Thursday, June 28, 2018


In 2008 there was one Bernie Madoff, in the post-truth Idiocracy there are millions of them. Compliments of American mythology, forty years of Supply-Side economic failure keeps getting recycled as "success", amid ever-more duplicitous behaviour...

This explains everything:

How To Monetize Idiots In A Post-Truth Idiocracy. For Fun and Profit:
"There are times when an investor advisor has no choice but to behave as though he believes in things that don't necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully. The good news is that mankind clearly has the ability to suspend rational judgment long and often"

What Trump represents is America's final descent, into unfettered corruption. The last false prophet promising MAGA, he is the embodiment of the Republican legacy: a continuous stream of non-stop lying and rapacious criminality. The inevitable result of Ayn Randian nihilism taken to its logical self-destruction: a society lost in a sea of ad-sponsored mass delusion. Feasted upon mercilessly by industry-owned sharks. 

This will be the downfall of the Republican Party and the new Herbert Hoover, right here...

1997 x Y2K x 2008 x 2016:
More capital is now at risk than ever before amid higher global risks than ever before. Average investors are totally clueless. They've been systematically led to believe that global selloffs, global trade wars, Fed double tightening, Y2K blow-off speculation, IPO pump and dumps, Emerging Market meltdowns, and oil wars, all occurring at the same time, are "buying opportunities". No need to ask where they got that idea from:

"The Obama-era rule effectively breathed its last on June 13, when a deadline for the DOL to appeal the Fifth Circuit Court’s decision to the Supreme Court came and went. The Trump administration has not been friendly toward the rule, which had required that all professionals offering advice on retirement accounts place clients’ interests ahead of their own."

"Knut Rostad, president of the Institute for the Fiduciary Standard, a non-profit research, education and advocacy organization, called the court's decision "tragic."

"...investors should demand to know whether their advisor is acting as a fiduciary...The vast majority of financial professionals will not be able to do that."

Using the 2015 analog, which is a very mild comparison, cash balances are far lower now than back then, despite 10x risks now:

The con man is good, very good:

"As president, Trump has promoted those businesses with his presence relentlessly. During his first 514 days in office, he visited Trump properties on 159 of them.

As demand rose, the Trump organization raised prices.

Mar-a-Lago, which Trump calls the “Winter White House,” doubled its membership fee to $200,000. Trump International Hotel, whose managers market it as a destination for diplomats, raised room rates almost 60 percent."

“The stars have all aligned”


When I started this blog, I asserted that Globalization would self-implode. "No one" believed me. Now it's actually happening in real-time. Still no one believes me. Which proves the historical axiom that you can fool all of the people whenever you want, like an ATM machine. The world is caught between denial and a hard place. Republicans are caught between a tax cut and a trade war. And there is no way out. But who could warn them, they don't trust anyone who can be trusted. Just remember the phrase "No one saw it coming", because you're going to be hearing it a lot soon...

Revisionist historians assert that the 1930s Smoot-Hawley tariffs caused the Great Depression. They didn't. However, today's tariffs WILL be the catalyst for the impending depression. The difference being that the Smoot-Hawley tariffs of 1930 came AFTER the market crashed in 1929, whereas today's tariffs are coming prior to a crash. As we see via today's markets (currency, credit, stocks), Trump's "fun and easy" trade war is adding substantial instability to the late cycle global economy, having already turned the "global synchronized recovery" into a global synchronized slowdown...

And yet, as batshit crazy as Trump is, he still manages to be smarter than the rest of the Republican party, which is quite something to realize. Trump knows that *Free* trade is a farce and the only country that actually ever had free trade was the U.S. Which means that there never really was such a thing as free trade, since it was all one-sided. Prior to 1980, the U.S. never believed in Free Trade either, which is how the U.S. amassed its gold reserves - via trade surpluses. So now Trump is threatening punitive tariffs if other countries don't drop all of their tariffs. It won't work.

Why won't it work? Because other countries never believed in free trade in the first place. That's solely an American fantasy that was intended to increase corporate profit at the expense of literally everything else - the economy, the environment, the workforce, and the country itself. Other countries saw the price that was paid for *free* trade, and said no way, we're not a bunch of fucking idiots.

So no, contrary to Trumptopian delusion, adding more tariffs now won't have the intended effect of removing all global tariffs. 

Why I have to explain that fact is a testament to how dumb the Republican party has become over time. 

100% FantasyLand.

Speaking of which...

