Tuesday, August 1, 2017


When the party is at its peak no one wants to rain on the parade. If everyone would buy more pot stocks risk could be zero...

The gap between fantasy and reality has never been wider. Stoned zombies are playing follow the dumbfucks. Straight over the cliff...

In a nutshell, the more capital is over-committed to revenueless Biotech and Chinese internet stocks, the less stress there is in the "system"...

St. Louis Fed Financial Stress Index:
"The STLFSI measures the degree of financial stress in the markets and is constructed from 18 weekly data series: seven interest rate series, six yield spreads and five other indicators. Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together." 

What about Bitcoins and pot stocks? Where do they fit into this model?

Here we see that when stress is lowest, risk is highest. The taper tantrum occurred when Bernankenstein threatened to reduce dopium flow to his addicted junkies. When financial markets had a hissy fit, he delayed tapering by seven months until Janet Yellen could take over. One year later, markets shit an even bigger brick.

Something about this model isn't working, I can't put my finger on it...

Financial stress (red) with Rydex cash balances (black)

I see how this works now, the more leverage, the less risk...

Retail, car sales, commodities, industrial loans are getting obliterated, yet I am to believe that financial stress is at an all time low:

"as the level of financial stress in the economy changes, the data series are likely to move together"

Retail bankruptcies up 110% year over year, but financial stress is low. Sure.

Change in inventories (black). Financial Stress (red):

"Don't worry, Amazon is just blowing up the economy and Amazon"

And for those who say that the VIX isn't working anymore. I beg to differ. It's perfectly confirming that 18 financial asset classes have been bid up to historically asinine levels amid mass complacency.

VIX black:

What about Apple?

Tomorrow Apple will likely gap up due to the fact that it beat lowered expectations consisting of the lowest sequential revenue in four quarters. 

All in anticipation of the iPhoney 8c++ which will cost twice as much as the iPhoney 7, despite only being "one" better. Yes, you read that right: $1100 for a dumb phone.

Aside from the 80th iteration of iPhone, this rally is running on glue fumes and revenueless Biotech which is now leaving the party:

Speaking of fantasies, oil and commodities are rolling over again. In other words the same problems from two weeks ago were magically put on hold during the latest OPEC circle jerk rally.

Why? Because this sell-off is not about the price takers on the supply side, it's all about global demand:

"Keep buying Netflix, financial stress is at record lows"