Thursday, June 1, 2017

Terminal Idiocracy aka. The Fake Wealth Effect

Apart from six mega-cap tech stocks, ALL markets now agree on the state of the imploding economy...

Unfortunately, you can't warn an Idiocracy, because they don't trust anyone who can be trusted...

Societies are ordered based upon certain character "attributes" that are deemed more or less desirable during that period of time. In this era, ignorance and arrogance in leadership are valued above all else. Why? Because even as the first order economy and status quo are disintegrating in real-time, the illusion of prosperity and success is projected over the now chasmic cracks in the facade. In other words, only the most determined of sociopaths need apply. 

In this era of the outsourced economy, distribution of wealth is not predicated upon value creation, it's predicated upon financial engineering, rent-seeking, and most importantly, the casino. This society venerates and trusts those who are closest to the casino and otherwise contribute most to propagating the illusion of fake wealth - the CEOs arbitraging the economy, the economists reading their Magic 8 balls, the Central Banksters printing money, the billunaires counting their fake wealth.

It's a societal ordering predicated solely upon smoke and mirrors, mass delusion, and dedicated exploitation.

The problem with a society led by sociopaths is that they have no clue when it's all ending. In fact they don't want to know. Therefore all effort is put into gaming the casino. 

Here we see a typical article indicating that "stocks" at all time highs are disagreeing with bonds about the state of the economy. 

Stocks are near record highs, driven by surging tech shares, a sharp contrast with the bond market, where interest rates have been sinking on worries the economy just isn't getting enough juice for growth to pick up.

"At some point, the bond market is going to be right because you have narrow leadership. At some point, those five or six stocks are going to run out of steam,  said Art Hogan...

Hogan sees a very shallow sell-off of less than five percent.

The logical conclusion of course. 

In other words, aside from six stocks, the entire stock market is agreeing with the bond market, but we would have no way of knowing that from reading the title of the article.

Average stock (% of NYSE above 200 dma):

Here we see that stock market sector rotation from cyclicals to recession stocks are agreeing with bonds:

Here we see that the disconnect between internet stocks and the rest of the market has been seen before, and resolved to the downside...

"The financial sector just gave up all of this year's gains, and some strategists say that's sending the broader market a message about the health of the economy."


"At some point, those five or six stocks are going to run out of steam"

And then fall 50-60%...