Tuesday, May 8, 2018

The Fool, Or The One That Follows?

The Idiocracy starts with a delusion and then work backwards to find any dunce who will tell them it's true...

"and so our wisdom, too, is a cheerful and a homely, not a noble and kingly wisdom; and this, observing the numerous misfortunes that attend all conditions, forbids us to grow insolent upon our present enjoyments, or to admire any man's happiness that may yet, in course of time, suffer change. For the uncertain future has yet to come, with every possible variety of fortune;"
- Solon, by Plutarch

Today's early rumour is that Trump won't cancel the Iran nuclear deal. Fortunately, there are only so many hours left of this back and forth. Either way, the premium is coming out of oil, and lower support for the S&P beckons.

Look up bull trap in the dictionary and see this picture of oil:

Which gets me to the point of this post. For months now, no amount of bad news has fazed the bulls.

Worsening data in Europe has seen European stocks drive back towards the February highs. EM implosion, has seen a drive into Go Daddy.

EM credit has just now broken through the election Maginot Line indicated as the point of "contagion" for developed market risk:

The divergence between mega cap tech and everything else can even be seen within Tech itself:

The real damage can be seen in yield, which has been monkey hammered by rising interest rates

Here we Consumer Staples weakest since 2008:

Mortgage REITs stalled below the 200 day:

Which goes to my hypothesis that this shit show doesn't just end, it explodes with extreme dislocation

Back test the 200 day. Check. 

Etc. etc.

With only seven months' notice

Not nearly enough notice for a stoned zombie. Mind you. 

Even ten years is not enough notice

May 8, 2018:

"I don't even understand technology''


"Buffett's own suggestion — made back in the dot-com bubble — that the reason he didn't invest in technology was that he didn't understand it"

ZH: Large Cap Tech Has Swallowed The Nasdaq
"First: unprecedented concentration: the Tech sector’s widespread popularity raises the risk facing portfolio managers. At the start of 2018 Tech stocks accounted for 26% of large-cap mutual fund portfolios"

Even worse, there is no place to run, as 2018 has witnessed the largest and fastest rise in stock correlations on record outside of 1987, with Tech sector correlations in particular rising far above their historical averages.

...the last time the Berkshire billionaire got in trouble with his bank holdings in 2008, the government bailed him out"

"What the wise man does at the beginning, the fool does at the end"
- Warren Buffett