Tuesday, May 2, 2017

For The Love Of Ponzi

The Fed is boxed in by their own bullshit - either they admit that the economy is slowing, and implode the stock market, or they continue raising rates, further imploding the economy...

ZH: Why Is The VIX So Low And Complacency So High?
"Clearly 'earnings growth' is an ENORMOUS factor right now"

'Earnings growth' visualized

We've never seen this before - a collapsing earnings yield (E/P) and quiescent VIX:

Also, Energy is expected to contribute 43% of Q1 earnings growth.

Here is what Energy stock investors think about forward prospects for Energy earnings and how that correlates with the price of Oil:

Then there is the other major reason for the imploding VIX, cited in the same article above:

"short vol' isn't just an institutional trade anymore, it's massive with retail as evidenced by the shares outstanding in the various VIX ETNs.  FT highlighted over the weekend that ‘short interest’ in VXX has actually outpaced creation of new shares in VXX this years, which is indicative of this growing retail demand for the ‘strategy.’  Currently per my stock loan team, VXX short utilization spiked to an insane 95% yesterday (% of the ‘free shares’ being used to short)."

Momentum AND shorting volatility. Two things that implode great together...

Meanwhile, outside of Fantasy Land...

U.S. light vehicle sales (millions of units, blue)
Auto leases, year-over-year, $millions:

Short-term car leases were the auto industry's new trick for turbo charging sales...which just means a glut of cars on the used car market...


Or not...

ZH: America's Debt Serfs Are Imploding. Again...

Credit-card specialist Capital One disclosed in its Q1 earnings report last week that provisions for credit losses rose to $2 billion, with net charge-offs jumping 28% year-over-year to $1.5 billion.

Synchrony, Capital One, and Discover – a gauge of how well over-indebted consumers are managing to hang on – have together increased their Q1 provisions for bad loans by 36% year-over-year. So this is happening.

"What's in YOUR wallet?"