Wednesday, August 31, 2016

The Globalized Ponzi Scheme Is Ending

"Good job everybody..."

Finally someone in the lamestream media with a fucking brain. But it took until the VERY END to figure it out:

"We have come full circle. Globalization, until last decade the Left’s antichrist, is now the same thing but for the Right.

What made anarchists disfigure downtown Seattle in 1999 has now made Donald Trump disfigure American politics. In 1999, globalization was derided as a rich-world conspiracy to abuse the Third World, rob the planet’s riches and contaminate its air. In 2016, globalization is demonized as the poor world’s ploy to flood the West with immigrants and take abroad its jobs.

Trump, in other words, is not the zeitgeist’s cause; he is its result."

In summary, Globalization made everyone poor except Bill Gates & Co, something apparently the right didn't have the honesty and brain power to figure out until the very end. Too much Faux News will do that to you:

Nevertheless, they haven't thought this all the way through to their investment accounts. Yet...

The Last Nail In The Coffin For The Idiocracy

Including Brexit, there have been three volatility cycles in the past 12 months - all got bought with both hands. This will be the last one...

But first, there is yet another G20 circle jerk this weekend in China. This one is for heads of state whereas the ones in the Spring were for financial alchemists and ministerial peons. Nevertheless, these boondoggles serve to give the illusion of doing something while accomplishing nothing whatsoever. Which is the Idiocracy's sole aspiration in life. And therefore, what we can expect upon final meltdown is what I call the "David Cameron effect" as exhibited post-Brexit. A bunch of vacuous posers abruptly quitting, leaving a massive void of leadership and a jilted Idiocracy - except on a global basis. It will be fun, you'll see...George W. Bush will tear off his Obama mask and say "I got you again, dumbfucks"...

In the meantime, one of these volatility cycles is not going to be like the other three:

BTFD visualized:
Cash balances inverted
I circled cash balances ahead of the last three dips that got bought...

Tuesday, August 30, 2016

Globalization: Highly Liquid. Totally Insolvent

A Ponzi scheme is a liability without an asset, which hides insolvency by using inbound liquidity, until everyone wants their money back at the same time. Then the con job is over..

As it was in 2008, global financials are rallying last...

Global Financials since last August:

Since 2008:

U.S. Banks

Royal Bank of Canada

World's most leveraged bank:

World's second most leveraged bank:

Asset Manager to Baby Boomers

And another...

Shouldn't Skynet peak last?

Retail is imploding...

So mind the Gap 'n Crap:

Monday, August 29, 2016

"Risk Parity". The New Subprime.

Money for nothing. Chicks for free...

Risk Parity, Smart Beta, and Low Volatility are converging on the exact same strategies of overloading risk under the universal asinine assumption that low volatility = low risk...

Risk parity (or risk premia parity) is an approach to investment portfolio management which focuses on allocation of risk, usually defined as volatility

The low volatility exchange-traded fund (ETF) craze has little to do with investors seeking less volatility.

Instead, the billions of dollars flowing into ETFs that track stocks exhibiting the least amount of volatility is a classic case of performance-chasing.

This deluge of inflows has turned low-volatility ETFs into the fastest-growing smart-beta category ever

This helps explain why everyone and their mother is launching smart-beta ETFs. 

The three largest "low volatility" ETFs are USMV, SPLV, and EFAV. All three shown here i.e. they're in the exact same assets. Volume is from USMV:

The top holding for both USMV and SPLV is AT&T:

The second largest common holding is JnJ, what else...

But really, what could go wrong?

At some point, the soccer ball will inevitably leave low-volatility land...For instance, currency-hedged ETFs had a good, two-year run of outperformance. The trade inevitably stopped working, with $10 billion of outflows recorded so far this year. The same fate awaits low-vol ETFs...

USMV:SPY ratio:

This deluge of inflows has turned low-volatility ETFs into the fastest-growing smart-beta category ever...

"Getting in was easy, but on the way out there were no more idiots for the other side of the trade"

They Don't Stop Lying At The Top

Capitulation Visualized:
The 30 day TRIN which measures selling intensity, was this low in September 2014, then at the prior all time high in May 2015, and again just now at the new all time high...

ZH: August 29, 2016
Extremely high t-bond and stock asset correlation doesn't always lead to a sell-off, only usually...

Obligatory pre-crash short-covering is well along...
SPLV with VIX:

New highs - lows:

Oil is ready for another leg down...

And so is the Chinese Yuan
w/rate of change:

Sunday, August 28, 2016

Trapped In The Temple of MORE...

ZH: August 28, 2016
Hedge Funds Are ALL IN
"So with volatility at near record low levels, stock-picking virtually impossible, and hedge funds underperforming every other asset class, what do they do? Why go all in, of course: recall that year-end bonuses are due in just 4 months, and as of this moment they are not looking good."

Trapped Poverty Capital: Global Real Estate Mega Crash. At 0%

"Has monetary policy aided and abetted risk-taking? I hope so. That's why we did it"
- Anthony Haldane, Bank of England, July 13, 2014

660+ global interest rate cuts later and deflationary poverty capital is now trapped in every single asset class on the planet: Oil, Commodities, Junk Bonds, Carry trades, Sovereign Ponzi bonds, Global stocks, IPOs, Biotech, Unicorns, Bitcoin, Gold, Art...

Real estate:

ZH: August 28th, 2016
The Housing Markets In Aspen, Miami, and the Hamptons Are All Crashing

“I’ve never seen anything like this before.”

The speed of the collapse has been stunning...a slowdown in January turned into a free fall." 

New York
Hong Kong
San Francisco/Silicon Valley

Toll Brothers builds McMansions in the U.S.:

Janet Yellen on 2008:
“For my own part,” Yellen explained, “I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.”

"You're hired":