Trouble In iPhoney Land

Instead of increasing year over year, iPhones sales went DOWN year over year. Slight difference...

Apple reported falling iPhone sales in its fiscal second quarter, showing why it’s urgent the company make significant upgrades to the next version of the flagship device to contend with rivals like Samsung

The company also forecast $43.5 billion to $45.5 billion in revenue for the current quarter, below analysts’ estimates of $45.7 billion.

This is Apple as of today's close

Bueller?

Meanwhile, the real story today was the melt-down in crude oil:

U.S. Oil ETF:

WTI

Oil longs are hanging tight with OPEC
https://www.investing.com/economic-calendar/cftc-crude-oil-speculative-positions-1653

And consumer staples

And banks

Tomorrow the Fed release and then Facebook after the close...

Internet stocks:

For The Love Of Ponzi

The Fed is boxed in by their own bullshit - either they admit that the economy is slowing, and implode the stock market, or they continue raising rates, further imploding the economy...

ZH: Why Is The VIX So Low And Complacency So High?
"Clearly 'earnings growth' is an ENORMOUS factor right now"

'Earnings growth' visualized

We've never seen this before - a collapsing earnings yield (E/P) and quiescent VIX:

Also, Energy is expected to contribute 43% of Q1 earnings growth.

Here is what Energy stock investors think about forward prospects for Energy earnings and how that correlates with the price of Oil:

Then there is the other major reason for the imploding VIX, cited in the same article above:

"short vol' isn't just an institutional trade anymore, it's massive with retail as evidenced by the shares outstanding in the various VIX ETNs.  FT highlighted over the weekend that ‘short interest’ in VXX has actually outpaced creation of new shares in VXX this years, which is indicative of this growing retail demand for the ‘strategy.’  Currently per my stock loan team, VXX short utilization spiked to an insane 95% yesterday (% of the ‘free shares’ being used to short)."

Momentum AND shorting volatility. Two things that implode great together...

Meanwhile, outside of Fantasy Land...

U.S. light vehicle sales (millions of units, blue)
Auto leases, year-over-year, $millions:

Short-term car leases were the auto industry's new trick for turbo charging sales...which just means a glut of cars on the used car market...

Autonation

Or not...

ZH: America's Debt Serfs Are Imploding. Again...

Credit-card specialist Capital One disclosed in its Q1 earnings report last week that provisions for credit losses rose to $2 billion, with net charge-offs jumping 28% year-over-year to $1.5 billion.

Synchrony, Capital One, and Discover – a gauge of how well over-indebted consumers are managing to hang on – have together increased their Q1 provisions for bad loans by 36% year-over-year. So this is happening.

"What's in YOUR wallet?"

Deflation Bets Crash "Down" To 2008 Levels

ZH: Citigroup Issues Warning On Macro Data Collapse

"This is the biggest crash in US Macro data in 6 years..."

"After a weak Q1, downside misses in economic data this week have a heightened capability to trigger a reassessment of the whole growth trajectory."

It's very clear that the U.S. long bond market is both terrified and bearish on Fed Policy by Police Squad.

Post-election, Treasury bond shorts reached record levels and have subsequently crashed back down to net long levels in the past week. The lowest level since 2008.

"Change of plans"
Scorned gamblers flipped from record short Treasuries to decade-long in 8 weeks. In other words, Trump's non-stop bullshit has now inflicted maximum pain on both Treasury longs and Treasury shorts, as positioning has round-tripped back BELOW election levels, along with Citigroup's macro surprise index referenced above. One difference, is that rates/yields are still far higher than they were back in October...

https://www.quandl.com/data/CFTC/TY_F_L_AL

Today saw Treasury bond bulls ease back a bit ahead of Police Squad, otherwise today's data would have imploded yields through the floor, taking the dollar, USDJPY and risk with them.

Wednesday we will find out what further deflationary rate hikes the Fed plans to inflict on the tanking economy, because ironically, the more they drive short-term rates up, the lower they push long-term yields.

They are the architects of deflationary self-destruction, now featuring Fed rate hike expectations at cycle highs:

"More Kool-Aid, Please"

ZH: Wall Street Bullishness Hits 20 Month High...

investing.com/analysis
"Every single piece of U.S. data that was released Monday missed expectations..., personal income growth slowed, personal spending stagnated, construction spending turned negative and manufacturing activity grew at its slowest pace this year according to the ISM."

Despite the ongoing deluge of bad economic data, gamblers prefer to trust the Circus-clown-in-chief with respect to their casino prospects. Beyond big cap tech, extreme risk-seeking has levitated BitCoin to new all time highs, and IPOs are soaring hence Wall Street wasted no time pumping out seven last week, with six more planned for this week. Year-to-date, IPO $ issuance is running a mere 365% ahead of last year. 


The IPO ETF:

I noticed Biotech running hot lately, so I took the ratio of the most speculative Biotech ETF over the least speculative ETF:

Clearly gamblers would like to pick up a few more nickels in front of the steamroller...

Retail, Consumer staples, Financials, Energy and Transports (below), are not along for the ride...

Consumer staples are done

Kelloggs

But I noticed that Cruise ship operators are having another good end-of-season run...

Which makes Netflix the last "safe haven"

Living Large On Bread And Circuses

2000 x 2008 x 1987 = ?

Stained underwear.

Where to hide when GDP is imploding? Netflix
The top four companies by weighting within the S&P 500 made new highs today - all technology stocks: Apple, Microsoft, Facebook, and Amazon. As yet, still unconfirmed by the S&P 500 itself... 

But first, in recognition of May Day: International Workers' Day

ZH: Isn't It Obvious A New System Is Needed?
"Communities that foster small-scale entrepreneurship, local efforts to address local scarcities and paid useful work thrive in ways that contrast sharply with communities dependent on bread and circuses and global corporations."

What's wrong with bread and circuses?
Everyone enjoys a good circus. It's not obvious a new system is needed, because we have the casino to generate the fake wealth effect. As long as Facebook keeps going up, this will all be fine. Rule #1, never question the system. 

Speaking of Facebook, earnings this week from Apple, Facebook, and Tesla - all of which made new highs today. As did Amazon reversing its key reversal from Friday. Rounding out the list of new Big Cap Tech highs: Microsoft, Salesforce, Activision, Netflix, Adobe, Priceline.

In other words, Netflix is now a "safe haven" in the face of imploding GDP.   

Meanwhile, Tuesday and Wednesday, the Fed meets to decide on money printing policy. Friday is the jobless report, where we learn how many real jobs were automated and replaced with McJobs.

In the meantime, "Let Them Eat iPhones"

Netflix

Facebook

Amazon

Microsoft

Adobe

Tesla

Apple

Bonus chart: Momo

Because that's what a Ponzi scheme is - dumb money chasing momentum...

ZERO HEDGE: HIGHEST RISK. EVER.

ZH: VIX Hits Lowest Level In 10 Years


Who is right, big money betting on a crash, or hedge funds capitulating to the melt-up?

Introduction to CBOE SKEW Index ("SKEW")
The crash of October 1987 sensitized investors to the potential for stock market crashes and forever changed their view of S&P 500® returns. Investors now realize that S&P 500 tail risk - the risk of outlier returns two or more standard deviations below the mean - is significantly greater than under a lognormal distribution. The CBOE SKEW Index ("SKEW") is an index derived from the price of S&P 500 tail risk.

Monthly Skew versus VIX

We know one thing, no risk is priced in:

ZH: China Bracing For North Korea "Emergency"


Korean Kospi just hit a new all time high:

Since 2001, Commerce's first of three readings on first-quarter gross domestic product undershot forecasts by up to 50 basis points on seven occasions. U.S. benchmark West Texas Intermediate crude traded lower five trading days after these releases 100 percent of the time

The median return for WTI over those seven instances was a negative 6.14 percent.

Today's close below the trend-line, not shown. Yet.

Commodities

In Goldman Sachs We Trust

The Idiocracy has bound their fate to a sociopathic circus clown...

“In the event of a major financial crisis, there is no possibility of an international ‘bailout’ of the American financial system” 

"After 65 years keeping an eye Wall Street, Paul Volcker knows a pivotal moment when he sees one. President Donald Trump’s first 100 days has given Wall Street bankers hope that they will be able to roll back the 2010 Dodd-Frank law that strengthened Washington oversight of the financial industry. Trump himself said he wanted to “do a number” on the bank reform law."

"Almost every major regional bank misses estimates for lending"

“The optimism and the willingness is there, but it has not yet translated into actions or behaviors”

"Trump recently complained that "many friends of mine who have nice businesses" can't get loans because of the regulations in Dodd-Frank. "The banks just won't let them borrow," the president said."

https://fred.stlouisfed.org/graph/?graph_id=368379&rn=2323

Fortunately, internet stocks are keeping the rally going...

Equal weight / cap weight S&P 500:

Nasdaq / S&P ratio

When economic growth slows at the end of the cycle, there is only one place to "hide"