Monday, March 11, 2019

Ponzi World Is Ending

The third false rally of the third false bubble. Only the most dedicated denialists don't see this coming aka. going. Having learned nothing from their last clown, this one was sent to finish the job...

Mass shootings, fentanyl suicides, industrial-scale human trafficking, biblical climate change, de facto global slavery. Life in a human toxic waste dump. One clown to rule them all. Looking back at past decades, Disney Trump was a step migration along America's journey from land of opportunity to land of opportunism:

"Opportunism is the conscious policy and practice of taking advantage of circumstances – with little regard for principles or with what the consequences are for others."

"Drawn by the promise of the joker and the fool
by the light of the crosses that burn"

Ponzinomics, Entropy, Fraud, Corruption, Denialism, Artificial Intelligence, Fake News, Globalization, Environmental desecration, Corporatism 

In order to keep my most recent posts near the top of the blog, this post will be an open-ended stream of consciousness. The most recent ramblings will be at the top. 

Date: May 25th, 2019
Label: Caveat Emperor

This decade kicked off with a bailout for Wall Street to punish them for collapsing the global financial system. And appropriately it's ending amid rampant fraud and corruption "as usual". 

All Ponzi schemes end when the last fool is found. This one is no different. If you don't know who the cuck is when you're sitting at the poker table, then it's you.

It appears to have been long forgotten that no one implodes casinos better than the Game Show Host in-Chief

I just perused Jimmy Kunstler's latest defense of I, Clownius: The Emperor Strikes Back. As always a great storyteller. He astutely sidesteps Trump's grand canyon character deficit while completely ignoring the glaring incompetence. Getting straight to the main point that these attempts by Democrats to overturn the illegitimate election, are illegitimate. Then he sums it all up by saying that the collapse of DonnyLand is imminent. More pablum for brain dead zombies being led down the road to Perdition by today's con men. 

Which sadly sums up the state of politics at this parlous juncture - two sides concerned solely about power struggle while ignoring the deleterious effects of two years of unfettered corruption. 

The sum total of this past two year vacation from responsibility will be viewed in hindsight as:  the creation of a mega bubble; a borrowed tax cut for the ultra-wealthy; Higher interest rates for the middle class; A disastrous trade war that started off with fake concern over the trade deficit and one year later metastasized into an hegemonic cold war with no exit strategy; Deregulation of Wall Street; Non-stop attempts to kill middle class healthcare; The elimination of the EPA; Fracking in every corner of the country; Record non-war government deficit. All while senile jackasses inform us that violent collapse is the booby prize for the demolition of democracy.

Third World class in every sense of the term. 

Keeping the Dow pinned to all time highs by every machination possible - from Central Bank money printing to leveraged stock buybacks was the secret to keeping this con job going and going and going. Until it reached a self-fulfilling sugar high, based upon the realization of massively lowered expectations fueled by non-stop bullshit. 

A two year vacation from responsibility, now ending badly

“The April durable goods report was bad, particularly the details relating to capital goods orders and shipments. Coming on the heels of last week’s crummy April retail sales report, it suggests second quarter activity growth is sharply downshifting from the first quarter pace”

The inventory channel stuffing to make the first quarter is downshifting:

Retail earnings were a complete disaster this past week, with blow-ups from Kohl's, Nordstrom, JC Penney, Lowe's, Foot Locker, and Urban Outfitters:

15 year high consumer sentiment is now "driving" GDP growth of 1%, 4% of which is borrowed money. An honest man would call that a recession. 

We've never seen anything this fraudulent:

The right wing hates AOC with an unbridled passion, because even though she has an infinitesimal fraction of the power of Trump, she has the power of inception. And like Bernie Sanders, she knows a con job when she sees one:

“And that would effectively increase the stock price, right? And I’ve done nothing to change my company, right? Nothing to make my product more valuable, my employees happier, I haven’t invested in training for the workforce to make the company inherently more valuable, but I’ve inflated the stock price,” she said. “How is this different than a pyramid scheme?”

Don't forget, buybacks also allowed insiders to cash out of the pyramid scheme, at the very top. 

"Last chance to get out before they realize we scammed them in the first quarter"

"They ignored AOC, because they placed their faith in criminals instead. The rest is history"

Date: May 23rd, 2019
Label: Smash Crash 2019 In Progress

The past week summarized.

Any questions?

Markets crash when too many dunces believe what is inherently false. Because they are in no way positioned for reality. So it is now, that the sheeple at large still believe Trump when he says that trade wars are "good and easy to win". Notwithstanding over a year of inconvenient truth to the contrary.

Because ironically, the country that prides itself on freedom of speech is now run by a sociopathic liar:

In other words, while the Dumbfuck-in-Chief is telling his base that the trade war will end imminently due to China capitulation, China's leader is telling his people the truth, which is to prepare for a long fight. 

It's clear that the Creator had in mind extreme humiliation prior to ending this Roman Circus:

Remember October's Hindenburg Omens? They warned of what was to come. A Hindenburg Omen merely means significant (> 100) new highs and lows at the same time. An unusual occurrence that often portends a top. 

This time around, too few stocks are making new highs to trigger the warning. Which contrary to ubiquitous belief, is not bullish...

At today's low, the S&P had retraced the entire trade war bounce which was rejected at the 50 day. The rest of the world is already making a new low:

The Nasdaq is leading the way down as momentum names get crushed:

Treasury bond shorts are getting annihilated as ten year yields are at an 18 month low:

The big carnage today was in oil which broke the 200 day on convincing volume. The war with Iran can't come fast enough to offset the trade war-induced global glut. Oil bulls heading for a margin call.

