Wednesday, July 31, 2019

Lead Me Not Into Trumptation

Evil can have no more dominion over us than we allow. That is a choice best made alone, lest mob rule prevail. Nationalist movements have an ignominious history of subterfuge by sociopathic opportunists...

What once was a free enterprise economy has now devolved into a crony corruptionfest predicated upon access to trickle down printed money, and mass fraud, now culminating in human history's largest insider cashout. Bernie Madoff is wondering why he's still in jail, when he could be running Treasury instead...

We finally found one Republican who will stand up to Trump - the most powerful one in the world. Today Powell made it abundantly clear he's not onboard with rigging more elections. He had two words for Banana Republicans:

"Fuck Trump"

Today's fake capitalists have set up the 2020 election to be all about preventing socialism from taking hold in the U.S. These people don't know what capitalism is much less socialism. What they really mean is that the rich will stand in front of the money printing press while everyone else gets the bread crumbs falling off the big table. 

The problem with Powell is that he's too honest, so he should never be in this job in the first place. He is unfamiliar with Wall Street doublespeak.

What this all comes down to is positioning the blame for what comes next. Trump has well-positioned the Fed to take the fall for not keeping his bigger, fatter, uglier bubble inflated. Nevertheless, I suggest that it will be cold comfort to watch Big Donny walk away from yet another exploded casino while blaming everyone except himself.

The reason why Trump-o-Nomics failed is because both the tax cut and now the rate cut went only to the wealthiest. What the middle class got was a con job and higher debt service burden. The Fed cut rates today because the global economy is sliding into recession. Unlike the U.S., European nations can't run 4% of GDP deficits in order to paper over recession. All those circus clowns crowing that Europe is weak while the U.S. economy is strong, are just more blowhards.  

Be that as it may, make no mistake this is now all about central planning gone awry. Because today's wholesale Idiocracy now overwhelmingly believes that recessionary interest rates are the primary reason to buy stocks. Global central banks have pushed gamblers over the cliff into risk in the face of recession.

Case in point, here we see the record disconnect between Aussie stocks and the Aussie dollar. Both are screaming downturn, yet gamblers are more concerned about return on capital while ignoring return of capital.  

"Investors are hoping for generous dividend payouts as some of Australia’s biggest companies look set to report profit declines this month"

The prospect of across-the-board earnings disappointment in a frothy sharemarket puts the spotlight on capital return"

In the months leading up to reporting season, downward adjustments to earnings guidance have outnumbered upward adjustments seven to one"

Of course, adjusted for competitive debasement, and returns don't look as good:

After the crash of 1929, the market bounced back and everyone believed the worst was over. Trade wars erupted and global competitive debasement ensued, but just as now, the disintegration of the world trading order in broad daylight was assiduously ignored.

Then came the real crash. 

It was always going to end this way. Arrogant jackasses led by much bigger arrogant jackasses. All believing that printed money is the secret to effortless wealth. 

Neither of them having a clue what is real and what's not real. Trapped in their labyrinth of imagined realities.

They have no answers because they have no questions. They are all fully assimilated.

Ready for shearing... 

Smash Crash 2019 In Progress

The Fed and Skynet just lost control over Trump casino...

The Dow just flash crashed as gamblers had a tantrum when Powell told them there would be no more dopium. All it will take is a good crash to get him to change his mind. 

"Now who's going to buy my stocks?"

The market is swinging in a wide range post-FOMC as Skynet unwinds its volatility collars. Be that as it may, significant technical damage has been done.

What pundits far and wide have forgotten is that while there has been no sign of economic "inflation" in the current economy, there has been record asset inflation. Which means that asset markets are hyper-sensitive to Fed policy while the economy is not responding at all. Which has driven a chasmic gap between the economy and stocks. 

Emerging Markets have been abandoned:

Overnight risk:

Here comes more rate cuts...

Fireworks In The MAGA Kingdom

The Trump double (fiscal/monetary) sugar high is ending...

In the meantime, there are a few aspects of Disney World that are particularly fraudulent. Financial engineering is not as good as it sounds.    

Begin with the economy itself:

Which one of these is the greatest economy of our lifetimes? Hint, Trump's is the worst economy of the past thirty years, and that's not even adjusted for debt accumulation:

I've noticed, that all of the major selloffs over the past year and a half took place at the beginning of a new month, at the current level of volatility, after a Fed meeting. I don't know why that is the case, but I suspect it's the happy confluence of monthly window dressing and algo-driven volatility compression into the FOMC drift window - i.e. the best 24 hours of the year:

Bob Pisani, 2015:

"It’s called “The Pre-FOMC Announcement Drift.”

the move up is real and “orders of magnitude larger than those outside the 24-hour pre-FOMC window”

There's another weekly factor that overlaps the FOMC drift perfectly. The fact that VIX weekly options expire Wednesday at the open, the last day to trade/manipulate being Tuesday. Here we see the cumulative (close - close) point gain by day of week:

What prompted this blog post was this article:

I've noticed that Apple has peaked every time concurrent with the overall casino:

Counter-point to financial engineering:

"The travails of General Electric are a reliable signal of the trouble ahead for the large corporate sector of the U.S. economy"

GE GE, +0.14% was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. "

GE has now left itself with minus $48 billion in tangible net worth at Sept. 30, with actual genuine tangible debt of close to $100 billion"

A few more "coincidences" I've noticed:

The NYSE composite peaked at this level in October. Also the ratio of the S&P / VIX has also peaked. Both at lower highs than January 2018:

AMD was the top performing S&P stock in 2018 then it imploded in October. It's also the top performing stock in 2019.

Now it's imploding again:

In summary, the sugar high is ending

My concern is that if too many algos read this, it won't happen:

Vix Net Speculative (lower pane) as of July 30th. Algos apparently not reading much these days:

Tuesday, July 30, 2019

Caveat Emperor

Trump's market manipulation rally is ending...

The hypocrisy in this degenerating society is overwhelming. Obama never questioned Fed policy once, yet his Fed chief was criticized for political interference. Now Trump blatantly coerces the Fed to cut rates, no one on the right even questions it. His abuses of power are unchecked and unprecedented, all gimmicks simply to get himself re-elected so he can ban democracy forever. It's the white alpha male double standard that defines the Banana Republican party. The all-knowing "we know better" wholesale Idiocracy. Little do they know that their very own Anti-Christ is about to bury them for good.

Three Hindenburg Omens on the Nasdaq. The third one fired yesterday:

Through various forms of alchemy and market manipulation, the Dow remains artificially pinned to the double broadening top. Which is bad news for gamblers because the Fed uses stock valuations as a metric for policy. One less reason for them to be aggressive. 

From a technical standpoint it portends extreme dislocation:

The real action is overseas in Europe where Boris Johnson is causing serious angst:

The rest of the world rolled over at the same level as May having failed to confirm the S&P's new all time high:

Cyclicals are not conned by Trump's doublespeak that a great economy needs rate cuts. 

Oil is stalled at the 200 day, sporting a fractal identical to May:

Apple is rallying after hours on reports of slowing growth and declining profits. Wall Street once again massaging expectations ahead of time:

New highs on the Nasdaq peaked a month ago, similar to October. Except this time, the index kept on chugging to new highs purely on smoke and mirrors:

Gamblers have been warned for ten years straight about the various gimmicks that have been used to create this illusion.

All warnings have been assiduously ignored.

"This decline in liquidity was the result of the rise in stock market volatility in 2018"

"Diminished liquidity in the E-mini market is symptomatic of broader trends. Analysts at JPMorgan, Deutsche Bank, and investment management firm Bernstein are among those warning that stock market liquidity is in serious decline, with growing dangers that a modest stock market selloff could snowball into a full-blown crash"

What has caused this decline in liquidity? Insiders getting out while they can:

The Emperor Has No Brain

Trump figured out a long time ago that if he speaks in front of a large enough audience and tells them what they want to hear, people will believe anything. Except the truth...

The two countries that created Globalization are getting set to explode it in every direction. The prevailing belief among today's consumption Borg is that Globalization was only good for Third World factory sweatshop workers. And all bad for the shop-a-holics. This lesson will be in the "unaffordable" price range...

Trump has convinced people that trade wars are good and easy to win, and rate cuts are a sign of a strong economy. He's good at what he does:

"Americans feel much better about the economy than the Fed does"

"The 'Conomy is strong"

Trump is riding a dangerously manic Twitter high. He's using the exact same arrogant overreach that imploded his last four casinos. It's abundantly clear that Trump is now using trade policy to manage the Fed. Yesterday he said that the Dow would be 10,000 points higher without the Fed rate hikes. Therefore a major rate cut is now appropriate, in order to increase the size of the bubble. At the same time he reminds us that this is the strongest economy in history so no worries:

“Fortunately, I’ve made the economy so strong that nothing is going to stop us”

This level of conmanship we've never seen before. Where he alternates between demanding more monetary stimulus while praising the strong economy. 

Judging by consumer confidence, clearly his "formula" has worked. 

Today - already predicting that he won't get the "large" rate cuts he wants - he is back to bashing China on Twitter. This is all very similar to what happened in May: Fed not dovish enough for Trump, followed by trade war escalation.

Markets are just now starting to realize this guy is an incompetent jackass focused only on re-election. 

Here is where it gets interesting:

Semiconductors - ground zero in this trade war, have been rallying into the FOMC meeting deja vu of May:

They are arriving at overbought status at the same time that FANG (Facebook, Amazon, Netflix, Google) are all rolling over post-earnings. AND, software stocks are losing momentum as well. Which leaves just one major Tech company to report tonight:

"Apple heading toward a sales downturn for the year, which has only happened once since 2001"

Meanwhile, China Tech is rolling over again, even as consumer staples leader Procter & Gamble makes another all time high:

Speaking of arrogant fools, this guy is playing high stakes poker with a pair of fours:

"I'm warning you"