Tuesday, April 3, 2018

The Slope Of Fake Hope

What this era proves more than anything, is that there is no lie too big, the sheeple won't believe it, if it preserves their delusion. And no shortage of con artists willing to serve it...

Today's bounce sponsored by the Spotify IPO and Wall Street's desperation to dump more junk before the "window" of opportunity closes, due to lack of available muppets...

There's so much horse shit around here there has to be a pony somewhere. Wall Street put out some mighty asinine earnings and price expectations for 2018. So we need not expect them to give up on those without a fight. They never admit they are wrong until well after the fact, by which time it's far too late for anyone who believed their conflict-of-interest bullshit.

But first, some badly needed context for today's "rally". Having yesterday taken out the 200 dma, the February low is the new Maginot Line. Which institutions are selling into with both hands, while myriad pundits speculate on what happens next. 

Stepping back from the "all-important" S&P 200 day moving average which is just one drop of data in the ocean of bullshit, we see that unfortunately the global risk markets have lost leadership. Worse yet, what leadership does exist is from beaten down recession stocks. Which is further confirmation for where we are in the cycle. It's at this point in time that all of Wall Street's forward earnings estimates turn into pumpkins. Meaning they are off by a minus sign. Proving once again that their forward earnings "estimates", derived by extrapolating prior year earnings using a slide ruler, have the veracity of a Magic 8 ball.

The rotation to Utilities is still underway, confirming the deflationary bias:

For the first quarter as a whole, U.S. stocks just saw their second biggest outflow ever (-$63 billion), while global stocks saw a commensurate inflow (+$63 billion).

Any questions?

One thing we know is that beyond being a loose gauge of sentiment, fund flows don't predict casino direction.

Speaking of where we are in the cycle. Recently, I've been reading some gleefully bearish commentary on Tesla going bankrupt. 

Does it ever occur to these people that Tesla is not the only entity that took on too much debt in this cycle?

Might they not be the dead canary in the coal mine?

After all, it was only a few months ago that people were buying Bitcoins on their credit cards...

You see, people never ask the "scary" other side of the question.

What if rising credit card defaults are NOT because of Bitcoin?

Did everyone get Bitcoins for Christmas?

In summary, what I'm trying to say in all of this, is that the slow drip lower is due to too much complacency. And the slide doesn't end until there is outright panic.

However, when panic is delayed too long, then a handful of mid-cap Utility stocks can't break the fall. Especially when it's at the end of the cycle.