Circus Clownius, The Last Emperor

There's one thing Trump excels at - blaming other people for his own incompetence...


This is a guy who already has the shallowest bench of leadership talent in U.S. history. You don't have to be a genius to see where this is all heading. And no, it won't be a buying opportunity...

Typical Trump cabinet meeting:

The reason why every right wing narrative points to the past as the "good old days" is because that was when wealthy white males predominated. EVERYONE else was their slaves - including non-wealthy white males who outnumbered the wealthy 10:1. In other words, there was no "good old days". And there never was true global balanced trade wherein one country was not accumulating massive trade surpluses at the expense of another. That fantasy period in time has never existed in human history. How do the gold worshippers think that the U.S. got its gold in the first place? Mercantilism.

Mercantilism is a national economic policy designed to maximize the trade of a nation and, historically, to maximize the accumulation of gold and silver:

Any questions?

Of course, under the new age of *free trade*, trade is only free in one direction. The "gold" today's mercantilist nations seek is not the metal, it's factories, industries, jobs, and intellectual property. All of which have been flying out the window non-stop since Reagan. Thirty eight years from the beginning of Ponzinomics, RepubliCons are finally starting to realize that trade protections were necessary all along. Closing the barn door after the horses are out. Like all late stage empires, the U.S. has erased history, and replaced it with histrionics and Caligula as president.

Getting back to the casino, ironically, the most important index right now is the "least important index", at least according to Wall Street. The widely watched Dow - because it's price weighted (versus market cap weighted) - is reeling from the effects of Donny's new trade war, unobscured by the massive "safe haven" exodus to Netflix. In the past 52 weeks, the largest contributors to Dow index performance, none are tech companies: Boeing, United Health Caterpillar, MMM, Goldman Sachs, Home Depot. The largest cap stock in the world - Apple, contributed only half as much of the Dow point gains as Caterpillar, despite having a market cap 10x larger.

The Dow is currently caught between the tax cut breakout line and the election trendline:

Needless to say a global trade war will not be conducive to further Dow point gains, given that it's overly exposed to global industrial multinationals. 

"Donald Trump’s yardstick for his own success is going rogue. That’s the Dow Jones Industrial Average, a regular feature in the U.S. president’s commentary over the past year as the equity bull market raged on"

The Achilles Heel for the Dow is clear enough: hurt Boeing by pulling orders (for example), and the Average will suffer disproportionately...the heaviest-weighted stock in the Dow is one of the biggest global users of aluminum, and derives 55 percent of its revenue from outside the U.S.

“in this game of chicken, the stock market is in the lane of oncoming traffic

The Dumbfuck Bubble Is Ending. Badly

We're being drowned in an ocean of dumbfucks with dumbfuck ideas right now. Mass confusion reigns supreme. But don't feel bad because even (especially?) today's "best and brightest" gamblers don't know whether they are coming or going. They've been gamed by the dumbfuck bubble, with its eponymous leader...

"False alarm. Everyone back in the Dow"

Remember John Paulson, he was the billionaire hedge fund manager who attained his mythical status on Wall Street with 2008's, The Big Short.

"One of John Paulson’s hedge funds has plunged about 70 percent over the past four years, marking a dire stretch for the billionaire plagued with investor redemptions"


Meanwhile, some readers may recall my all time favourite hedge fund manager, Hugh Hendry. It was Hendry who coined the term that best describes the age of the dumbfuck. He called it, "Imagined Realities". Well he imploded in 2017, because under Trump, imagined realities went to level '11' and even the guy who invented the term itself, couldn't go full retard enough to make it work. I really miss this guy. 

Circa 2014, in hindsight, it's shocking that he lost his clients:

"There are times when an investor has no choice but to behave as though he believes in things that don't necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully."


