Wednesday, December 4, 2019

The End Of Ponzi World. As We Know It.

Earlier this year, in the Spring, I put out a post saying Ponzi World was ending. I'm not sure what gave me that idea...

For some reason, I assumed this circus was ending: The economy was heading towards recession, global stocks were in a bear market, the trade war was escalating. It all had a very 1930s feel to it. But, of course, I had forgotten "Hendry's Iron Law" of Disney markets:

"The worse the reality of the economy becomes, the more we take on the reflexive belief in further and dramatic monetary expansion and the more attractive the Disney market looks"

All good. Fast forward six months and now that gamblers are fully lubricated going into recession - I feel this time maybe the last fool was found. In any event, one thing is abundantly clear, over ten years from when I started this blog - I personally had nothing to do with any of this. Something to tell my grandkids, when they ask me why everyone in my generation was such a readily conned jackass.

"What a fool believes he sees
No wise man has the power to reason away
What seems to be
Is always better than nothing"

As we know, my financial predictions have not always been timely as pertains to the massively manipulated S&P futures. Everything else has pretty much imploded on schedule. The last bubble is always the biggest, which is the passive indexing bubble -  the one Big Short protagonist Michael Burry has warned about. The guy who made his fortune from the subprime meltdown.

Where I clearly went wrong was underestimating the extent to which this society would bury itself financially to rent prosperity for as long as possible. I had forgotten that for *some* people, this is their last vacation from responsibility, hence they don't care how much inter-generational theft must take place to keep it going as long as possible. No fiscal limit, no monetary limit, no fiscal monetary limit - The "MMT" (Modern Monetary Theory) so many bailout artists fear, has already arrived. In fact it's the current driver that has been melting-up the Trump Casino.

Ironically, the overnight repo collapse caused by Trump's deficit - that hammered liquidity in September - is now what is funding this final stage of rally via Fed balance sheet expansion (lower pane).

MMT profligacy is the new super juice:

As the article states, this much monetary heroin has never been used before at an all time high amid record valuations.

So far, December is kicking off deja vu of last year, with a fake trade truce. Trump asserted this past Thursday that a trade deal is imminent, which he clarified yesterday to mean one year from now. Or never.

This all makes perfect sense to people who have no sense whatsoever. 

One year of incoherent Twitter gibberish later and NOTHING has changed in the trade war, other than escalation:

This time around, I intend this to be my last post. For the rest of my rants I'm switching to Twitter which I regard to be the end of civilization anyways. I need to tap back into the Borg to deliver my final messaging, as I'm clearly outside of the safe space, and therefore have a very limited audience. I've been wandering in the 150+ character wilderness for long enough. Which means unfortunately, no more drunken rants. At least ones that get written down anywhere. 

Good luck.

Monday, December 2, 2019

The Elevator Ride Down. To Humility.

Note to archaeologists: Yes the end of the Roman Circus was as insane as it sounds. It's all you need to know that today's Evangelicals actually believed Donald Trump was their saviour. Which is why this revelation cannot come as more of a shock to them. They still haven't located three wise men and a virgin...

Japanification gone global - the serial over-use of stimulus as a proxy for a real economy, at the expense of future generations. All so that an aging society could pretend "nothing has changed" in their cannibalized lifetimes. Whereas in reality everything was commodified for quantity over quality. The corporate Disneyfication of everything, overseen by a generation of sociopathic Mad Men, and economists who know the cost of everything and the value of nothing. Now placing their full faith and credit in simulated prosperity, by way of proving their intellectual bankruptcy...

Now, with the benefit of hindsight, we know that the U.S. entered intractable deflation approximately two decades ago with the DotCom bust, 9/11, and of course China WTO ascension. When, for the first time, the Fed lowered rates to 1.5% in order to pull forward consumption, resulting in the housing bubble and bust. Most people think that the housing crash was due to subprime loans - that was only the proximate reason. The real reason was that the Fed had pulled forward consumption from the future and used the housing market as an ATM machine to do it. That's the point at which I realized this was all going to end extremely badly. Short-term Japan-style gimmicks instead of real economic policies. 

Over the past ten years since the global financial crisis, globalization has been fully deconstructed. The only thing standing between this oblivious society and revelation is the central bank asset bubble. The disintegration of globalization went into overdrive three years ago under Trump. Compliments of his exceptional ignorance of global trade and investment flows. He, like most mercantilists, believes that trade is a zero sum game. Which is why he sees every other country as a competitor nation using "currency devaluation" to cheat the U.S. out of exports. And therefore explains why he is constantly using trade war as a way to punish other nations. He has no clue that the dollar reserve currency status is what makes the U.S. currency less competitive. The indestructible curse.

"Americans are proud of the fact that the dollar -- their money -- is also the world's dominant international currency. But this very same global role also helps explain some of Americans' major complaints about the world economy: why we constantly run sizable trade deficits; and why U.S. manufacturers often are at a price disadvantage with foreign competitors."

The need to blame other countries for corporate America's greed, is paramount. It wasn't U.S. companies that shipped jobs and factories to China to gain record profit margins, the Chinese came here and stole them. For all the reasons, Trump's rank amateurism has completed the process that 2008 started. The American century has now been fully deconstructed under the slogan "Make America Great Again". You can't make this shit up. Likewise for Boris Johnson, via the Brexit fiasco. The two countries that built globalization have now torn it down.  

