And Then There Were None

Aside from left-for-dead retailers getting short squeezed into outer space, and Transports crossing end-of-cycle bridges to nowhere, global RISK IS OFF. I just thought I would point that out, because this week's Crypto meltdown and momentum stock shellacking haven't stirred stoned zombies from their stupor. Go figure...

And no one tells better end-of-cycle lies than the Financial services industry. Can we all agree on that?

Of all of the numerous lies this week about the economy, OPEC, tax cuts, money printing, BitCasinos etc. none was more dangerously delusional than Zerohedge's assertion that "global" equity markets are fat and happy for the 13th month straight. The U.S. is the only major stock market still moving higher. Europe has rolled over. China has rolled over hard. Japan has rolled over.

And Emerging Markets are getting shellacked...

Especially China Tech, the global gift that keeps on giving...

Despite the U.S. melt-up, S&P 500 volatility is rising due to the global dislocation:

Unfortunately, a tax cut can't offset global risk, it can only have gamblers looking the wrong way down the tracks when the freight train is coming from the other direction. 

The direction no one seems to ever look. 

"Best rally since March 1st"

Trump speech to Congress, March 1st, 2017:

"When we rollback healthcare for the middle class, we will provide massive tax relief for people like me"

Key reversal of fortune:

"Buy The Abdication Of Responsibility"

My cousin used to order six shots at last call. It was never a good idea...

The casino is going vertical ahead of the Senate vote. Stock gamblers have entered the glue sniffing phase...

What this tax cut represents more than anything is inter-generational abdication of responsibility. Wall Street analysts are tripping over each other to see who can issue the most bullish forecast for what happens if/when the tax cut is passed. 

"Let us therefore bow our heads and pray for the plundering of our grandchildren"

First, they must ignore the fact that this is the second longest expansion in U.S. history. And, the longest streak of monthly stock market gains in 22 years. Amid DotCom era P/E multiples, despite corporate profits as % of GDP the highest since 1929 i.e. the greatest income inequality since that same peak. All good. With the flip of just one wafer thin mint - after tax profits - everything will be A-OK. Because we all know that tax cuts are free money. These analysts also ignore the fact that the Fed is tightening both ends of the yield curve to slow the economy and will work double time once fiscal stimulus is enacted. 

Nevertheless, the Kool-Aid has been imbibed. The crack has been smoked. The glue has been sniffed.

As some have already opined recently, is Bitcoin really the biggest bubble or is it the Dow Casino - inflated by the unfounded hopium of Generation Madoff?

Good question.

My hypothesis is that they're all part of the same social mood bubble, and hence they will all implode at around the same time. That said, two bubbles don't make a right, so the logic of defending Bitcoin on the basis that it's the least impactful of bubbles, is questionable at best. 

Bitcoin had a counter-trend a-b-c rally overnight, on the hourly. Which means that this is the third wave down. The 50 day moving average is just a speed bump. A correction of the four year rally could easily take this back to $1,000 or $0 when the miners abandon it en masse.

Once again, Transports are leading (asset) "reflation"

This end of cycle delusion is no more real than Bitcoin:

"His S&P 2018 price target reflects strong fundamentals and a synchronized growing global economy"

We all know how wealth inequality was "fixed" in 1929...

The Momentum Of Inconvenient Truth

Trump's tax cut for the ultra-wealthy is the Republican solution for fixing wealth inequality. Which brings to mind the joke about the man who asked a genie to grant one wish - to have his penis touch the ground. So the genie cut his legs off... 

“Now comes the moment of truth”

“We're going to eliminate tax breaks and complex loopholes taken advantage of by the wealthy… It's all right. I don't care. Some of my wealthy friends care. Me, I don't care. This is a higher calling.”

The weakest link in Trump's tax cut, among others, is the fact that the rest of the world doesn't believe anything he says anymore. Even within the U.S., according to the most recent polls, it's encouraging to note that almost 2:1 Americans oppose the tax cut versus support it:

Nevertheless, it's that loyal base of dunces who account for why U.S. stocks are vastly outperforming the entire rest of the world...

The rest of the world is waiting for this farce to end...

In other words the genie is ready to fix wealth inequality...

"This is the moment of truth"

Key Reversal Of Fortune

It's been quite a week already and only about halfway through...

Amazon/Cyber Monday blowoff. Check.

New Fed head confirmation. Check.

North Korean missile launch. WWIII banter. Check.

Janet Yellen last chance to blow smoke up our asses. Check.

Momentum stock reversal. Check.

Volatility reversal. Check.

Bitcoin blowoff top. Check.

Which leaves OPEC circle jerk and tax cut, both Thursday...

Bitcoin smash crashed below $9,000 and is now correcting higher. The largest U.S. exchange, Coinbase, was offline for several hours today, as was the largest U.S. retail broker Fidelity.

Two strong harbingers as to what is about to come. There is not enough computer power in the world to handle Ponzi meltdown...

Speaking of key reversal of fortune. Remember two days ago...

