Wednesday, January 28, 2015

"Shit Breaks or They Break Shit, Whichever Comes First"

Ponzinomics: Only One Lie to Live
"Any attempt to normalize interest rates, will CAUSE something bad to happen, just as it did in 2008 and just as we are already seeing now with the "unforeseen" rise in the dollar, slowing of Emerging Markets, reversal of carry trades and collapse in commodities. Just the "hint" of normalization is causing shit to break. "

ZH: Jan. 28, 2015
Markets Disappointed as Fed Upgrades 'Economy' in Hawkish Statement
The 3 key phrases from today's FOMC Statement are:

"Strong Jobs Gains" instead of "Solid Job Gains", 
"Considerable time" dropped entirely 
"Solid Pace" instead of "Moderate Pace" For Economy

The illusion-formerly-known-as-the-economy has been reduced to parsing bullshit issued by bureaucrats who print money for a living:

The Davos Money has left the station
Thirty year Treasuries at new all time high - not buying any of the bullshit about an improving economy and higher interest rates. (So much for a "pullback"):

Billion Dollar President

Koch Brothers plan to spend $889 million to get a RomneyBot elected

"The political network led by industrialists Charles and David Koch plans to spend $889 million for the 2016 elections. In modern politics, it's more than just a ton of money."

"It's about as much as the entire national Republican Party spent in the last presidential election cycle, four years ago."

"It's double what the Koch brothers and their network spent in 2012."

"No other outside money operation matches the Koch network in funding or organizational breadth."

Greek Banks. Locus of Risk

I mean Spanish Banks:

This is whose been buying all of the Spanish Ponzi Bonds

National Bank of Greece

The Man Who Wants Everything, Ends Up With Nothing

OxFam, Jan. 28, 2015

This has been an 'interesting' time watching this disaster unfold in broad daylight. The psychopaths finally bought ALL IN to their own delusion. Sure, a few are scoping out farmland in New Zealand, but the vast majority are still bought in to their own self-deluded clusterfuck. They can't imagine a world that doesn't have them installed at the top. 

Crashing commodities? No problem
Treasury yields at all time lows? No problem
China GDP growth at 25 year low? No problem
Middle Class wealth at 20 year lows? No problem
Middle Class income down 10% since 2007? No problem
Housing starts at 1968 levels? No problem
Output Gap at a massive 20%? No problem
Employment Population Ratio at 38 year lows? No problem
Credit spreads and junk bond spreads at one year wides? No problem
U.S. inflation expectations at Lehman lows? No problem
Child homelessness at all time highs? No problem
Sovereign Ponzi borrowing? No problem
Printing money to buy stocks? No problem
Negative interest rates in Europe? No problem
Corporate profits leveraged to unprecedented levels,  now declining? No problem
Spreading global unrest and failed states? No problem
Politicians with 8% approval ratings? No problem
$33 trillion+ in squandered global 'stimulus"? No problem

Risks are high. Delusion is far higher.

This Isn't About Oil. It Never Was.

CNBC: Jan. 28, 2015

"Despite the large declines in commodity prices, we see risks as still skewed to the downside over the near-term"

Demand is falling faster than prices.

I had to move the arrow down another year. Prices were in 2003 last week, this week they are back in 2002, I mean 2001...

Ground and Pound

"Inventories of U.S. commercial crude rose more than expected last week, pushing stockpiles to the highest ever on record."

"Stocks of U.S. oil increased by 8.9 million barrels"

"Analysts in a Reuters poll projected WTI inventories would rise by 3.8 million barrels in the week ending Jan. 23."

'Analysts' were only off by 125%. A dart-throwing chimp would make a better oil analyst.

BI: Jan. 28, 2015
"Bespoke Investment Group noted that this is the biggest three-week rise in crude inventories since 1989"

MW: Jan. 12, 2015
"Goldman Sachs found in its Top 400 analysis of the world’s largest new oil-and-gas fields, that pre-sanctioned projects will be “uneconomic” at $70 a barrel. Such developments, are those where a final investment decision hasn't been taken yet, represent some 20 million barrels of oil a day."

