Friday, January 11, 2019

2019: Collusion Of Delusion

2018 started off with non-stop lying and global RISK ON. Later in the year, the decoupling delusion turned out to be a delusion. So far, this year is starting off the exact same way. Lying is an entire way of life for these people...

Speaking of which, the best Camacho tweet of 2018, was by far:

I was astonished when I came across this headline today:

Astonished, because one year ago, I read this headline, also in January:

Where to begin, with this logical delusion:

First off, why the best start to a year since 1987 would bode well for the rest of the year, is not for me to say. In the event, 2018 was the worst year for stocks since 2008.

Next, the real point: it stands to reason that if 2018 was the best start to a year since 1987, then this is the best start to a year since last year. And, according to Idiocratic logic, that bodes well for the the rest of this year. 

That's the good news. Here (below) we see what headline skimming sheeple, smocking crack, don't get to see: unlike last year's parabolic ascent capping a two year rally, this year's "best start ever" is a tad more precarious.

Notice that the NYSE Composite, shown here, warned in September that something was wrong because it failed to confirm the all time high in the larger cap indices.

"This is the best start to a year since last year"
"I'm ALL IN, bro"

But, to what does the world owe this latest RISK ON rally? 

Fake-believe trade talks that concluded sans resolution this week. What else?

"While Chinese goods going to the U.S. initially held up in the face of higher tariffs due to so-called front-loading, their value slumped in the final quarter of 2018"

“The hard work of addressing structural issues to create a level playing field in China do not appear to have been resolved...we do not see the U.S. fully removing the specter of tariff hikes any time soon.”

You can't make this shit up:

On the topic of re-coupling, I've noticed lately that EM currencies have been rallying hard since September 2018 in an unusual divergence from oil. EM currencies peaked before oil and are re-converging at levels reminiscent of 2015:

The rally in EM currencies sponsored a nice three wave retracement in EM stocks which had begun "correcting" one year ago. 

I overlaid with the NYSE Composite (gray) to show the nature of re-coupling:

Getting back to the land of delusion, here is another chart chock full of warnings in broad daylight. Transports are supposed to confirm a strong economy. Alas they do not. In fact the 2018 Dow Theory Signal has now been definitively broken.

Note that this is the second three wave retracement to the downside. Third lower high;

The other warnings being ignored right now are profit warnings:

"Macy’s Inc. cut its profit estimate, Barnes & Noble Inc. warned it might as well, Kohl’s Corp. reported lackluster holiday sales, American Airlines Group Inc. cautioned that earnings could fall short of its forecast and Ford Motor Co. said it would cut jobs in Europe as the region weighs on results...
That all happened this morning."

Speaking of all sectors, what we are witnessing in global risk markets is a correlated retracement bounce in ALL global risk assets at the same time. 

Which will be followed by a 100% correlated decline at the same time.

Crude oil and commodity currencies:


"The government shutdown hasn't completely stopped the flow of stunningly bad housing data."

Homebuilders are wrapping up a three wave short-covering rally, wholly diverged from reality:

Tech Stocks

Industrials: Also never confirmed the September top:

A longer-term view on Transports

Defense stocks

Warning this is the end of the cycle. Again:

Dec. 31st, 2018:

"2018 will be remembered for its extreme volatility"

That's not volatility, THIS is volatility...