Unlucky 13

Yesterday, Tom Demark, who has the best market timing record on Wall Street said "sell the world" and was, according to his indicators (see below), very close to a sell on the U.S. As of yesterday's close, the count for the U.S. markets should be "13" as well, although he still sees 1.3% potential upside (i.e. just a 'wafer thin mint'...

The Seeds of Panic Have Already Been Sown

This is the third straight asset bubble in 12 years - 1. DotCom 2. Housing 3. Now this Debt Monetization bubble. In each situation, there were explicit incentives and malincentives that both inflated the bubble and amplified risks. For the housing bubble, we know that low interest rates coupled with securitization, coupled with lax lending standards, a "laissez-faire" regulatory environment,  and all of Wall Street's privately traded and massively leveraged derivatives (CDO/CDS), all combined to create a financial Weapon of Mass Destruction. Granted, in this current era we won't find out what massive risks that Wall Street and the banks have conjured up this time - until after the fact. Yet, we can already discern by looking at public markets some very obvious incentives to increase, ignore and amplify risk, that will combine to create the all new financial WMD...

Wall Street Learned Nothing From 2008

AIG which was at the epicenter of the 2008 Wall Street collapse, just announced that it is considering suing the U.S. government for bailing it out. As always, you can't make this shit up. When a society's wealthiest constituents become so greedy and corrupt that they can no longer make an honest living, then all they can do is resort to rent seeking until the entire system collapses under the weight of its own stagnation and inertia...

The Fever is Rising

The State of Reality

Obama will give his State of the Union address later this month. If politicians were capable of telling the truth, below is what he would say. However, unfortunately, because we live in a shrink wrapped bubble inflated by cheap debt, society is overrun by child-like dunces in leadership positions who spend their entire time convincing us that reality can be ignored indefinitely. The stewed masses of course willfully believe that these factors all belong to that indefinite future. So when the bubble bursts, we can expect plenty of shock and awe from the Idiocracy, when they realize that the future just got here ahead of time:

1) We face a stagnant and bloated economy which is no longer self-sustaining and hence totally dependent upon ongoing debt accumulation

2) A stagnant jobs market with fewer jobs today than six years ago, despite a larger population. Fools and apologists say we added 5 million jobs since 2008, however, the U.S. accumulated $5 trillion in debt in the meantime which works out to $1 million per job.

3) A bloated and dysfunctional post-secondary education system now bankrupting its own students

4) A bloated and corrupt military industrial complex which has doubled its size in the past decade, and is sucking the lifeblood out of the political and economic system

5) Medicare and Social Security programs that are totally unfunded, now facing an overwhelming rise in recipients at the same time as the number of payers into the system is falling off commensurately

6) A totally dysfunctional political system that ignores all of the larger issues and focuses all of its attention on campaigning, partisan bickering and legal contrivances with an ever-dwindling half life

7) An incoherent foreign policy with troops in 140 countries while geopolitical instability verges on spinning out of control

8) A clueless corporate media focused on amusing, entertaining, confusing, obfuscating and otherwise ignoring the underlying causes or solutions to the major problems of the day

10) An oblivious general populace stewed in junk food, junk culture, and Prozac. Now becoming mentally unstable as the overwhelming issues of the day exert their inevitable toll on mental health

11) A rising trend towards mass violence propagated by 300 million guns floating around in god knows whose hands.  A too-little-too-late gun control movement just enough to light a fire under gun owners who are considering taking up arms against their own government

12) A massively leveraged stock market levitated by Central Bank debt monetization programs, now strongly diverging from economic reality

And the biggest issue of all which is that none of these issues are being confronted or addressed head on in any meaningful way, as society's overwhelming preoccupation at this juncture is to hide from reality.

Other than that, everything is A-Ok...

Brother Can You Spare a Trillion?

The latest over the top insanity emanating from the Idiocracy is the idea of minting a single coin with a $1 trillion dollar denomination. This would ostensibly allow the U.S. government to bypass the debt ceiling restriction by literally printing physical money. Critics say that it would lead to inflation. Sure, if they print 5 of them. If they print one and use it in place of issuing a trillion dollars in bonds which are then bought by the Federal Reserve, there is really no difference to the money supply under those two scenarios. What this really shows however, is the depth of depravity of U.S. "thought dealers" at this juncture who have clearly convinced themselves that the status quo is infinitely sustainable. What better example of mass complacency do we need than to contemplate the notion of printing a $1 trillion dollar coin as a solution for the nation's "debt" problem. Instead of focusing on the real economy and creating businesses and jobs that generate underlying value, U.S. policy-makers are solely fixated on fiscal brinksmanship, political games, money printing schemes and now coin printing scams. As I have said before, the U.S. is now led by Ivy League sociopaths who have convinced themselves that reality no longer exists for them. No contrivance is too bizarre for these financial alchemists who already put the world at financial risk once and are now doing it all over again. What is to stop the next set of buffoons from printing 3,4,5, of these "magic" coins? Nothing. This scenario would unambiguously cross the rubicon of actually printing money. Quantitative Easing is really just a cleverly disguised money printing scheme, but this would be the wide open version. And once the Idiocracy gets accustomed to a really dumb and fucked up idea - military blunders, mass junk food, mass junk culture, assault weapons for sociopaths - then it doubles down.  After all, if some is good, then as much as possible is a fuck of a lot better...Clearly this Ponzi Scheme economy is heading for Full Retard x 11. America's 30+ year vacation from reality just went on on too long and has rendered the population down to an infantile state where every difficult decision is assiduously avoided and every task at hand is turned into some sort of game.

