Wednesday, May 31, 2017

One Clown To Rule Them All

The leader of the "free world" was off his meds last night. But don't worry, this all makes perfect sense to demented morons who consider nonsensical gibberish acceptable for a man commanding 6,000 nuclear warheads...

First he puts this out at midnight last night:

To be fair, we all have our drunken rants. So far worse yet, in the morning theoretically when he would be sober again, he puts out this even more asinine "clarification", suggesting a more permanent condition is at work:

Because we all know that the problem with the first tweet was a misspelling of 'coverage' and not the fact that it failed to express the slightest semblance of a cogent thought. 

Holy fuck. We're doomed. 

The de facto Idiocracy will be buried deep of that I am 100% certain.

Trump's relationship to Twitter, explained:

Third World Aspirations aka. Careful What You Wish For

America's transformation into a banana republic is further along than most people seem to realize...

"A withdrawal would put the United States in the same camp as Nicaragua and Syria"

And yet, shockingly, the Energy sector did not thank Circus Clownius for this gesture...

May 18th:

"Exxon Mobil, Chevron and BP have also pledged their support for the Paris climate pact"

Also this morning...

"Shares of some of the U.S.’s largest financial institutions are getting hammered Wednesday, led by a sharp drop in Goldman Sachs’s stock, as bank executives were signaling a slump in second-quarter trading, pointing to the possibility of woeful revenue figures in the financial sector."

For some reason, Donny Trump's two favourite sectors don't fully appreciate his corruption friendly business practices...
"Over the past three months, financials have declined 5.6%, the third worst performance over that stretch behind energy’s 8% drop"

I think we all see where I am going with this...unfortunately, the low volatility "regime" doesn't allow for imploding banks...

"More volatility please"


"And then they installed Goldman at Treasury again, to be in place ahead of time for the next bailout"

Tuesday, May 30, 2017

An Inconvenient Ground And Pound

Today's S&P ETF volume, within 1% of the S&P's all time high, was the lowest full day volume in over a decade. Now that's conviction...

"Wait, I thought Globalization was fixed. By cheap money for the gambling casino and Forrest Chump..."

What is the risk of calling an early election?
"Tonight: we reveal YouGov's first seat by seat projection of the campaign - suggests Tories fall 16 seats short of overall majority"

GBP selloff has only coincided with three global risk off events in the past year. Out of three...

"Election? WTF, you just had one..."

"Most Americans, I feel confident in saying, aren't aware it's even taking place."

I feel confident in saying that no gamblers anywhere are aware it's taking place...

"No serial conned dunce saw it coming"

"Faux News. You lied to me"

Almost There, Keep The Bullshit Flowing

Gamblers are loading up on Trump bullshit ahead of recession. Which will ensure a deep burial of all things Idiocratic...

Small Caps
Recession stocks
Defense Stocks

Mission O'Complished:

Two oblivious billunaires for the price of everything...
The irony of the century is that Amazon is the top performing mega cap stock since Trump's election, and Bezos owns the Washington Post which is doing everything possible to bring Trump down. A real conspiracy alright...

Meanwhile, faith in Trump's tax cuts is going altogether the wrong way...

Small caps which are the primary beneficiary of a corporate tax cut are massively underperforming:



Deflation with banks


One down. Two to go...

Sold to the usual morons, by the usual psychopaths aka. Treasury by Goldman Sachs...

Gamblers can take comfort in the fact that Go Daddy is leading this rally...

"Artificial intelligence was rampant"

Sunday, May 28, 2017

Make Lying Great Again aka. Trickle Down Fake Wealth Effect

While Circus Clownius is blowing smoke up everyone's asses non-stop, his empire is collapsing. Just thought I would mention that. Apparently when he said last Fall that the election was rigged, he meant it...

Of course that's water under the bridge now to his reliable apologists. The fact that the U.S. election was systematically undermined by a foreign power with the sole goal of getting Trump elected so he would end Russian sanctions with an under the table quid pro quo to his own cash-strapped empire, brokered by his son-in-law. Bearing in mind that's pure speculation, attended by corroborating testimony from now four separate U.S. intelligence chiefs, including of course the CIA and FBI. What do they and the people below them leaking all of this information really know?

In the meantime, the Denialist-in-Chief was outvoted 6-1 on Climate Change affirmation at the G7 in Europe.

After all, who has time for that nonsense when he's too busy making coal implode again:

And making the entire Oil and Gas complex implode deja vu of 2015, as well:

Speaking of non-stop lies, I wanted to get back to the fake wealth effect, because after all, fake wealth is now at global record highs. What that means is that the trickle-down-Ponzi-bread-crumbs have never been greater.

Hence we should fully expect the attendant lies in the face of extreme poverty at the end of this last cycle, to be of an historic scale as well. And of course they are.

First, fake wealth: Here we see Sotheby's auctioneers of all things priceless:

Meanwhile, at the complete opposite end of the spectrum, dollar stores will account for 80% of new store openings in 2017:

To further cement dollar store dominance, Trump wants to cut foodstamps to pay for his tax cut and Keynesian bombing of foreigners. Foodstamps have already been cut twice by Congress...

Foodstamps versus defense stocks

And like clockwork, Fed mega dunces are out in full force to cement the June rate hike...Who needs a fiscal package when we have trickle down fake wealth?

But why is the dollar not believing this bullshit?

And how about that meaningless OPEC extension? Is there a corn and soybeans output cut in the works as well?

When you have fake wealth, real wealth just seems like a lot of work...

Saturday, May 27, 2017

Manias, Panics, Crashes And The Madness Of Crowds

Unfortunately, the speculative cycle is extremely abrupt, and therefore the economic cycle is very abrupt as well. This is going to be an education they never forget...

For some totally unknown reason, the Economics profession remains wilfully ignorant about the downside effects of cheap debt - not only on speculative portfolios, but on the economy itself. To be sure, they are well aware of the (fake) "wealth effect" thrown off by monetary policy:

The Wealth Effect:
"The wealth effect refers to the psychological effect of asset value increases, such as those experienced during a bull market, on spending patterns. The concept focuses on how the feelings of security, referred to as consumer confidence, bolstered by the rising value of assets, such as investment portfolios and real estate"

What about falling values? No effect?

The problem with this willful ignorance is that it leads to widely ingrained behaviours such as extrapolating the business cycle out to infinity. The problem in turn with extrapolation is that the business cycle bears no correlation whatsoever to the latest stale bread crumbs of backwards-looking economic data. And yet that doesn't stop economists from making serially-wrong predictions. After all, the trend is their friend until the very day it's not. 

In the bubble economy in which we find ourselves, the primary determinant as to the health of the credit cycle and by extension the "economy" is the speculative asset cycle, which I have modeled above.

This is well-documented by Minsky, but I wanted to add some additional relevant detail, because the bubble cycle is not just about credit accumulation it's about the interdependence between asset values and credit - after all, available leverage is a function of both income AND asset values

As we see above, speculative asset values are initially supported by income, but eventually supported by debt/leverage as the cycle progresses. Asset values and leverage spiral higher since one feeds off the other via the speculative equity effect. As in, look my house value went up and so did my equity. This can go on for quite some time, until such time as asset values rise too quickly and exceed available buying power. This is the Wile E. Coyote moment. Why? because the model does not go in reverse. Marginal asset values can fall very quickly, but unfortunately, fixed debt obligations do not. This results in forced selling, and ultimately panic. 

The $Trillion dollar question is knowing when it's the end of the cycle, because one must jump in the time machine and be a seller ahead of that point in time. And by my humble estimation, the only way to know it's the end of the cycle is when price accelerates after a "prolonged" period of slow and steady increase.

I would suggest that this is not a good time to be fucking around with speculative asset values...

Recession stocks:

Dow Transports

Recession sector rotation versus IPOs