After this, the frat boys will be flunked, by history:
Today's "best and brightest" are corrupt con men who are none too bright to say the least. This time they conned themselves. Unfortunately, America has become a profoundly corrupt country wherein inter-generational theft is the go-to strategy for RepubliCons. But don't take my word for it:
"The driver of our debt is the structure of Social Security and Medicare for future beneficiaries,” Sen. Marco Rubio (R-Fla.)"
Be that as it may, the mentally challenged and Larry Kudlow will be shocked to discover that the rest of the world has no interest in funding a tax cut for America's bailout class. I say shocked because it turns out that Trump's own Goldman Sachs appointed Treasury Secretary doesn't have any clue how the "system" works. You see, the U.S. MUST run trade deficits in order to finance its colossal fiscal deficit. That is the Faustian Bargain behind Supply Side dumbfuck-o-nomics. That's the only thing that has kept interest rates from exploding higher.
"Treasury Secretary Steven Mnuchin's comment that a weak dollar is good for the country accelerated a decline in the currency and fed fears in a market already speculating that White House may make the dollar less attractive for the longer term."
In other words, Donny can't deliver on his promise to balance the trade deficit AND give Billy Gates a tax cut at the same time. His patented I want my cake and eat it too fantasy. But, he's not bright enough to figure that out.
Speaking of the rest of the world, here is where it gets interesting. Volatility's paid vacation is now over. The short volatility trade is unwinding in broad daylight, and it turns out the catalyst for ending this trade was the casino melt-up itself.
Yesterday, Zerohedge noticed the same phenomenon, although they offered no definitive reason why this is happening, just that it is in fact happening.
Here is why:
Ironically, the global melt-up ended the low volatility regime which had been in place since the election. The manic FOMO rally imploded the short volatility trade:
Ironically, the global melt-up ended the low volatility regime which had been in place since the election. The manic FOMO rally imploded the short volatility trade:
On a longer-term basis we see that the machine-like levitation in Emerging Markets is what gave the S&P 500 a paid vacation from reality - The likes of which has never been seen before. As we see in the top pane, RSI has not fallen below the mid-point since the election:
As indicated above, volatility is already trending higher INTO the melt-up. Which portends badly for the reversal phase.
As pointed out previously, the largest holdings in the EM portfolio are large cap Asian tech stocks which I show all the time.
But here's another top holding, for example:
But it gets even more interesting, because despite the S&P 500 being record overbought, the average stock has been falling behind the average for many months now. A divergence that has not been seen before - at least in the past two decades:
What this means is that when the last remaining large caps roll over, the index will implode straight down
Any questions?
