Concentrating all asset flows into a handful of stocks has left the casino "fragile" to borrow Taleb's parlance:
Speaking of fragility, if we want to see what is in store for the DowCasino, we need look no further than BitCasino, locus of what passes for modern "financial innovation":
In the past week, the largest U.S. Bitcoin broker, Coinbase, went offline twice. The largest U.S. exchange, GDAX crashed, the CBOE futures were halted limit (up) multiple times, and $70 million in Bitcoins were stolen. All of this "innovation" controlled by Japanese housewives leveraged 15x. But really, what could go wrong?
Meanwhile, the head of Japan's largest cryptocurrency exchange, bitFlyer, revealed to the FT what may be the secret sauce behind Mrs. Watanabe's unprecedented control over bitcoin: 15x leverage
Worse yet, in order to accept the fantasy that BitCasino is the leading edge of financial innovation, we have to ignore the blow-off top in the Dow, semiconductors, FANG stocks, Emerging Markets, China Tech, TitCoin, and FuckToken that has taken place at the exact same time. In other words, it's pure coincidence that a Social Mood melt-up occurred as Bitcoin "reached its potential".
Here is where it gets interesting. The simultaneous melt-up of all sectors of the casino has never occurred in any other cycle. Usually there is sector rotation as the cycle advances, from cyclicals to growth, to value/dividend plays. In other words, as the economic cycle progresses towards recession, the stock market adjusts its underlying foundation to price in economic weakness. Not this time. In this cycle, relentless sector rotation has kept the largest stocks in each sector bid, while the remainder of the casino rolls over. Meaning, there's no real support for this point in the cycle:
Case in point, Transports:
Consumer Staples
Big cap Tech
Energy
Healthcare
Which leaves Financials rolling over ahead of the Fed rate hike this week:
