Thursday, July 20, 2017

The Underwear Will Be Mighty Stained

We are led by the dumbest fucking people on the planet, so when the sheeple realize that their leaders are even dumber than they are the underwear will be mighty stained...

After 2008, it became clear that history's largest debt bubble was imploding. So the de facto Idiocracy looked around to find anyone, and I do mean anyone, who would rescue them from certain fate. Enter Bernankenstein, student of the Great Depression. He's the genius who figured out how to save a debt bubble by making it even bigger. In other words, he wasn't a student of the Depression, he was a student of Dungeons and Dragons. 

And so on from there whereby crack addicts became city mayors and casino owners became presidents. Only the dumbest and most nefarious people enter politics now because their sole job is to package and feed sugar coated bullshit to the Soylent masses self-medicating themselves into fucking oblivion. 

Fast forward eight years, down the rabbit hole straight into the Twilight Zone where we find ourselves now...

Now we are told that across the biggest bubble cities: Vancouver, Toronto, San Francisco, Sydney etc. there is a colossal housing shortage. Despite the obvious fact that there has been a construction boom in these cities the likes of which they have never seen before. In fact, housing construction has became a CORE industry in Vancouver for sure, I imagine in the other cities as well. In other words, they don't have a housing shortage, they have a housing casino, consisting of tens of thousands of brand new empty condos waiting to be flipped back into the parabolic market. These speculators don't want rental tenants because then they can't flip the property on a moment's notice. It's not about income it's solely about capital gain.  

The corrupt mayors and politicians in these cities allowed offshore money to turn their cities into safe deposit boxes. All while the ultra-corrupt real estate industry was more than happy to stoke the public's outrage at the housing "shortage". Among other things, by systematically lying about the vast number of empty housing units. Why? So they could build more speculative condos, that's why. Even as marginalized families worked two jobs and double overtime to afford their monthly payments. And, while the truly marginalized became homeless and then euthanized by fentanyl, while the exact same government said they didn't have enough resources to handle the homeless problem. 

And of course when the bubble bursts every fucking moron and their dog, will realize it was never a shortage, it was a glut.

And then entire streets and buildings will be blighted. But then again, we've only seen this movie once and that was eight years ago, so how would we know?

We are surrounded by FUCKING MORONS.


"No Way Out" is a movie about a KGB mole named "Yuri" who gets tasked with investigating his own crimes, which he doesn't do a very good job of, because instead he's trying to figure a way out before everyone realizes he's the plant. Silly...

Speaking of no way out:

ZH: VIX 20 Is Now The Wipeout Scenario

The VIX just traded at the lowest level since 1993, and according to the linked article, the average since 1993 is exactly 20. So, the VIX is currently at the rock bottom end of the range and a return to mid-point of the range is now a wipeout market scenario.

In other words, returning to a level of volatility seen four times in the past two years (blue line) is no longer an option:

What the article doesn't mention is that speculators are a fly on an elephant's ass. They're always finding some way to blow themselves up. The real issue is the amount of large scale unhedged capital now at risk as hedged funds morphed into mutual funds over an eight year period. And as a tsunami of capital migrated to passive ETFs.

This is how Wall Street used to hedge:

Herein lies the problem, because spot volatility is already rising relative to expected volatility, even though absolute vol remains rock bottom:

Meanwhile, second derivative volatility relative to spot volatility has been uptrending for eight years, which means that there is extreme sensitivity built in to the volatility complex.

The absence of volume is not going to benefit gamblers trapped in the casino

EM Currencies were bid today:


Trapped In The Last Trump Casino

Trump's only "success" will be his con job...gamblers are currently throwing their last pennies away on Chinese internet stocks and whatever other junk they can find...

Fake Fed reflation is done. Fiscal reflation is over before it started. Consumer confidence is collapsing. The dollar is getting monkey hammered. There's only one problem, the Trump "premium" is still in the casino. Because meltdown is all one big buying opportunity...

But don't take my word for it, straight from Donny himself, via Faux News:

It's been that kind of week for Circus Clownius. On Monday he urged the Senate just to ditch Obamacare and replace it later. Or not...

Two days later, the Congressional Budget Office "scored" this latest idea:

Remember the 1990s "White Water" scandal in which a RepubliCon-led investigation into Bill Clinton real estate transactions from the 1970s somehow revealed Monica Lewinsky giving him blow-jobs in the late 1990s?

Well payback is a bitch, because just now we learned that the Special Prosecutor, Robert Mueller is looking into Trump's business transactions.

Investigators are examining Russian purchases of apartments in Trump buildings, Trump's involvement in a New York development with Russian associates in SoHo, the 2013 Miss Universe pageant in Moscow and Trump's 2008 sale of a Florida mansion to a Russian oligarch

They are also looking into the Bank of Cyprus, where Commerce Secretary Wilbur Ross served as the bank's vice chairman...Trump's son-in-law and aide secured financing for some of his family's real estate properties 

Mueller's investigation is said to have stemmed from a money laundering investigation started by U.S. Attorney Preet Bharara, who Trump fired in March

So, what to do? Trump is going to fire the entire Department of Justice, starting with Attorney General Jeff Sessions, who Trump essentially called incompetent yesterday...

Why the fuck didn't Clinton think of that?

All I can say about the Trump Casino, is that time is running out, because Sears holdings (and other left-for-dead retailers) is now leading this fake rally. They're going to sell Kenmore appliances on Amazon. You can't make this shit up...

Amazon versus Sears:

The chart of the week is this one, although it's a run-off tie with about twenty other charts now code red on the meltdown scale.

I mean last chance buying opportunity...

The Trump premium can be clearly seen in the Stock/bond ratio which overlays perfectly with regional banks, both of which are still bid for some unknown reason...

Time to get out of the BitCasino

Apart from Sears, Chinese internet stocks are leading...

Wednesday, July 19, 2017

Nothing Matters Until It Implodes Spectacularly

"The S&P 500 tech sector broke its previous record closing high that had held since March 2000 in the midst of the dot-com and Y2K tech stocks bubble"

"It's different this time"

"This time"

"This time"

"This time"

"This time"

"This time"

"This time"

The Big Long Is End Of Cycle

The Fed has an unbroken "success" rate for imploding every recovery, and they don't like losing. Last week, Fed head Janet Yellen admitted that higher interest rates after an eight year debt binge don't create reflation. Stoned gamblers took her newfound economic skepticism as a great reason to load up on Netflix. They will be shocked to learn that it's not...

"Wall Street found enough concern that inflation might not in fact head back up toward the Fed's 2% target to justify renewed market bullishness"

It was Pavlovian inevitability that economic collapse would eventually be seen as "bullish"...

Last Friday Wells Fargo missed on revenue. Today, Northern Trust missed on earnings...

Put it all together, what do you get?

Fed Policy by Police Squad deja vu:

Blackrock also missed this week

And of course Goldman imploded yesterday:

"Commodity weakness helped drive the decline, registering an unprecedentedly poor performance."

"We need to do better"

Good luck

"Get me some Netflix"


Record valuations and record complacency, two things that implode great together...

The Trump premium is still in the casino, despite the risk premium at multi-decade lows. Why? Because sheeple have a well established tradition of buying first and asking no questions later.

Could be a rude awakening when they realize what they bought:

The asinine rationalizations over the crash in risk premia continues, as one would fully expect at such a perilous juncture...

In a nutshell, what S&P 500 implied volatility at 9.5 is telling us is that if the casino falls (or rises) less than 9.5% in the coming year, then on average hedges lose money. If however, the casino falls more than 9.5% at any point, then someone is going to shit a brick, because options are not priced for that scenario.

Here is some data mining right here:

MW: Who's Afraid Of A Low VIX?

No one. That's the whole point.

Short-term movements in the casino have been extrapolated to infinity and priced as "low risk" by a backwards-looking options market...

Full disclosure: I am always long brick shitting volatility. Extrapolate insanity and otherwise gamble at your own risk.

But why is it the most expensive, that's the question...

"I think people are looking at the remnants of the Trump trade and saying, this is a pretty big failure, and therefore they're knocking out a decent portion of it," he said. "This represents a pretty big move back."

The Trump premium is still in the casino

The BOJ meets tonight (Thursday, Tokyo) to decide how much more funding it should receive...