Guard Your Manhood

Recession stocks are now leading the "reflation" rally. Sure, whatever...

To anyone who can still fog a mirror, a statistical anomaly to be sure, the only relevant question on the table is how big will be this mega-crash...

I've aligned the stock/bond allocation (red) with the banking risk allocation (black), to indicate the magnitude of impending clusterfuck:

Weekly:

Daily
Lower pane is NYSE lows...

In other words, guard your manhood, because adult diaper stocks should not be leading a "reflation" rally, unless they're really going to be needed...

Nasdaq / Dow ratio:

I have an idea, jump off a bridge instead...

HEGEMONICS aka. Dunce Feedback Loop

Today's pseudo-elite are trapped in an echo chamber of like-minded dunces. A circle jerk of epic proportions. Zombies are just along for the ride...

Fake-believe reflation and overallocation to financials has preceded EVERY market crash in the past ten years. Unfortunately, raising interest rates after an eight year debt binge is anything but reflationary.

Speculators bid up Oil and commodities and then told themselves that higher prices were evidence of economic reflation. We live in a society of hardcore dumbfucks. No half measures will suffice...

Commodities (black) with global yields:

"Fool me five times, I must be a total fucking moron..."

Rydex financials asset allocation (red) with U.S. 10 year:

Ironically this very weekend, Warren Buffett, the "Oracle of Omaha" is doling out free advice on the secrets to becoming a billunaire: bailouts, money printing, Ponzi borrowing, mass outsourcing, and political connections...

Because this week, with gambler asset allocations to financials at the highest levels EVER, all of the systemically risky banks rolled over. Again...

Berkshire Hathaway, world's largest financial stock:

First, banking asset allocation levels...

Short-term view with Global Financials

World's most leveraged bank, Deutsche Bank, with German 10 year yield (red):

RBS imploded this week on a larger than expected loss:

With UK 10 year:

Barclays with UK 10 year:

Credit Suisse with German 10 year:

Cue Berkshire Hathaway's largest holding:

Bueller?

"Warren Buffett made a $1 million bet in 2007: that hedge funds would not outperform index funds over the next 10 years."

NO, he made a $37 billion dollar bet by selling put options on the S&P 500 and other major indices...

“In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal”

????
“Indeed, at Berkshire, I sometimes engage in large-scale derivatives transactions in order to facilitate certain investment strategies”

Let's revisit Berkshire's 2008 Letter to shareholders:
We have added modestly to the “equity put” portfolio I described in last year’s report. Some of our contracts come due in 15 years, others in 20. We must make a payment to our counterparty at maturity if the reference index to which the put is tied is then below what it was at the inception of the contract. Neither party can elect to settle early; it’s only the price on the final day that counts...Our put contracts total $37.1 billion (at current exchange rates) and are spread among four major indices: the S&P 500 in the U.S., the FTSE 100 in the U.K., the Euro Stoxx 50 in Europe, and the Nikkei 225 in Japan. Our first contract comes due on September 9, 2019 and our last on January 24, 2028. We have received premiums of $4.9 billion. The two financial items – this estimated loss of $10 billion minus the $4.9 billion in premiums we have received – means that we have so far reported a mark-to-market loss of $5.1 billion from these contracts.


Of course after 2008, that long-term position recovered and that paper loss was erased. For now...

Global Financials

Let's try this again, sans bailouts...

Payment Is Due In Full

Some things should not be sold...

And some things should not be ignored...again, and again, and again...

The last shall be first. The first shall be last.

HEGEMONICS For Complete Idiots

"Reagan proved that deficits don't matter" - Dick Cheney

Two dunces for the price of $everything...

HEGEMONICS:
There are two types of economics - those that apply to reserve-currency hegemons, and those that apply to everyone else. For the lucky hegemon, the cost of the intervening alchemy and malfeasance accumulates, and the bill is served at the end. Which brings us to "now"...

U.S. Economic Growth slowed in 2016 to 1.6%
U.S. Deficit in 2016 was 3% of GDP

In other words, were it not for Ponzi borrowing, the U.S. would already be in recession. In addition, "excitement" over the election has papered over the other data that is pointing to a very hard landing. 

The hardest landing ever...

First off, the fact that all retailers ex-Amazon are imploding at the exact same time, should have been a canary in the coal mine. These are not all "bricks and mortar" retailers either. Land's End garners most of its sales via catalog and online:

Stock prices can be manipulated all day via buybacks, mass layoffs and other gimmicks to create fake wealth. However, commodities don't lie... 

Oil and gas inventories both reached new record highs this week. And gasoline demand fell 5% year over year which is "unheard of" outside of recession. 

Next, food commodities are imploding similar to 2008.

Coffee:

Sugar:

On to lumber:

Switching gears to GAAP corporate profits. We are told that profits will come back any day now. What if they don't?

What if current forward P/E ratios are just a Wall Street fabrication, as they are at the end of every other cycle in U.S. history...

Treasury tax receipts 24 month rate of change:

In other words, what if we're just being lied to all over again?

Then the bond market would be right. Again...

And loading up on coal stocks was a bad idea. Again...

Gamblers will realize they got conned. Again...

But this time all of the orange Twinkies won't put humpty dumpty together again...

And then EVERYONE will learn that Twinkies are bad for you...

The Corporate Soylent Idiocracy aka. Zombies

Globalization is bankrupt. Morally, intellectually, and financially...

We've become a society of total fucking morons from top to bottom. Not partial morons. 100% hardcore dunces euthanized by corporate junk food and junk culture. A Soylent Idiocracy. If you're reading this before the collapse, statistically you don't exist. Sorry.

"Then we successfully bypassed the entire U.S. economy to the benefit of the jobless consumer, who lives in the Econ 101 text book. Surprisingly all of the retailers went out of business at the exact same time. No one saw it coming..."

HIGH ALTITUDE SOCIAL MOOD IMPLOSION

The last fool has been found. Junk stocks are played out. Algos are trading back and forth on nominal volume at all time highs, using imploding hedge funds as their marginal source of liquidity... 

There are no buyers beneath the casino. Social mood is ready to collapse onto the head of the Orangeutan-in-chief...

High Beta stocks are set to implode from high altitude:

Liquidity

Price / volume:

Marijuana stocks, Uranium stocks, frackers, Biotech, mining stocks, played out.

Here is a junk shipping stock:

The Uranium ETF couldn't be rescued by Trump's latest promise to start WWIII

Top performing IPO of 2016

IPOs (red) with Russell/Dow ratio:

IPOs with S&P:

"I make the best explosions. You can ask anyone. This is going to be a tremendously amazing explosion. You'll see..."

"I'm not some big orange fucktard you know, I just act like it..."