Oil led all week despite OPEC's pledge last Friday to increase production. Completing the three wave retracement off of the 2014 decline:

Crude oil (black) with World Stocks (ex-U.S.):

"No one saw it coming"

This week is the end of the second quarter and first half of the year. The S&P 500 has been stair-stepping lower, each leg of larger magnitude. It's a waterfall crash in real time. Each decline coming overnight, followed by a BTFD rally during the day. 

As we see via the chart above, the rest of the world is telegraphing risk, and U.S. gamblers are buying it with both hands...

Now here we have an IQ test:

S&P 500, :5 minute view (recent top, June 13th):

Zooming out to the daily view, bears got rinsed back through the 50 day to complete the quarter/half. The horizontal blue line marks the break-even S&P level for 2018. Skynet is trying to close the first half of the year in positive territory. Much better marketing that way.

 Of course, as it was the last two times (circled), breaking this level is a clear shot to the 200 day which is now within convenient overnight gap down distance...

"The $30 billion that came out of global stock funds in total in the past week was the second highest ever and largest since the financial crisis"


The other reason the casino hasn't imploded just yet, is because this is Wall Street's biggest June pump and dump since Y2K:

Adding to weekend fun, Canada's retaliatory tariffs go into effect, when else, Canada Day, July 1st. Trudeau can't back down politically, so we'll see if the assclown-in-chief takes the bait again.

Trump's counter-retaliation against Europe last Friday pounded the S&P -60 points on Monday this week. One more semi-literate tweet and this gong show explodes in his face...

Adding to the excitement, in response to the Indian Central Bank's request to slow quantitative tightening, the Fed will (automatically) accelerate balance sheet rolloff by an additional $10 billion/month, beginning in July.

To kick things off in style, an entire month's worth of liquidity removal ($30 billion) will take place this weekend, hitting the tape Sunday evening. 

This strategy will continue until something implodes, more than likely everything at the same time, since there's not one part of the casino that hasn't rolled over. It's a tried and true formula, why stop now? 

"Another week of this Johnson"

One way or the other, there will be fireworks in DonnyLand next week:

Wednesday, June 27, 2018

Buffoon-o-Mania 2018. Is Ending

All of the corruption is coming together this week. The machines can't handle what comes next. The question on the table is who to trust, markets or proven idiots?

The casino is setting up deja vu of 2015, with a few differences:
First, the cycle is three years older and interest rates are higher now. Secondly, there is a global trade war underway. Third, defensive stocks have already rolled over. Fourth, the Fed is rolling off their balance sheet. Fifth volatility is already elevated, due to February VolPlosion. Sixth, there is far more leveraged capital at risk now due to far greater complacency. Seventh Wall Street is dumping IPOs at the fastest rate since Y2K.

Despite yeoman effort, today was a rare down Wednesday in the casino. Which means that Skynet is ceding control to Netflix margin calls. Which leaves the S&P looking identical to where it was in March, except 80 points closer to the next stop, 200 day. 

The Dow is in an even dicier position, clinging to the 200 day, having tested it several times this week: 

Likewise, Transports are poised at the 200 day, meaning Dow Theory sell signal is imminent for the first time since 2016. Which when triggered, will usher significant capital to the exits...

EM Credit new low today:

Emerging Market stocks deja vu

“People have long thought the U.S. economy will eventually hit a recession at some point. But there are growing worries Trump’s trade policies may hasten that. The fear now is that ‘America First’ may become ‘America Worst’”

“This rolling EM meltdown is another expression of the ‘QE to QT’ reality, as the easy carry environment of the post-global financial crisis period is now coming home to roost”

ZH: Largest Month-End QT Portends Selloff

"Monday July 2nd spooz should trade heavy if this QT theory holds true"

"Investors and policy makers have been closely monitoring the shape of the curve because they’ve been on guard for it to invert, a shift that has historically preceded recessions. Yet despite the growing focus, so far the Fed hasn’t altered its normalization plans. This month, it boosted its outlook to four total interest rate increases in 2018 from the three it envisaged in March."

The Fed is ignoring the bond market, because they're wrong again. And again. And again. 

Bond bears wrong again. And again. And again...

"The IPO Calendar is on fire as Wall Street wraps up the first six months of 2018. For the final week of June, bankers expect to price 16 IPOs to raise $2.83 billion. That’s a lot of traffic."

