Sunday, December 30, 2018

A World Run By Idiots

The generation that fucked up the planet, the economy, and human welfare still has a deathgrip on power. They're going to fix everything by fucking it up more. This time around they have the advantage of senility...

Before anything can change, the first step is for the usual sociopaths to get monkey hammered. For good:

Look in any direction - academics, business, economics, politics, media - they're all proven failures now. Corporate whores tasked with maintaining the illusion of the status quo at any cost. Today's best and brightest have run out of stupid fucking ideas. What happens when the zombies wake up and realize their leaders are as dumb as they are? Nothing good: "Hey, I thought I was the fucking moron around here".

One more day left in 2018, and is it coincidence that the Santa rally arrived just in time to stave off meltdown prior to bonus payout? Probably not. 

The Santa Trump rally began on December 26th and so far indicates a three wave correction off of the December low. As we see below, these past two weeks since the rate hike have featured the two most volatile days since February. One to the downside post rate hike, followed by one to the upside this past week. Skynet is losing control.

Speaking of rallying off the December low, here we see below that the S&P bounced at the 200 week moving average which hasn't been breached for seven years. Also, we see in the lower pane that realized volatility far exceeds February VolPlosion, and eclipses 2008 on an absolute basis - albeit not on a % basis. 

Deja vu of 2008 there was a dip in volatility over the summer followed by a renewed surge in Fall: 

What gamblers apparently have forgotten is that there was a Santa rally back in late 2015 as well, post Fed rate hike. But then for some reason post-bonus payout, the market went bidless in the first two weeks of January, -15%.

The difference this time is in far more optimistic positioning (top pane). And breadth implosion (lower pane):

Breadth is worse than 2016 and remains pinned at crash levels:

Worst since 2008:

CNBC: Stocks Close Out Worst Year In A Decade


As long as Wall Street gets paid, that's all that matters.

For the next 48 hours.

Interestingly, there were two big pot stock rallies this past year, which exactly coincided with new all time highs in the S&P. Go figure.

Bait and switch. Pump and dump. Bull trap.

Call it what you will. It was epic.

This was the widely believed delusion that trapped gamblers in the casino:



SEC Commissioner:

"We give stock to corporate managers to convince them to create the kind of long-term value that benefits American companies and the workers and communities they serve...Instead, what we are seeing is that executives are using buybacks as a chance to cash out their compensation at investor expense."

The hook was set in November with this widely believed statistical delusion:

"Eighteen out of 18 times, the S&P was higher from the October low close — up just over 10 percent on average,"

The end of year result: -15% off the highs

"For the first time ever, the S&P 500 will end the year with a loss after being positive for the first three quarters...The fourth-quarter sell-off flies in the face of history, as the last three months are typically the strongest time of the year for the markets."

What trapped gamblers have to look forward to in January:

ECB To End $2.95 Trillion Stimulus Program In January

"Our work is done here"

In summary, the year is ending the same way it started.

Friday, December 28, 2018

2018: The Year Globalization Ended

Trump was sent to Washington to implode the status quo. I give him an A+. Looking back, years in the future, archaeologists will say this was the seminal turning point for Globalization aka. Pax Americana...

For the first half of 2018, the U.S. was "winning" the global trade war. On Twitter only of course. A Jedi Mind Trick for weak minded fools that lasted the amount of time it takes to steer global capital into the last Trump casino. Right before it imploded vertical down into bear market. At which point correlation with the rest of the world soared back up to ~100%.

To the downside:

Global merchandise trade peaked in 2014 on a nominal dollar basis (data through end of year 2017). As of the end of 2016 trade was back to 2008 levels. 2018 was the year of the trade war.

Due to the tax cut, imports to the U.S. soared, vastly offsetting the effects of the trade war. 

In 2018, the U.S. trade imbalance in goods reached record wide.

Once again, arrogance masquerading as competence:

The next casualty of tax cuts and tariffs was the U.S. housing market. Double teamed by a combination of higher interest rates to pay for the tax cut and tariffs on Canadian lumber:

As we see below, the spike in lumber prices lasted just long enough to collapse demand for U.S. housing:

Next, tax cuts and tariffs collapsed the U.S. auto sector.

Sadly, the tariffs on steel intended to assist U.S. steel mills backfired due to falling demand from industries that use steel:

U.S. Industrials imploded in 2018, due to overseas exposure:

The hardest hit were U.S. farmers now clinging to life support

Trump's obsession with keeping oil prices low for his base of demented hillbillies - even using a mutilated journalist as bargaining chip - has obliterated the U.S. oil sector:

Oil services stocks are far below 2009 lows:

Oil is hanging by a thread to final support:

Thursday, December 27, 2018

"Good News, We Have Finally Achieved Terminal Idiocracy"

"And then they elected a reality TV star to be their saviour"
"No fucking way"

The definition of senility is attempting the same failed economic policies over and over again, each time trusting a bigger circus clown. Those who've doubled down on Donny are in for the surprise of a lifetime. Facts and data can't compete with sweet nothings told by a Manchurian Candidate trained by WWE:

When I first started this blog back in 2006 I believed that the collapsing housing bubble would end the reign of Supply Side Voodoo Ponzinomics for good: The outsourcing of the 'Conomy for fun and profit. Clearly I was wrong. My mistake this past decade was not seeing that Japanification has gone global - the recycling of failed ideas over and over again each time expecting a different result. All to benefit a senile old age home incapable of handling change. Hence, another round of corporate Shock Doctrine ensued. Nine million mass layoffs to make the quarter. On top of that, the money printing and Ponzi borrowing. What makes the U.S. different than Japan is the sheer level of buffoonish arrogance extant today. An entire generation having conflated a reserve currency with "exceptionalism". Luck and hubris masquerading as previous generations' success.

It is that very fatal arrogance that drives the chasmic policy divergences between the U.S. and the rest of the world. Three years ago in December 2015, the Yellen Fed raised rates for the first time in nearly a decade, thereby imploding global markets. The Powell Fed just did the same - in addition to balance sheet rolloff at $50 billion per month, in addition to ECB liquidity withdrawal for the first time since 2016.

Global markets (ex-U.S.) are back to where they were three years ago when the Yellen Fed imploded global markets. A very expensive three year round-trip to nowhere.

Or should I say a ten year round-trip back to the Lehman 2008 level:

The Trump tax cut has been a one way gong show for the rest of the world since it was implemented last January. Per Econ 101, the concept is called "Crowding out" whereby large scale government deficits cause interest rates to rise due to asinine levels of bond issuance:

"The U.S. Treasury Department said government borrowing this year will more than double from 2017 to $1.34 trillion as the Trump administration finances a rising budget deficit."

Bearing in mind that Wall Street is unanimous in their view that the casino will be higher one year from now than it is currently. Despite the fact that circumstances today are far more lethal than those that abided in 2016.

Being bearish or realistic in a society of aspirational zombies is neither challenging nor interesting. It's highly repetitive. 

Today's oil collapse is deja vu of 2015/2016. Far too much investment in over-capacity. Global capital chasing short-term return at the expense of long-term solvency.


Far more damaged now

Three years ago banks and Financials held up until the New Year. 

Not this time:

Corporate leveraged loans

Round trip to implosion:

Market breadth, worse now than at the nadir of 2016:

This is where it gets interesting.

The only reason the wheels DIDN'T come off the bus in 2016 was because of the rotation to safe havens, which bridged the gap between Central Bank stimulus and the return of the "animal spirits". Safe havens were truly safe back then.

Now, not so much:

The other key difference between now and 2016 is the level of complacency now versus then...

Complacency born of fatal arrogance, serial bailouts, and a casino croupier for president.

All of which means that regardless of what we may read in the business-oriented lamestream media, we are about to witness a level of volatility and uncontrolled implosion impossible to describe.

And no one sees it coming. 

Why? Because it's already here. And it's amazing what zombies can come to consider "normal":

Wednesday, December 26, 2018

The Last Trump Rally

My New Year's prediction is major prison time for today's believed and beloved "con men as usual". And unaffordable losses for their loyal followers...

The same corrupt scum who did everything to eliminate Obamacare, fully succeeded in eliminating investor protections. 


The judgment that has been rendered is biblical in scale. The real cost will be measured in carbon units.

December 21st, 2018:

The Dow just logged its biggest single point gain in history, as the casino-operator-in-chief implored the faithful to double down on 1987-style waterfall crash in real-time. Which begs the question, whose noose is tighter?

"I think it’s a tremendous opportunity to buy. Really a great opportunity to buy."

Trump just changed the Satan selloff into a Santa rally, just by conning more sheeple. Which begs the more important question: Who is this guy?

"Last chance to buy"

Today was the most lopsided buying panic in five years:

Somehow the Idiocracy STILL hasn't figured out that borrowed tax cuts for the ultra-wealthy do not create broad based prosperity. Sadly, there is no such thing as "free money". This will be their last lesson.

Way back in 1987 a late cycle Republican tax cut caused gamblers to go into a speculative frenzy driving the casino into melt-up mode. The sugar high surge of fiscal stimulus forced the Fed to accelerate monetary tightening. When the bubble burst, computerized hedging programs known as "portfolio insurance" did the opposite of hedging by accelerating the decline.


"Roughly 85% of all trading is on autopilot—controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast. That market has grown up during the long bull run, and hasn’t until now been seriously tested by a prolonged downturn."

Computers have taken over 85% of the trading and 100% of the thinking. All of the like-minded criminals on Wall Street are on the same side of the boat.

After all, it's not their money.

"But we're running out of fools to con"
"Tell bigger lies"