Monday, May 28, 2018

Wandering In The Desert

Those who don't possess the intellectual veracity to understand that the Globalized system has failed, are doomed to wander in the desert. 40 days, 40 nights, or 40 years. Their choice. All intelligent answers begin with a question. And the question has yet to even be asked... 

Friday, May 25, 2018

Hairless Monkeys Versus Reality

Sadly, the historical record isn't good...February was the widely ignored warning. What comes next is the banquet of consequences...

The sum total of what today's psychopaths have achieved is to suck record amounts of global capital out of local cash/bonds and into the riskiest internet stocks. In order to fund Supply-Side proven failure taken to level '11' FULL RETARD.

"There is no alternative. To Netflix"

This was a batshit crazy week, even by Trumptopian terms: China trade wars off/on. WWIII off/on, car tariffs looming for Japan and Europe, NFL-mandated patriotism, "Spygate", Dodd-Frank rollback, and to summon the Kraken once and for all - the Capitals in the Stanley Cup playoffs against Las Vegas. In other words, hell has frozen over...

But first, start at the locus of implosion, Ponzi reflation is now fully imploding:

"Oil prices plunged on Friday as reports said OPEC and Russia are considering lifting production by as much as 1 million barrels a day to meet the shortfall in supply from Iran and Venezuela."

Any questions?

Meanwhile, Treasury yields are screaming lower as another mega bubble implodes.

Which leaves the set-up distinctly deflationary, deja vu of '15/'16:


Only one bubble left to implode, which will be spectacular to say the very least...

We also learned that the Fed is steady as she goes...

Getting back to the theme of this post, all week, retailers announced their earnings, and depending upon whose bullshit one was believing this quarter was either the beginning of a retail comeback or sheer fantasy.

MW May 22nd, Macy's Upgraded On Same-Store Sales Potential 

"People are talking about how Macy's has resurged. ... That's bull. It hasn't happened yet. In a year, if their performance continues to improve, you might be able to describe what's going on as a turnaround."

Mind the Gap 'n Crap

Thursday, May 24, 2018

Pax Americana

As Memorial Day approaches, Forrest Trump reminds the world, that when diplomacy by Twitter goes unexpectedly awry, Keynesian bombing is the next only option remaining...

The RepubliCon playbook.


And greed:

Preferably both

This is going to fix Emerging Markets

An Aspirational Idiocracy

Conditions are identical to 2015, with an end-of-cycle twist. For starters, the "global synchronized recovery" Jedi Mind Trick is still in play. May the farce be with you...

While proven corrupt idiots were babbling non-stop, the world's asset bubbles crashed/rolled over one by one:

Short volatility
Emerging Markets
China Tech
Social Media
Artificial Intelligence
Global Real Estate

The three largest bubbles are the last to fall and they are 100% correlated:
Long oil/Ponzi reflation
Short Treasury bonds
Long Mega cap Tech

Way back in 2015, the Fed was in tightening mode, the dollar was screaming higher, gamblers were chasing risk, then Emerging Markets hit a brick wall...


When the Yuan devaluation crashed global risk markets in August 2015, the Yellen Fed pulled back from a September rate increase due to "global market conditions". The deflation trade was put back on in size. By early 2016, global Central Banks had collaborated to juice the global casino one more time, leading to the blow-off top this past January. 

What is different now? For one, it's three years later and the cycle is older meaning capacity utilization is higher, inflation is running hotter. The global leverage bubble - across stocks, Bitcoins, real estate, everything, is far larger now. The final margin call will be painful to say the least. Global interest rates are higher, and the Fed is tightening on the short end and the long end at the same time. The asset allocation into stocks from bonds has been far more extreme, and the Fed is oblivious to EM dislocations:

"The Federal Reserve’s gradual push towards higher interest rates shouldn’t be blamed for any roiling of emerging market economies, which are well placed to navigate the tightening of U.S. monetary policy"

“Emerging market fundamentals are in a much better shape

"since the 2013 taper tantrum, the group’s dollar debt has climbed in excess of $1 trillion -- more than the combined size of the Mexican and Thai economies"

Final bubbles 1 and 2

Final bubble #3

Wednesday, May 23, 2018

Slowly At First, Then Everything At Once

Once the machines lose control, it's all over. Another overnight gap down was bought today with both hands - all global risk assiduously ignored. Gamblers are sailing nonchalantly into a shit storm ahead of the U.S. long weekend...

This sums up the U.S. economy:

100% Science Fiction

"They were watching Netflix 24x7 and the next thing you know, the whole shit show fell apart. No one saw it coming"

Social Mood is imploding

Emerging Markets I just covered in the last post, so we'll  cover the other markets that are not taking Monday off. Today, European economic PMIs came in at an 18 month low. How better to tie out a head and shoulders top, over a year in the making:

"Business activity in the eurozone slowed for the fourth straight month in May and more sharply than expected, a survey of manufacturers and service providers showed, a sign that economic growth has yet to rebound from a surprisingly weak showing in the first quarter."

"the tariffs could be as high as 25%"

Over in oil land, crude inventories just rose massively ahead of peak driving season:

"Crude inventories rose 5.8 million barrels in the week to May 18, compared with analysts’ expectations for a decrease of 1.6 million barrels."

Just in time, frackers are enjoying a mid-week reversal of fortune:

On to retail earnings, one wouldn't know by following Jim Cramer, but yet again, it's a tale of two cities. High end retail is doing just fine, middle class/low-end retail is imploding...

U.S. new home sales also fell in April (not shown)

Staffing. Or not. All of this can be explained away by "bad weather". Everywhere, at the same time. 

The unexpectedly dovish Fed just ended the massively crowded short Treasury trade. And hence the bank rally. 

In Printed Money We Trust

The problem with a tax cut for the ultra-wealthy, is that it benefits those who need it the least at the expense of those who can least afford it. As we didn't learn in 2008, there is no model to bail out the people who really need it. Historically and geographically-illiterate gamblers are going to get trapped in the casino during a global currency crisis...

Death cross:

The 2008 bailout recycled failure into success, thus setting a template for the decade to follow. What we have now are proven idiots constantly looking for ways to increase the wealth of an ever-smaller cadre of billunaire bailout queens, at the expense of everyone else. When Japan failed to export their way to long-term prosperity twenty-eight years ago, that should have served as a warning that the global imbalance of trade is a dead-end. When China copied Japan's export failure, resulting in 2008 collapse, that was the second warning. This Idiocracy is out of warnings.

"That’s a legacy of a decade-long debt binge during which emerging markets more than doubled their borrowing in dollars, ignoring the many lessons of history from the 1980s Latin American debt crisis, the 1990s Asian financial crisis and the 2000s Argentine default."

Even those that have been effective in building local-currency debt markets aren’t invulnerable from the Federal Reserve-led rollback in global liquidity."

"Turkey is entering the throes of a full-blown currency crisis.

The lira suffered its biggest loss in almost a decade Wednesday on a closing basis as trader confidence in the central bank’s willingness to halt its slide all but evaporated."