Monday, January 6, 2020

Who Is Ready For Super Crash? Exactly.

Non-stop lying to get Trump re-elected will be in the category of astronomically unaffordable, for true believers. Ironically, putting the system at risk by fearing democracy. Like all con jobs, this epic fraud will be measured solely by how many useful carbon units believe in it, aka. Super Crash...

No surprise, war is now a consensus trade:

"Bombing Iran will keep GDP bid through the election"

Where to continue...

Begin with the fact that outside of Tech stocks, global markets have been in a bear market since the January 2018 melt-up, two years ago. As we see below, that melt-up coincided with the high point for S&P 500 new highs.

2018 was roughly a one year bear market, and 2019 was a one year three wave retracement to a lower high. And yet we hear all the time that "global stocks" are at an all time high. It's a load of bullshit. U.S. Tech stocks are at all time highs.

Which of course, is why the crash ratio is so extreme right now:

NOTE Nasdaq new highs lower pane. The lower high in lower highs lines up perfectly with the market tops in 2000 and 2007:

Emerging Markets are rolling over, and the overnight selloffs are getting bought with both hands in the U.S.

Small cap value stocks have gone nowhere for two years straight - these are mostly regional banks and small energy companies. The right shoulder is looking a lot like the left shoulder two years ago:

Bulls should never want to see fracking stocks "leading" the rally as they were today. Because that means it's ending.

The average stock NEVER confirmed the bull market:

A reminder on sentiment AND positioning:

Pharma confirms - the Cheech and Chong high is wearing off, on the right shoulder:

Aside from mass delusion and funny money, this market has one thing going for it:


Who is ready for currency crisis?


I predict VIX at 146 to complete the trifecta. I'm not in this for chump change

Sunday, January 5, 2020

Trumptopia And The Age of Lies

History will say that Trump was the grand finale for an entire decade of stimulus-sponsored lies...

Which is why so few see the Trump Circus ending. It's been that entertaining.

What history will say about this Roman spectacle:

2008 definitively proved that the Anglo-American post-WWII creation known as "Globalization", was a colossal human failure. It failed to raise the standards of living of the developing world, yet it did a fine job of collapsing the developed world middle class. It also put the natural environment at the brink of catastrophe. However the aging populace at large was in no way ready to accept failure. Several years of Japan-style monetary bailouts later, enter Trump and Boris Johnson. The white nationalist saviours with the mandate to rearrange Globalization to suit their own marginalized constituency.

Somehow Trump succeeded in convincing a downtrodden blue collar working class AND the big money Wall Street elite that he was their guy. He was a populist billionaire who lived in New York penthouse apartments and had a penchant for gold faucets. A Caligula of renowned sophistry and deceit, who imploded his own inherited business empire and then reinvented himself as a success on reality TV. On the way to becoming president. Outside is America. 

His political strategy was to scapegoat the entire rest of the world for all of America's self-inflicted problems. He was the right man for the job, having a non-existent knowledge of history and world affairs. This gambit would require as little knowledge as possible as to how things really work in the real world. The goal being to explode the "deep state" with all of its ties to the status quo.

Trump's geopolitical mission impossible was to maintain and advance America's interests abroad while at the same time withdrawing American leadership from the world stage back to Twitter. 

His number one goal was to defeat Chinese hegemony in Asia by imploding the world's second largest economy and marginal buyer of everything on the planet. 

As I write, so far, so good.

In order to maintain control over a majority of the U.S. populace using only a minority of the popular vote, democracy needed to be duly destroyed. By whatever means necessary, and whatever foreign assistance necessary. He had ample Russian assistance in this regard. 

Along the way, the Federal Reserve had to be commandeered to political purposes in order to monetize the astronomical pro-cyclical deficit which had cratered liquidity in financial markets.

The net result was human history's largest stimulus-driven asset bubble, using on the order of 10% (GDP) combined fiscal and monetary stimulus annualized.

At the end, the populace at large was deep in a stimulus-addled stupor, amid record investor optimism. Wall Street analysts had systematically raised their market projections to keep pace with the melt-up. Economists of the day were as always predicting the future by extrapolating the past.

