The globalized economy is a colossal Ponzi Scheme in which the vast majority survive on the bread crumbs falling off the table. The possibility of 7 billion people achieving a consumption-oriented lifestyle is zero, so the World Bank conveniently set the poverty line at $1.25/day to legalize global slavery. As long as someone else's children are doing the suffering, it's "all good". Post-2008, this illusion was extended merely by plundering all future generations.
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Thursday, April 14, 2016
Low Volatility Is The Last Block Of The Jenga Pile
Global markets resemble the kids game "Jenga" wherein blocks are stacked into a multi-level tower and then one by one removed until the tower implodes...of course up until the time that it falls apart completely, it gives the illusion of stability...
As I've said many times, key sources of liquidity have been systematically depleted: Central Banks Profits/buybacks Carry trades Institutions Momentum trades Short-sellers Therefore for a swaying pile of shite, what could be left holding it together? The answer is self-evident: Low volatility. In a lethal game of cat and soon-to-be-dead mouse, volatility has been systematically crushed as a last resort to keep the jenga tower in place... Bollinger band width:
Which means that when the last block is removed, all sources of liquidity will be gone at the same time...and the game will be over.
The worst performing sector of 2016, Financials, are finally "leading", but I wouldn't read too much into that...they had a good late stage bounce in 2008 as well...