"This also includes shale developments, where investments for $930 billion are in jeopardy"

This is Brent as of yesterday's close: West Texas Intermediate is at $45:

Recession Here. Bear Market There.

"The U.S. market’s foundation is crumbling, according to my calculations — just as it did in 2000 and in 2008."

"This condition has happened two other times, in March 2000 and December 2007. In each of the following years, the market lost more than 30%."

NYSE Tick:

Weekly Money Flow

S&P with 52 week price range of average stock:

CHOOSE: The Skynet Illusion

Tuesday, January 27, 2015

"Who Wants to Be A Billunaire?"

Multinationals only like weak dollars, not strong dollars...

The best stock printed money can buy
Microsoft with Fed balance sheet:

These multinationals with their artificially inflated profits are worth as much as Fed-printed money: $0. 

The 3% drop in GDP during 2008, caused profits to drop 50% i.e. 17:1 leverage. And we know that leverage has only grown every single day since then.

"Dude, Where's the Economy?"

The recovery has been postponed until the economy returns from China

So that's what this was all about...
1 Year Treasury Rates:

Another year of corporate "synergies" and 0% interest rates, should fix everything

Atlas Shirked

Davos Breakout Session: 
"How the obscenely wealthy can escape the consequences of obscene wealth" 

The Guardian Jan. 23, 2015
"With growing inequality and the civil unrest from Ferguson and the Occupy protests fresh in people’s mind, the world’s super rich are already preparing for the consequences. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said."

Unfortunately, New Zealand is part of the Ponzi Scheme
You don't escape from a Ponzi Scheme, and there is no way to stop it from collapsing. At its most fundamental level, a Ponzi Scheme is merely an accumulated liability with no offsetting asset. Billionaire wealth is an illusion, it's a fiction. It was printed out of thin air by Central Banks and upon collapse, it will return to its original state - nothing. Will there be a sequence and order to the financial asset "liquidation"? I'm counting on it; however nothing is assured. Suffice to say no one is immune from the consequences of this Globalized disaster. 

Not even the people who primarily caused it:

The top 85 billunaires own as much as the poorest 3.5 billion slaves.

Ayn Rand would be so very proud.

Denialation By Ponzi Scheme

All societies live and die by their asinine assumptions, this one will be no different.

These are the basic questions economists should have asked to spare themselves from bankruptcy:

Q: How can we print so much money without (hyper)inflation?
There are two reasons why Money Printing (aka. QE) never led to hyperinflation, as it did in the Weimar Republic and to a lesser extent the 1970s 'Stagflation':

The first reason of course is mass Third World outsourcing, as depicted by capacity utilization below. Today's output gap is chasmic, and under the current "free trade" paradigm it will remain chasmic. There is an unending supply of cheap Third World labour to tap into:

Muppets to the Slaughter

The lemmings just ran off the cliff

CNBC: Jan. 27th, 2015:

ZH: Jan. 27th, 2015

"More lenders are lowering down-payment requirements, allowing borrowers to commit 3%—or even less—of a home’s purchase price to get a mortgage. Many had been requiring down payments of at least 20% since the recession began."

"The moves come as mortgage originations declined substantially last year. Lenders gave out an estimated $1.12 trillion in mortgages in 2014, down 39% from a year earlier and the lowest amount since 1997"

The fiscal trade attention deficit. Fatal.

Monday, January 26, 2015

U.S. Recession

Treasury Bonds have been screaming recession for months. Now sector by sector, stocks are indicating recession as well.
The recent Dow high was December 29th. Back in 2007, stocks peaked six weeks before the recession officially started. Some sectors peaked before the recession started, some peaked after. Many of the sectors that peaked AFTER the recession had begun last time, have already peaked months ago.
Energy exploration is the new subprime, which just crashed taking heavy construction, industrial machinery, basic materials and energy with it.