The crash came out of "nowhere" and was devastating. Global central banks were powerless to stop the meltdown, having squandered their dry powder creating the virtual simulation of prosperity and the mega asset bubble. Deflation was in the extreme. Sovereign debt markets collapsed among the weaker nations. Setting off a 1997-style currency crisis. 

Rage was extant, as confidence in globalized capitalism collapsed back down to 2009 lows.

It was as if the entire decade of bailouts had never even happened.

The age of lying was over, and the inconvenient truth was large and in charge.

Hard to believe, I know.

Saturday, January 4, 2020

A World Of False Promises

“Money is human happiness in the abstract; and so the man who is no longer capable of enjoying such happiness in the concrete, sets his whole heart on money.”
- Arthur Schopenhauer

"At the end, what passed for consumer confidence, was the compulsion of consumers to borrow unlimited amounts of deflationary poverty capital at record low interest rates based upon the fake wealth effect emanating from a mega stock bubble inflated by a Fed-monetized 5% of GDP deficit. They were shocked that no one had tried it sooner. And even more shocked when it exploded in their faces, amid record optimism"

One need not wonder why we face a rampant mental and physical health crisis with today's corporate Disney World now entirely at odds with reality. The ad-sponsored false promises propagated by today's corporate Matrix bear inverse correlation to the actual future. But as long as they can keep getting rolled over one quarter at a time, we are told to "believe" in the advertised version of the future.

In no way can this Disney fantasy and its fraudulent assumptions produce inner peace or internal gratification. Quite the opposite, it's intended to create a perpetual desire for "more". A capability this model has fully accomplished. Now featuring a mindless consumption Borg of competitive conformity, with nil chance to find true happiness. 

More and more people are turning to Eastern philosophies and practices such as yoga and meditation, in order to fill the black hole of humanity created by the modern lifestyle. This can work at the individual level, but in a disconnected society of narcissistic cyborgs, individual pursuit of zen happiness can only go so far. Islands of inner peace floating in a toxic waste dump of humanity. The full extent of what corporations have destroyed remains well hidden behind the Disney facade of ad-sponsored bullshit and self-medicated fake happiness. The people who propagate this failed way of life themselves scarcely human. Everything is fake now, especially the people.

Which gets us to tomorrow, the busiest day of the year for online dating. Apparently, a lot of single cyborgs make a New Year's resolution to get back out into the Matrix and find a superficially compatible Borg unit:

"If you're single and your New Year's resolution was to rev up the romance, then Sunday, Jan. 5 might be the best day to immerse yourself in dating apps. Dubbed "Dating Sunday" or "Singles Sunday," the superficial holiday is the busiest online dating day of the year...It's the first lonely holiday after the New Year."

I couldn't have said it better myself: A superficial iPhone holiday driven by rampant loneliness in a sea of competitive conformity. No wonder sex robots are flying off the shelves. We have a society that can no longer differentiate between being with a mannequin and being with an iphone zombified human.

In the Maslow's hierarchy of needs, acceptance of facts is at the top of the pyramid. Whereas today, acceptance of facts and reality doesn't exist. Until these people are capable of facing the truth, nothing will improve. 

No surprise, central banks have figured out how to manipulate social mood. Simulated happiness and simulated prosperity are one and the same now. Disney markets are what reassures the Mickey Mouse Club that everything is A-ok.

Remember back in August when everyone was saying recession is imminent? Google Trends "recession" interest was at a decade high. Well, the Fed fixed that with balance sheet expansion, and the trickle down fake wealth effect:

In August consumer sentiment was at a three year low:

The 10 day call/put options ratio exceeds the left shoulder melt-up and subsequent VixPlosion:

Further to the topic of simulated prosperity, recall that the Fed added RECORD amounts of stimulus to calm the overnight repo market into year end. Which is what drove the fourth quarter 2019 melt-up. Stimulus that is now set to roll off in the weeks ahead. Given that these were liquidity operations targeted at short-term assets, they will automatically shrink the Fed balance sheet as they mature, unless the Fed explicitly rolls them over. In other words, deficit-driven quantitative tightening is back, potentially as soon as Monday. Which, corresponds with the first full week of trading in the New Year. Should be interesting to say the least.

Recall on the chart below, January 2016 when Fed tightening blew up global risk markets (S&P -15%), and of course again last December (-20%).

Notice the article doesn't even mention Fed liquidity reduction. The term clueless doesn't begin to describe this society.

