Saturday, October 28, 2017

"Why Come No Tats?"

The good news is that fake wealth reflation is real, the bad news is that economic reflation is a hoax...

"Don't worry, the rest of the world is doing great"

The IMF are trend-following chimps. The Idiocracy can take solace in the fact that some things never change. China's twice-decade Commie-Capitalist Party meeting just ended this past week. Xi Jinping unanimously declared himself leader. 

Any questions?

The five largest stocks in the casino - accounting for the majority of 2017's casino gains - just had their largest one day relative gain since 2009. Cramer says we should already be triple down, what are we waiting for?

"So large was Friday’s rally in the biggest companies — Facebook,, Alphabet, Microsoft and Apple — that without them, the S&P 500’s gain went from 21 points to almost zero."

Market Cap of Five Largest U.S. Companies Up 35% Since The Election

Now picture a day when the five largest cap stocks in the casino are not catapulting the Nasdaq to the biggest relative gain in eight years. What does that look like?

The Dow has gained 15% year-to-date. The reflation trade has gained a paltry 6.5% year-to-date. Why come? Because the Fed has been doing their part to implode the economy for the entire past year, so now it's time for Trump to deliver on his reflationary tax cut for Bill Gates. I can feel the nickels falling on my head already. I may have to go out and buy a gumball.

Contrary to overwhelmingly ubiquitous belief, the tax cut was priced in ~9 months ago. U.S. reflation was mostly a bygone 2016 story. The Dow gained 5,000 points from the February 2016 low through February 2017. Subsequently, the next 1,000 points took five months, powered entirely by big cap tech. Big cap tech accounts for almost all of the 2017 gains - by coincidence, a growth/deflation trade. Only when Treasury Secretary Mnuchin lit a fire back under the tax cut in early September, did the reflation trade snap back to life:

This tracks the reflation trade (black) versus the Dow, gray. Reflation burned out this past March, then went sideways through August until Mnuchin signaled tax cuts are coming.

Which fueled the blow-off top in everything from revenueless Biotech to Fuck Token...

This melt-up phase has been a combination of reflation/deflation, called buy anything at any price, for any reason. This coming week the RepubliCons need to put up or shut-up by revealing their vaunted tax plan. Deja vu of the TARP Senate/House vote in '08, we will now see if markets do indeed sell the news. 

"Ways and Means Chairman Kevin Brady (R-Texas) confirmed he’ll roll out his bill on Wednesday and begin marking it up in committee on Nov. 6, a week after the memo’s timeline."

Back to the casino, Big Cap Tech just saw the biggest surge since 2009, and before that the TARP passage in October 2008. Right before the wheels came off the bus:

Yes, this Nasdaq 100. What's not to like?

Speaking of TARP:

Buyers of real stocks have decided it's just safer to buy Treasury bonds, because they don't tend to go down -50% in a few weeks. Which means that 280 P/E Amazon needs to keep gaining a Fedex in market cap every day, to keep this shit show running:

And as far as risk-seeking, this chart shows equal weight (speculative) Biotech versus big cap real Biotech:

How to get to Trump's goal of 3% GDP growth? Grow the deficit at 5% per year, how else?

The deficit could reach $1 trillion as early as 2019 – four years earlier than the CBO calculated in January.

Noting deficit trends since 1980, the analysis adds that the nation "has piled up debt more than twice as fast as economic growth."

The $1 trillion deficit level held symbolic power for Republicans during President Barack Obama's tenure. They used the prospect of "trillion-dollar deficits as far as the eye can see" to win back the House in 2010 and force a Democratic administration into contentious budget negotiations."

The only thing growing faster than the deficit are big cap tech ponzi valuations:

In technical analysis, a shooting star is interpreted as a type of reversal pattern presaging a falling price