The globalized economy is a colossal Ponzi Scheme in which the vast majority survive on the bread crumbs falling off the table. The possibility of 7 billion people achieving a consumption-oriented lifestyle is zero, so the World Bank conveniently set the poverty line at $1.25/day to legalize global slavery. As long as someone else's children are doing the suffering, it's "all good". Post-2008, this illusion was extended merely by plundering all future generations.
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:
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:
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...