MAGA: License To Implode

This past decade was a test to see who would place their faith in de facto global slavery. I suggest based on my blog stats and the addiction to alt-bullshit, that the vast majority failed the test...

Denial is by far the most profitable line of business right now. Devoted adherents are ecstatic whenever their numbers go up. Because when it comes to rejecting reality, there's strength in numbers, until the whole system blows up in your face. And no one sees it coming. 

"In 2018, Fox News averaged its largest prime time audience in the 22-year history of the network"


The true cost of denial will be wholly unaffordable. Right now denial addicts are being lied blind about the economy by corrupt dunces.

Biggest jobs report miss since 2008: 

"Despite the jobs number, Kudlow said the U.S. economy is still on track for growth of 3 percent or more."

Picture China popping the MAGA bubble. The irony would be biblical. The global slave trade imploded by rank arrogance, learning once and for all that you can't get blood from a stone. Three overnight gaps were bought with both hands in the U.S. this week, warning that the global slave trade is ending.

One year ago the U.S. saw record inflows just prior to the global top. This time it was China's turn:

Record inflows bought a -6% haircut on the week:

This was the most under-reported financial story of 2018:

"A raft of tech IPOs have arrived on U.S. shores from China, with minimal operating histories and convoluted corporate structures"

The companies include clones of established U.S. tech companies, which are largely shut out of the China market, and can be so ridiculous that the list could be read by the Pets.com sock puppet and be taken just as seriously"

“In terms of investment, there is not one single Chinese entity that is listed outside of China in ADR or on the H.K. [Hong Kong] exchange that has a clean, legitimate set of books. Investment in any Chinese entity is therefore made at a 100% level of risk,” Dickinson said, adding that he would not even call these vehicles an “investment.”


CNBC December, 2018:
"Nasdaq, which attracted several large initial public offerings by Chinese companies this year, said it is still “rigorously” luring Asian firms to list on its exchange."

Manic gamblers conditioned by serial monetary bailouts, have been too busy front-running central banks to realize that central banks are out of economic bullets. Sure they can inflate asset bubbles for a time using cheap money, but they can't make insolvent borrowers whole when the bubbles pop.

The critical lesson not learned over the course of this lost decade: There is no such thing as "free money".

Economics 101: Crowding Out 
"When the economy is operating near capacity, government borrowing to finance an increase in the deficit causes interest rates to rise."

Once upon a time America had courage, but those days are long gone. Now we have old men and Lost Boys circle jerking each other with alt-reality. Rush Limbaugh co-leading the effort to keep the Trumptopian bubble full of hot air. He and his illusory ilk are the necessary condiment to failure...

Club Orlov: License To Kill:
"George Orwell once offered an excellent explanation for this phenomenon: as the imperial end-game approaches, it becomes a matter of imperial self-preservation to breed a special-purpose ruling class—one that is incapable of understanding that the end-game is approaching"


Fifty years ago, America's achievement was launching a six million pound rocket 250,000 miles to the Moon and back at the velocity of a bullet. Now, we can share food experiences on Snapchat over the internet backbone invented in the 1960s. The question, "what the fuck happened", doesn't quite do justice.

"As of 2019, the Saturn V remains the tallest, heaviest, and most powerful (highest total impulse) rocket ever brought to operational status"

If it's embarrassing describing this shite, imagine being the sheeple drooling it up without question. The old age home has existential fear and a death grip on political power. Banana Republican Senate leader Mitch McConnell rejected the House electoral reform bill out of hand this week. He will take up the Green New Deal just to watch it fail, but he won't even consider reforming electoral corruption. He would never get elected again if he did. 

Time is not on their side. 

This week's shout out goes to Jeremy Grantham, a man who made a fortune, but can still tell the truth, on climate change, tax reform, and wealth inequality. Why? Because he's an order of magnitude smarter, more honest and more human than the denialist Twinkies who define this era. Human call options with imminent expiration.

I had almost forgotten what it was like to listen to a real man, and not someone whose job is to make excuses for incompetence:

"Wealth inequality in the U.S. is approaching that of countries like Brazil and Chile."

We got comically asinine economic data out of Europe, China, and the U.S. late this week. The U.S. payroll report missed consensus estimates by an order of magnitude (20k versus 180k). Afterwards, I couldn't find one link to it on the main page of CNBS. As the news broke, all of the usual economists were standing around looking like the fucking morons they were proven to be a decade ago.

As always, deflation is beating denial:

We've come to think of the Third World as an endless vessel of cheap labour, ours for the exploitation. All while blaming them for our problems. Uncontrolled deflation post-2008 proved that model wrong, as our own interest rates plummeted to 500 year lows. What did we learn? Nothing, other than recycling greater exploitation into greater deflation via another round of the Hunger Games.

Now a mere 250 basis points stand between us and them. 2.5%.

Europe is already at 0% and so is Japan. Here in the U.S., contrary to popular belief, printing money to buy stocks does not float the economy back from China. All it does is drive a bigger divergence between fantasy and reality. It sponsors delusion.

Speaking of imagined realities, it turns out that the Chinese government facilitated this week's reversal of fortune. Why?

Because as part of the Faustian Bargain of MSCI stock inclusion, they had to agree to take a less active role in priming the stock market.

The cost of inclusion.

"Such a sell rating must have been authorized by the regulators"

"This sell rating is like a depth charge for the market"

Contrary to Zerohedge assertion, there is no plunge protection team anymore.

There is just overnight risk. OFF.

And gamblers maximum leveraged to denialistic bullshit. Having learned absolutely nothing ten years later, aside from how to operate like a Third World country.  

SYSTEM RISK

The beloved "System" is maximum leveraged to Bozo the Clown. "No one" sees it coming...

MAGA is the seven deadly sins, personified by Trump: Greed, Gluttony, Pride, Wrath, Envy, Sloth, Lust. Packaged in continuous deceit. 

“We need to free ourselves from the clutches of consumerism and the snares of selfishness, from always wanting more, from never being satisfied, and from a heart closed to the needs of the poor.”


Sorry Pope, they had exactly ten years to learn that lesson and it was squandered digging a bigger hole. Those who wasted the past decade by still wanting more and never being satisfied, will find this unburial a tad more challenging. Meanwhile, we were also inconveniently reminded of the true cost of the "system" this week, as deaths of despair have doubled in the U.S. since 1999. Because after 2008, the system had to go into full Lord of the Flies mode by way of proving that it works. 

"Dr. Miller attributed the increasing disparities in health care and inequalities in income as crucial factors in the feelings of despair, loneliness and a lack of belonging that contributed to suicides among many Americans."



Getting back to the circus...
MAGA is system risk, period. Nothing more, and nothing less. It's the lethal combination of leveraged hubris and risk that puts this circus at the brink of extinction, consisting of: Extreme leverage, extreme complacency, and higher interest rates.

This multi-month stock rally was predicated upon the end of the trade war, which we are told is imminent. And yet ironically, we learned this week that the U.S. trade deficit is record wide. Eclipsing the 2008 low. The net effect of Trump-o-Nomics has been to make the U.S. less competitive. The trade war did nothing to improve the balance of trade, while the tax cuts drove interest rates and the dollar higher aka. "Free money".   

This is MAGA in a nutshell, farce and fraud on an epic scale, attended by manic speculation, and rampant denial. 

For those who want a president who does the exact opposite of what he says he will do, Trump is the guy:

"We have a massive trade deficit, and I'm going to fix it"

Speaking of fraud, this week is the tenth anniversary of the post financial crisis bull market:

This just in:

And yet, despite the myriad warnings to date: consisting of global stocks peaking over one year ago, U.S. stocks tanking -20% in the fourth quarter, the housing market imploding, retail sales imploding, and finally Ponzi GDP imploding - even at this late juncture, the bimbos on CNBC are selling the dream.

And the sheeple are buying it with both hands:

Ten years later, and faith in Ponzi capitalism is now at existential risk. What I call "system risk". As we didn't learn in 2008, it's no one's job to manage systemic risk, so they don't. Instead what they do, is they keep selling to make the quarter. They keep stuffing Mr. Creosote with more leverage until he explodes. All the while ignoring the fact that he's getting fatter and fatter. And when it explodes, they say "no one saw it coming". That's the "system". 

This set-up appears to be a lethal combination of VolPlosion 2018 and Smash Crash 2015. I've maintained all along that the machines can't handle the endgame of this circus, and I mean that now more than ever. 

From an investment standpoint, I never give advice, but I will say this - the one thing I have learned this past decade, is spread your bets.

Why crash is extremely likely is because from a sector standpoint, there is no place left to hide. The great rotation from stocks back to bonds is already underway, as bond yields fall. Which means that the "safe haven" stocks are the final leg of the stool.

Here we see the equal weight S&P. Interestingly, the last time it was rolling over from this level was one year ago (February). That Friday pointed to by the arrow was the jobs report, as is tomorrow the jobs report. Monday was implosion. The casino this time is declining at a faster rate than last time:

Transports are now down ten days in a row:

Healthcare already rolling over:

Oil is a coiled spring:

Financials kissed the 200 dma goodbye, are now back in December mode:

Overnight risk comes via China and Emerging Markets:

The other overnight risk comes via Europe as the ECB just confirmed that the European economy is imploding.

The beloved IBD momentum stocks are right at the 200 day:

Utilities new high today, clinging to support:

The last safe haven:

Throughout this era of rampant denial, the cost of (not) hedging has been constantly rising in the background. 

This shows the S&P volatility (VIX) relative to VIX volatility. 

Basically indicating that the options market is ultra-sensitive to changes in volatility.

"I can free you from the clutches of always wanting more and never being satisfied"

It's called "MAGA"

Prepare For Hard Landing

Ironically and fully in keeping with the front-running hypothesis, rumours of an imminent trade deal have brought selling on the news...

"We're finally here. It's like we're at the finish line [on a trade deal]. The stock market has to reconcile with the bond market how the downward trend is going to reverse on a trade deal. Bonds are not smoking the same kind of optimism pipe that stocks are smoking."

"By the time you get through all these meetings and Chinese denials, you already did harm to America's businesses and workers. This is the U.S. going back to the Obama and Bush era...we're setting up a mechanism which is very similar to past mechanisms where we failed to enforce our laws."


Where this gets "interesting" is that the largest weighted Dow stock is also the one that is most leveraged to a trade deal. Boeing, which is now 11% of the Dow - almost twice that of the next highest weighted stock - has been viewed as an industrial safe haven from trade wars. For what reason, I don't know.

In addition to weighting and trade leverage, according to NorthmanTrader Boeing is arguably, the "U.S. market's most dangerous stock" from a technical perspective. 

He compares Boeing to Cisco circa March 2000 the Y2K Nasdaq top:

"Aerospace giant is arguably the U.S. market’s most dangerous stock, and puts the Dow at risk"


This stock is up 50% in two months:

Via the first article above:


"Traders are getting cynical about the China deal in the sense that they think what [Trump] really wants is a North Korea deal and he needs China to get that done. instead of getting a terrific deal with China he might do things that helps [Chinese President] Xi [Jinping] feel better about things," said Art Cashin, UBS director of floor operations. Cashin said a North Korea deal could help trump get re-elected."

What company is both a major commercial industrial AND a major defense contractor

Boeing

But is this really about one stock ready to implode?

No, this is about the last stock(s), overbought and overowned, imploding.

Because everyone is crowded into the exact same trades:

"Great minds think alike"

Fools seldom differ

We Have Nothing To Fear. But Fear Itself

"We have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men" - George Orwell

For most of the past seventy years the greatest threat to this species and planet was thermonuclear warfare. Now, the greatest threat to this species and planet is the corporate way of life. Globalization is a human and environmental disaster on an unprecedented scale. The failure of which was self-evident in 2008, and yet compliments of ongoing monetary bailouts, the disease was allowed to continue to consume the planet. Fear is the overriding human emotion, and right now fear is existential. Manifest in obligatory denial. 

Unacknowledged by the Idiocracy at large, during the past decade, Globalization has collapsed the developed world down to Third World status. Which has been merely papered over using every device known to man and many previously unknown: bank bailouts, chasmic deficits, zero interest rates, record monetary expansion, and serial asset bubbles.

And yet for all of the gimmicks, just so long as the contours of global slavery remain intact the sheeple continue to believe in Globalization. It's when would-be reformers start talking about "socialism" that fears the Ponzi scheme might collapse take hold. 

Therefore as Orwell reminds us, the depth of depravity is such that the accepted narratives must be of an amnesiac nature to forget the sequence of failure that led to this juncture. Which is what allows failure to be recycled. Corporate Disneyland is final imploding, yet the burden of proof remains on us realists, because the corporate propaganda machine is cranking like never before.

Sadly, the trade wars, rising nationalism, rising hate crimes, and societal acrimony are not a figment of the imagination. They are merely assiduously ignored. Ironically, Trump's election itself was a marker of Globalization's failure, capitalizing on rural deaths of despair; and yet no surprise, his presidency is just another deceptive gambit by the world's rich to plunder the middle class. Under the auspice of being the working man's last, best hope.

The notion of a spoiled dilettante serial business failure being the saviour of the working class, is beyond farcical. Illustrative of the depths of despair.  

Trump's popularity comes down to the fact that he has tapped into the existential fear:

"Trump models a simplistic way to vanquish self-doubt and defend oneself against existential anxiety.

In times of enormous demographic shift and economic uncertainty, populism exerts a strong appeal for the anxious voter

Trump relies on righteous indignation, blame, and contempt as weapons of war"

Make no mistake, this IS an existential moment, however contrary to popular belief the two opposing sides are not Democrats and Republicans. That's merely the circus spectacle while corporate Disneyland self-destructs in the background. Neither side is prepared for what comes next.

The true enemy is the competitive consumption lifestyle itself, something that myriad addicts don't ever want to admit. They're hooked. They love their corporate infotainment spectacle. They love fake news and fake food. Fake education. Fake science. They love consumption.

But mostly, they love fake reality:

The Learning Channel:

And yet, the cost of this circus keeps mounting in terms of morbid diabesity, mental health disorders, fentanyl suicides. environmental collapse, and mass shootings. All of which is a mere down payment on what is actually owed for the past decade of abject denial. 

This is an existential moment for a species that turned its back on reality in order to have mass produced corporate replicas of what used to be real. Watched as it blew up in their faces, and then stewed away for another decade in a toxic waste dump until there was barely anything left to recover. 

Disneyland is a choice. And for those who can't give it up, a terminal one. I predict nature will win and the carbon record will be thick. Those who would tell us any different, are just members of the Mickey Mouse club.

And their fear level is about to skyrocket. 

What A Beautiful World This Could Be

MAGA has turned its back on science and reason, placing its faith in con men, greed, nihilism, and corruption. For true believers, it will be a one way trip of their own making. Carbon levels will plummet, making us alarmists feel like fools, as denialists layer themselves into the archaeological record, gamed by the rules of their own "system". They placed their fate in the hands of Donald Trump on the basis that he's a sociopathic liar who figures out what they want to hear and works backwards to the lie...

At this late stage the Financial Services industry has earned the credibility of Bernie Madoff. However, mass delusion is the last functioning investment strategy so for now they're in their element. It's compliments of trust in serial psychopaths, that the sheeple don't see this coming:

Fortunately for the industry that must "dance while the music is playing", Trump killed the Fiduciary Rule, giving free reign to imagined realities:

"The “fiduciary rule” is officially dead.

The Labor Department rule, conceived by the Obama administration, was meant to ensure that advisers put their clients’ financial interests ahead of their own when recommending retirement investments.

The rule’s fate was all but sealed with the election of President Donald Trump, who generally opposes financial regulations. Just two weeks into his presidency, he ordered a review of the rule"


Blind cynicism being the order of the day, conflict of interest is assumed and therefore ignored. 

As Janet Yellen said this week, Trump is as ignorant on the economy as he is in business. He excoriated her for NOT raising interest rates and now he's excoriating his own Fed candidate FOR raising rates. Duly worried that his sole accomplishment - a bigger, fatter, uglier con job, will implode. His management style consists of blaming other people for all the problems he creates. 

Which is why he has the least competent administration in history:

Trump: "America is now booming like never before"

Herein lies the problem, whereas historically stocks have been leveraged to the economy, in this era due to rampant asset bubbles created by money printing, the economy is now leveraged to stocks. We now have what I call Ponzi GDP: Economic growth leveraged to the S&P futures. Which is why GDP fell off a cliff over the past few months. It's the fake wealth effect going in reverse. Also why today's economic growth predictions have the veracity of a fortune cookie.  

What went wrong?

Over-confident buffoons, born under a reserve currency, that's what went wrong. The more certain of future utopia they became, the more they swapped effort for bullshit - now Trumptopian scale. This species has unending capacity to layer in fellow humankind as another carbon brick in the archaeological record, by exploiting poverty as a line of business. While constantly blaming the monetized people who fall to the bottom for their predicament.  

At this latent timeframe: 

Delusion and arrogance paper over reality.
Asset bubbles paper over slavery.
Entertainment spectacle papers over collapse.
Continuous lying papers over inconvenient truth.
Pseudo-science papers over corporate interest
Cynicism papers over corruption. 

Which gets us to rampant speculation, the order of the day. Because central banks bailed out gamblers in 2016, this time around instead of de-risking, fearless gamblers are front-running central banks.

Into the riskiest junk they can find.

To paraphrase Jeff Gundlach, there is nothing new under the sun in speculation. It's strictly about delusion and momentum. 

Led now by the 5G Telecom trade war:

Ciena:

Xilinx

Fintech assisting insolvency

"Total outstanding U.S. consumer loans hit a record last year, driven by digital-first lending options."

Financial technology, or fintech, companies now make up 38 percent of the personal loan market — up from just 5 percent five years ago"

Meet the new subprime

This is the era of stoned complicity

Because unfortunately, nothing has changed in the past sixty years. The TCP/IP backbone that Facebook rides upon was invented in the 1960s. 

Goodnight Moon

Goodnight noises everywhere