Wednesday, August 16, 2017

"Another Smash Crash With A Twist Of Lemon. Please"

The definition of insanity is sticking your head up your own ass over and over again each time expecting a different result...

The casino is setting up identically to August 2015. The only problem for gamblers is that it's not 2015.

The week of August 20th was options expiration. 


The proximate catalyst for the 2015 flash crash was Yuan devaluation which was in fact preceded by EM currency rollover:

Low volatility was reversing

Speculation was rampant

The Energy sector was imploding

Breadth was extremely weak
This shows 2014 and 2015

Europe had rolled over

Japan had rolled over

The Fed was clueless
Albeit, that's nothing unique to 2015 or now mind you

The twist of course this time is the fact that it's the end of the cycle. Time to get out of the casino...

Tuesday, August 15, 2017

Eight Years A Central Bank Muppet

Zerohedge posits the relevant question: why did the muppets just buy the nuclear war dip? They offer the Wall Street axiom that the end of the world only comes once and you can't make any money off of it. However, the truth is that the hairless monkeys have been well trained for eight years to buy every dip with both hands, regardless of risk...

Hence, I'm not betting on the end of the world, I'm betting on the end of denialistic zombies who've perfected the art of knowing everything by knowing nothing.

"This is a six sigma permanent plateau"

"Hold this level until everything is ready for simultaneous collapse"

Here we see that the nature and character of this rally has changed in that second derivative volatility remains extremely elevated:

Small caps indicate why this is likely the case, as market breadth has deteriorated substantially.

Here small caps are shown with the S&P VIX:

The "world is saved by changing nothing" rally vis-a-vis fake reflation:

Amazon Denialism At Level '11' Asinine

I thought that when Amazon got monkey hammered this past quarter for a HUGE miss on earnings and weak forward guidance, that would put the 'Amazon is putting retail out of business' fake meme out of operation, but as always I totally underestimated the Idiocracy's overwhelming compulsion to believe ANYTHING, except the truth...

This week due to earnings releases for retail, the sector is going into bloodbath mode across the board. But don't take my word for it, straight from the horse's ass:

"They say, 'Amazon is almost back to a [$1,000 stock price] after a mediocre quarter. That's what I want to be in.'"

"There's just a tremendous fear of Amazon everywhere,"

Sporting Goods panic mode

Outlet panic mode

Auto Parts panic mode

Coffee panic mode

Cheesecake panic mode

Groceries panic mode

"Then Amazon took over the entire economy, right before it collapsed. No one saw it coming"

Rich Man's Panic

The gambling-class are wearing rose coloured welding goggles. Fantasy narratives have been chasing capital around the globe for an entire year now. But don't take my word for it...

"Any comparisons to past overheated markets are ridiculous"

"world growth will continue to be good"

Despite the fact that the Yen is now the world's strongest currency...


This entire past year proves without question that Social Mood is the ultimate arbiter of risk markets. I wouldn't bet five cents on Prechter's serial-wrong bond yield predictions, but his assertion that Social mood drives speculative risk markets has been put to rest...

Recall last November, prior to the election, market pundits unanimously predicted an election victory for Hillary Clinton. Which meant that the deflation trade was on in full force. They also predicted that a Trump victory would pound stocks at least 10% lower. Upon Trump's election, the S&P overnight futures were limit down on the news. It appeared that a Black Swan event had just occurred. However, by the time the U.S. markets opened, most of the overnight losses were erased and the market was racing higher. 

Because on that day, the deflation trade - dividend yield and growth - got tossed out the window in favour of the beaten down Financials, Energies, and cyclicals which had been shorted for almost eight years straight. It was a colossal short-covering rally. In the event, Emerging markets got pounded lower (wave b, below) since reflation was a U.S.-only party at that time. The Fed went into full rate hike mode, raising in December, March and June of this year. Of course, U.S. reflation turned out to be a mirage further dimmed by the massive backing up in long-term treasury yields - an instantaneous tax increase on the middle class via mortgage rates.

So, by January of this year, despite the Fed's misplaced optimism, Wall Street cast about for a new narrative - which became U.S. reflation is dead, but global reflation is now the next big trade. That latest fantasy, attendant with global yields backing up and monetary tightening in many countries, drove the past seven months of global risk rally. 

In other words, the entire past year consisted of capital rotation followed by after-the-fact invented narrative. Meanwhile of course, speculation was rampant in IPOs, small cap stocks, EM stocks, crypto-currencies, internet stocks and anything else that wasn't bolted down to 0%. Low quality junk stocks vastly outperformed higher quality dividend stocks.

As it was in Y2K, critics were roundly scorned and otherwise derided into non-existence. The crowd was stampeding and the only option for anyone managing a P&L was to get out of the way. Now of course there are no voices of reason in the public sphere, there are only sycophants and con men willing to ride the momentum train straight into the side of the mountain.

Words of warning can't compete with fantasy and misallocated capital. 

Friday, August 11, 2017

The Clown To End All Clowns

Circus Clownius is now developing invasion plans for every country on the planet "just in case" they dare defy his imperial Twitter decrees...

The problem with being an ignorant dunce, is that no one tells you when to stop. It took eight years, but the Idiocracy finally went ALL IN FULL RETARD...

"What other wayward nation can we invade?"

Does Trump need assistance from China on North Korea? If so the best thing to do is poke them in the eye with a stick repeatedly:

Trump has good company with the Fed, Wall Street, and OPEC. All corrupt mega dunces.

Global central banks, are all as dumb as a fucking post...

Another Wall Street pump and dump is over. 

An entire year of IPO gains wiped out in two weeks:

Largest IPO since 2014

Snapped Chat