The Season For Giving Back

The abiding sentiment that fuels this Globalized delusion - and the reason "no one" sees it ending - is because they always assume that someone else is next to go under the bus to keep the shelves stocked with cheap junk, at Walmart...

When the "system" is predicated upon marketing and selling aspirational illusion, it can be quite impossible to know how much risk is getting bought with both hands. It's no one's job to say where we are in the sales cycle. Quite the contrary. 

This is the 2018 Santa Rally, brought to you by 100% non-stop bullshit:

"Now, is always the best time to buy"

We are continuously reminded of the impossibility of getting the globalized toothpaste back in the tube, via the Brexit clusterfuck. The UK is now caught between a rock and a hard place. No easy way out and no easy way back in. Globalization demands its pound of flesh in return for entree to the global trading system. Whether that is paid for in terms of industrial depletion, debt penury, wage slavery, and/or mass immigration. One way or another a price will be paid. There are no "winners" under Globalization, there are just those who have yet to figure out whose turn comes next. As we see via Trump, re-ordering the deck chairs on the Titanic is nothing more than a feel-good exercise causing far more harm than good.

Here we see European stocks deja vu of late 2015, except further along in the meltdown relative to Dec. 31st. Double death cross both times:

The one sector that is supposed to "benefit" from higher rates is not waiting for next week's rate hike to go into meltdown mode. Here everyone thought this was a Tech-led meltdown. Come to find out, it's both... 

"Bank capital is under severe pressure because managements are giving away literally hundreds of billions of dollars in stock buybacks and what remains is being eroded by higher interest rates."

There is little or no evidence that buybacks helps the bank stock prices."

What makes you say that?

For a time of course, it looked like the U.S. was "winning" the trade war. That delusion lasted the amount of time it takes to funnel the world's capital into one death trap, prior to implosion:

The latest fake rally was compliments of a non-confidence vote for UK PM Theresa May. I suggest this latest feel-good rally will have the shelf life of a rotten banana. It's not even visible on the weekly view:

ZH: If Theresa May Leaves, Sell. If She Stays, Sell Harder.

The detainment of Tech heiress Meng Wanzhou is clear indication that the trade war between the U.S. and China supersedes trade deficits. Which is why a timely outcome is highly unlikely, notwithstanding daily futures rallies. The concessions the U.S. is seeking are core to China's long-term plan to dominate next generation Tech.

The real mistake of course was made many years ago when the easy and most short-term lucrative decision was taken to outsource U.S. manufacturing to the world's rising economic powerhouse. At that point all control was lost over intellectual property. The complaint we hear daily is that China is an unfair competitor. Surprisingly we never heard that once in the years during which corporate profit margins were expanding.

What both sides have in common is that they would rather point figures at someone else than look in the mirror for their own problems. China has an economy tilted too far towards supply while lacking demand. Deflationary. The U.S. has an economy tilted too far towards debt-funded consumption while lacking domestic real investment. Deflationary.

Neither side is going to "win" this trade war, especially considering that the artificial intelligence bubble was nothing more than another misallocation of capital:

What they instead are going to learn, is that supply and demand are opposite sides of the same coin. Something they should have learned in 2008.

October 15th, 2018:

A much better lesson is coming now, compliments of those who believe that "someone else" will always do the heavy lifting...