There Is No Alternative (TINA) To Crash

The record global inflow into U.S. momentum stocks is now unwinding in record size. An "unexpected" reversal of fortune for Lehman week...

This is the binary stampede scenario that today's financial pundit used-car-salesmen have been assiduously ignoring. 

"This shift is unnerving to investors because momentum stocks, those defined by their large growth expectations relative to the broader market, have outperformed value names in recent years. A rotation away from these stocks could result in a downturn for the broader market."

This is the biggest two day rotation from growth to value since the election:

Momentum Tech is getting annihilated

The right shoulder is complete:

You never want to see Energy stocks, the smallest sector by market cap, "leading" the rally.

Because that means it's over:

Short-covering is the only thing holding up this market:

Any questions?

Momentum stocks are imploding just as the rest of the market is completing second wave retracements:

Semiconductors, FANG internets

$USDJPY Carry

High Beta Cyclicals (Banks, Retail, Industrials, Transports)

Rest of world stocks

Oil

And the Dow:

Look out below

The MAGA Kingdom Is Going Out Of Business

The sheeple have amply proven they will always trust opinion over fact, and they will believe ANYTHING for money. Sadly, non-stop lying does not make anything "great again"...

Here is what we have learned over the past decade:

We have learned that you CAN trust people - to do what everyone else is doing, no matter how asinine the venture. To believe what failed in the past will work now. To question nothing and have answers for everything. To desperately follow demagogues. To seek inner gratification from external gratification. And to have no idea who or what to believe when the lying ends.

The current insane belief among the majority is that they can ride out recession in the most overvalued stocks. 

My how things can change in one year. This time last year GDP was running at a multi-year high compliments of the tax cut sugar high. Retail stocks were making new all time highs. One year later, GDP estimates have imploded down to 1.5% for the third quarter, which is -2.5% ex-deficit. A recession at any other time in U.S. history, prior to the age of Ponzi. 

Which explains why the Google Trends search term "recession" is the highest since 2008:

Retail stocks peaked a year ago:

Recession stocks are leading

On a shorter-term basis, Hong Kong stocks had a great week as the rioting calmed down, and the news of renewed trade talks broke. 

They are right back to where they were last December when the wheels came off the bus ahead of the FOMC meeting:

Double Or Nothing In The Last Trump Casino

"By the end they bet the farm on Donald Trump...Yes, I'm serious..."

It's amazing how many zombies now believe that total disintegration of everything is just "business as usual". The first derivative of this old age home is non-stop bullshit, the second derivative is collapse. The problem with arrogant denial and cynical trust in proven con men, is that one gives up the right to know when inconvenient reality is closing in for the final kill. Make no mistake, this ten year central bank sponsored Ponzi scheme was solely to give the Baby Boomers the illusion of retirement. Because 50 years since Woodstock, really what has changed?

Despite new tariffs that went into effect on Sunday, Global stocks exploded higher this week on news that U.S.-China trade talks may resume sometime in October, as mass delusion reaches maximum overdrive:

"I don’t think 18 months is a very long time...The stakes are so high, we have to get it right, and if that takes a decade, so be it,”

Today's jobs number missed expectations which should come as no surprise given that job cuts are tracking at the highest levels since the last recession due to the trade war:

Challenger Grey:

August Job Cuts Highest Since August 2009

"U.S.-based employers ramped up the pace of downsizing in August, as companies announced plans to cut 53,480 jobs from their payrolls. This is up 37.7% from July’s total of 38,845...Last month’s total was the highest August total since 2009"

Employers are beginning to feel the effects of the trade war and imposed tariffs by the U.S. and China"

"Job cuts announced due to bankruptcy have hit the highest level since 2009, according to a new analysis of monthly job cut announcements from global outplacement and executive and business coaching firm Challenger, Gray & Christmas, Inc."

This last and latest short covering rally pushed the Dow past the .618 fibo retracement of the all time high set in July. The one month trading range having finally broken out to the upside, leaving behind two chasmic gaps below the casino. 

Which sets up human history's biggest headfake rally:

Info Tech has been fatally gored by the trade war:

Cyclicals are yet again rallying into the FOMC meeting, September 18th.

Today's Trump casino gamblers are now going to learn the difference between realized and unrealized gains.

1929 Waterfall Crash aka. Bullshit Trap

Due to non-stop central bank bailouts, far too many dunces made it through 2008 unscathed. Which is why the moron bubble is by far the biggest, and the last to burst...

Stocks remain hypersensitive to every trade-related headline, now tracing out a fractal ledge, similar to 1987, more accurately 1929. In Elliott Wave parlance, third wave down. Gamblers have been been fully brainwashed to buy and hold on the belief that final victory in the Trump trade war is always just around the corner...

There is a reason for the dumb money mega bubble: Because sheeple have been brainwashed to believe that if they don't own enough "stocks" they will never retire. The economy is now inversely related to the stock market. The lower interest rates go, the more infinite valuations can be "justified". 

"In the broadening top, the smart money is selling and the dumb money is buying"

ZH: The Smart Money Is Selling. And the Dumb Money Is Buying

We can see relative to the June rally that the strength of this one month rally has been far weaker, as the smart money hits the exits:

Breadth has gone nowhere on this rally. Money flow (lower pane) confirms distribution from institutions to retail investors

Utility stocks are going parabolic as recession concerns mount

The Global Dow is well below the 200 day, while volatility is already as high as the past two selloffs.

A function of relentless Twitter risk:

Internet stocks have gone nowhere on this latest rally

War is Trump's last option to stimulate the economy.

Defense stocks are trading accordingly

Compliments of non-stop central bank bailouts, far too many dunces made it through 2008 unscathed. Which is why the moron bubble is the last to burst.

Front-Running Meltdown

Record hurricanes and record mass shootings. No amount of biblical warnings can waken the Idiocracy from their denialistic stupor. At this late juncture, they are still figuring out how to front-run collapse. Faith in central bank bailouts is now ubiquitous. Everyone is on the same side of the boat...

Last year I created this graph showing on an inflation-adjusted basis the most costly hurricane seasons in U.S. history. All were in the past 15 years:

The largest number of mass shooting fatalities, all in the past twelve years:

Talk about hardcore denialists. The MAGA Idiocracy exemplifies denialism - an abject unwillingness to face reality, even in the face of extreme risk. Preferring to double down on self-destructive bullshit, than to make the slightest adaptation. Forty years of Banana Republican failure, why change now?

The most imminent risk of course is in the casino where the market has been range bound for a month straight, as gamblers rotated to all of the various perceived "safe havens". These will be the final risk assets to crash.

Amid ever-strengthening deflation, the consensus viewpoint - aided and abetted by copious useful idiots on Zerohedge - sees imminent inflation, as faith in central bank bailouts is unquestioned. 

For my part, I'm betting against that pervasive delusion and the consensus fools chasing it. Amid record low global interest rates, central banks now lack the dry powder to reflate the economy. Worse yet, the impending asset dislocations will reveal all of the myriad ponzi schemes that have been operating in broad daylight, including the stock buyback fraud, the Energy industry ponzi, the IPO/venture capital pump and dump, and the global real estate money laundering scheme - just to name a few.

Quantitative Easing will not have the same effect that today's gold addicts have been well-conditioned to expect from it. Shockingly, printed money for billionaires will fail to offset insolvency. 

Panic will ensue.

And then, today's make-believe capitalists will come begging for yet another bailout. At which time all of the apologists for greed will be exposed for what they've been all along - inter-generational thieves.

Sadly for rapacious criminality, the no-bailout team will be on the streets in force. This time demanding the pound of flesh that has been owed for the past decade. 

Around that time, Big Donny will have a total mental breakdown, as all of the lies from his bilious life flood back over him. At that point, even the greatest of fools will abandon the Trumptopian Titanic. Chalking up their past forty years of wandering in the Banana Republican desert to a lifetime of exceptional failure.


I predict that the entire central bank bailout trade will get wiped off the map before markets find bottom. Which means:

Crude oil speculators, still net long
Treasury speculators, still net short
Gold speculators, multi-year net long
Volatility speculators, still net short

Last but not least, home gamers still betting on their saviour, Forrest Trump

Let's get to some charts:

Now fully overbought, the S&P is heading back to re-test the 200 day.

This time the test will likely fail

How do we know the test will fail?


Momentum Tech is breaking down out of the rising wedge:

Low vol recession stocks new highs

Remember when the Trump tax cut was going to be "reflationary"? 

They bought that lie too

We will now see deflation on a scale never before imagined

Sadly, MMT will be post margin calls, post Trump mental breakdown, post panic, post bailout failure, and post QE failure

The second mouse gets the cheese