Saturday, October 21, 2017

Time To Put The Idiocracy Out Of Their Misery

A crash now will cause maximum pain to the denialist idiots who will believe anything and anyone, except the truth. Trump is a litmus test to separate those who will believe anyone including human history's biggest fraud, poser, and pretender...

This is the third RepubliCon tax cut in thirty five years. Tax cuts have an unbroken history of getting markets all lubed up with no place to go, but down:

Any questions?

Trumptards are largely enraged geriatrics sprinkled with a few 20-something man-boys for good measure. One thing they don't have, is time on their side. Which is why their policies all have the shelf-life of a rotten banana. Denial is the only policy they've implemented so far:

Steve Bannon speaking to Trump's base this past weekend:
"If you have the wisdom, the strength, the tenacity to hold that coalition together, we will govern for 50 to 75 years"

Meanwhile, back in the casino... The one thing that 1987, Y2K, 2008, and 2015 all have in common is that the Idiocracy didn't learn their lesson. This will fix the problem, at the source. Whereas 2008 was the story of Wall Street collecting self-imploding (subprime) yield using other people's money, this is the exact same thing. Same movie, better ending. And we know they never remember the ending...

"In economics, moral hazard occurs when someone increases their exposure to risk when insured. This can happen, for example, when a person takes more risks because someone else bears the cost of those risks."

Bailouts, mass layoffs, money printing, ponzi borrowing, negative interest rates etc. etc. Despite three limit down events in the past two years, U.S. gamblers remain oblivious to global risk...

"We didn't blow up last time, so add more leverage"

Per the axiom of reflexivity, insensitivity to risk has led to increased leverage and greater risk. During the pre-2014 global risk rally, gamblers rightly perceived the rising markets and falling volatility as a sign to take profits on volatility shorts. When volatility spiked they were inoculated from loss. In the event, like all good BTFDers they "learned" that risk reduction is for cowards and putzes. The fact that their own risk reduction was the reason they were unaffected, was lost on them. Literally. Fast forward to this latter cycle, and they took falling volatility as a rationale to increase exposure:

This should fix the problem

Friday, October 20, 2017

The Idiocracy Is Wandering In The Desert

The old age home has had a good run, but they're out of dumbfuck ideas...and getting dumber with each passing day. Nature is compassionate in this way. They never see it coming...

"We've had a series of weak, soft readings on inflation, core inflation, beginning in March and the reasons for that are not immediately clear," Yellen said. Reasons for low inflation were "pretty understandable until this year. This year has been a surprise."

Don't try this at the end of the cycle

Of course the chart of the week has to be this one

The denialistic fantasies of demented 70 year olds and Xbox man-boys who just discovered Etrade. At the end of the cycle...

Today's blow-off top did nothing for TechPlosion

As I hypothesized, the round-number-seeking momentum algos running the Dow are now running Bitcoin

"The process of removing accommodation is working well," Yellen said Friday. 

A Con Man For All Seasons

Of course, getting in on zero volume was easy...

Unfortunately, a few of us have seen this Central Bank contrived Jedi Mind Trick before. Last time of course, gamblers didn't assume that the ultra-low volume/volatility vacation from reality would last forever, because it didn't. It ended with the Emerging Markets rally. 

This time they assume it will last forever..

Unfortunately, the EM rally rolled over this week. An advent that was fully ignored by gamblers...

Almost one year since the election and today's blow-off top is compliments of Trump's imaginary tax cut, what else?

The fact that the tax cut will do absolutely nothing for the 'Conomy is of no concern to the bagholding dumb money:

"Where it came out, according to analysts at the Tax Policy Center, was a tax plan that in 2027 would give 80 percent of the benefits to the wealthiest 1 percent of Americans"

This melt-up is only about one thing: Wall Street

And of course momentum

The smart money is selling into the blow-off top. Active Managers have the lowest exposure since the election:

Gamblers are ignoring the 'Conomy

Unfortunately, at the top there's only one person left to con


Careful what you wish for...

30 years ago this week:

Thursday, October 19, 2017

BTFD: Selling Fire Insurance In A Fire

Volatility sellers have not been forced to cover for TWO YEARS straight...So far, they've been constantly bailed out by the global BTFD team. Therefore they've added ever-more size to their position, once again finding the best way to blow themselves up...

"This is the new permanent plateau, featuring maximum risk taking and minimum volatility"

The reason they don't think a crash can happen is because they're not prepared for it. Quite the opposite, deja vu of 1987's disastrous "portfolio insurance", record volatility shorts make it far more likely to happen. Always talking their own book, always...

Last night, Hong Kong crashed -1.9% into the close, and per my hypothesis, China Tech got monkey hammered sending the S&P futures down -15 points overnight. No fear, the volatility compression team got straight to work, however, the more they compress the volatility futures, the more likely they blow themselves up. 

Realized volatility is record low, but starting to rise. Any further (overnight) selling will ultimately feed through to the VIX:

The BTFD team got right to work this morning, but they have their work cut out for them...

In the meantime, the volatility sellers are compressing vol futures which is pushing the volatility curve towards self-imploding backwardation. As we see from VIX ETF volume, the volatility complex will force unwind in backwardation. For the first time in two years...

Once again, they're selling fire insurance in a fire assuming that the conflagaration doesn't get out of control:

As long as there is no more overnight selling, this will all be fine...

Otherwise, prepare for island reversal of fortune aka. MEGA CRASH

Margin of error is nil:

Wednesday, October 18, 2017

"They Don't Tell You You're An Idiot At The Top"

Because they're too busy selling into strength...

Pump and dump worst stock in the Dow. Check.

"How did IBM "beat" again? By once again applying a lower tax rate than a year ago: a paltry 11.0%, down from the already laughable 12.5% in Sept 30, 2016. Had IBM used even last quarter's 12.5% tax rate, it would have missed."

Dow 23,000 compliments of tax avoidance:

Pump and dump Chinese tech IPO. Check.

What's wrong with America in a nutshell:

 The Casino is more important than the 'Conomy: 

This is going to be a hard lesson to learn for the casino class...

It's too late to worry.

"Indeed, when comparing the daily index levels for the S&P 500 in 1987 with the progression thus far in 2017, they appear to follow an eerily similar path"

But Stovall said there are key differences between this market and the one from 30 years ago.

"First, the market this year is not exhibiting the same signs of euphoria it was back in 1987"

Jumping to number three:

"interest rates are much lower now than they were 30 years ago"

Because the 'Conomy's been outsourced. Which is so obviously "bullish"

"this bull market is much older than the one that ended in 1987"

I can't argue with that logic