Set-Up For A Mega Crash. Check.

Eighteen years ago this week, the Nasdaq tech bubble burst. The only stock index making new highs right now is the Nasdaq. No other global stock index is near all time highs...

Bueller?

"the Nasdaq maintained its trade in record territory amid lingering optimism over Friday’s jobs data, which combined solid growth with a lack of wage pressure"

Hong Kong is identical to 2007:

The locus for major risks can be described to a 'T':

Tyrannosaurus Trump
Turnover within Team Trump
Trade wars and tariffs
Tech stock bubble
Treasury short bubble
Tax cut driven rate hikes

Beyond asinine levels of risk, in order to generate a mega crash, first and most important, the vast majority of gamblers must be blowing smoke up each others' asses while bidding up their own assets. Check.

Secondly, gamblers must be crowded into fewer and fewer stocks making new highs, which is what makes the Nasdaq extreme global divergence so dangerous.

Even within the Nasdaq, there is a colossal divergence between mega cap tech and the average stock. The average stock is corrective off of the January high:

Nasdaq new highs are at the same level as last August second peak:

The Nasdaq is one year overbought:

The Wilshire 5000 is the broadest measure of the U.S. stock market, and it is clearly corrective, currently at .618 retracement of the January peak:

Don't try this at home

During the last 10% "correction" in August 2015, gamblers went RISK OFF. Not this time...

Most people are either too old or too young to remember how this ends. Which sums up this Idiocracy in general.

DENIHILISM Is Ending. Badly

DE•NIHILISM: The art of knowing everything, by knowing absolutely nothing

What we've learned in this era, is that Social Mood is all powerful. Not only can it overcome global Central Bank tightening, but it can recycle failed economic narratives over and over again. Each time expecting a different result. Right up until final burial.

Speaking of final burial, emboldened by his tariff gambit and departure of Gary Cohn, the weekend rumour is that Trump is mulling a purge of what remains of sanity from the White House. Following a year of the highest turnover in U.S. government history - and the fewest Senate confirmations in U.S. history, the Donny is going FULL MAGA RETARD. Starting with his chief of staff, John Kelly:

On the topic of serial insanity, in the past few weeks we got news that U.S. supply is surging, crowding out OPEC. The only thing missing from a repeat of the 2014 disaster was collapsing demand:

"The rise in global oil production, led by the United States, is likely to outpace growth in demand this year, the International Energy Agency said on Tuesday."

In just three months to November, (U.S.) crude output increased by a colossal 846,000 bpd and will soon overtake that of Saudi Arabia. By the end of this year, it might also overtake Russia to become the global leader"

"provided global growth remains strong...

most producers will be happy, but if not, history might be repeating itself”

Too late:

When oil prices were low, serial dumbfucks loaded up on gas guzzlers:

"Right now, there's a lot of big, heavy, thirsty vehicles out there on the road." Sinclair said. "That's going to play into ... whether or not they'll be able to gas those things up."

A new AAA survey asked consumers if there was a gas price point that would make them "change their driving habits or lifestyle to offset higher gas prices...we're there, we're at that level in a lot of cities, a lot of metropolitan areas around the country"

In an old age home, the bar keeps getting lower, and lower, and lower. Until there's nowhere left to go, except straight into the fucking ground...

"quarter-over-quarter annualized gross domestic product growth rates in the three largest advanced economies -- the U.S., the euro zone, and Japan -- have turned down. In all three, GDP growth peaked in the second or third quarter of 2017, and fell in the fourth quarter. This is what the start of a synchronized global growth downswing looks like"

Occupy Terminal Idiocracy

The Dow rises to the drumbeat of continuous decay, cheered on by demented geriatrics. America's failed economic ideologies are morally, intellectually, and financially bankrupt.

The only reason today's geriatrics are not worried about an exit strategy from this clusterfuck, is because they've assumed they wouldn't be around to need one. Fortunately, this can all work out fine in the end, as long as the failed ideologies get buried with the dumbfucks who espouse them: Everyone gets what they want, albeit not necessarily when they want.

Everywhere I look, zombies are eagerly self-destructing. Globalization is nothing if not an efficient human meat grinder. Since 2008, every piece of bad news has been good news - because it meant more Central Bank dopium. At this latent stage gamblers have been thoroughly conditioned to believe that bad news is always good. In other words, Wall Street has completed its takeover of the United States. 

"For once, Wall Street didn't begrudge Main Street some good news about the economy and jobs"

"Well, as long as they're low paying McJobs, we can accept a few jobs not getting outsourced or automated"

This fiasco only came about, because the aging Idiocracy had a strong preference for stock market gains at the expense of the economy and jobs. The systematic strip mining of company pensions to make the quarter, and then the subsequent strip mining of Social Security to pay for serial tax cuts, has led this society to conflate economic progress, with the Dow Jones Industrial Average. Despite the fact that they are a zero sum game. 

Therein lies their seeds of self-destruction. The Dow only goes up when there's bad economic news. Ten years on from 2008, with the casino near all time highs, it stands to reason that the casino has been having it's way with the economy and jobs this entire time. 