Is this what their voters really wanted? Of course they would say yes - still unwilling to face the full magnitude of what they have wrought. However, what they really wanted and believe they got, was a seamless break from globalization, paid for by someone else. A free lunch. 

Little do they have even the slightest clue that the bill is about to be served to them personally. And for that we can thank the echo chamber of exorbitant conceit for keeping these people in the dark as long as possible. People too distracted by politics to understand that their entire way of life is now gone with the wind. Fools who believe they get to vote for their own version of reality via a slot machine handle in a voting booth. And a game show host for president. 

And to think that the U.S. used to criticize Japan for its deflationary policies, and now this country is doing the exact same things. To date, global central bank money printing has acted as an inflatable bumper to keep asset crash at bay. In the process inflating an ever larger bubble. Now, compliments of central bank dopium, asset correlations are approaching 100%. Whereas there used to be safe havens, now there are none, outside of zero yielding "cash" (t-bills, money markets). 

"The S&P 500 is up more than 25% and counting. Treasurys, which tend to fall when risk assets rally, also gained in 2019. Oil, gold and corporate bonds all scored double-digit returns."

This does not constitute investment advice, it is merely an observation. I predict today's gold lovers will get monkey hammered along with the rest. Like everyone else, they have been front-running central banks for over a year straight. There will be NO REFLATION until they put money in the hands of the middle class.

And for that there will need to be a regime change. And I don't just mean political, I mean ideological. This bullshit American mythology has put the entire middle class at risk. 

History will say that Trump's facile and infantile views of the world were his fatal undoing. A man who inherited everything he ever owned and then squandered it. He is emblematic of his entire generation and the economic debauchery that has ensued over these past decades.

And then of course there were his true believers who could no longer tell right from wrong, good from bad, real from fake. 

Globalization has been entirely to the benefit of America's ultra-wealthy. The fact that Trump could tear it down in broad daylight with 95% Republican approval is exceptional. In the broadest sense of the word. 

Proving he is the chosen one, no question. 

Black Monday

Today is Cyborg Monday, the day when online retailers go into the black for the year and the mindless Borg goes deep into the red for the year, celebrating the annual rite of material acquisition...

Last Friday I showed the NYSE Hindenburg Omens, here we see the Nasdaq H.O. six day moving average. Highest since last October:

Cramer has the over-subscribed denialist point-of-view well covered. Doing his part to make sure no one sees this coming: 

"Manufacturing activity in the U.S. continued to contract last month"

“If you’re looking for a reason to sell, the ISM number certainly gave it to you”

"What about simulated prosperity?"

No surprise, the Alibaba IPO marked peak pump and dump:

Momentum Tech imploding

REITs deja vu of VixPlosion 1.0

Transports deja vu

Remember last week when I said that Latin American currencies are imploding?

Trump apparently has also noticed and therefore decided to accelerate implosion: 

You will be hearing more about this situation on the lamestream news very shortly:

Outside of the Tech mega bubble, this has been a bear market for a year now:

Look out below

Sunday, December 1, 2019

We've Seen This Explosion Before

When this central bank Jedi mind trick for weak minded fools spontaneously explodes at all time highs, I'm going to take a break from describing reality to a non-existent audience. In the meantime, archaeologists are going to want to know, "what happened?"...

The supposed benefit of living in a Japanified Idiocracy run by aging dunces free-basing narco-pharma, is that you get to watch the same movies over and over again. Each time with an audience "surprised" by the ending. Which is why Netflix has decided they no longer need new content...

The subject of this post is RECORD NEW LIES:

For some reason I'm not enjoying being locked in a central bank managed "safe space" run by and for arrogant geezers evincing the combined intelligence of a fucking brick. Now fully conflating inter-generational theft as "GDP". I'm just not big on circle jerks. I've never been a joiner.

Which is why my blog stats have been quite flat lately, which the lonely reader can take as a harbinger for how many people you know are about to shit a massive brick. Because when this groupthink bubble in self-medicated delusion explodes, the panic will be unprecedented. And not a few geezers will be "triggered" for the last time.

Imagine a scenario in which the real economy no longer matters because central banks have discovered a way to fabricate simulated prosperity out of thin air. All they have to do is meet every six weeks and decide how much money to print. 

That is the world we now live in:

The economy has been weakening this entire year, while stocks went higher:

Why is that a problem?

Good question. Albeit one that would have seemed asinine at any other time in U.S. history, going back some ~243 years.

I asked myself, have we ever seen this magnitude of disconnect before - more specifically, have we ever seen the "reflation" trade rally during deflation.

And of course we have seen this before, in 2014/2015.

Here we see that in 2014, treasury bond yields crashed as they have been this year, until recently. Then, bond yields staged a three wave Ponzi reflation rally. Meaning, gamblers rotated into the reflation trade assuming reflation would follow.

Shockingly, what followed was not reflation, it was smash crash 2015:

Now we know why new highs are not confirming this rally.

And we know how this movie ends.