Race To The Bottom. Buried By Bullshit

Shorts are covering ahead of Trump's latest attempt to bullshit his way to 4%, 3%, 2% GDP growth. You know, by borrowing more money...

Global asset pump and dump, Fake global reflation, borrowed GDP, fake OPEC recovery, retail annihilation. All paid for with printed money and obscured by a bubble of idiots...

Careful what you wish for

2008 was the wake up call, but the stoned zombies weren't ready for the party to end. So starting with the massive bailout and doubling of U.S. debt, the economy went under the bus for the sake of the casino. Only history's most vacuous generation could make that separation, with the aid of printed money to offset the torrent of deflation. The Idiocracy needed a handy narrative that would place stock market performance ahead of economic performance and for that they turned to the myth of Amazon. In other words growth at any (all) cost became more important than economic viability. Now featuring the highest number of retail bankruptcies in U.S. history. Now the entire narrative is collapsing in real-time, but don't as always, don't take my word for it.

Meet Amazon the Ponzi retailer for the Ponzi generation:

"Amazon has been ‘buying’ sales for the past 15 years, considering profits have not been its primary focus — unlike other retailers...Amazon posted a 77% drop in quarterly income last month even though its second-quarter revenue was up 25% from the prior year"

Adjusting retail sales for inflation and the size of the U.S. population, this is what you get:

Per capita real retail sales

"We import people and then we pretend the economy is growing"

"The Atlas-like croupiers of the day scratched their heads as to why the 'Conomy wasn't growing"

"I can't put my finger on it, but something doesn't feel right"

And if Amazon doesn't dominate any one retail category (other than books), why are the leaders all imploding?

This week it was Best Buy

"Then Amazon got into art work"

Away from retail, here are some key financials:

Largest cap stocks:

Waterfall collapse in progress...

This short-covering rally compliments of sheer bullshit:

10 months of misallocated capital later...

"Don't expect any specifics, just bullshit as usual"

Collapse In Broad Daylight Is Not A Black Swan Event

Two paranoid nutjobs are about to go toe to toe, hence it's clearly a buying opportunity...

What we've learned again in the past 24 hours is that the rest of the world sells risk and the U.S. buys it, something about Faux News and being the "last to know"TM

Let's see, a 500 year deluge of the U.S. oil capital, ballistic missiles hurtling across Japan, Camacho-in-chief with his finger on the trigger. It can only be another buying opportunity.

And apparently, the algos borrowing in Japanese Yen to fund S&P rallies need a geography lesson, otherwise I'm guessing they'll be funding more gap down open comeback rallies. Either Trump retaliates or Kim Jong Un continues missile salvos until Trump retaliates:

Either way, this just in: "RISK OFF"

Yen carry traders are slightly over-exposed to a cage match between two megalomaniac nutjobs

Meanwhile on the big picture front, this chart is a reminder as to why Emerging Markets are leading the global fake reflation rally now:

"Black Swan Event"

Powered by imagined realities all over again...

Well at least we have Alibaba-sponsored fake global reflation, because fake U.S. reflation is done:

And European fake reflation

We've only seen two meltdowns from this level, but really, who's counting?

"The storm’s forced shut down of refineries on the Gulf Coast, the largest refining hub in the U.S., is already affecting the supply of gasoline in North America and also hurting the demand for crude oil...Refineries that are shut in or sidelined can’t take delivery of oil"

What to do? Cover shorts ahead of the weekly inventory reports and wait for good news, what else?

Fortunately, the iPhoney8 is due September 12th. Of course every time Apple makes a new high the S&P plunges:

What happens when Apple is the only big cap stock making a new high? We're about to find out:

In the meantime, one more chance to BTFD before all hell breaks loose:

I gave up on the Bitcoin wave count

40 Days And 40 Nights

Once I stood to lose her when I saw what I had done

Bound down and threw away the hours of her garden and her sun

So I tried to warn her, I turned to see her weep

Forty days and forty nights and it's still coming down on me

The area is home to nearly one-third of the nation's capacity to turn oil into gas, diesel and other products

Kloza said that normally refining is knocked offline for just a brief time, making the impact on prices fleeting. But that depends on the severity of the storm.

"Katrina was the exception," Kloza said, referring to the 2005 storm that badly damaged Gulf Coast operations.

12 denialist years later...

"This is a storm that the United States has not seen yet"

This Week on ZeroHedge:
Global Warming Denialists Would Like A Harder Lesson, please

Speaking of dedicated denialists

The perfect shit storm deja vu:
Debt ceiling standoff, EM market rotation, Fed balance sheet rolloff, U.S. deflation, and of course mass complacency

"This time with feeling"

The fifth wave is ending the exact same way as the first wave.

You know, mass denial propagated by a society of total fucking morons who know everything by knowing nothing:

Mexico Will Not Be Paying For The Wall

"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"

History 101:
Q: Why was the last emperor a pathological liar?
A: Because he was the only one who could make America great again.

Stoned gamblers holding out for a tax cut will be paying for the wall. But don't take my word for it...

"Believe me, if we have to close down our government, we're building that wall"
- Trump, Aug. 22nd, 2017

Herein lies the problem: for the next several weeks through the end of September, no one with an IQ greater than 5 can own risk going into the debt ceiling resolution. Congress needs the Democrats and Democrats don't want a wall.

"Democrats are almost uniformly opposed to paying for the border wall and their leaders are putting the onus for raising the government’s borrowing authority on Republicans

"But conservatives in the House are demanding that steep spending cuts accompany any debt bill"

Trump fulminated against Republican congressional leaders over the debt-limit “mess” in a Twitter posting Thursday morning...The tweet spurred a spike in investor concern that Congress and the White House may not act in time.

In other words, in his infinite wisdom, Donny has just created a no bid market. But as always, don't take my word for it:

And we don't have to wait to find out what happens when the Fed rolls off their balance sheet at the EXACT same time as the debt ceiling is reached. Because that's what happened in 2011. Prior to that, balance sheet rolloff also occurred in 2010 as well.

Any questions?

This time of course there is EXTREME Twitter risk added to the equation:

ZH: T-Bill Default Spreads Record Wide

"the resolution of these problems, either the debt ceiling or the government shutdown, is not a simple linear decision tree, but is one where any momentary whim, or tweet, by Donald Trump can abort any compromise at a moment's notice"

During 2011 as the Fed was busy letting the balance sheet shrink organically, Japan and Europe had to step in to steady markets. The U.S. sneezed and the world caught a cold:

"while the T-Bill market is clearly paying attention, equities and VIX have yet to respond: as DB's Dominic Konstam writes, "despite this tail risk and the apparent turbulence surrounding DC, markets remain comparatively unperturbed. Recent spikes in the VIX have proved short-lived"

Recall this was the year of harvesting volatility and the VXX ETF reverse split this past week. The last time this ETF split was last August which was the cycle low for volatility:

And also contrary to ubiquitous belief, the 2011 debt downgrade did NOT hammer long-term Treasuries. Instead, yields collapsed...

Bueller?

The last time Emerging Markets were reaching new highs was 2011, before that 2008. 

Which is why I maintain my assertion that gamblers in U.S. risk assets will pay for the wall. Because instead of a tax cut, someone is going to get a haircut:

But don't take my word for it:

"A sharp drop in asset prices would not necessarily be troubling to the economic outlook, said Dallas Fed President Rob Kaplan on Thursday"

I leave you with this prediction for the future from Forrest Chump: