Sunday, July 31, 2016

All Ponzi Schemes Collapse Suddenly And Violently

They're a mass delusion propelled by greed and belief in a free lunch...

The definition of a Ponzi scheme is insolvency disguised by liquidity. By total coincidence, Central Banks use liquidity to disguise insolvency. Bernie Madoff is wondering why he's the one in jail. The fact that Central Banks are willing to buy ever-more financial assets doesn't change their underlying value. Paying a trillion dollars for a brick doesn't make the brick worth a trillion dollars...

The Bank of Japan already owns over half of all ETF shares, and the the majority of Japanese Government Bonds. On Friday they announced an expansion of their ETF buying program. The Japanese Nikkei was up .5% on the news and the USDJPY tanked:

Japan and Europe with the combined Central Bank balance sheet (red).

Contrary to Idiocratic belief, what some fucking moron paid for a stock yesterday has no bearing on what it's worth today...

Not impressed...

Yen Risk OFF

Yuan Risk Off

Nowhere To Hide

Wall Street's "Safe" energy play imploded late last week. Exxon, the only Energy company still making money posted its smallest profit since 1999, missing analyst expectations by 35%...

The Exxon/Energy sector ratio has rolled over...

U.S. Stocks were 100% correlated to oil back in January. Currently they are negatively correlated, with stocks rising despite oil's accelerating decline...

Only a tool assumes that will continue now that Exxon is rolling over...

Nothing matters until it collapses...

The Year of Living Dangerously

One year of extreme rising risk totally ignored...

Yuan devaluation
JPY carry trade unwind
Central Bank loss of control
Oil collapse
Deflationary implosion
Global GDP collapse
Global financials implosion
Global anarchy

Flight to yield:
The low volatility implosion Fund (red) with S&P downside gaps...

The Emperor Has No 'Conomy

Post-2008, the Idiocracy chose fake-believe over solvency, because the status quo is in self-destruct mode. Along with the posers who believe in it...

Obama's pseudo-recovery was all borrowed money

GDP less Deficit:

Fed Funds Rate

"Who needs 'Conomy when we have stocks?"
Two year yield

ZH: July 30, 2016
In 50 years this has never failed to trigger a bear market...

Saturday, July 30, 2016

Manic Blow-off In Tech

Tech moon shots and semiconductor acquisitions. Wondering why the Nasdaq has been outperforming in the past month? Wonder no more...

Semiconductors are the quintessential cyclical industry that historically leads in the early part of the economic cycle, peaking early. Recently they went parabolic due to several 
mergers and acquisitions...

But first, a primer on bubbles:

MarketWatch: Some economists argue that the economy has just been bubble after bubble and that we’re doomed to repeat this cycle.

Greenspan: Well, I agree with that...what we’re dealing with is that both a necessary and sufficient condition for the emergence of a bubble is a protracted period of stable economic activity at low inflation. So it is a very difficult policy problem. I do believe that central banks that believe they can quell bubbles are living in a state of unrealism.

One chip-maker that usually does peak late is video game graphics company Nvidia:

Texas Instruments



Of course there's no bigger bubble than this one...

Consumer staples P/E Ratio:

Friday, July 29, 2016

LEVEL 11 Fake Believe

This week U.S. GDP turned -2% negative ex-deficit - what an honest person would call "recession". What Obama calls 'Conomy...

Recession stocks lagged badly as the financial cycle finally converged with the economic cycle...

USDJPY resumed its epic collapse

Deflation resumed its downtrend, and oil dutifully followed...

Junk bonds, Energy stocks (aka. Exxon), and Emerging Markets rolled over in the direction of oil...

Global financials resumed their weakness as the next rate hike was postponed until never...

Cyclicals enjoyed a good end of cycle short-covering bounce

Avis car rental:

Valero Refining


Growth and momentum played catch-up sort of...

Skynet catapulted Big Cap Tech and still couldn't get the Nasdaq to a new high...

Complacency was rampant as the VIX hit the lowest level since last August

An entire year of risk totally ignored

"When you need that extra push over the cliff, where can you go? To 11. Exactly..."

The Status Quo Took 7 Years To Consume

Copious dunces or reality. Choose carefully...

The first major Yuan devaluation was one year ago, meaning an entire year of extreme risk has been ignored.

The S&P is trading in the narrowest range in 40 years, while diverging from every other risk asset on the planet.

MW: July 29, 2016
The S&P 500 Hasn't Done This In 40 Years. And it's Bullish

It's bullish when stocks ignore risk. What else could it be?

Current divergences:

Deflation/Treasury yields
Small Caps
High Yield/Junk Bonds
Carry trades
Rest of World


S&P / Russell Ratio:

Sears, Credit spreads, US 10 Year, German 10 Year, Deutsche Bank, Global trade (BDI):

The Lamestream Narratives Are Guarded By Zombies

We'll always be rich, they'll always be poor

Trade is free, and so is money

2008 was a one time event resolved by borrowing more money

Billary is a safer choice than Trump

Recessions only occur when the Fed raises interest rates

Daily mass killings around the world are all random and uncorrelated

There is no price to be paid for two thirds of the planet being continuously mired in poverty

Printing money is the secret to effortless wealth

Politicians and Central Banksters have this all under control

Overnight Risk

Last night, the Bank of Japan underwhelmed global markets with its latest "stimulus" package. BOJ Governor Kuroda has ordered an inquiry as to whether or not 25 years of CasinoNomics is still working:

In the event, Treasuries and JPY fell while stocks went overnight manic mode, what else?

Nevertheless, the status quo is on borrowed time and money...

Consumer staples are finishing up their first down/up sequence:

Exxon aka. "Energy" is getting monkey hammered on a weak earnings report:

Amazon is finishing up one more moonshot...

And Biotech is now leading...

If you think that's all bullish, then you deserve what comes next, because Skynet only has one way out...

The tightest trading range in 20 40 years. Visualized: