There is no part of this house of cards that resembles reality...
Ironically, a surprisingly strong jobs number pounded stocks at the open. Yet again reinforcing the Faustian Bargain between casino and economy...Gamblers still haven't figured out that central bank liquidity can't generate long-term prosperity amid ever-declining fundamentals.
What central bank liquidity CAN do however is push gamblers further out onto the risk curve, hence driving a chasmic gap between fantasy and reality. Case in point the regions/countries pumping the most monetary liquidity right now, have the weakest economies and stock markets - Japan, China, and Europe. The U.S. has the tightest monetary policy, and is out-performing all of them - economy AND stocks.
This latest global moonshot was sponsored by European economic collapse driving German bund yields to record (negative) yields, causing a tsunami of capital flow further out on the risk curve, across every global market. Which is why right now, everything is bid at the same time.
"German factory orders slumped in May in the latest sign that global trade uncertainty is turning Europe’s temporary slowdown into a more serious downturn."
The year-on-year decline of 8.6% was the biggest in almost a decade."
Here we see the chasmic gap between fantasy and reality driven solely by the ripple effect of excess liquidity, in turn driven by economic collapse:
On the subject of delusion, last weekend's "trade truce" didn't even last a week:
"However, Trump said after the G-20 meeting that the 25% tariffs currently imposed on $250 billion in Chinese goods will not be reduced."
Any questions?
Getting back to fake wealth, we now know that 2018 was the largest year for stock buybacks in U.S. history. As of now 2019 is on pace to beat that record. And yet, we see below that during the highest quarter for stock buybacks in U.S. history - fourth quarter 2018 - the market was down -20%. Which speaks to the fact that for every buyer there is a seller - in this case an insider looking to cash out at the top.
In addition, just because some moron paid a million dollars for a brick, doesn't make the brick worth a million dollars. It certainly didn't in 2007 and 2018.
Which gets us to the index mega bubble - the largest bubble in the world right now, which has been driven by passive investors pushing money into cap-weighted indexes. These index funds in turn push ever-more money into the largest stocks REGARDLESS of valuation. The end result is that the stocks experiencing the least "volatility" grow larger and larger capitalizations, until such time as they are massively over-valued. At that point, they are neither growth stocks nor value stocks. They have no rational investment thesis, so when they lose momentum, they crash.
Here we see the differing effect of the 2016 Shanghai Accord and the 2019 Shanhai Discord vis-a-vis the yet-uncorrected "low volatility" complex.
Which due to extreme valuation, no longer lives up to its name, as we see in the lower pane:
In short, global gamblers are over-caffeinated, and hence due for a crash landing back to reality.