And yet they will all be surprised when this all ends badly. And no one sees it coming. It can't possibly be because of Trump's level '11' tax cut driving Fed rate hikes. The 5% U.S. deficit imploding the bond market. Nor the too-little-too-late tariffs monkey hammering the Dow.

Because it's all just free money and free trade magic, coupled with willful mass ignorance on a scale never before witnessed. 

"No one was allowed to know when the bad news was really bad news"

The Madness Of Crowds

All this time I've been deriding the zombies as fools, and dunces. It turns out they're actually insane instead. I apologize. Far be it for me to insult those who have no choice in the matter...

Way back in March 2000, the Nasdaq was leading, the Dow was lagging, the masses were fat and happy. Then it all imploded spectacularly. No one saw it coming...

Large cap tech has been making new highs non-stop. The Dow just carved out its third lower high, featuring another three wave retracement:

The tech divergence has reached a new extreme:

Two weeks ago, the S&P gapped up to one year overbought, rolled over and tagged the two year trendline. Today the S&P closed at the same level as two weeks ago, this time further overbought:

Oil made its fifth lower high today:

The crash ratio made a new low today, and new weekly highs - lows rolled over:

The Tech/Treasury ratio reached a new high this week:

Breaking through the March 2000 level, for the first time ever. The definition of insanity is doing the same thing over and over again, each time betting everything on a different result...

Goldilocks And No Bears

It's been six years since there was any sustained selling in the casino. Today's gamblers have not even the slightest clue what derisking means...

But first, the gamblers celebrating the pseudo-economy consisting of no wages:

There can be no wage growth, because Supply Side economics is the preference for return on capital over return on labour. Which means that at any sign of wage inflation, interest rates rise stamping out "reflation". It's a Faustian Bargain terminating at Third World status. 

But don't take my word for it:
"As far as investors are concerned, the key point is that most Fed policymakers still seem pretty confident that inflation pressures won't follow too far behind wage pressures, as businesses pass along a portion of their higher wage bills..That's why an interest-rate scare is looking possible, even if a legitimate inflation scare doesn't materialize.

This week, Kroger, Dollar Tree, and Ross Stores all said they're raising wages for employees, and their stocks sold off amid worries about profit margins."

Got that?
"We must raise interest rates to protect the jobless consumer from the damaging effects of higher wages"

Clearly, the U.S. has gone full retard, a function of having too many global multinationals domiciled in the U.S., conflating their own interests with that of the country. 

Yesterday, the S&P closed at the exact same level as January 8th - two months to nowhere. Hemmed in between the 50 day and the rising trendline. Three lower highs each tracing out the same retracement fractal:

The Nasdaq 100 is the strongest index and likely to make a new high post the "more than expected McJobs, weaker than expected wages" report.

As a reminder, the last three times the VIX spiked to 50 it was because large caps had rolled over. This time, large caps have not rolled over.

Yet.

It's all Amazon now

Large banks are rolling over at the 50 day, same as last time(s):

Homebuilders have left the building

Europe third lower high:

Bitcoin is getting pole axed again. I noticed that Bitcoin always rolls over slightly ahead of the S&P:

Video games are a great end of cycle growth play:

At least they were during the past two cycles:

The big story this week were the tariffs on steel and aluminum made official yesterday. Meanwhile, with all of Trump's growing Russian/porn star/money laundering/legal entanglements, no one with an IQ greater than 5 will be willing to join Trump's gong show going forward - It's an invitation to have the NSA data mining your cell phone calls for the past 10 years. And otherwise be ostracized from the entire planet ex-Trumpfuckistan. I heard through people who know Gary Cohn's wife that she threatened divorce if he didn't quit. Her social life is probably permanently ruined anyways. Her husband will always be known as the guy who plundered Obamacare and Social Security to get a tax cut for Goldman Sachs and $800 billion in stock buybacks to pay for insider selling dilution. 

Even Larry Kudlow turned down the job. And if you can't get that guy, where to go next Joe Kernen? Bernie Madoff?

The chart of the week:
For all of that hyperbolic bullshit, steel stocks were down on the week. the rest of the world hangs by a thread:

Globalization Is Going Out of Business

What Globalization represents is overinvestment in collapse. The recycling of excess capital into excess capacity. Of course, we could have learned that lesson in 2014 via the crude oil market, but instead, yield-starved gamblers recapitalized the shale industry, because they preferred return on capital over return of capital...

I just noticed that the S&P 500 is tracking oil 1:1 now. Oil is carving out its fourth lower high since late January and now sits on the seven month trendline:

The world's largest oil stock is trading like a brick

"Over the next three years, the U.S. will cover 80 percent of the world’s demand growth, the IEA says in its newly-released Oil 2018 annual report. Canada, Brazil and Norway will cover the remainder, leaving no room for more OPEC supply."

The irony is that the substantial gains in output from shale will only be possible because of the OPEC cuts, which has tightened the market and boosted prices"

On a related topic, credit card debt just saw its biggest increase in 30 years during the fourth quarter:

We always have Tech

Go Daddy is the Idiocracy's new blue chip

Who needs the oldest Dow stock? GE is the only Dow component still in the index since the Dow's inception in 1896 (GE was founded in 1892):