The Roman Circus Is Ending

Third World dictator. Check...

The farce that is the Trump Presidency is ending. Like all failing empires, the U.S. has reached a clown too far to save itself from ignominious history, and in doing so has added extreme insult to injury:

"Wolff quotes News Corp CEO Rupert Murdoch as calling Trump a “fucking idiot.”...Gary Cohn, the president’s top economic adviser, regards Trump as “dumb as shit.” The president’s top national security adviser, H.R. McMaster, considers him a “dope.”...None of this, notably, includes Secretary of State Rex Tillerson own take on his boss. A “fucking moron” is how he reportedly deemed Trump"

Nevertheless, the charlatan-in-chief comes in at a pathetic if not pivotal juncture in U.S. history...

"According to Torsten Sløk, the chief international economist at Deutsche Bank Securities, the extreme levels of income inequality in the country mean that only a vanishingly small percentage of Americans are seeing much impact from the boom on Wall Street."

"the richest 0.1% of Americans owns as much as the entire bottom 90%, a trend that has been accelerating since the mid-1980s"

"America actually ranks among the worst countries when it comes to income inequality, based on its Gini coefficient, a measure of the wealth distribution of a country’s residents. The coefficient for the U.S. is nearly 0.40, which puts it roughly even with Turkey"

The solution to inequality is obvious to all RepubliCons: another tax cut for the ultra-wealthy, paid for with borrowed money

"Goldman: options investors are positioning for the average stock in the S&P 500 to move 22% over the coming 12 months"

"While stock volatility is not the same as broad-market volatility—and indeed, low correlations has been cited as a primary factor behind the market’s lack of sharp gyrations—Goldman expects both to see a pickup."

ZH: Retail Is Re-Imploding

"what is most troubling for Macy's, is the stock's reaction to today's news: whereas in the past, M would jump on any mass layoff and/or closure news, this time it enjoyed a brief kneejerk moment in the green, before tumbling"

Don't worry about the bailout, there won't be one...

Who's Ready For Mega Crash?

That's what I thought...

In a Ponzi scheme the act of throwing money away is what gives it the patina of ephemeral authenticity.

For example, bidding up oil while spreading stories about the oil recovery...

Or bidding up stocks, while lying about the 'Conomy...

"Record low correlations accompanied the relative lack of market swings, and indeed may be seen as a causal factor

Markedly different reactions to the year’s major events created stronger diversification effects, dampening volatility in the benchmarks"

Correlation, like this?

Banks, Energy, and Transports:

Supply Side Ponzinomics: Betting On Proven Failure

Trump's tax cut for the ultra-wealthy is human history's largest bull trap:

There are dunces and then there's Larry Kudlow:

Republicans are looking to create broad-based prosperity by taking a policy that has generated broad-based poverty for 37 years, to level '11'. It makes perfect sense to anyone with an IQ of 0 or lower.

Giving massive tax cuts to the bailout class on the theory that the bread crumbs will fall onto the heads of the indolent masses, has been tried twice before already. Each iteration leading to more job insecurity, more financial insecurity, and far more debt. Nevertheless, here they go again. It never once occurs to any of them that only by directly increasing the incomes of the middle class, can the roller coaster ride to penury end. But these are not bright people. They're serial failures, and their main skill is conning idiots.

The locus of imminent failure for this third iteration of the experiment of course comes on the monetary policy side. As the term "inflation" makes its way into the Wall Street lexicon, the bond market and even the dullards in the Fed begin to take notice. Even though there is actually no broad-based inflation, especially not in wages; however any minor lift in wages is seen as a threat to the temple of debt. Under the *free trade* race to the bottom, real wages can fall continuously, but they can never rise. Lest they pose a threat to corporate profit margins.   

Therefore, working in close collaboration, the Fed and Republicans are generating insolvency for the U.S. middle class:

But it gets worse, because they are also generating insolvency for China which pegs its currency and therefore interest rates to the U.S. 

And yet there is no offsetting tax cut for China.

"China’s central bank will increase money market rates as it seeks to curtail excessive borrowing and avoid too much divergence with U.S. policy"

In other words, Trump and the Fed are popping China's debt bubble for them. Free of charge.

Despite massive EM inflows (primarily to stocks), EM debt is lagging currencies:

Here is where it gets interesting. S&P 500 volatility sensitivity has never been higher. And volatility never lower.

So this will all end via overnight gap 'n crap, compliments of Emerging Markets:

In Ponzi World, what comes around goes around...

At least they don't see it coming.

How could they? They don't trust anyone with an IQ above zero...

Beware Violent Reversal Of Fortune

The dumb money is stampeding off the cliff, led by trusted psychopaths, but they're too busy doing bong hits to notice...

Happy New Year from CNN!!!

Pot stocks are leading the list of New Year's highs. What else?

"Previously, the Alternative Harvest ETF was known as the Latin America Real Estate ETF, a fund dedicated to high-yielding real estate investments in Latin America. Earlier this year, ETF Managers Group LLC announced it would be changing the fund's investment objective from Latin American real estate to marijuana."

Out of career preservation, hedge funds have morphed into mutual funds. Which means that anyone who can still fog a mirror is getting stampeded by dumb money...

ZH: Beware Violent Reversal Of Fortune

"History suggests one should watch out for crowded stocks at the beginning of the year...after Dec. 31, fund managers "tend to rebalance after year-end" 

"As Tech accounted for  38% of the S&P 500’s returns in 2017, the unwind - which has yet to come - will be especially violent and painful"

"not only is the exodus of funds out of active (and into passive) vehicles accelerating - with passive winning and active losing for most of the last 9 yrs - but the cumulative outflows from active funds since the great financial crisis are now approaching $1 trillion dollars"

Big money is hitting the dumb money bid...

The other strategy in play, is the "if you can't beat 'em, join 'em" hedge fund groupthink, at work. 

If he's an investment genius, then why did he buy at $15,000 instead of $1? Was he waiting to see if it had true Ponzi value?

It's the fear of missing out. On Ponzi...

Betting On Global Synchronized Collapse

Having been corralled into extreme risk assets by sociopathic liars, global capital will now experience the same fate as global labour - annihilation...

Our leaders are proven failures - their only success is in telling ever larger lies. The denialists who believe them are in denial about everything, but mostly about being in denial. Whether on the topic of the economy, financial markets, global solvency, mass shootings, the U.S. empire, the environment, human health etc. today's level of denial is unprecedented. For a reason. Throughout this era, as the level of desperation grew, so did the lies and the obfuscations. The dumber the ideas that were applied, the dumber the populace had to become to accept those ideas. At this late stage, proven failure has been re-cast as success. The Idiocracy is flying blind - without the slightest clue what's real and what is fake. Casting about for the next bigger set of liars to tell them the next bigger set of bedtime stories. 

It's a true old age home wherein the aged enter watching 60 Minutes, and by the end they're watching Gilligan's Island re-runs. Voila. 

China definitively proved that global capitalism has failed. That country did more than any other to become "the factory to the world", and yet it still doesn't have a middle class. It can't turn the corner to become a balanced economy, because the factory slaves garner no real income. In the U.S. where the middle class has been systematically annihilated to fund stock buybacks and tax cuts, Zerohedge informs us continuously that having stagnated for fifty years straight, raising the minimum wage now is a "very bad idea" since we shouldn't overpay for a what a service is worth. No, instead we should continue to outsource the economy and displace it with debt - a much sounder idea. The people who write that bullshit evidence the same morality as a 12 year old carrying a pig's head on a stick. Throughout this entire Globalized era, the value of labour has fallen continuously. Skills never gain in value, they only lose value. Wages in aggregate can never be raised because the Fed always has its hand on the economic kill switch, at the slightest sign of "inflation". In other words, the status quo was a one way trip to Third World impoverization. There was no way back. Global poverty funded cheap capital, and the debt-bloated system is now married to ever-cheaper capital. Interest rates can't rise without imploding the temple of debt, therefore the standard of living can't rise under the current *free trade* paradigm.  

In the next step of this fiasco, global corporations will learn that their profits are as ephemeral as the wages that no longer support them. There can be no real wealth without real incomes to support it. The Idiocracy has conflated debt with wealth. 

This is the lesson of Globalization.

This cycle is ending the exact same way it started - with a blip in Submerging Markets:

"Global synchronized recovery"

The End Of The Speculative Economic Cycle

Economists' economic predictions ignore markets. While Wall Street's market predictions ignore economics. Which is why none of them see it coming - the trickle down fake wealth effect is the last straw of the 'Conomy. Gamblers bidding up their own assets while pretending to be wealthy...

Regardless of ideological persuasion, there's such a thing as the speculative cycle. In Elliott Wave parlance, it's Social Mood. In Keynesian terms, it's the "animal spirits". In reality, it's just greed.

As I've shown recently, the greed cycle is burning out across multiple different asset classes at the same time. Therefore it's not hard to imagine that risk liquidity is receding as maximum risk exposure meets margin calls. 

As we see below, Bitcoin is getting compressed between the former support level which is now resistance, and the 50 day moving average. The 50 dma is eliciting a smaller bounce with each re-test. Therefore when it breaks, gamblers will get stopped out of their positions which is what leads to third wave panic, because there's no support until the 200 day, which is significantly lower: -70% from the all time high lower:

The next ~24 hours should be interesting...

Next, we look at Oil futures speculators:

In other words, oil futures prices are the highest since 2015, while crude oil net longs are almost 2x higher than 2015. Because in Ponzi World, bidding up one's own assets is "bullish". 

You just can't make this shit up. 

Unfortunately for over-exposed gamblers, below we see that the previous speculative cycle (within the overall 2008 'expansion'), ended by sheer coincidence in 2014, when oil gamblers pushed their luck just a bit too far: