Tuesday, October 29, 2019

FOMC: Fear Of Missing The Crash

For the third time this year, global risk assets have melted up into the FOMC decision. Which is why gamblers are well lubricated for what comes next...




The data mining in the above article is compliments of looking at global stocks in local currencies, all of which have been massively devalued relative to the dollar.

Here we see an example: The Aussie dollar has been crushed to decade lows while Aussie stocks are at decade highs. The Aussie dollar is pricing in slowing global growth, and Aussie stocks are pricing in imagined realities, compliments of record low interest rates. 






The hunt for yield is obligatory to those money managers who must produce enough income to meet their annual investment goals. Which forces them to pretend that default risk doesn't exist. Capital is now subsidizing consumption. Which is what negative interest rates implies - borrowers paid to borrow money. Ironically, the bidding up of bond values compresses yield spreads giving the illusion of low risk. Everyone gets to say no one saw it coming. All over again.





This is the biggest Tech (breadth) divergence we've ever seen:





For the past three years October was the turning point for volatility:





Distribution by large institutions visualized. Not conducive to a new bull market.