A Conspiracy Of Dumbfucks

The left hand of this global circle jerk doesn't know what the right hand is doing. I just learned on Zerohedge it's ANOTHER well-executed conspiracy. Of like-minded dumbfucks...

As I said in January just before VolPlosion, this shit show isn't going to crash, it's going to explode in every fucking direction. Because what this era represents more than anything is astounding heights of ignorance and arrogance.

It would be one thing if asset valuations were only bid back up to Y2K historically asinine levels amid record complacency and risk exposure 

Or another thing if global interest rates were spiking to cycle highs after a decade of languishing at 500 year lows

Or, if global Central banks were just now draining the trillions in liquidity that have supported global assets for a decade, even as global fake reflation implodes in real-time

Quite another thing to layer in a tax cut for oligarchs funded by stealing from Social Security

And then something altogether different to begin a trade war at the end of the cycle

But to do all of them at the same time. That is the height of ignorance and arrogance.

Any questions?

Gundlach and Gross are about to shit a brick, along with every other dunce who predicted higher bond yields...

"Synchronized global recovery"

We haven't seen a second breakout in backwardation on weekly volatility since...

The Dumbfuck's Guide To Fixing Wealth Inequality

I think we all know where I'm going with this. What we've learned from history is that hairless monkeys don't learn from history...

Globalization was supposed to fix wealth inequality by raising the standard of living of poor people, not by imploding everyone else. Unfortunately, our dunce economists, politicians, and business leaders didn't get the memo. 

Here is where this unique approach to fixing wealth inequality gets interesting. Way back in 1929, Republicans were cutting taxes, the stock market was booming, gamblers were obliviously speculating in every risk asset known to man using record margin. Business and consumption sentiment was soaring. Wealth inequality was extreme.

But then as now, there was a fix for all that. 

1929 Federal Reserve History:

"The Federal Reserve’s rate increase(s) had unintended consequences...In September 1929, stock prices gyrated, with sudden declines and rapid recoveries. Some financial leaders continued to encourage investors to purchase equities"

Speaking of elevated assets, the Fed today raised rates again by a quarter point and they also raised their forward economic outlook. 

Wall Street is going to regret sending all of the C students to work at the Fed. They apparently can't interpret their own fucking graphs:

Based on this "hawkish" view, banks rallied while the erstwhile "safe haven" yield trade further imploded. 

In other words, the Fed has successfully imploded the safe haven trade. 

While corraling dunces into banks deja vu of February:

We haven't seen failure at the 200 week in Real Estate (REITS) since...2008.

Last week:

Also last week:

"Safe haven"

They will be surprised when the BTFD retest is not "successful"

The Elevator Ride Lower

The casino is levitating on short-covering ahead of the Fed in the weakest sector: Energy. Meanwhile, Consumer Staples are getting monkey hammered. The defense has left the field. It's all offense now...

The Dow is clinging to the tax cut Maginot Line:

Recall that back in 2015, it was Consumer Staples that buoyed the casino when Tech imploded:

Now we are witnessing Y2K-era tech valuations, record gambler exposure, and record complacency, and a late stage rally supported by oil. Or should I say a three wave retracement off of the February low.

Recall about a week ago I said that the S&P (gray) is tracking oil 1:1. That is no longer the case, now the S&P is lagging oil:

Oil can't keep this shit show levitated. The rest of the world and NYSE breadth are reminiscent of 2014 the last time global fake reflation imploded:

Exxon is looking more like 2015:

As do the other mega cap stocks. 

We'll soon find out if the Fed can monkey hammer Financials with some lovey dovey Fedspeak, deja vu of last March. 

Either way, they're a tad extended:

Bueller?

Terminating The Idiocracy. For Good...

Colliding level '11' fiscal and monetary policy are imploding the status quo in real-time, while even the slightest rearrangement of deck chairs on the Titanic is deleterious to record profit margins, and hence share price. We are one sadly missed bailout away from blowing this exploitation scheme sky high. 

Deja vu of 2007, they can't see it coming: There are houses to be sold, cars to be sold, junk IPOs to be sold. Even in the face of rank stupidity, you have to keep dancing until the music stops. 

Time Magazine: July 2007: 
Citgroup's CEO Wants To Ignore Subprime. Can You Blame Him?

"You have to dance while the music is playing" - Citigroup CEO, 2007

Like Japan for the past several decades, the entire world is now pretending that the abnormal is the new normal:

"Countries around the world should get used to pattern of unfamiliar inflation, growth, monetary policies and asset prices"

However, I'm here to say that the new abnormal is not as politically stable as the Idiocracy desperately needs to believe. First off, some history for those who've been checking out aliens and UFOs on the History Channel: The reason why Republicans had to go further and further to the right for the past forty years is because there was nowhere else to go that would boost share price. The "liberal" economic agenda at this latent stage consists of balanced trade, a living wage, and solvent retirement benefits - basically a return to 1950s Eisenhower-Republican policy. 

In other words any structural change to the status quo is now deleterious to stock price. For example, tariffs, trade wars, higher taxes on internet firms etc.:

And yet despite this non-stop rampage to the right for forty years, Zerohedge has no shortage of idiots on speed dial willing to explain the extreme dangers posed by a move back to the center, and the attendant risks of putting money in the hands of people who actually deserve it. Of course, if these proven dullards could remember as far back as 2008, they would recall that sans bailout, their utopian exploitation scheme consisting of socialism for the rich, would have already been obliterated.

What I'm trying to say, is that the U.S. is now Japan, but with an "Austrian" twist:

Since 1990, Japan has experienced:

Relentless deflation

Relentlessly falling bond yields, now at 0%

Over-reliance on fiscal and monetary stimulus

Serial asset bubbles

Zero structural reform

An aging Idiocracy desperate to believe "this time is different"

Sound familiar?

The key differences between the U.S. and Japan, is that the Japanese people no longer trust the stock market, because they've learned the hard way that being encouraged to go ALL IN in at the top, is a recipe for 50%+ haircut every time.

The other key difference is the fact that the U.S. practices reverse socialism, meaning bailouts for the wealthy and extreme poverty for everyone else. I would suggest that the U.S. version of Idiocracy-o-nomics will not prove to be as stable as what Japan has experienced. 

But let's give it another try.

The Scylla And Charybdis of Fantasy And Reality

The Fed can remain eminently clueless and signal the removal of more liquidity, or they can monkey hammer the fake reflation trade. It's really up to them...

The Nasdaq's island reversal of fortune just trapped gamblers in the casino. So they played another hand of BTFD. What else?

At the lows today, the casino was enjoying another 90% down day. But don't take my word for it...

Yes, this again...

Today was the first gap 'n crap since the early February implosion. The S&P 500 gapped below the fifty day at the open and kept running. I think we all see where I'm going with this...

Overinvested In Uncreative Self-Destruction

Today's frat boys just admitted last week that ~40 years of  shipping the economy overseas has NOT led to creative destruction. There's nothing creative about it...

Even the most vociferous champion of free trade is now onboard with China tariffs. In other words, the barn door is now finally closing, the horses haven't been seen for years...

"Kudlow is "going to follow the president's lead or he would not have been offered the job or he couldn't take the job."

"I must say as somebody who doesn't like tariffs, I think China has earned a tough response not only from the United States," Kudlow said 

Over on UFO-central, that other Reagan-era ardent proponent of free trade, has yet to recant: Stockman gives an excellent blow-by-blow dissection of Amazon's Potemkin business model, but still manages to miss the forest for the trees. Like all of today's apologists for greed, overriding belief in the jobless consumer prevents him from seeing global capitalism self-destructing in real-time. After all, bankrupt companies are one thing, bankrupt ideologies can be a little harder to face...

This is the REAL reason why Amazon's Potemkin business model is a problem:

Retail bankruptcies and defaults hit a peak last year, soaring past records set during the recession, and things could get even worse this year, according to the credit-ratings agency S&P Global Ratings.

"We believe defaults in 2018 could match or exceed last year's record level," S&P Global Ratings analyst Robert Shulz wrote in a recent report that identified 20 retailers at risk of defaulting.

It was inevitable that today's mega dunces would create a profitless intermediary, aka. Amazon, between China and the U.S. - to provide a 'frictionless' conduit for cheap junk drop shipped to yuppy doorsteps. To complete their delusional economic utopia fully bypassing the U.S. economy to the benefit of the jobless consumer. In doing so, by necessity they conflated recycled capital with income - the inevitable consequence of an economy based upon Supply and Debt versus Supply and Demand. 

In the event, the frat boys on Wall Street inadvertently created a retail wrecking ball called "Amazon" that for 24 years has been devoid of profit margin and hence free to go about decimating the real economy, under the auspice of 'creative destruction'. In other words, were it not for the performance chasing growth-momentum algos and speculators, this shell company representing the efficient frontier of global bankruptcy would have imploded a long time ago.

But since it didn't implode, it went about its time imploding the economy while taking up an ever-greater share of stock market market cap. Which is how today's dunces overinvested in momentum collapse.

Wall Street's perpetual growth model - embedded in every discounted cash flow model - is off by a minus sign...

Entitled Dumbfucks

We are approaching the expiration date for studied ignorance. Picture a scenario wherein tech implodes, the fake reflation trade implodes, and the recession trade is already RISK OFF. Because that's what is happening...

"What changed? We knew he was batshit crazy, that's why we elected him"

The definition of insanity is believing the same proven idiots over and over again, each time expecting a different result. The decline of the United States started when college turned into a partying experience rather than a learning experience. Fast forward a few decades, and we now live in a circus run by degenerate frat boys. Entitled, ignorant, arrogant, under-educated, facile buffoons...

Salesmen, schooled in sports and entertainment. Assiduously avoiding any other subject while pretending to know everything. Inveterate con men and sociopathic liars. Self-destructing alchoholics and testosterone depleted sexual predators. Oblivious buffoons recycling the same failed ideas over and over again, spending all of their time conning sheeple, this time it's different. 

Today's alt-white geezers and curmudgeons are beside themselves that women are now taking over their hard won circus. It's abundantly clear that aside from insecure emails servers, Hillary's real crime was being a woman. Doesn't she know her place is in the kitchen? What other crime did she commit? Invasions of foreign nations under false pretense? Destroying the Middle East, and setting off human history's largest mass migration? No, that wasn't her mission accomplishment. That fell to a frat boy well qualified in failure. 

Speaking of serial insanity, this week is Fed week and the FOMC is widely expected to hike interest rates again, at the behest of fake reflation. 

Which brings up my proprietary Central Bank "dot plot". In this March cycle, the ECB and BOJ have already met, so the Fed is last at bat.

Last year, fake reflation imploded right after the March 15th FOMC meeting. This time humpty dumpty won't be making a comeback. 

Don't ask me how I know...

Herein lies the problem, the last time Tech imploded (August 2015), the recession trade (Consumer Staples/Utilities) supported the casino. That won't happen this time.

Because contrary to ubiquitous belief, the cycle is cyclical.

Record Muppet Show

Wall Street's mantra is never let a manic melt-up go to waste...

This past Friday saw the first tech unicorn - Zscaler - to go public in 2018. It was up over 100% in one day. This coming week will be the main event: Dropbox. Wall Street is flooding the market with junk before the "window" of opportunity closes. But don't take my word for it...

"The share of loss-makers in the IPO market has been rising. Last year, it reached the highest percentage [75%] since the peak of the dot-com boom in 2000. By contrast, data spanning nearly four decades shows 38% of companies are typically unprofitable when they go public."

“Certainly, this is the sort of thing you typically see toward the end of a market cycle.”

I noticed that the IPO ETF has been well bid throughout this "correction", ensuring fertile soil for the upcoming pump and dumps:

I also noticed that Snapchat, last year's biggest mega flop peaked twice with the market - last year AND this year:

Of the largest tech IPOS of 2017 - Snapchat, Blue Apron, Switch, Roku, Altus Networks - all are down from their first day except Roku (red) which is now imploding...

"Another reason for the drop in profitability among newly public companies is that nearly 30% are biotechnology firms...When they go public, they typically aren’t generating much revenue. The median sales among the 32 biotech companies that went public last year was less than $1 million"

Equal weight Biotech:

In summary, record inflows to stocks overall and tech, are being put to good use in junk tech IPOs...

Bonus chart

The World Leaders Index comprises the 200 largest cap stocks in the world, including the U.S. And as we see, it's not heavily weighted to technology: