Wall Street Is All In, And Then Some...

I noted a week or so ago that the index put call ratio was showing unusually low values in the past six weeks.

So I decided to look more closely at the last six years' worth of data.  Going back six years, I found that 223 days had index put/call ratios below the magic "1" level, which is roughly 15% of the total population.  So 85% of the time the index put/call ratio shows puts significantly outnumbering call options, as index options are typically used for hedging large portfolios.  I then graphed the distribution of these 223 values below "1" as you see below (my analysis is after the jump)...

Deadly Disconnect

What is the only major global stock market to hit a new one year high this week? German Dax.

Which country is now seeing a three sigma collapse in industrial output?  Germany.

Just the latest overwhelming proof that Central Banks have created a lethal disconnect between fantasy and reality.  Historically the stock market has always led the economy, but now Central Banks have inverted that relationship. If output is falling now with stocks and investor confidence levels high, what will output look like when stocks and confidence catch up and pass the economy, to the downside...

And...
What is the one stock that is large enough and volatile enough to take down this whole market?  Apple
Which stock is about to have a moving average (50/200) cross-over aka. "Death Cross".  Apple
(Apple's last "death cross" was September 22nd, 2008 - 3 days before the market collapsed).  

While everyone is focusing on Apple, the real story is the Nasdaq 100 which includes Apple, Amazon, Google, Intel, Microsoft etc.  Below you see a few days ago it backtested the 50 day moving average and today the 200 day moving average, just as it did last year, right before its breakaway to the downside...

Inside the Matrix

When a society becomes so stagnant and bloated that it can no longer accept reality on any level, then it has capacity for only one course of (non) action:  Brainwashing, Escape and Obfuscation. Every other course of action is assiduously avoided.  

That's all this era is about.  Nothing more, nothing less...

When Ponzi Schemes Fail

Ponzi schemes fail when everyone tries to take their money out at the same time only to realize that there is no money.  As long as there is no "run" on the Ponzi and incoming flows of new money exceed redemptions, then a Ponzi can continue.

That's exactly how the globalized Ponzi Scheme will end.  Wealthy investors will try to take their money out of risk assets only to realize that their account balances are merely a notional illusion...

Rats In a Barrel

What is so exciting?  I was watching CNBS on mute today and they kept flashing up Citigroup which was having a most excellent 7% rally.  Then I read the news and realized that Citigroup is cutting 11,000 bankster jobs. All of the bank stocks were up big time on the bloodletting.

It appears that Wall Street (and CNBS by proxy), having laid off a big chunk of the rest of America are now leaping for joy at the prospect of cutting their own kind from the payrolls. So it seems that the rats are now feeding on their own and as only rats could, still enjoying the feast.  However, contrary to what the bad guy said in Skyfall, knowing the Ayn Randists, only one will come crawling out of the barrel at the end...

Mass Corruption Portends Mass Extinction

The Idiocracy at large is too bloated and corrupt to be saved at this juncture.  This society has a unique ability to determine what would be in its best long term interest and then doing the exact opposite. Finding the easiest way forward, however superficial and temporary, is the overriding goal of this comfort seeking society.

I have maintained all along that Obama's failure to reform Wall Street will ultimately be not just his downfall but this nation's downfall. Whatever accomplishments he and his supporters think that he has achieved, will be long forgotten when the Idiocracy is rudely awakened from its narcoleptic food coma in the midst of a renewed much deadlier meltdown. Then will come the dawning realization that aside from four new seasons of American Idol, nothing has changed since 2008...

Ka-Ching !!!

The Romney Class is going ballistic over the "fiscal cliff" because it means that they will have to start paying their fair share in taxes.  Therefore, the number of "special dividends" being paid out is skyrocketing and is now unprecedented in U.S. corporate history.  These moves take cash out of companies and generally move the stock price by a commensurate amount e.g. a $1 per share dividend usually equates to a $1 drop in the stock, ex-dividend. So far, there are have been 173 special dividend announcements and the number is going up every day. On the face of it, if the cash is getting re-invested in stocks, then it's a zero sum game, however, at minimum personal taxes to cover the dividends, will be coming out of the market.  More to the point, this is money coming out of corporate balance sheets and therefore tens of billions will no longer be available for growing the businesses, which does not bode well for companies' future growth prospects. If the after tax dividend monies are not reinvested in stocks and instead go somewhere else, then it would be one more nail in the coffin for this already-staggering stock market. It would be highly ironic if, in their effort to avoid paying a few percent more in taxes, the Romney Class inadvertently bring this entire shit show crashing down...

Digging A New Grave Right Beside The Old Ones

Three Bubbles in a Row. How Do We Think This One Will End?

The implicit, inevitably catastrophic assumption that we now live under is that continued levitation of the $200 trillion global capital markets is solely dependent upon the incremental drip feed from Central Banks and not upon the solvency of  underlying assets.

We've crossed this same level 30+ times since 1999. 

Bulls are taking a cigarette break at their old gravesite. Not recommended.

Going to C(r)ash

"Cash" is the most misused term in all of finance without comparison.  Every day, investors including those on Wall Street who should know better, say they are "going to cash" which is a presumed safe haven, even though it's not.  We should have learned the true definition of cash back in 2008, because all of the lessons about what is and is not cash, were on full display, but apparently some lessons have to be learned the hard way.  Back in September 2008 at the height of uncertainty surrounding Lehman Brothers, Mohammed El-Erian the Chief Investment Officer for PIMCO, the world's largest bond trading fund, told his wife to go to the nearest ATM and pull out as much cash as possible.  Why?  Because he of all people should and does understand what is and what is not real cash...

The Idiocracy Lives !

The Idiocracy is a movie about a guy who travels 500 years into the future to find a dystopian world where:

1) All of society has been commercialized to the point where human beings are walking billboards

2) Society is incessantly bombarded with and dumbed down by, a popular media totally devoid of intelligence

3) There is a pervasive movement towards anti-intellectualism

4) The President is a sloganeering buffoon who has no idea or control over what is going on around him

5) Society is being systematically poisoned by the mass proliferation of junk food, devoid of any nutrition

6) The few remaining people who think for themselves decide not to have children because they don't want to raise them in a cesspool

My only complaint about the movie is that it was sold as science fiction/comedy, when it's really a documentary.  Because just as the rate of change in the melting of the polar ice caps has been continually underestimated - by the same infantile society too bloated to understand (or accept) basic science; here we see also that an event - the devolution of humanity - expected to take 500 years - only took 6 years (since the movie was made). That's quite an acceleration. Fortunately nature selects against those members of a species that squander resources and otherwise attempt to defy reality.  That lesson is on tap for the Idiocracy.

And I expect even the Taliban will be caught off guard by how much Western civilization has declined in such a short period of time, but I am sure they will adjust their plans accordingly...