Monday, March 30, 2015

The human species has only one enemy. Itself.

This is the era of voluntary self-extinction: mental, physical, economic.


March, 28, 2015 ZH: Kyle Bass
"Global stock markets have a five lane highway getting in and a goat trail coming out"

"Strategies with negative skew have been described as “picking up nickels in front of steamrollers”. An investor may make a series of small gains, only to be wiped out by a sudden, large loss"
"Financial markets tend to have “fat tails”—more extreme outcomes, in the form of bubbles and crashes, than the normal distribution [bell curve] would suggest"

"Markets tend to rise more slowly than they fall. They may take months to advance by 15-20% but can drop that far in a week or even a day. In statistical jargon, this is known as “negative skew”."

The statistical skew of the S&P 500 is deeply negative indicating a disproportionate chance of loss versus gain:


Saturday, March 28, 2015

Teach The Children Well

With respect to social responsibility, there are really only two types of parents - those who teach their children, "that could be you", and those who teach their kids, "we're better than them". 

From the very early planting of that all-important inception, every manner of future decision, political and personal, will derive.  

Of course, even those with the greatest of wealth, who possess the vaguest sense of history and humility, knows that their own descendants could end up living under a bridge somewhere.

Unfortunately, due to the extended nature of this debt-fueled vacation from reality - coming solely at the expense of future generations - far too many people are going to find out that they were lied to by their own parents.

Friday, March 27, 2015

Manic: Check. Panic: On Deck

Social mood is diverging massively from stocks

Since the beginning of this pseudo-wreckovery, stocks have diverged from the outsourced economy. Starting in 2011, stocks diverged from global trade and commodities. Beginning last year, stocks diverged from revenues. In the past 3 months stocks have diverged from forward earnings. Now the Skynet-illusion is diverging from investors:

"Outflows from equity-based funds in 2015 have reached their highest level since 2009"

Four months to nowhere: "The invisible bear market"
Up volume as ratio of total volume:

Dow Theory Non-Confirmation
Dow Transports / Dow Industrials

Approaching the October Lows
Price range of the average Dow stock

Last ones out lose everything

Sunday, March 22, 2015

In Greed We Trust

This will be the largest loss of capital in human history, without any comparison.

"In a chart making the rounds on Wall Street, Ned Davis Research points out that the price-to-sales ratio for the median stock in the S&P 500 has risen to the highest value ever..."

I will summarize the attached article as:
BTFATH because TINA: "There Is No Alternative"

I performed another stock screen, this time across ALL companies > $25 million market cap (incl. ADR, CDN, excl. ETF, MLP, CEF):
Across all companies, 1694 or 30% are operating at a (combined) loss of -$198 billion, with a combined market cap of $3 trillion. Loss as a percentage of sales is -10%.

File this In the Museum of Archaeology

By the end, the perma-stoned Corporate Idiocracy tuned in weekly to witness the plight of 600 pound land whales eating themselves to death.

All while 20,000 children died every day globally, for want of a few dollars worth of food and medicine.

This spectacle was all part of the Learning Channel and History Channel's campaign to uneducate everyone, since corporate disposable batteries have no interest or reason to know anything.

And then it all collapsed, suddenly and unexpectedly. "No one saw it coming".

All Aboard The Blue Pill. Bought In. Sold Out.

This moment of manic delusion brought to you by Central Bank bukkake whores, Russian programmed HFT Bots, State-assisted Billunaires, Media Mannekins, Walmart Street, the Corporate Borg, self-bankrupting Etraders, and other assorted Dow Casino worshippers...

"When I was young, it seemed that life was so wonderful,
A miracle, oh it was beautiful, magical.
And all the birds in the trees, well they'd be singing so happily,
Joyfully, playfully watching me.
But then they sent me away to teach me how to be sensible,
Logical, responsible, practical.
And they showed me a world where I could be so dependable,
Clinical, intellectual, cynical."

"Now watch what you say or they'll be calling you a radical,
liberal, fanatical, criminal.
Won't you sign up your name, we'd like to feel you're
Acceptable, respectable, presentable, a vegetable"
[Supertramp/Logical Song]

Bred For Failure: The Arrogance is Staggering

The biggest bubble of this era is the astounding arrogance of today's leadership buffoons: in government, business, media, and academia. Today's buffoons are the last stage hubristic generation that is bred for failure - to do the exact same thing over and over again until it implodes with extreme dislocation. Bred to fabricate and believe their own bullshit.

This era is the 2008 playbook deja vu, with 10x leverage. Nothing has changed except the amount of irretrievable risk. They pushed their luck then and got away with it, so they are pushing it far harder now, oblivious to any consequences. They have 100% confidence in policies that have already failed 100%. Zero introspection.

