Thursday, February 15, 2018

1929: Canary In The Implode Mine

I see no hardcore bears out there. Just Wall Street self-dealing, as usual. "There's so much horse shit in here, there must be a pony somewhere..."

Unfortunately, comparisons to 1987 are spurious. Unlike now, that event was not the end of the rally nor the end of the cycle. Which makes this event more akin to 1929...



Even us "perma-bears" are right once in a when-it-matters-most. For exactly two years - this week - since the February 2016 low, perma-bulls have been "right" to buy the dip. Now they find themselves a tad over their skis but yet still recycling the same witless "wisdom". The hairless monkey is inherently predisposed towards optimism - without it we could never face the future. Optimism predicated upon wise and thoughtful action is warranted. Whereas optimism predicated upon depleted personal savings, rising interest rates, a bubble in assets, Inter-generational plundering, and non-stop bullshit, is not warranted. Knowing the difference, is key. 

Subsequent to last week's "event", we've been hearing a lot about the "late cycle", as in pre-recession. Of course, Wall Street being what it is, can't possibly conjure a reason to sell, therefore it must be a reason to buy. So it is with mild contrarian interest, I read why this dip must get bought. 

"it was the USD breakdown which [has] provided the most relief for US equities...What drove this next leg lower in the “short USD trade,” - is a larger view of what the particulars of the inflation report said about the status of where the US economic cycle is (hint: late-stages)."

Got that? You buy stocks because the dollar is imploding, because the economy is imploding. Holy fuck, with logic like that who needs enemies.

Then he goes on to say that in this late-cycle "pre-recession" environment he favours the Energy sector because it's the sector most negatively correlated with the imploding dollar. The only problem is that despite dollar implosion, Energy happens to be the weakest sector.

In other words, timing "pre-recession" buys, which is the dumbest fucking term I've ever heard - can be trickier than expected...

Meanwhile, "What correction"

Large cap internet just did in 4 days, what it took a five week melt-up rally in January to accomplish:

Lower rally off the right shoulder, global stocks implode. We've only seen this twice before...

The reason why the S&P keeps going up, is because it has to. All that matters is this trend-line. And the one two charts above. Then again we've only seen this movie twice in the past~8 days, so how the fuck would we know?