Sunday, November 18, 2018

The Last Mega Bubble: Kool-Aid Loving Sheeple

"You never count your money while you're sitting at the table, there'll be time enough for counting, when the dealing's done"

Someone is going to shit a brick in the next six weeks, and my bet is that it won't be me.

Professional money managers have now cut exposure back to early 2016 levels and hedge funds are getting liquidated in size. 

The only players left in the casino are the dumb money wed to the belief that Trumptopia will last forever.

Two things will happen in the next six weeks which will decide the fate of global markets. First off, more than likely the Fed will increase interest rates at their December meeting (Dec. 19th). Secondly, the massively hyped G20 meeting later this month will be nothing more than a photo-op, leading to automatic escalation of the trade war in January 2019. In the meantime, global macro data will decline every day between now and then. By contrast, gamblers are betting that "all is clear", now that the mid-term elections are passed.

But first, this week is Black Friday aka. Black Thursday. Previously known as "Thanksgiving" the third Thursday in November is now reserved for 3am shopping brawls. 

Prepare for Wild Turkey 

"President Donald Trump gave the market a boost Friday when he said he was hopeful the U.S. and China would strike a deal on trade, a major focus for stocks. But White House officials later downplayed his comments and said there were no signs of a deal"

This is so two weeks ago when Trump said that a trade deal was in the works ahead of the mid-terms, only to be contradicted by his own advisors. Will the true Donny Trump please stand up for something that has a shelf life longer than :5 minutes.

Unfortunately, this farce is running out of time and money.

"The U.S. still plans to raise tariffs on Chinese imports in January with President Donald Trump and China’s Xi Jinping likely at best to agree to a “framework” for further talks "

“We certainly won’t have a full formal deal by January. Impossible.”

In other words, this is late 2015 except with the addition of tariffs:

U.S. Industrials are getting annihilated

Why are Industrials getting annihilated?

Because the U.S. trade deficit clearly shows, "we're winning", by losing. A patented Trump casino strategy for ensuring certain bankruptcy. 

Speaking of fake-believe, the historically crowded reflation trade is getting duly monkey hammered along with all other fake beliefs:

Friday, November 16, 2018

A Bigger, Fatter, Uglier Circus Clown

The capacity of the hairless monkey to entertain and amuse while self-destructing, is literally unlimited. This rock spinning through outer space has the children hiding under the bed. And I'll tell you why, because they don't really have faith in God in the first place. Contentment and gratitude being anathema to corporate whore aspiration...

"Is anyone home?
There is no pain, you are receding,
A distant ship's, smoke on the horizon
I have become comfortably numb"

Global markets are teetering on mega crash as the algo-driven tail is no longer wagging the dog. Today's zombies have bet the farm, their mental health, and their entire way of life on a fraudulent mega bubble and human history's biggest circus clown. 

Eleven months and $1 trillion in stock buybacks later, the S&P is up 1% on the year. Why? Because stock buybacks can't compete with imploding global growth. 


"So many of them are baffled that we could find ourselves in this late-cycle dilemma that wasn't supposed to occur so soon."

"The situation reminded Cramer of when, on the cusp of the 2008 financial crisis, his corporate sources confided in him that the Fed "seemed to be out of touch ... with what was happening" 

Unfortunately for Cramer, beyond gambling recommendations, he is totally clueless as to how the economy actually works.

As I say all the time, the Fed has been boxed in by fiscal policy:

"The hike in interest rates triggered by faster growth from U.S. tax cuts may cause the bubble in credit to high yield bonds suffered their worst October since 2008 and continue to sell off this month."

Stocks, bonds, currencies and real estate are all overvalued"

The headline stories this week are...

Oil market annihilation:

The Brexit clusterfuck.

Exhibit A of a country attempting to retain all of the profits from Globalization without incurring any of the social "costs" aka. British Trumptopia. 

The latest dead semiconductor canary in the coalmine

"The company blamed the inventory issue on the passing of the cryptocurrency mining craze...miners have sold off their rigs, unleashing a flood of secondhand gaming chips like Nvidia’s Pascal-based chips and those made by AMD onto the market."

In the face of all of this economic turmoil, what "worked" all week was the recession trade:

This week was the worst week for junk bonds since February:

Wednesday, November 14, 2018

"Just Dessert. Please"

Two years of continuous "BTFD" later - at the advice of proven psychopaths - and the casino has lost its bid. Because there are no more well trained chimps beneath the market. Go figure...

The bailout is the root cause of today's problems - not only did it prove that the "system" has failed, worse yet, it gave free reign to rampant criminality. Now, the sheeple at large are totally oblivious to "corruption as usual".

Already in an advanced state of mental breakdown, there won't be enough Prozac around for what comes next...

Big Cap Tech has lost its bid as hedge funds get liquidated en masse:

"After beleaguered hedge fund managers had their worst month in seven years, many are bracing for an industry day of reckoning: Nov. 15. That’s the deadline for investors to put managers on notice to get some -- or all -- of their money at year end."

If history is any guide, the rush for the exits will be swift and accelerate"

The blood is in the water:

Financials got monkey hammered today as House Democrats announced that the era of deregulated corruption is over.