Casinos down. Booze and Cigarettes now leading.
Brewers are the only sector that peaked AFTER Lehman in 2008, because everyone wanted to get shit faced, one last time. I think we all see where I'm already going with this...

Skynet: Controller of the Matrix

MW: Jan. 26, 2015

Like trying to make McDonald's unhealthy
First, off Russians programmed HFT. Secondly, it's already pre-programmed for instability, as we have found out about 1,000 times since 2010. There is no point in destabilizing something that is already inherently unstable. For the record, the programmers were American Russians, not to be confused with Russian Russians.

While Etraders were mesmerized by the Dow, the post-2008 economic crater was being dug twice as deep

How Skynet constructs the Dow illusion on minimal volume:
First find some nearby market moving 'event', then sell volatility against the event (ECB, Fed, BOJ etc.). Next, take away liquidity (depth) to slow volume down to nothing, so institutions can't sell in any size, which lowers realized volatility. Then use the futures to walk the market higher, running all stops and taking out all day-trading shorts. Cover the volatility short after the event. Do this long enough until everyone capitulates and volume is essentially zero, like now:

Black Swan Inevitability
Unfortunately, this con job has succeeded at convincing the vast majority that it can continue forever. Life outside of the Matrix (aka. the linear extrapolation of the impossible), brings its own health benefits, but it's not for the attention deficit. Betting against human history's largest bubble, is not a game for those who seek the seductive comfort of conformity.

Buy The Fucking All Time Lie

S&P with Fed Balance Sheet
Unfortunately both stopped going up at the exact same time

S&P With Rydex Asset Allocation (Bull: Bear) Ratio
The usual bagholders showed up right on time:

Fiddling While Rome Burns

Another Davos Ponzi Party Over.

The failed states are stacking up like cord wood while everyone pretends this is all "business as usual". This week it was Yemen. Next week...[Insert any country here].

Today's "elites" can't face the problem, given that they are the problem. 85 billionaires now having as much wealth as the poorest 3.5 billion people. History's largest ponzi scheme without any possible comparison. 

Microsoft with Fed Balance sheet
Both peaked at the same time. Coincidence?

Given enough time and neglect, most problems fix themselves, and the people who caused them.

Megalomaniac Overdrive: The God Complex @Full Insanity

Bring back Rambo - He hasn't lost one war yet. He even won Vietnam after it was over.

CNN Jan. 24, 2015
Troops on front lines in Iraq?
Pentagon says yes (again)...

Jan. 25, 2015:
Troops in Yemen? 

Jan. 24, 2015:
Troops in Ukraine? 
U.S. Special Forces in Ukraine

When your own country is falling apart, it's Manifest destiny to fix everyone else's instead.

Success is purely a function of how many people you bomb. 

Only huge amounts of bombing will win radicalized youth over to junk food and junk culture.

Spectacle 2015: Collapse of The Globalized Empire

404-Plane Not Found.

ISIS will conveniently infotain the Idiocracy while everything implodes in real-time. 

Ponzinomics: Only One Lie To Live

Debt IS the economy and you can't spend the future twice
The ongoing infotainment around Fed rate hikes is all well and good; however it all ignores the fact that only further debt accumulation - by households or governments - will keep the "economy" afloat, albeit temporarily. At PEAK LEVERAGE, any attempt to reduce debt will collapse what is left of the illusion-formerly-known-as-the-economy.

"This" does not go in reverse, as we learned in 2008
Debt as % of GDP with Fed Funds rate

The Fed Has No Dry Powder...

Sunday, January 25, 2015

Land of the Setting Sun: Leading the Way

Japan's Abenomic currency debasement program is bankrupting "consumers" by raising import prices. Fortunately, currency debasement makes exporters more competitive.

Bloomberg: Jan. 23, 2015
"I think the export as I said has increased somewhat, but not much"...