Clearly, no dire blogger can compete with a magic coin show much less American Idol, the fiscal cliff circle jerk, the NFL playoffs or whatever other spectacle the Idiocracy can use to hide from reality. Which suggests strongly that anyone who is optimistic as to how this all turns out, is not only guzzling the Jim Jones Kool-Aid from a fire hose, but also skipping merrily down the path of extinction.

And the obvious question - is it time to buy gold, yet? My usual answer - wait for the inevitable market crash which the Idiocracy is going out of its way to ensure. When everyone is struggling to buy bread and ammo, we'll buy our gold much cheaper, from all of those who think it's today's latest get rich quick scheme. Of course we will need to load up on gold before everyone gets a trillion dollar welfare coin in the mail, and while Mitt Romney is telling 97% of us what a bunch of lazy fucking bums we are...

Lastly, a trillion dollars is 3 times Greece's GDP.  So let's ask them what they think about America's reality avoiding magic coin, as the IMF pole axes their economy into oblivion...

Blow-off mode

[Updated: January 6th, 2013] Here is a longer term view that is even more ludicrous...

[Updated: January 4th, 2013]
We are reaching for that manic moment personified by Buddy Israel over to the right of my blog. Like a coked up gambling addict going all in for the last time, today the Value Line and Russell 2000 both closed two standard deviations above their 20 day moving average for the 3rd day in a row - extremely rare and overbought. Again, it's insane to realize that this much euphoria could be generated by a six week fiscal reprieve and a tax hike for the middle class. As long as the market keeps going up, no one questions the liquidity driven mechanics of this market, nor stops to recognize that the eroding economy is diverging with the ever-rising market. Next week, earnings reports roll in, at which point this fantasy will meet the brick wall called reality...

[Original Post: January 3rd, 2013]
I highlight the Value Line Average because it's the only major index that is still hitting new highs (and the Russell 2k). Here we see in stark clarity that every single dip since early 2009 when the QE programs were started, has been bought. We also see that every rally is of shorter and shorter duration, with each wave overlapping the prior wave by an increasing amount. Lastly we see that the slope of the trend is now going vertical after a four year rise on ever-deteriorating fundamentals. Just today Dollar Store announced weak earnings guidance. So the fact that the market is euphoric on news of a payroll tax increase when the middle class is barely making ends meet, shows the depth of the disconnect. It's solely a liquidity driven fantasy only a Central Banker could love. Notice the magnitude of the rise from 2009 v.s. the prior 2003 rally, each roughly four years in length. This is a market on monetary steroids. A market like this has only one goal - to suck in as many people as possible before heading hard down...

There have been three market glitches just in the last four days alone, so a Flash Crash meltdown is extremely likely once volume and volatility explode...(here's one, and this one, and another one)...

Another Fucking Con Job

I just realized that the masses at large were once again conned into believing that this latest fiscal cliff deal was a victory for the middle class, when in fact it was the exact opposite - an overwhelming victory for the wealthy elite. Yet another con job of the masses at the behest of the rich...

No Exit Strategy

Long-term Treasury yields, pinned to the mat by deflation:

I was just watching CNBS for today's much-ado-about nothing jobs number. Steve Liesman said he is looking forward to the unemployment rate (now at 7.8%) going up, because that would signal more people coming back into the jobs market. This asinine position reinforces my view that it's ludicrous for the Fed to target a 6.5% unemployment rate as a target for ending quantitative easing, because that would require a lot more people giving up looking for work i.e. the overwhelming driver behind the lower unemployment rate...

Full Retard

The Fiscal Cliff deal that held world markets hostage for six weeks, has a shelf life of six weeks. The world's largest economy now reduced to a never-ending amateur Circus Act.

The net revenues gained from this groundbreaking deal reduce the deficit by 5%:

(h/t ZeroHedge for the chart data...)