Today's best and brightest are neither, their intelligence is dwarfed by their arrogance. They were bred to believe in their own entitlement to being permanently installed at the top. So they push their luck way beyond the limit, oblivious to the fathomless rage that accumulates steadily as their global pseudo-recovery falls apart in broad daylight.

I call these leadership buffoons human call options, because they have a finite interval to the upside and then expire worthless. A footnote in history. 

Take a good look at them now, because expiration approaches.

Saturday, March 21, 2015

In Greed We Trust

Fake Wealth. Has No Natural Buyer

The Atlas-like job destroyers will find that out the hard way, when this all collapses like a cheap tent.

"The vulnerabilities of developing and emerging economies have been heightened by weaknesses in the international financial architecture. It was hoped that the global financial crisis would give rise to sufficient political motivation and intellectual strength to address these weaknesses in a more determined manner. But efforts in this direction, have been stymied by pressures from global financial interests"

"Such monetary injections fuelled asset appreciations not only in the United States and the United Kingdom, as discussed above, but also in many other stock markets, as measured by the MSCI global index. Between mid-2010 and the last quarter of 2013, that global index more than doubled, while real economic activity remained subdued. But in some cases, as can be observed by stock market reactions to releases of employment data in the United States and elsewhere, good news on economic activity triggered a fall in the stock market, reflecting the anxiety of speculators about reversals of the liquidity expansion if economic activity and favourable employment conditions were to resume. "

...And Six Years Back to Manic

Idiocracy: A society that keeps conning itself over and over again.

This is the one index that can't be manipulated by Skynet:

The European Version:

Globalization is the largest bubble in human history - fully encompassing the three mini-bubbles above, which merely represent the Idiocracy's feeble attempts to stave off reality.

Denialism: Blissful Self-Implosion

An aging society that has painted itself into a corner will always choose self-destructing denialism over change. Japan is Exhibit A of an old age home in a death spiral.

Fortunately, Faux News creates the false sense of complacency that accelerates the time to collapse.

The human call option visualized:

As you may have surmised, (0,0) is eight feet under. Aging is along the horizontal axis right to left. The area under the horizontal line is the 'dog food' zone for those who are later in life. For the rest of us it's two part time jobs and Top Ramen.  

The older a society becomes, the less likely it is to choose the 'change' option for what are the perceived last few years of existence. Because that confers benefit on future generations at the expense of short-term cost to the older generation. Now, any one geriatric may disagree with this interpretation and state adamantly that they support whatever change is necessary to fix this clusterfuck. However, those people are outnumbered 100:1. Think Tea Party. 

The real optionality in this disaster, and sole focus of this blog, is the perceived timing of the dotted blue line. This old age home masquerading as a society, spends ALL of its time and effort on distorting people's myopia that the day of FORCED change is FAR into the future. That is the role of Faux News, to create a false sense of complacency.

Denialism, fundamentally, is the self-destructing illusion of choice. By creating a false myopia, extending the perceived time to disaster, the net effect of denialism is to accelerate the timeline for forced change aka. economic collapse.

The International Conference on Climate Change Denial
(Sponsored by the Koch Brothers and Exxon)
Please NOTE: Must be 100 years or older to attend:

Free t-shirt for all attendees: "I'm Exxon's Bitch"

Friday, March 20, 2015

The Jedi Mind Trick For Stunned Dunces. Is Ending.

The incremental cost of delusion, is rising faster than the market

Price / Volume (8 week MA)


This sets up the long-awaited Skynet System Test

This Week In Collapse: Kool-Aid Overdose

March 18, 2015: Fed Chairwoman, Janet Yellen:
"Valuations are high but within the historical range"

"The Market is Hyper-Overpriced"

Got that?
According to the psychopaths who mix the Kool-Aid, the market is within historical range of collapse.

Unfortunately, the Idiocracy is already too stoned to listen.

Official Central Bank Policy: Leave No Survivors

When this mania implodes with extreme dislocation, there is no "Plan B"

In 2003-2007 The Fed encouraged home owners to load up on cheap debt until they self-imploded. Homes as ATM machines. 

In this era, Global Central banks are coercing everyone to borrow and gamble until self-implosion.

It's 100% clear that Central Banks are hell bent on wiping out everyone.

