Sunday, April 22, 2018

A Consensual Collapse

This is where it gets interesting - we've never seen so many like-minded idiots in one place at one time. I'm looking forward to irrefutable proof that the Idiocracy exists. Forty years of failed Supply Side policy is all it took to convince them that it works.  There's never been such extreme consensus on fake reflation as we are seeing right now. Unfortunately, outsourcing the economy for nine years straight and then raising interest rates at the end of the accompanying debt binge, is not "reflationary"...

Record dollar shorts
Record Treasury shorts
Record oil longs
Record stock margin

Suffice to say, one-sided gamblers can't afford to be wrong...

"...higher inflation is the consensus view of those sampled by Bank of America's latest monthly global fund manager survey, as net 82 percent of respondents earlier this month expect the core consumer price index to rise over the next year"

Despite the fact that there are a few more days left in April, I will take that bet, again.

"We've been waiting for inflation, literally, for the last nine years, since the recession ended in 2009. You could ask the question, 'Well, why now?...what's different today?'" He told CNBC he's been fielding more questions about risks surrounding inflation from his clients.

The answer can be found in a weak U.S. dollar"

The answer can be found in a weak dollar, which by sheer coincidence has been record shorted lower.

Let's zoom in on the latest data, where we see that an increase in net shorts did not lead to a new low in the dollar:

"Euro bets at record high"

Remember this?

Here is the key chart I didn't show earlier this week:

Meanwhile, the strength in oil is tracking the dollar inversely. 

Short dollar and long oil is an Idiocratic pair trade that is 100% correlated.

In summary, this looks corrective, meaning the new direction is down. 

And as this trades down, so begins the biggest financial clusterfuck in human history. Without any possible comparison.