Then there's hedge fund billionaire, Ray Dalio. Ray runs the world's largest hedge fund. In late January of this year at Davos, Dalio said that any investor who is parked in cash is a fool. The Dow dropped -10% in a straight line almost from the minute he said that. The biggest drop in two years, and the biggest one day spike in volatility EVER. Dalio was one of the pioneers of "Risk Parity" which is an automated form of investing that uses historical volatility to determine asset allocations. In February, the risk parity strategy had its worst one week return since 2013.

Dalio's fund is not publicly traded, but this fund gives an idea of how the sector is trading:

Then there's Bill Ackman another well known hedge fund guru. Ackman is one of the only hedge fund managers to IPO his fund:

Which brings us to Warren Buffett.

Last week at his annual meeting, the "Oracle of Omaha" embraced the dumbfuck bubble with uncommon zeal. He said that bonds are usually riskier than stocks. And that passive indexing is the best way to invest.

Combined, these are the the two greatest risks to the casino right now. And there is no way out, for the dunces who believe him. Picture the stock market (earnings) yield imploding with bond yields at cycle highs. One market massively overvalued and the other market massively undervalued.

Third Wave PANIC

For this to be THE end-of-cycle selloff, a few criteria must be met:
Global blow-off top in risk. Check.
Flattening yield curve. Check.
Rising volume and volatility. Check.
Central Bank liquidity reduction. Check.
Tapped out consumer. Check.
Mass complacency/lack of hedging. Check.
Disintegrating breadth. Check.
Reckless speculation. Check.

Bonus risks:
Trade wars. Check.

Daneric is still using the same count...
The third wave (blue) within wave 1 (red) down in February, kicked off with an overnight gap. Like today...

Oil is tracking a similar breakdown fractal:

Tech is still bid...

The Tech/Treasury liquidity ratio is rolling over

There's been no sustained selling for six years, so this will make up for it...

NO BID MARKET

When Go Daddy rolls over, there will be no place to hide...

When Tech rolled over early last month and pounded the 50 day, the rest of the S&P was at peak relative strength. Subsequently, Tech has gained strength while the broader S&P has weakened. 

I think we all see where I'm going with this - We've never seen this kind of chasmic divergence before between Tech and the rest of the market:

As we see above, the last time Tech imploded was two years ago. At that time, Consumer Staples was already gaining relative strength versus Tech. When the August decline hit, leadership immediately rolled over to Staples as indicated below by the higher lows. Which is why when Tech retested in early 2016, the casino found its footing.

That's not going to happen this time. Tech's new all time high corresponds with Staples languishing below the 200 day:

That's what tightening monetary policy does - it implodes the casino.

At the end of the cycle.

August, 2017:

"The Fed has tried to reduce its balance sheet six times in the past, with five ending in recession"

"I'll take those odds and a Powerball ticket to go"

Record Boom In Dumbness

Archaeologists are going to need to dig deep to find what's left of this Roman Circus when it final implodes...

I, Clownius has turned being a fucking moron into a popularity contest. Idiots far and wide are extrapolating the impossible into the indefinite future. But don't take my word for it...

"Any U.S. trade protections will be done "in a loving, loving way," Trump said. And the end result will be that countries "like us better, and they will respect us much more."

Now we know where Trump's tax cut paid for with a 5% record (post-war) deficit is going:

"J.P. Morgan notes that buybacks will be a support for stocks and recommends that investors continue to buy the dips."

The $800 billion figure is an extrapolation based upon record stock buybacks year-to-date.

I would note that $212 billion in year-to-date buybacks did nothing to prevent the largest decline in two years. But why is that? One theory, predicated on the fact that stock buybacks prior peaked in the third quarter 2007, is that companies just are not that good at timing the market:

As it was at the end of the last cycle, growth companies are massively outperforming buyback companies. Why? Because only growth boosts share price on a long-term basis. Buybacks are smoke and mirrors to hide economic stagnation.

Blow-Off Top. In Tech

As it was in March 2000, the Dow aka. real companies faltered early. Tech continued higher for several weeks longer and then imploded spectacularly. The difference of course between now and back then is that the gamblers now will be hiding in GoDaddy when the recession begins...