Jerome Powell:

Friday, January 3, 2020

Prepare For Hardest Landing

The Banana Republican playbook is a total disaster: geopolitical, economic, financial, environmental, healthcare - just greed all around. The lesson NOT learned from 2008. The party of greed, hate, war, and circus clowns has one more lesson to learn: GAME OVER, MAN...

I am 100% convinced Trump is the Anti-Christ. Although aside from his sordid personal life, ongoing tax evasion, serial bankruptcy, hate mongering, incessant lying, and abuse of power, I have no actual proof. Nevertheless, every time the casino hits a new all time high he comes out with some Black Swan announcement that tanks the market. This time it was war with Iran. The one country in the Middle East the U.S. hasn't tried invading. It would be highly ironic and yet fitting if this is the event that begins meltdown. After all, most of the Faux News audience couldn't find Iran on a map if their life depended on it. They just know that we are the good guys and they are the bad guys...

Prepare for Keynesian bombing of foreigners

aka. Republican Second Term Election Strategy 101:

This is the end of the oil rally

As of mid-day Friday WWIII is getting bought with both hands in the U.S., but the overnight is where the damage will be done...

It took several months but Zerohedge finally admitted that the Fed is monetizing Trump's deficit. This has been obvious from the first day's of the repo crisis, and something the Fed themselves have admitted. There is something about being a Trump supporter, a gold hoarder, and an ad-sponsored conspiracy propagator that prevents the truth from seeing the light of day. I can't put my finger on it. 

Nevertheless, contrary to Zerohedge assertion, this is not true "helicopter money", since none of it has been made available to the masses. This same type of monetization of the deficit took place back in 2009 during the darkest days of the recession, however, it has never been attempted at record over-valuations and in a Tech mega bubble.

A fool's errand of the highest order.

We are still very much in a deflationary environment, which is about to be made 10x worse when the mega bubble explodes. At that point, I expect it will take some time before the Republicans decide to bail out the middle class, if ever.

Time, and rioting.

In the meantime, the death of the Treasury bull market has been greatly exaggerated. I expect a new plunge in long-term bond yields to all time lows approaching the zero bound.

Full disclosure, I am not long Treasuries at this juncture. And as we see from 2009, I would consider such a position a rental.

This is my opinion, not advice.

I also expect the very crowded gold trade to get duly monkey hammered. These speculators have been front running central banks all year, under the premise of imminent "reflation".

We've seen this movie before and it doesn't end well for gold.

More importantly from an economic standpoint, after the crash and the rioting, I expect a sea change in political mindset. Eventually.

When today's mega bubble in arrogance explodes, today's exceptional Idiocracy will realize they are not too good for "socialism" after all. Quite the other way around. How could they know anything about "socialism", when they think that capitalism is a decade of monetary bailouts for the rich. What I mean in any case is merely a rebalancing of the economy back to where it was in the two hundred years before Supply Side criminality became the order of the day.

When they finally admit that they don't know anything about anything, that is when I expect real helicopter money to arrive. Around the same time that Sean Hannity is no longer the most popular vacuous blowhard on television, and Big Donny is wearing an orange jumpsuit. Handed to him by his own party of delinquents.  

In the meantime, one of these bailouts is not like the others:

Prepare for hard landing

Thursday, January 2, 2020

President Madoff 2020

Those who don't see anything wrong with non-stop lying, are about to learn the lesson of a lifetime...

I assert full copyright to the book and movie of the name "The Big Long". Should be a huge hit - exact same plot as last time except Donald Trump as lead con man. Once again starring the same guy who became famous by predicting the last crash. 

Ignored all over again by a society deep in narcoleptic coma...

Imagine if there was a guy, call him Michael Burry, who warned about the 2008 subprime time bomb, made millions of dollars shorting it, and then was featured in a book and movie about it - would anyone believe him the next time he warned of a bubble? Of course not. We live in a total fucking Idiocracy...

New all time high for extreme greed:

Unlike perma-bears such as myself who have warned for a decade straight that simulated prosperity will end extraordinarily badly, Burry only warned six months ago about the index bubble. And yet he too has been assiduously ignored.

"Do ETFs threaten the market's structure by making it too easy to pile into — or bail out of — the same stocks or bonds at lightning speed?

That's the public claim of Michael Burry. Burry is famous for appearing in "The Big Short," a book about his bet against mortgages ahead of the 2008 crisis. Burry, who ran Scion Asset Management, has called ETFs and passive investing a "bubble." He says ETFs put too much fast money into too few concentrated positions."

That assertion is "fake news," Matt Bartolini, head of ETF provider SPDR Americas Research, told a gathering of financial advisors at the Schwab Impact conference in San Diego"

No conflict of interest there...

Here we see the net effect of passive indexing - a chasmic gap between market breadth and the senior market indices. What happens when ETFs put too much fast money into too few concentrated positions:

Recall, the Rydex asset positioning ratio is warning as to what's coming:

The Hindenburg Omens are warning what is coming.

Hindenburg Omens warn of a bifurcated market consisting of significant new highs and new lows at the same time:

On a volatility adjusted basis, the market peaked a month ago. New highs peaked several weeks ago:

"Safe havens" are entering third wave down:

Gamblers are thoroughly drugged by the virtual simulation of prosperity and its acolyte QE.

Whereas the 2018 top was led by pot stocks, this top is led by real drugs.

The kind that kill you:

Emerging Markets are leading today:

The weekly view

Another year of trade war, leading to higher tariffs, another truce, and a completed three wave correction:

AMD was the best performing stock in the S&P 500 two years in a row. Now in parabolic blowoff mode:

Move along, nothing to see here

Wednesday, January 1, 2020

Fool Me All The Time, Shame On Me

Trump is the Bernie Madoff of this era. Nothing more, nothing less. The only difference is that everyone knows in advance that Trump is a con man. This time there is NO excuse...

Apparently when this became the longest bull market in U.S. history, that's all it took to convince everyone this would go on forever. Because prior to Trump's non-stop bullshit, they had their doubts. Today marks two decades of asset bubbles and crashes. Yet somehow the same morons keep getting fooled by the same psychopaths. This time with help from a renowned expert at bilking casino gamblers. Because they couldn't do it without him...

"We need Trump this time"

What history will say about the decade of bailouts for the ultra-wealthy:

Seven years of maximum monetary stimulus. Implosion (2016). Two years of maximum fiscal stimulus. Implosion (2018). And for the grand finale, one year of ($2 trillion) combined fiscal and monetary stimulus (~10% of GDP). 

No one saw it coming.

Today's Bernie Madoff acolytes at central banks and the financial services crime syndicate have herded this society off a cliff. Over the past several decades, corporations found ever-new and "innovative" ways to maximize profit at the economy's expense. Cannibalizing the economy to make the quarter, while using debt to backfill the demand crater. A relentless middle class strip mining operation that has led to greater and greater deflation and lower and lower interest rates. Having dispensed with real pensions, companies found a new and creative way to generate simulated retirement - 401k retirement savings plans to expedite the final transfer of middle class wealth to ultra-wealthy corporate insiders cashing out. In conjunction with corporate-funded stock buybacks to give the illusion of profit growth. When in fact aggregate profits haven't grown for years.

Aggregate pre-tax profits peaked five years ago:

This entire fraud, happily propagated by the media via the Dow Jones Illusional Average - which in no way represents the average stock - has done a fantastic job of concealing the damage to the underlying economy. Now featuring a U.S. stock market "at all time highs" excluding ALL of the economically cyclical industries: Banks, homebuilders, transports, autos, industrials (ex-defense), energy, retail, construction. None at all time highs.

This has never happened before in U.S. history. A one year+ Dow Theory divergence:

It's the "miracle of indexing", we are told. The idea that a handful of stocks bid up to unprecedented valuations can continue elevating the permanent plateau while everything else implodes in real time.

We have been told this same fairy tale three times in the past two decades. Each time, the exact same morons believe it.

All this to say that social mood will be the final arbiter of this con job, when greed turns to fear on its way to panic and stained underwear.

Bonus is in the bank, it's time for real selling.

Here we see $USDJPY carry on the verge of risk off for only the second time in a year. Aligning with the global third wave down.

Recall one year ago this week, $USDJPY flash crashed at the end of wave '1' down. 

Leaving this much of the market behind is recipe for wholesale collapse without a safety net:

As it was in 2008, rails are outperforming trucks. For now...