Stop me any time:

No one believes in bailouts more than Uncle Wally:

"The latest addition to the "Oracle of Omaha" portfolio emphasizes Berkshire Hathaway's growing confidence in the U.S. banking system"

Notice however, that Apple is his largest holding by twice the next largest position. Because stock buybacks are like crack cocaine for Uncle Wally.  

And apparently he learned nothing from his IBM lesson that stock buybacks don't offset imploding growth. Just because someone paid a trillion dollars for a brick yesterday doesn't make it worth a trillion dollars today. 

Another reason the casino has lost its bid is because short-covering in retail stocks, ahead of this week's big earnings over. 

No one wants to hold this crap ahead of Black Friday next week:

Put it all together and what do you get?

An unexpected visit from inconvenient reality

Tuesday, November 13, 2018

A Crude Reversal Of Fortune

This global synchronized selloff is identical to the one in 2016, with one difference: Gamblers are still betting the farm on fake reflation...

Amid the longest oil rout in U.S. history, something tells me that bet is not going to pay off:

Other than delusional positioning, the set-up is identical:

Oil implosion. Check. 
Chinese Yuan implosion. Check. 
Tech wreck. Check.
Emerging Market stocks/credit imploding. Check.
Global synchronized slowdown. Check.
Fed hiking rates. Check.

First, the story of the day, week, month is the annihilation in the crude oil market. Pundits are wondering, why is crude crashing: Too much supply? Too little demand? Strengthening dollar? Excessive speculation? Donny's Twitter commandment to lower oil prices?

The answer is, all of the above.

In a nutshell, deja vu of 2015, OPEC has decided to fight U.S. producers for market share, into a weakening global economy. 

And, as we see, speculators are still far too bullish. Which means, the margin calls are rolling in:

Been there, done that:

Emerging Market credit almost at the 2016 nadir:

Tech wreck deja vu:

Small cap:

Apple, joining the supply chain lower. Sayonara $1 trillion market cap:

Amazon deja vu:


Overall breadth:

The key difference. Still betting on fake reflation.

Monday, November 12, 2018

Betting The Farm On Denial Trump

Even Wall Street knows this is all over. Now only the most hardcore denialists are clinging to this gong show - the ones who will believe ANYTHING, EXCEPT the truth. Imagine literally betting the farm on the biggest fucking tool in human history. There is no coming back from that. 

Meanwhile, what happens when we reach third wave down in every global risk asset class at the same time? We're about to find out. Every day is the same pattern - the market opens at the highs of the day and closes at the lows of the day. Typical bear market action. And also why the smart money flow indicator is showing record outflow. The dumb money keeps buying the dip and it's no longer working. These people have been lied to so much, they are incapable of believing that the party is over...

"Market bulls continue to see strong U.S. GDP growth, a tight labor market and surging corporate profits.

The factors lining up against the market are formidable: slowing growth, peaking profits and the global trade war."

Add in rising interest rates, imploding Emerging markets, recession stocks leading the rally, Tech wreck, and imploding commodities. 

The dumb money bubble is the last bubble on the planet. This slope of fake hope which keeps the market stair-stepping towards crash.

What sets this decline apart from all of the other "corrections" of the past several years, is the abject lack of fear. Even smaller corrections than the current sell-off elicited more concern than this one. Every dip is a buying opportunity:

Momentum stocks have reached a critical juncture

Small cap growth, same story:

Perma-bull Cramer loves to say there is always a bull market somewhere. Not anymore:

That said, some people still consider money markets to be an asset class

Gamble at your own risk.


The Golden Gaffe has the reverse Midas Touch - everything he touches turns to a steaming pile of dog shit. His blind followers see nothing but gold in them thar hills...

The Founding Fathers clearly never predicted that a sociopathic mega clown, born on third base, with the IQ of a dead squirrel, would hijack the country. And the world. Epic irresponsibility is the order of the day for the Banana-Republican-in-Chief. Unfortunately, the world has its limits as to how much rank stupidity can be accommodated. Having spent all of 2017 inflating the bubble, Donny has spent all of 2018 imploding it. I give him an A+ on the Kamikaze scale:

Fiscally suicidal tax cut, deregulated corruption, delusional trade war, now add forest management to Trump's list of stupid fucking ideas. Over the weekend he was "helping" California deal with unprecedented wildfires by threatening to withdraw Federal funding. One more source of plundering for his offshore bank accounts. There is literally no limit to how fucking stupid this guy is.

"At least 25 people have been killed in the most destructive blazes in California history."

Speaking of poor forest management. Trump is an expert on the topic:

"America's soybean farmers are hanging onto their crops in an attempt to wait out President Trump's trade war with China, more than doubling U.S. soybean inventories"

Unlike corn, soybeans don't store well, so farmers are risking their livelihoods for an economic detente that isn't guaranteed."

Hanging on to excess inventory into a weakening global economy, on the bet that prices will eventually increase. What could go wrong?

WSJ Nov. 11th, 2018
U.S. Unveils New Tactics to Save Intellectual Property
"The strategy, launched with a crackdown on a Chinese chip maker accused of stealing from Micron, opens a new front in Washington’s commercial dispute with Beijing"


Sept. 20th, 2018:

Six weeks later:

As I write:

"Conserving oil is no longer an economic imperative for the U.S., the Trump administration declares in a major new policy statement"

"Now THIS is proper forest management"

Truck / car ratio: