Monday, December 31, 2012

2013 Predictions

The Idiocracy Has Come Up With A Plan To Avoid the Fiscal Cliff...

Sunday, December 30, 2012

Molon Labe !

Is the rally cry of the ascendant underground American militia, in response to recent calls for gun control. It's a Greek expression of defiance first ascribed to Leonidas of the Spartans of "300" fame.

It means "Come and Get Them"... 

Deal or No Deal ?

The mass media is on pins and needles wondering if there will be a deal or not on the dreaded "fiscal cliff", before January 1st.

From a markets perspective, it no longer matters...

Saturday, December 29, 2012

The Scylla and Charybdis Called Reality

Hedge fund redemptions, a failed Santa Claus rally, inexplicable bullish sentiment, the ongoing fiscal cliff clusterfuck, leverage at multi-year highs, punk holiday sales, weakening consumer confidence, rising VIX (see below), an Elliot 3rd Wave (down) at multiple degrees of trend, all packaged in a candy-coated suppository administered by HFT bots, courtesy of Central Banks.

Prepare the Escape Pod for Evacuation
Meanwhile, the smart money has ignored its own advice (to buy stocks) and instead increased their holdings of U.S. Treasuries to a record level.

For the Idiocracy - Your Bus Is Now Loading...Faux News On Every Station... 
Lastly, as we see below, the jaws of reality are at three year wides, to lure as many oblivious fools as possible onto the bus ride into the abyss...

Friday, December 21, 2012

2012: Escape From Reality

This will likely be my last post of 2012, barring an "event".  So I tried to come up with one chart that sums up the overall zeitgeist of this surreal year.  I haven't shown the above view in a while, so I felt that this was the perfect chart to capture exactly how fucked up and dangerously far removed from reality this year has been...

Thursday, December 20, 2012

The Temple of Greed is Self-Destructing

Wow.  The rabid right just devoured their own party leader, John Boehner.

Obama's fiscal cliff starting position was that any household making over $250k would see a tax increase (anyone under that amount would see no tax increase).  Of course, that wasn't good enough for the rabid right.

Then Obama came back with a proposal that anyone making over $400k per year would see a tax increase. That still was not good enough for the rabid right.  Even though, $400k is the 98th percentile for U.S. households.

Then a few days ago, Boehner, the House Republican leader countered with his own "Plan B", which stipulated a tax rise only affecting those making $1 million or more per year. The 99.5 percentile !

He then offered this plan to his own party tonight - and they rejected it.  They wouldn't even vote on it.  In doing so, they likely sentenced the entire country from top to bottom to a tax increase come January 1st. So everyone from the guy making $7 an hour minimum wage to Mitt Romney is now going to take a haircut because the rabid right couldn't compromise.  Of course, Mitt and his fellow RomneyBots only paid 14% tax on their onshore money and 0% on their offshore money this past year, so this whole exercise was just a charade from their standpoint.  Think about that - the ultra-wealthy had no skin in this game.  They knew that if tax rates went up for everyone, they could fall back on their loopholes, deductions and offshore accounts to keep their tax rates low.  Therefore, a universal tax increase actually benefits them, because it reduces the deficit at the expense of everyone except them.

Still, the markets know there is no free lunch, so stock futures flash crashed limit down on the news.  Automatic circuit breakers had to kick in to prevent full meltdown.

Greed has its death grip on the U.S. and it won't let go until everyone is impoverished.  As fully expected, the self-cannibalizing extreme capitalism model has begun the self-destruct countdown sequence...

History's Dumbest Society Contemplates Suicide

Without doubt, the laziest and dumbest society in history - no comparison whatsoever.  Two hundred and thirty+ years of illustrious history squandered in one generation.  Now hanging merely by the thread of continuous Central Bank money printing - a Jedi Mind Trick solely intended to keep the stewed masses from revolting...

Every time something bad happens, we find every excuse in the book except the most obvious and actual reason for why the event occurred. Now, we can't turn around without hearing the dumbest rationalizations for why the Newtown shooting tragedy occurred, all to take heat off of the gun control debate and otherwise obfuscate and waste time.  Sound familiar?  It's just the Global Warming redirect strategy all over again...

Wednesday, December 19, 2012

Reversal of Fortune

Gold got nicked again today and it's now significantly underperforming its "Risk On" cohort (stocks, junk bonds etc.).  Let's see, a couple of days ago, Municipal bonds rolled over, now gold.  One at a time, risk assets are leaving the party, meaning fewer and fewer places to hide.  Zerohedge is trying to rationalize the decline in gold as being caused by a hedge fund liquidation. First off, given the overall underperformance of hedge funds year-to-date, that should be a major red flag - widespread hedge fund redemptions.  Redemptions that force asset liquidations into a low volume market are clearly not conducive to market stability.  Anyone remember Janus Fund circa 2001?  The gift that kept on giving...Secondly, once you start rationalizing your losses, then bigger losses lie dead ahead.  Don't ask me how I know that...

Corrupt Hypocrites

Today, one of the bond rating agencies came out and said that policy-makers need to come up with a "fiscal cliff" deal, because raising taxes and spending less (i.e. the fiscal cliff) is not acceptable. They even threatened the U.S. credit rating. They also want a deal to raise the debt ceiling ! So for the U.S., they advocate more spending and lower taxes v.s. the exact opposite, which is what will occur if policy-makers do nothing. For the European nations that are in the exact same fiscal bind, ratings agencies advocate the complete opposite - higher taxes and lower spending aka. austerity.

This is fucked up on so many different levels, I don't even know where to begin...

Tuesday, December 18, 2012

Legalized Slavery

McDonald's Urging Owners To Open On Christmas Day. 

Because the 400 pound fat man of the Idiocracy can't go one day without his junk food. 

And the Corporate Greedbots can't give up one day of profits.

The question on the table isn't whether or not this society can be saved, it's whether or not this society should be saved.

Bernankenstein's Monster

When Historians look back on this post-2008 era many years from now, they will say that it was all just a very well orchestrated illusion. Therefore, we should attempt a first draft of this era's history lesson, just so that we don't come across as having been totally oblivious.  After that, we can leave it for the historians to dig down through a mile of rubble and fine tune the minute details.

How Bernankenstein's Monster Ate The World
When Bernankenstein's Monster (aka. Wall Street) got off its leash in 2008 the entire world was afraid. But the people who were the most afraid were those at the top of this Ponzi pyramid, who feared a new world order could emerge.  So, under the principles of Shock Doctrine, they took full advantage of the prevailing state of fear to reinstate the pyramid scheme as quickly as possible, knowing full well that they had a finite amount of time...

Connect the Dots...Before It's Too Late

We have entered a deadly era in which risks are extreme, yet complacency is rampant. We are constantly lied to by the same sociopaths who tried to bury us in 2008.

Having been Monkey Hammered on my investments in 2000 during the DotCom bust, then again on 9/11, then again in 2003 when Bush decided to invade Iraq for some still unknown reason, I decided that I had better start thinking for myself if I wanted to survive. As you see I'm a quick learner - I only had to get shellacked three times to learn my lesson. In two of those aforementioned situations, there were many largely ignored clues that things were not "right" leading up the big "event".  In the case of 9/11, few recall that the market was already selling off heavily leading up to that fateful day...

Monday, December 17, 2012


Two weeks left in the trading year and Wall Street is pulling out all stops.  Equity Hedge funds now underperforming by 50% relative to the overall market.  Today, the ISEE call/put ratio hit 208.  This is the most exuberant reading since the September top of this year (205).  The other recent peak came in late July 2011 right before the post debt ceiling crash that launched Occupy Wall Street.

Meanwhile, under the radar, the RomneyBot asset class, Municipal Bonds (above), are now tanking. The ultra wealthy love Muni Bonds because they don't have to pay any Federal tax on the interest.  Municipal Bonds have given up over a year's worth of yield in two weeks.  From a capital gain standpoint, it's a three month loss.  This is fully what we should expect as one asset class after another leaves the party...

Outside is America

This brewing gun control debate highlights the major underlying problem in the U.S. today - a complete and total vacation from reality. Only a country that has detached itself from economic reality for the greater part of the last 30 years could survive this level of moronic behaviour. Unfortunately, it's all due to the overwhelming dominance of the dollar as reserve currency which has subsidized this vacation; therefore, this level of willful ignorance will appear to "work" until it stops working entirely. At that point Americans will have to become like much of the rest of the world - fed on commonsense and reality, instead of fantasy, wishful thinking, and endless rivers of bullshit...

Sunday, December 16, 2012

An Overwhelming Fear of Reality

In part due to conflict of interest, the overwhelming majority of financial commentators still espouse a concern for inflation over deflation. Most financial commentators today who argue the imminent inflation hypothesis, either have already taken a position in inflation correlated assets (gold and silver), or gain advertisement revenue from these inflationary investment positions (gold/silver). Worse yet though, given that they feel a need to be fully invested in "something", most of these same people are far too afraid to gaze into the abyss and fully confront the idea of a global asset deflation (market crash), so they have magically just taken that scenario off of the table...

Saturday, December 15, 2012

Global Economic Depression is Unavoidable

The magnitude of an economic depression is proportional to the magnitude of the asset bubble preceding it. Therefore we can fully expect that this impending depression will be of unprecedented magnitude, given that this credit-inflated asset bubble we euphemistically call the "economy" has been leveraged to an historically unprecedented magnitude.

And thanks to their sycophantic subservience to Wall Street, global economic policy-makers, having squandered massive public resources on the bailouts from 2008, have only guaranteed that this impending depression will be ten times worse than it would have been, had the bailouts never occurred in the first place...

Friday, December 14, 2012

Mentally ill Society

Almost daily now we are confronted with yet another mass shooting.  The frequency is picking up and it will only increase exponentially as the economic depression accelerates.

Only In the Idiocracy
This just in: there is no sign that the number of mass killings is increasing, other than that they are increasing. The fact that there have been a number of recent attacks may give the impression that they are becoming more common.  We await statistical confirmation, or everyone hiding under their bed, whichever comes first...

Wednesday, December 12, 2012

Wall Street's 4th Dopium Shipment Has Arrived

This new $1 trillion dopium stash will be cut and distributed to the junkies on Wall Street in $85 billion bong hits each month over the coming year.  To give perspective, the highly criticized (by right wing stooges) GM bailout cost $50 billion, has already been paid back, and saved tens of thousands of jobs and entire towns.  So this one QE4 program equates to 20 GM bailouts in cost, but of course will have $0 economic ROI.   This new trillion of QE4 money is on top of the prior $2.8 trillion that has been thrown down the monetary shit hole already...

Tuesday, December 11, 2012

Dr. Bernankenstein:

How I Learned To Stop Worrying And Love Printed Money

The Fed meets this week to determine how much monetary euthanasia to apply to the markets, while the real economy dies with each passing moment...

Extend and Pretend To The End:

Monday, December 10, 2012

BTFD: Bring Your Own Underwear

Picture perfect wedge with picture perfect backtest.  Bulls stalled right at the lower trend line. Get busy living, or get busy dying...

Sunday, December 9, 2012

45 Years: Saturn V to iPhone V

This is a cautionary tale for any society that changes its focus from Science and Engineering to Marketing and Finance...

Saturday, December 8, 2012

Let Them Eat Cake

I am cancelling my subscription to Elliott Wave Theory.  Many would argue that it's well overdue.  I put up with their theoretical bullshit for years now merely so I could gain access to their graphs and quantitative research, but I've had it with the nonsense.  Elliott Wave Theory is just another fabricated excuse for ignoring reality and personal responsibility...

Their latest unfounded assertion is that this fiscal cliff driven "soak the rich tax grab" by government is purely a sign of "bearish social mood", having no other justification.  They are fully bought in to the convenient "makers" and "takers" false dichotomy that sees the 47% as being a drag on the "productive" members of society.  In reality this is just more wishful thinking by those who have yet to be directly affected by the poverty-inducing effects of the global pyramid scheme.  There has been one and only one overwhelmingly pervasive social mood these past thirty years: GREED, GREED and MORE FUCKING GREED.

Below is the only chart we need to see to know that the latest issue of their newsletter is pure toilet paper. This is the distribution of wealth in the U.S. at this late juncture.  This type of Third World wealth distribution is unsustainable in a country where people are used to a decent standard of living.  For the generally under-armed Romney class to go all in against the middle class which is now stockpiling guns at a prodigious rate, shows how out of touch and oblivious these greed worshippers are at this point.  Putting the majority of this country's children at imminent risk of extreme poverty, only to further amplify the extreme wealth of a handful of Americans, is unconscionable and puts us all at risk.  At the end of this, no one will be talking about "makers" and "takers" - that I can say with 100% certainty.  If as EWI asserts, Warren Buffett is onboard with tax increases, it's only because he knows a thing or two about history and reality - a lesson the Ayn Randers have in front of them.

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)...

Friday, December 7, 2012

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...

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...

Thursday, December 6, 2012

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...

Wednesday, December 5, 2012

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...

Tuesday, December 4, 2012

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...

Sunday, December 2, 2012

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...

Saturday, December 1, 2012

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...