The most important chart right now is this one depicting the narrow exit gamblers must navigate to get out of the casino...

In other words, as long as Netflix doesn't implode, this will all be fine...

"Safe haven"

Make 1929 Great Again

Forrest Trump is doing a great job of imploding the status quo. I give him an 11 out of 10 on the dumbfuck scale...

Trump is following the 1929 Herbert Hoover playbook to the letter. To date, he has monkey hammered the global bond market, raised interest rates via his tax cut, shepherded record amounts of money into stocks, and now he is pounding the manufacturing customers who use steel and aluminum...

Thirty years too late, Trump's tariff is 100% political gimmick, because the steel industry has been collapsing for decades and now has a very small workforce:

"if you look at the data, there's very few people - only about 140,000 - who make steel in the United States. There's 6 1/2 million people who work for companies that buy steel"

"A former adviser to President Trump sold off $31.3 million in stocks he owned in a steel-dependent company, just days before the president announced hefty tariffs on foreign-made steel."

First, the losers:

NO.

"Both stocks represent about 14 percent of the Dow, pointed out Craig Johnson, chief market technician at Piper Jaffray. Both have the potential to fall further given the recent bearish price action, and that has implications for the broader market"

The "winners"

The Art Of The Con

The joint ignorance pact has its downsides. With each flagging rally, the lies must be repeated with greater and greater conviction. This society is investing for the future by cannibalizing the status quo...

Another overseas selloff gets bought in the U.S., shocker. So far, this pattern of selloff Tuesday-Thursday and reversal Friday-Monday is deja vu of last week. My discussion today will be on the importance of trendlines as predictors of the future. I think we all see where I'm going with this...

I finished writing my online book called "The Sustainable Economy: Why Globalization Failed And What To Do Now". I am fairly confident that I will be first off the press when the final collapse arrives unannounced, since the herd has jointly agreed not to see it coming ahead of time. 

My hypothetical commencement speech for the youth at this juncture would say that IF, you/we are doing the things necessary to build a better future, then the future CAN be better than today. Optimism is warranted. However, if you/we are engaging in short-term, risky, and self-destructive behaviours then it stands to reason optimism is not warranted. Very profound. An obvious statement that somehow eludes today's Idiocracy. 

At this moment this aged Idiocracy is engaging in the most self-destructive and irresponsible economic behaviours never before conceived much less tried in human history - selling off the economy to make the quarter, stealing Social Security deductions to pay for tax cuts, conflating debt with GDP... Stock buybacks are now the sole source of liquidity for the casino: the cannabilization of the share count to give the illusion of growing wealth. Today's fools have put the cart before the horse - because they've invested in the future, they've decided the future MUST be better. They conveniently forgot the hard part about taking action to ensure the future WILL BE better.

In other words, no one has to predict the future, we only need to look at what is going on today to know what things look like in the future. Over on UFO central, they are finally catching on to the importance of trendlines. Trendlines matter because they indicate the direction of momentum. Fundamental analysts eschew technical (chart) analysis because they say that the past can't predict the future. But as I've said, actions in the past are the ONLY way to approximate the future. Conversely, fundamentalists prefer to guess where corporate earnings will be a year from now. If the economic expansion continues, they will be right, however if it's the end of the cycle, they will be off by a minus sign. Again. And again. And again.

Which is how crashes happen.

Getting back to trendlines, we have a few to look at now:

We have the strongest index - Nasdaq deja vu of 2000, now making its third lower weekly high:

There's the 1987-looking Dow, not quite as strong...

There's the rest of the world, perilously invoking 2014:

There's the world leaders stock index camped out on the two year trend-line:

Oil invoking exactly one month ago before the wheels came off the stock market bus...

China Tech invoking 2015

And of course there's the IQ Test.

But most importantly as long as *everyone* is agreeing that no one knows what's going to happen. And therefore everyone is assiduously ignoring global risk and buying it with both hands.

Then we know exactly what's going to happen.