Wednesday, June 6, 2018

Party Like It's 1929

As The Lonely Crowd informs, we live in a society overrun by industry-captured bukkake whores, blowing smoke up each others' asses constantly. The third (and last) installment of the Lord of the Flies trilogy is ending amid record hubris...

Speculators, consumers, economists, politicians, and business leaders are all extremely over-confident right now. Excited at the prospect of robbing future generations so they can pretend to be wealthy and successful now. After all, there was no other way:

Rule #1: Never Go FULL Donny:
The divergence between momentum stocks and value stocks is record wide. The smart money is record betting against Forrest Trump:

Note below that in the last cycle, business confidence followed the rate of deflation. In this cycle, compliments of Central Planning for billunaires combined with fiscal profligacy at level '11', business confidence has diverged from the underlying rate of deflation. Gamblers who believe that economists and business leaders can predict the future, will be surprised to learn that they can't even predict the now. Consider that Treasury bonds are record shorted right now and the Fed is planning to raise rates next week, for how fast this delusion will unwind when Y2K 2.0 implodes. As long as Go Daddy holds its bid, this will all be fine...

The mega bubble stocks of this era - Amazon, Netflix, Tesla, all have one thing in common: They never make any real profit. They don't have to - they are perma-bid merely based upon the hype and future-casting of their beloved corporate leaders. Sound familiar? They are emblematic of the Trump bubble. Trump took over a flagging late cycle economy and used his hyperbolic bullshit (and 5% borrowed GDP) to drive one-time manic over-investment, giving the delusion of indefinite GDP growth. What he created in reality is the exact 1929 scenario - a business-friendly president cutting taxes at the end of a decade-long expansion and deregulating industry, generating an over-heated economy, over-speculation, monetary tightening and a waterfall crash...

Like Donny, what Wall Street sells is a field of dreams predicated upon 100% delusion.

Since the S&P top in January, the bid under Internet stocks has become increasingly frantic, as the broader market implodes...

Revenueless Biotech is always a good measure of speculative appetite:

Monday and Tuesday of this week were the lowest volume days of 2018. Today's volume is tracking in similar moribund fashion. Skynet knows that the only buyers are above the casino, while epic margined-out sellers lurk below. What is the purpose of this algo-driven bubble expansion? 


Here is where all of this corruption-as-usual gets interesting:

"The upshot: A total of 27 new IPOs jumped into the pipeline over the past two weeks. That’s a lot...We have to go back four years to find more filings over a two-week period."

The last time Wall Street dumped this much junk into the casino - four years ago, marked the peak for large cap breadth (lower pane). This time, they are dumping into a much weaker market, led by small cap junk stocks and a handful of massively overvalued large cap Techs. 

Ironically, the sectors that Trump has "helped" the most via deregulation are performing the worst:

"The chart of the financials has reached a very precarious level, according to founder Todd Gordon."

In March 2017, Donny made over-investment in Energy great again, because the "EPA's war against cheap energy" only allowed oil to trade down to $26/bbl in 2016. With the help from industry mega dunces, it should get much closer to zero this time:

Last March, 2017:
"By executive order, Trump will end the Environmental Protection Agency's war against cheap energy"

Fast forward to today:

"A big surprise crude build - along with major builds in gasoline and distillates - was a big shock for traders"

Speaking of inconvenient shock and awe, one thing we already know for certain, is that just as Skynet has artificially inflated the bubble on low volume, the algos will amplify the selling on high volume:

"Average down day is 24% bigger than the average up day in 2018"

Because these industry whores don't learn too good: