Monday, September 25, 2017

"Buy The Fucking Detonation"

These are some very well trained hairless monkeys. Unfortunately, having a clown as president does not constitute a "Black Swan" event. Although we already know that's what they will call it...

Reason #1: WWIII 

As we see, ordinary Americans are being pitted against each other to the sole benefit of the multinational corporation and its beneficiaries. One factor that seldom if ever gets mentioned on any blog or web site is the fact that Industrial Arbitrage via "Free Trade" allowed multinational corporations to sell off the middle class. Leaving behind the spent carcass of the erstwhile economy now overrun with the toxic weeds of rent-seeking and financialization. Central Banks didn't create deflation by increasing the money supply - that's an asinine supposition. Central Banks monetized imported deflation, in order to alchemize excess capital into phony demand. You never hear today's bailout junkies mention this first order factor - mostly out of shame. We can never blame the model itself for not working, it's always some second derivative factor that allows blame to be deflected from the origin.

And the fact that Globalization created a global third world refugee camp instead of a global middle class is of absolutely no concern. As long as the Dow is always pegged to all time highs.

Where was the corporate media in all of this? They were giving the status quo the patina of solvency. Scrutinizing every issue in isolation and never once drawing a straight line between cause and effect. Never seeing the forest for the trees. Questioning nothing. 

Back to Detonation BTFD:

Another day of this Johnson: Tech demolished with the S&P pegged to all time highs via volatility compression.

As mentioned on Zerohedge, the VVIX/VIX ratio is all time highs. Meaning, the implosion trifecta of record low volatility, record short futures positioning, and record high second derivative sensitivity to volatility are occurring simultaneously...

“I think a lot of folks have gotten lulled into a false sense of security because the short trade has gone so well for so long,” 

“We are still shorting volatility but we have an itchier trigger finger.”

Notice he didn't say they had sold. Only that risks are extreme, and they will beat the crowd to the exits at 2am when the futures roll over. Unfortunately, the record high VVIX/VIX ratio by definition indicates that they are not alone. It means that VIX acceleration sensitivity is at a record, hence the risk of a large one day percentage move is also extreme.

Which generates the detonation sequence:

Coupled with the fact that RISK IS 'OFF' for the first time in a year...

Rotating to Energy. Bad idea.

Lower yields? Clueless Fed? I don't believe it again, and again, and again...

ZH: That Didn't Work. Yet.

"Buy The Fucking Detonation"