"If there’s one person who’s enjoying the trade war with China, it’s Donald Trump"

EMs, new low

The usual denialistic wishful thinking based upon data mining the recent past. 

Looking at a broader timeframe than the one in the article and we see that the market is not oversold at all.


Speaking of BTFD:

This is the 20 day moving average of overnight gaps, which have been bought with both hands in the U.S.:

Got long weekend risk?

The Lies Get Larger At The End Of The Cycle

We're at that point in the cycle wherein the salesmen have to try that much harder to con the marginal dunce, to make the quarter. It's Ponzinomics, if you didn't buy your degree from Wharton, you wouldn't understand it. The biggest jobs miss since 2008 is the catalyst for a 50 point S&P short-covering rally, so far...

The casino was reaching prior oversold levels, and bounced at the 200 day. Both open gaps above the market just got closed, leaving multiple open gaps below the market, going back to December.

The Transports were multi-decade oversold at the end of last week:

Some bimbo on CNBC last week, it doesn't matter which one, was advising not to worry about the Transports, because the Railroads just made a new high.

Which is what happened in October 2008:

The long awaited Boeing crash has arrived compliments of 737s falling from the sky. Somehow the news always corresponds with parabolic speculation coming to a screeching halt. 

The largest weight Dow component was down -17% from recent highs at the open. Volume is ~8x average at midday.

Chinese stocks are driving this short-covering rally back into the weekly island:

Oil is back-testing the broken trend-line deja vu of December

Retail sales in January "beat" expectations, but December was revised lower still. The fake wealth effect took a heavy toll. This latest (delayed) data will revise down Q4 GDP and Q1 GDP, as GDPNow just fell back to .2%

Don't worry, it's only retail apocalypse:

"...just two months into 2019, it sure looks like the U.S. retail scene will continued to be plagued by a stunning number of store closures — and perhaps quite a few retailers going out of business for good."

In a single 24-hour period last week, Gap, J.C. Penney, and Victoria’s Secret announced they would be closing more than 300 stores combined"

Retail short-covering another last leg of the stool:

I had an epiphany today that one of the drawbacks with Ponzinomics, among a few others, is that the downside of the Ponzi cycle takes its toll on certain professions - realtors, investment advisors for example that rely upon steady asset price inflation. And when that goes in reverse, it feeds back into 'Conomy in the form of lower commissions.

Of course then the reasons to buy must become more urgent and hence more specious. 

Which is where we are in the "cycle"

I call this the crash ratio because it shows that the casino is held aloft by fewer and fewer very large stocks

This chart shows that last year's 10% and 20% decline have not deterred Skynet from shorting volatility

This should do the trick...

Sunday, March 10, 2019

An Inconvenient Con Job aka. "No One Saw That Coming"

Fortunately, everyone has a good excuse, they can just say they believed Trump...

For several years after 2008, skeptics of printing money to inflate asset values described the policy as "Extend and pretend". However, after the 2016 election it was reinvented as "Greatest 'Conomy ever". It was the exact same con job, under new management featuring higher interest rates and reduced casino liquidity. A bigger circus and no safety net. 

Here we see U.S. homebuilders with rest of world (ROW) stocks. I knew I had seen that chart somewhere. 

There are several reasons why Larry Kudlow still predicts 3% GDP in 2019, all data to the contrary. First off, because he's a dunce and a con man. Although that's strictly my opinion based upon listening to him for thirty years. Secondly, the government shutdown has obfuscated and further delayed already delayed backwards looking data. Third, economists right now uniformly believe that the impact of laying off 800,000 Federal workers for a month and forcing them to use local food banks, will "rebound" in the second quarter once they pay off their payday loans at 400% annualized. Fourth, they assume that tax refunds absconded from the middle class to the wealthy won't impact 2019 GDP, because they ignore the fact that the marginal propensity to spend is far higher at lower incomes. Fifth, they assume that the critical December holiday sales collapse was a "fluke", as was Friday's payroll collapse. But most importantly, they are all ignoring the collapsing fake wealth effect which is what the past ten year "expansion" was predicated upon. Which I will now discuss next...

The reason why economists can't predict recession is because economic data is lagged. It's impossible to predict the future by looking in the rear view mirror. Markets usually lead the economy, however, in this cycle the relationship between markets and the economy was inverted via the trickle down "fake wealth effect". The operational gimmick during this entire cycle was the well known "quantitative easing" policy of buying up government bonds in order to force investors further out onto the risk curve. Global policy-makers expressly pursued this policy to generate an artificial sense of economic wealth and well-being. The long-term net effect was to drive a chasmic gap between market valuations and long-term earnings potential while wholly desensitizing speculators to risk. On top of that shit pile add in record stock buybacks which are also highly cyclical. Billions in fraudulent Chinese IPOs. A tax cut for the rich paid for with higher interest rates for everyone else. A year long trade war. Cap it off with a reversal in Fed balance sheet liquidity now into the second year. 

All of which means that the new "leading indicator" is speculative appetite, best indicated by pot stocks:

Meanwhile, the fake wealth effect is going in reverse.

Here we see that household (total) wealth as % of GDP (red line) reached a new record high in 2018 and then rolled over in the fourth quarter. The blue line is the median sales price for homes:

If we look at the rate of change of home prices on a longer-term view, we see that there was never a time when a negative decline did not lead to or precede a recession.

Going back sixty years:

Going back to the household net worth graph and this time overlaying the Fed balance sheet, the question on the table for anyone who can fog a mirror, isn't why this is happening, it's why do they assume it's not happening?

What matters is that this time around everyone 100% agrees with my opinion on Larry Kudlow.