Super-Cycle Top aka. Bulls Trapped

Bulls are all lubed up about buying into a recession...

Way back in 2007, the S&P peaked and then fell hard. A few months later (October) it made a higher high and then rolled over at the final top. Fast forward to now, and it's deja vu. The bubbles are all popping, most sectors have rolled over, every other country has rolled over in $USD terms. So how Skynet keeps making new highs is testament to excellent programming. 

This mass delusion is running on clown antics and smoke and mirrors...

'Policy makers and market participants alike are watching as the gap between short- and longer-term rates narrows. Historically, recession has followed such inversions"


Getting back to the casino, as I showed yesterday, aside from FinTech, all of this era's bubbles have now imploded. 

Within the major S&P sectors, only Technology, Healthcare, Transports, and Consumer Discretionary are at new all time highs. Energy, Financials, Utilities, Staples, Industrials, Autos, Materials are far from making new highs. 

The leading sector for the past year in % performance has been Retail, ubiquitously viewed as a sign of the resurgent jobless consumer. For the past several years Retail was the most beaten-down sector and hence the most widely shorted. 

So what is viewed as a renaissance in Retail has merely been human history's largest short-covering rally in what had been previously the worst performing sector. 

The Dow which is heavily weighted with cyclical banks and industrials has yet to confirm this new high, and likely never will. 

Globally, in $USD no other country stock index is at all time highs.

In local currency, India is leading:

China is lagging

Tax Cut Meltup To Meltdown 2.0

It was so much fun the first time, they decided to give it another go...

Unfortunately, there's no telling them that fiscal expansion at the end of the cycle accelerates final collapse it doesn't prevent it. 

"There is no means of avoiding the final collapse of a boom brought about by credit expansion" - Ludwig Von Mises

Risk/Reward at this juncture can be summarized thusly:

Extreme breadth divergence across all U.S. markets:

The Social Media bubble is over

The Artificial Intelligence bubble is over

Ex-Apple, the Dumbphone bubble is over

The China Tech bubble is over, of course

The FANG bubble appears corrective off of the first leg down:

Short-covering in retail is "end-of-cycle"

FinTech is parabolic:

Crime Doesn't Pay

What we are witnessing in broad daylight is human history's biggest organized crime, about to get busted in the act. Proven thieves are robbing the economy to line corporate insiders' pockets. It won't work. Sadly, the morally and mentally challenged don't see it coming...

The only thing that has changed in the past 10 years is that back in 2008 there was only one Bernie Madoff, whereas now there is an entire political party full of them. The transformation to banana republic, replete with thieving dictatorship, is now complete. 

"Dallas Fed President Robert Kaplan said Tuesday he would like to see three or four more “gradual” interest-rate hikes...the shape of the curve suggests to me we are ‘late’ in the economic cycle”

Inter-generational theft has reached a new all time level of debauchery even by Madoff standards...

"Why didn't anyone try this sooner? What fools"

The Republican Party is now human history's biggest crime syndicate without any comparison:

"the Treasury Department expects to borrow more than $750 billion to pay its bills during the last six months of this year"

Even the White House's own rosy forecast acknowledges that the deficit will exceed 5 percent of the overall economy next year — a level it has previously reached only after deep recessions when unemployment topped 10 percent. Today, the economy is near full employment. 

Anyone who actually studied Keynesian Economics would know that proper implementation calls for running deficits during recessions and surpluses during expansions. The party of tax cut profligacy runs deficits during good times and bad times. Because it's "free money". 

What makes this abject irresponsibility even more amazing is the fact that Treasury yields are still lingering at 2009 recession lows. Whereas stocks have bolted several hundred percent higher based solely upon Ponzi borrowing and non-stop delusion.

The chasm between fantasy and reality has never been wider:

In other words the ignorance-fueled arrogance has reached a new all time asinine extreme.

Not only are gamblers betting that stocks are right, by a record margin, they are betting that bonds are wrong by a record margin. Talk about amazing con artists, they've convinced each other that the cycle is no longer cyclical. 

Ironically, it's their very own actions of robbing the U.S. economy i.e. the workforce of vital spending power, that is their obvious undoing. Obvious to anyone with an IQ greater than a dead gopher. 

Despite a 4% fiscal deficit, capacity utilization is still lower than it was in 2015: 

Which is why bond yields are falling instead of rising.  

Based solely upon bond yields, one would have no clue that the U.S. just passed the largest tax cut in history:

Looking at speculator positioning amid declining bond yields and one can be certain that a bunch of criminals are about to get wiped off the map:

Who could warn them? They don't trust anyone who can be trusted. 

  

Countdown To Self-Implosion aka. False Pride

This past week Donny's trusting base doubled down on the casino-bankrupter-in-chief. Rule #1, never go FULL Donny, it might turn out that "someone else" isn't the one getting fucked this time around...

"Consumer choice"

The most important thing that wasn't learned in 2008 was humility: Taking down the all-knowing bimbos on Faux News. America has always had a problem with hubris, but since the Dumbfuck-in-chief got elected, false pride has reached level '11' asinine, especially among Trump's alt-Christian base of sanctimonious hypocrites. When I say a "good" lesson is coming, I mean in the biblical sense. 

As of Friday, there is now a 96% probability of Fed-assisted global implosion within the next month, or imminently, whichever comes sooner... 

2018 year-to-date can be summarized thusly:

The lie of borrowed prosperity, aka. Voodoo Economics

A borrowed tax cut for the ultra-wealthy squandered on stock buybacks and insider cash outs, and paid for by the rest of the world:

As we didn't learn three years ago, the countdown doesn't always make it to September...

We have reason to believe it might not take until September this time either

Jackson Holed

Is this a great fucking con job? Or what?

I've come to realize that most of my life has been controlled by Supply Side circus clowns. As long as they get fucked over this time, I'll live in a cardboard box. 

You see Trump was sold as a saviour but all he is really is the latest re-incarnation of tax cuts for the bailout class, masquerading as something different. The fact that he got off his leash is purely a function of bottomed out IQ. After George Bush, really where to go? 2008 didn't stop them from rolling the dice all over again. They remind me of my crack addict relative, or two. Same dumbfuck ideas, always expecting a different result...

Fed head Powell confirmed that more rate hikes are coming. Trump confirmed more trade war is coming. U.S. speculators went into manic blow-off mode on the news.

In summary, U.S. stocks closed the week at record highs. The rest of the world just got Jackson Holed...

Speculation is manic in internet stocks, especially outside of the usual FANG mega caps which are played out.

FinTech is leading the party:

Artificial Intelligence stocks, proving what this society has in abundance.

Nothing unusual here...

The mythical jobless consumer is alive and well. Backbone of Supply Side Ponzinomics. 

Living with Sasquatch and the Abominable Snowman

On a cap weighted basis this is the first three wave correction for internet stocks.

Indicating that third wave down is the next most plausible scenario...

What I'm trying to say is...

Some people need to look at charts more often:

Because the rest of the world is right.

The party IS over...

"One minute I held the key
Next the walls were closed on me
And I discovered that my castles stand
Upon pillars of salt and pillars of sand"

The Post-Truth Collapse

"We hold these lies to be self-evident..."

The problem with electing a con man is that you never know if you're not the one being conned. Clearly his Faux News addled base have no fucking clue. Raised on bullshit, you get a taste for it...

First off, they've been led to believe that the trade wars are good and easy to win.

Secondly, they've been led to believe that dollar strength is temporary:

"U.S.-based currency-hedged funds have logged $10.2 billion in withdrawals this year, while their unhedged counterparts have attracted $30.7 billion...That is a break from past practice, when investors rewarded currency-hedged funds as the dollar gained."

In other words, gamblers are betting that market risks will go down ahead of the election. Unlike two years ago when the dollar rallied right up to the election:

And because this time it's different than the last Yuan devaluation:

Third, they've been led to believe that the economy is strengthening, justifying more rate hikes:

"Orders for long-lasting U.S. factory goods fell 1.7 percent in July, the third decrease in the past four months."

They've been led to believe that there has been a retail recovery, when in fact it was just tax cut sponsored stock buybacks driving short-covering, at the end of the cycle. A total fucking illusion:

And of course this week they were told that this was the greatest and longest bull market in U.S. history:

Ex-Tech, the rally ended in January. We are just waiting for the most over-owned and over-leveraged stocks in human history to final implode...

Just six are responsible for all of the gains...

"My advisor told me that Go Daddy is a safe haven from trade wars"

The global rally ended in January. This is the sixth lower high:

One thing we know for certain, the truth ended 18 years ago...

U.S. Stocks / U.S. Debt