Pisani is covering his tracks today by telling us how bullish the rotation (aka. obliteration) from Tech to Retail is...

He will be surprised to learn that record store closings is not "bullish". Nor is short-covering at the very end of the cycle:

And in the pantheon of bad late cycle calls, none was worse than Goldman's casino upgrade to level '11' bulltard last week. Subsequently they've been backtracking somewhat...

Last week:

This week:

What changed in the past week?

Not everyone got the wink/nod explaining that Kostin's asinine 2018 prediction is was the last chance to get out...

Bob Pisani needs to look at charts more often...

Margin Call

The Trump tax cut is imploding momentum. But don't take my word for it. After tomorrow banks will get sold as well...

As of now, the day is only half over and already near record volume out of momentum:

Here we go again...Fake reflation unwinding...

Bitcoin hit ~$11,500 overnight and then dropped -10% in a straight line. Now limping back. Semis, not happy...

Hiding in Transports. Won't work...

Got tax cut?

The 0% Faustian Bargain

Ponzi schemes don't so much unwind, as explode. There's no such thing as "free money", only an Idiocracy believes in such a thing. The bill comes at the end of the vacation from reality, which is bought and paid for not with interest, with principal...

Bitcoin is going full Icarus. The narrative of the day is that price measures how wrong skeptics have been to date. Unfortunately, price is a measure of how much money is going to vanish into thin air. 

There will be a lot of "acrimonious" debate when this all ends. Wandering in the desert wondering what the fuck happened? Which clowns can we trust now?

ZH: It's All The Same Trade Now aka. "RISK"

Go figure. 0% poverty capital turned globalization into a momentum con job. Since there was no income nor yield due to outsourced demand, capital was forced to cannibalize itself to create an illusory "income stream". In the context of the vaunted short volatility trade, it comes in the form of elevating one's own asset values toward infinity, while pretending that volatility compression can go on indefinitely. The fantasy of covering half the distance to the wall with each step, while never actually touching the wall. But then comes reality: margin balances max out. Momentum reverses. The butterfly flaps its wings, and next thing you know there's no one else on the other side of the trade. Textbooks don't cover tequila on the linoleum and angry spouses wondering why the college fund is in Bitcoin. 

Eventually the compressed animal spirits bolt out of the barn, inconveniently expanding the trading range. The entire charade is ruined.  

Where? Junk bonds. Oil. Muni bonds. Netflix. Amazon. Bitcoins. Semiconductors. Junk IPOs. Chinese Tech. Vancouver crack shacks.

Everywhere 0% is accepted.  

The delusion that Central Banks can control their frankenmonster is a first order fantasy. They already lost control on the way up, so they sure as hell are not going to have any control on the way down. To be sure, China will try to fiddle fuck around with their casino. They outright banned selling in 2015. In the event, the Shanghai Composite only lost 60%. Something about no one wanting to buy stocks that can be halted for weeks at a time. The law of unintended boneheads.   

Skynet trades globally on millisecond boundaries. It doesn't wait six weeks for the next meeting of the League Of Extraordinary Money Printers. 

The Crack Up Boom

Global central banks have lost control over their monetary acid trip. There is now an 80% probability of global coordinated asset crash. Plus or minus 20%. The fate of the financial system rests on BitCasino...

ZH (July, 2017): New Accounts Highest Since DotCom Bubble

2011 deja vu: fake reflation, Fed rolloff, fiscal cliff, fool's gold

Been there, done that...

Based upon the parabolic trajectory of Bitcoin, the chance of a major crash is now 80%:

It's called too far, too fast. The vast majority of people buying this thing have no clue why they're buying it other than sheer speculation - as it was with Dotcom stocks and the housing bubble. Most of the people buying Crypto were too young to learn from the prior two bubbles, hence "this time it's different", the same refrain we heard the last two times.

When Bitcoin crashes it will domino crash the rest of the cryptocurrencies, which are largely denominated in Bitcoin. ~1200 ponzi schemes built on top of an even bigger ponzi scheme.

What makes BitCasino somewhat "unique" is the fact liquidity is purposely reduced the more it increases in value. This is the "hashrate difficulty" setting which automatically increases, requiring more and more computing power to keep the currency functioning. Whoever thought of that was a fucking genius. Putting futures on this thing is the dumbest thing the futures exchanges have ever considered. Might as well put futures on horse races. Imagine putting 20x leverage on a currency that can take hours or even days to clear. It's a disaster wanting to happen, rife for manipulation. So far there's been no good way to short this thing. Wait until large scale speculators can short this thing until the miners disappear and there's no way out. 

Suffice to say when, not if, this thing implodes it will be spectacular to say the least...

In the meantime it's merely a visual indication of how much control Central Banks have lost over their monetary acid trip:

$10,000 should break any time now...

Semiconductor stocks are starting to leave the mining party early...

Can Bitcoin crash the global financial system? In the same way that Lehman pricked an eight year housing bubble, yes...