ZH: Mar. 20, 2015: "Significant Correction Coming" 
Drug Dealer Blames Addicts For Taking Free Heroin
"What worries me is how totally lazy investors have gotten, totally dependent upon the Federal Reserve [after six years of free money]"

wsj: Mar. 11, 2015: BOJ Helps Tokyo Stocks To Soar
The Bank of Japan's stated reason for buying stocks:
“We led the cows to water, but they didn’t drink it, even though we told them it tasted good, so we thought we should drink it ourselves, showing them it was tasty.”

Thursday, March 19, 2015

We're In the "Normal Range" Between Manic and Panic

Comfortably Numb

ZH: March 19, 2015
Greek Bank Run Accelerates 

European Composite versus Greek Stocks

Rule #1 of dope dealing: "Don't get high off your own supply"

We've Never Seen This Level of Risk

The Centrally Planned chasm between reality and fantasy is unprecedented

Nasdaq Internals
There are 72 IPO lockup expirations in the next 10 weeks

The world's largest IPO had a lockup expiration yesterday. There's a bigger one in September:

Stock and flow: only the constant stream of fools willing to throw their life savings away keeps this shit show levitated. It's their last party, may as well let them enjoy it.

Earth Records Its Warmest Winter on Record

March 19, 2015

"Though it was a cold winter overall in eastern North America, including the United States, the Northern Hemisphere also saw its warmest winter on record. This was due to widespread above-average temperatures in western North America, Europe and Asia. NOAA says that record warmth was observed in the western United States, portions of central Siberia and eastern Mongolia."

Wednesday, March 18, 2015

Monetary Policy Fixes The Economy, Like Dying Cures Obesity

At what point do we collectively realize that Monetary Policy doesn't fix the problem, it merely covers up the problem? Allowing it to get far worse.

Economic Euthanasia Visualized
Fed funds rate with manufacturing employment
What exactly is going to be the benefit of keeping interest rates low for another year? Jobs will go negative?

Why Wall Street's Fed bukkake whores are entrusted with the economy will be the question for all time. 

The Best Economic Model Is The One That Prevents Bloody Revolution

The current Ponzi model need not apply

The desire to manage the economy via top-down Macroeconomics arose as a means of forestalling bloody revolution during economic depressions. It's been too long since the last Depression, so in the meantime, the Lost Boys bastardized all of the macroeconomic theories that today seem either antiquated or downright insane.

The reality however is that these top down policies were not intended to finance military blunders, tax cuts, trade deficits and other chicanery, they were originally intended to be counter-cyclical i.e. used sparingly during contractions and reversed during expansions. As a means of buffering the economy and lessening poverty.

We are witnessing in real-time the horrifically mis-applied implosion of modern economic theory... 

Terminal Velocity: Central Bank 'Exit Strategy'

Central Banks have sponsored financial suicide

Throughout the "wreckovery" there has been an ever-growing divergence between the real economy and financial risk-seeking. Central Banks have incentivized investors to ignore every type of economic risk. 

Chasmic Economic Divergences

Debt Per Capita
Debt-adjusted GDP growth
Jobs Per Capita
Middle Class wealth
Middle Class income
Global Trade
Global deflation
Global debt levels

Have all steadily deteriorated and are now reaching stall speed.

Shock Doctrine Visualized
The first massive divergence between economic and financial risk was evident immediately in 2009 when sovereign debt accumulation exploded with minimal economic effect. 

GDP - Debt: This figure had been rising for forty years straight, but then 'something' changed in 2008. Due to the massive (8 million) job losses, all of the new debt fell straight to the corporate bottom line. It bypassed the economy. The vaunted counter-cyclical 'Keynesian' multiplier which had been squandered for 30 years straight on tax cuts and military adventures, was no longer working. Like taking antibiotics for 30 years straight and then acting like a stunned dunce when they stop working:

Velocity of Impact
As the divergence between risk-seeking and economic fundamentals grows with each passing day, so too does the velocity of impact. To say that Central Banks don't have an exit strategy is to miss the point - that would entail a lessening of risk-seeking behaviour in the face of growing risk. Quite the contrary, what Central Banks have created is an accelerated impact strategy by which investors are slammed into the brick wall of economic reality at terminal velocity.

Tuesday, March 17, 2015

Generation Terminus: University as Social Stratification Machine

ZH/Economic Collapse Blog: March 17, 2015
"Out of 22 countries, the report from the Educational Testing Service found that Americans were dead last in tech proficiency.  We were also dead last in numeracy and only two countries performed worse than us when it came to literacy proficiency…"

In a previous article, I highlighted some statistics from USA Today about the declining state of college education in America…

-“After two years in college, 45% of students showed no significant gains in learning; after four years, 36% showed little change.”
-“Students also spent 50% less time studying compared with students a few decades ago”
-“35% of students report spending five or fewer hours per week studying alone.”
-“50% said they never took a class in a typical semester where they wrote more than 20 pages”
-“32% never took a course in a typical semester where they read more than 40 pages per week.”

"Parents should be screaming bloody murder about the quality of the education that their children are receiving."

Quite the contrary, today's parents look back fondly at their college days as the "best days" of their lives. As I've said before, College has devolved into a ludicrously expensive drunken frat party, interrupted by Ritalin-assisted sessions of rote memorization. 

Worse yet, in a marketing-based Corporatocracy, learning and knowledge are wholly downgraded. "Networking" with other like-minded sociopaths is by far the most important benefit conferred by a degree.

Barriers to Entry
And these ludicrous tuitions are the barriers to entry to the country club. After all, in a zero growth economy that has devolved into ever-fewer haves and ever-more have nots, there has to be some way of stratifying the masses and determining who will be the master and who will be the slave. The 'system' stopped being about education a long time ago at the same time that the focus of the economy shifted from making things to selling things. Engineers to salesmen. 

University today is not about education, it's strictly about social stratification. It's America's caste system.

The Middle Class ATM Machine Is Empty

Clueless gamblers are skydiving without a parachute
Riots are never as good as a bailout
Investors who bought the dip, or otherwise bought and held through 2008, are in for a rude fucking awakening. There will be no bailout this time, so essentially there is no safety net beneath this massively leveraged clusterfuck. Those counting on the Fed to precisely time the next QE to coincide with history's largest liquidity withdrawal will be likewise surprised. The Bernanke "put" didn't stop Lehman and the 55% S&P drawdown, and it won't stop history's largest meltdown. 

This just in:
5.4 million homes ARE STILL underwater from 2008 the last time Wall Street used the Middle Class as their personal ATM machine. Meanwhile Goldman Sachs just got paid $2 billion back profit from 2008

Hazardous Immorality Visualized:
The "best rally ever", accompanying the first non-recovery in U.S. history
Value Line Arithmetic Average
Going back 40 years to 1975:
% Change lower pane:

In a slowing economy, investors seek growth over value. Biotech over Dow
We're bypassing 2007, straight to 2008:
Growth: Value Ratio

Reverse Shock Doctrine
Only the most clueless and self-absorbed frat boys would assume that they will get bailed out again by the same Middle Class that they outsourced.

Spot the 'Hidden' Bear Market In the Dow

CNBC: March 17, 2015
"A third of the members of the blue chip barometer have hit new 52-week lows this year. By no coincidence, the Dow briefly turned negative for 2015 Tuesday."

% of Dow stocks above 200 day moving average

And Lumber
ZH: March 17th, 2015: Housing Starts at 18 Month Lows. Biggest drop in 8 years

As long as biotech stocks with no revenue keep going up, this will all work out fine.

At The Precipice: Betting On An Oil Rally

Energy stocks as ratio of oil prices:

Anyone betting on the overall stock market is betting that crude doesn't make another leg down, taking energy stocks with it. Right now, investors are betting with both hands that the overvaluation is all 'temporary', because oil prices "are going to go straight back up".

Oil stocks (red) with West Texas Intermediate (black). Right at the precipice:

The Grapes of Wrath 2015: Why Obamacare was Inevitable

Obamacare was made wholly necessary by the exact same people who opposed it (and are still trying to kill it)

Once upon a time, the United States had a robust economy with an abundance of well-paying full time jobs. Under the U.S. system - which differs from almost every other developed country - the employer was responsible for providing healthcare coverage to its workers. The system seemed to work great for decades since most families were covered, the extreme poor had Government Medicaid, and the elderly had government-provided Medicare...

Monday, March 16, 2015

In Ponzi World, Life Is a Competition

There are 1,826 winners. And 7.3 billion losers.

This sad era is solely about the people who can't admit that they already lost.

Via: OxFam

We're In a Late Stage Manic Blow-Off. All Bad News Is Ignored

Just waiting for the word 'patient' to blow-up the financial system

ZH: March 16, 2015

Wolfstreet: March 11, 2015

The current rate of profit deterioration is clearly associated with recession:

U.S. Deflation Expectations:

Top Performing IPO Has No Revenue

Janet Yellen: "Biotech valuations are stretched"
The Yanis Varoufakis school of observation.

Market cap: $2.1 billion

And here's an $8 billion Biotech with no revenue...

Catch a Falling Knife

Since December, Etraders have spent $41.5 billion playing Jed Clampett via the USO oil ETF

Now they are underwater and the oil keeps flowing faster than ever. Another leg down in oil and the S&P is toast.