If all 16 IPOs get out the door this week, it will increase June 2018’s total to 37 deals. You would have to flip back to June 2000 for heavier June IPO traffic"

For those who were around in June 2000, the Nasdaq had already rolled over, as it is now. Wall Street was dumping into a down market. 

Any questions?

This year's largest IPO

Dropped Box (red)

WWE smackdown begins imminently

Tuesday, June 26, 2018

The Magic Kingdom

Unfortunately, America has devolved into everything that is fake and fraudulent. Rule #1, never go full Disneyland...

A combination of lethal factors have coalesced to portend an amount of rage that can't even be fathomed. It took ten years, plus Trump, plus rising interest rates, a global economic slowdown, and a global trade war, to generate a level of optimism not seen since the top of the last cycle. Their entire delusion now rests on Netflix. And the pixie dust is wearing off...

The gap between fantasy and reality has never been wider, as we're now surrounded by human history's largest cabal of con men. 2008 unleashed Pandora's box of licentious criminality. They symbolically jailed Madoff for scamming thousands, so they could give Wall Street a free money bailout for bringing down the global financial system...

"Such men being past feeling have abandoned themselves to impurity, greedily indulging in every kind of profligacy"

And yet, in the Magic Kingdom that is today's pseudo-economy, that leading fantasy stock, in all senses of the word - Netflix, was bludgeoned -7% yesterday. The pixie dust is wearing off. As of this writing, the Dow and S&P are both perched at critical support. Skynet is working double overtime, because below this level, it's panic time...

The Dow is perched at the 200 day:

On a long-term basis, this would be the first break of the 200 day since the 2016 global meltdown.

The key investing theme of 2018 is trade wars and how best to profit. You can't possibly make this shit up:

Although the US economy is relatively insular with domestic demand generating approximately 90% of the US GDP, the US equity market is quite a different matter. The S&P 500 is comprised of many multinational corporations and 50% of US company profits come from abroad.

This is the theme of my recent posts: whatever Trump attempts to do on the economic side will have direct and disproportionately negative effect on the capital side. Which is fine too, however, suffice to say gamblers are not positioned for that outcome.

How do we know? Because as we learned yesterday, global trade wars are viewed very positively.

In summary, it took ten years, plus Trump, plus higher interest rates, and a global trade war, to generate a level of optimism not seen since the top of the last cycle:

"Fifty-four percent say the economy is good or excellent, the highest recorded by CNBC in the 10 years of the survey."

Meanwhile, China is devaluing the Yuan at the fastest rate in history - faster than 2015, just prior to the smash crash. Because China knows the best way to hit the U.S. is to implode the Dow...

"This is a clear signal from the central bank to the US President Donald Trump that China could lead the yuan lower as revenge for the trade war sparked by the US. "

Meanwhile back in the casino...
Monday's selloff of course was widely considered a minor event, despite the fact that it was focused on technology, which was down three days in a row.

As I've reiterated previously, this past five months has been all about Wall Street. World stocks, the Dow, S&P peaked five months ago. This last stage in the rally was a rotation to pure junk: overvalued internets, revenueless Biotech, and short-covering in junk retail stocks.

All of which allowed 75 IPOs - mostly internet and biotech - to take place between February 1st market peak and now, despite the deterioration in every other sector. Yes, you read that right. A 34% increase over last year, year-to-date. 

Looking at what, up until the past three days, was the leading sector - technology, here is breadth:

Nasdaq 100 above 200 dma (red):

And here is the breadth oscillator

Solve this equation for a happy trade war...

NDX McClellan Oscillator

Saturday, June 23, 2018

One Clown To Rule Them All

The problem, in a nutshell, is that America's vassal states in Europe and North America, did nothing to rein in America's last clown, George W. Bush. Preferring to blame the world's problems on other countries instead. Which, inevitably led to a far bigger clown now, and what for the mandarins in Ottawa and Brussels is turning out to be a darn fine lesson in the downsides of relative morality. Likewise, Bush did his best to bury his Republican base beneath the rubble of 2008, and yet somehow they came crawling back out. So it's up to Trump to finish them off, and hey, what a great job he's doing so far. Republicanism is a virus, killing its host. What we are witnessing in real-time, are the profoundly sordid and pathetic last days of the American Empire...

Wars can end suddenly and decisively, or they can drag on seemingly forever through attrition. This post-2008 era has been a war of attrition - mental, physical, and economic. Perma-bulls who claim that their beloved "great deformation" is proof that us perma-bears are wrong, are ignoring the toll it has taken on the populace at large maintaining this delusion. Primarily a mental toll, but as we see through skyrocketing diabesity, a health toll as well. All of which manifests in terms of widely ignored mass shootings and fentanyl-assisted suicides. 

Nevertheless, even wars of attrition eventually reach their climax. Following two massive military blunders, a tax cut for the ultra-wealthy, a housing bubble, and recession, the incompetent reign of George W. Bush  ended in financial collapse. His final send-off bore all of the reminiscent humiliation of Nixon's last helicopter ride from the White House. In this post-bailout era, had Clinton been elected, this economic cycle would have very likely already ended in 2017. The Democrat economic agenda was not sufficiently "stimulative" to keep the gathering deflationary forces at bay much longer. The deflation trade was on in size ahead of the election, anticipating her victory. We all know what happened next of course, Herbert Hoover got elected with his business-friendly agenda consisting of de-regulated corruption, tax cuts for the ultra-wealthy, and trillion dollar deficits paid for by the rest of the world. Followed by Smoot-Hawley tariffs.

Shockingly, these "business-friendly" policies which entailed tariffs and higher interest rates for the rest of the world, ended the global synchronized expansion dead in its tracks.

Which comes as no surprise to the rest of the world. By the way, this is how to win a trade war sans copious bullshit. 

Debase the currency:

Speaking of currencies and global growth collapse...

Any questions?

Despite the fact that the Bush collapse disproportionately obliterated the Republican base, they soon started to blame their Kenyan president for all of their problems. They yearned for the days when rapacious Republican criminality would be restored to its previous grandeur. Nevertheless, in order to reinstate the exact same policies which had led to the prior collapse, but on a larger scale, a bigger clown would be needed. Enter the Trump Super Clown. A man whose depth of depravity knows no limits. And no matter how low he stoops his base is right there with him, cheering him on to the next level of self-debasement. No act of defilement is considered too vile to force them to break ranks. 

Illegally detaining men in cages was unfortunately old news, Bush had already been there done that. So Trump had to go bigger and bolder by now detaining babies in cages. His alt-Christian base loved it. Forget the fact that disastrously failed U.S. policies both in the Middle East and Central America are the root cause of these mass migrations. Facts mean nothing to the Trump Idiocracy. All of this chicanery of course follows in the long human history of nihilistic decadence preceding collapse.

Neverthelss, aghast Democrats need not entertain the fantasy that the Roman Senate will impeach Caligula. Knowing that he is the only thing standing between them and re-regulation of corruption - that can't happen. 

In other words, Trump's election spawned a late stage mega bubble in arrogant ignorance that will forever signify the last days of the American empire. Trump's latent efforts to rearrange Globalization to his own liking are a fool's errand on the highest order. After all, what the wise man does at the beginning, the fool does at the end. His cadre of deeply devoted clown followers are under the well-cultivated delusion that the U.S. is an island unto itself. And that Globalization is an unnecessary fiction dreamed up by the "Deep State". 

These are the last people on the planet to learn that on the other side of the shrinking global trade ledger, is...

das Dow kapital:

I can say with 1,000% certainty that from a mental, physical, and financial standpoint, Herbert Hoover's base won't survive what comes next. After all, they barely survived their last clown.

This is for the kill.

However, please bear in mind, none of this was my idea. After all, I warned last time too.

Friday, June 22, 2018

The Haves And The Have Been Conned Again

Trump is going to fix wealth inequality, just not in the way that his supporters expect...

Trump supporters still haven't figured out that he's a con man, and always has been. After all, who would warn them? There isn't one in their midst with the integrity to stand up to grand theft larceny on an historically epic scale. They're too busy making excuses for child abduction. Therefore, that lesson is yet to come, and the price will be entirely unaffordable. Physically, mentally, financially...

The fall of GE evidences the totality of the smoke and mirrors "economy", now at level '11' full Disneyland under Trump

"Some companies are built for a quick buck. Others are created for the ages, such as they are in the fast time warp that is American capitalism.

Among the latter is General Electric, formed in 1889 and based on the many breakthroughs of Thomas Edison."

GE once embodied American know-how, industrial might and the rising, secure middle class."

Then came Jack Welch.

He was the most skillful operator in a new style of American capitalism, where institutional investors and a demand for ever-higher stock prices ruled an impatient Wall Street. Mergers, industry consolidation and layoffs pleased the markets."

it takes a special blend of greed, hubris, incompetence and bad luck to make this mess, whether you’re GE or the U.S."

The test will now commence...