the end of the year and end of the cycle are converging into one mega clusterfuck that is one overnight crash away from obliteration...

It was that kind of week:

In summary:

A late cycle spurt in wage inflation caused reflationary expectations to skyrocket

Three of the largest Central Banks are now tapering/tightening for the first time in 8 years

Yields have spiked across the entire world, tightening monetary policy everywhere

Emerging Markets saw the largest outflows in five years

Global bonds had the worst rout in 25 years

The Anti-Globalization vote (Brexit, Trump, Italian referendum) got bought with both hands

Small caps had their biggest rally since October 2008

Financials priced in about 15 rate hikes. Deutsche Lehman led the rally

Trump started a trade war with America's largest creditor, China, on Twitter

China's capital and reserves outflow hit the highest level since last January's market meltdown

Trump handed the U.S. government over to corporate Special Interest Groups

The 1950s trade went parabolic, amid unprecedented overcapacity 

The probability of a Fed hike like the one that hammered global markets last year, hit 100%

And to sum it all up, it looks like the Santa rally already took place...

Breadth rolled over today

Equal cap / market cap ratio:

Nasdaq 100

T-bonds and yield:

The big spike in futures volume mid-week was caused by Dow theory confirmation, as the Transports finally caught up with the Industrials. We see how well that worked out in 2008:

Oil (red) was all over the place this week:
with oil stocks...

The "January Effect" was just moved forward by a month...
i.e. the propensity for small caps to outperform once tax loss selling abates for the prior tax year...

Small growth / value ratio:

The fourth overnight selloff got bought with both hands after the Italian referendum last Sunday...


Much ado about nothing...