Linear Extrapolation of the Asinine, Is The Bane of Humankind

First, dumbfucks attempt something inherently stupid; if by some random miracle it works once, they then proceed to do it over and over again until it implodes. Ideally, they will convince as many people as possible to participate.

Those who manage to survive - due to pure luck, merely ascribe their misfortune to a "Black Swan" event - extremely rare and totally unpredictable; and then they start all over again, until such time as they implode.

Taleb's "Fooled by Randomness" in two paragraphs. Human history in one blog post.

"We'll Do Whatever It Takes"

S&P 500 adjusted for CPI aka. "15 years to nowhere"
With Rydex Bullish Asset Allocation (back at all time highs this week)

It's sad how fucking stagnant this society has become and the lies they desperately need to believe. Life without mass consumption. Unthinkable.

Financial Collapse Or Hyperinflation?

The Inflationists who are betting that hyperinflation will take their gold bars off their hands, are running out of time

Post-2008: Bailing out lenders by giving borrowers more debt
Contrary to the dunced narrative of the day, we do not live in the Weimar Republic. There is no mechanism by which today's monetary expansion makes its way into the real economy other than via Mega-yachts and artwork. Quite the contrary, while billunaires enjoy their $47 hot dogs at Davos, the Middle class is getting inexorably squeezed by massive debts and deflating wages. There is an inexhaustible supply of labour deflation waiting to be imported from the Third World at ever-lower cost. Once multinationals "use up" one country, they move on to the next cheaper one. Constantly trying to get production costs down to Perfect Competition's "marginal cost" aka. $2.50/day, which is where half of the world's population resides. The "motherlode"...

Saturday, January 24, 2015

Three Minutes to Midnight

Staring into the abyss and seeing only Kardashians staring back

This top has been forming for over a year now aka. three airliner searches
All World Stock Markets ex-U.S.:

DEFLATION Expectations (Since 2009): "RISK OFF"
Canadian dollar, all commodities, Russian stocks, U.S. inflation expectations, EM Currencies

Friday, January 23, 2015

Worshipping in the Temple of Doom

One mega-lie deserves the next bigger one...

Large scale bets against this disaster reached a 2.5 year high. TODAY
Index put/call: 

The State of the Obamanation
"We've turned the page, to the next page, which will take us to the next page, of bullshit"
The Obama "Recovery" compared to the Bush "Recovery" via one year interest rates
You have to squint to see his fantastic recovery that cost $100k/household in new Federal debt...

Too Big To Bail: In Flagrante Delicto

A corrupt society can't recognize corruption

NY Times, Jan. 13, 2015
"The continuing assault on the 2010 Dodd-Frank law has achieved remarkable success"
"The financial industry has been methodical, drafting technically complicated legislation that can pass the heavily Republican House with a few Democratic votes. "

"The House was back at it this week. Lawmakers approved by a vote of 250 to 175, with just eight Democrats in support, a broad measure to impose a variety of new restrictions on federal regulators"

"The current efforts to undermine Dodd-Frank have been textbook lobbying. In the first three quarters of last year, the securities and investment industry spent nearly $74 million on lobbying — on 704 registered lobbyist"

Goldman Sachs is running the ECB AND the U.S. Government.

Weapons of Mass Destruction aka. Financials
Financials have significantly underperformed since the start of the year:

The next wave down is the "third" wave, and hence the most devastating. Thanks to the hard work by Wall Street and Congress in rolling back Dodd Frank, collapse will pick up right where it left off.

A fitting way to end - history's largest gang of bukkake whores caught in the act. 

Life in Ponzi World: Fake It 'Til You Break It

Billionaire goes "remarkably long" U.S. stocks while assuming this is all doomed to fail

BBG: January 22, 2015
"Greene, flew his wife, children and two nannies on a private jet plane to Davos for the week"

“I’m remarkably long [stocks] for my level of pessimism,” he said. “Our economy is in deep trouble. We need to be honest with ourselves. We’ve had a realistic level of job destruction, and those jobs aren’t coming back. America’s lifestyle expectations are far too high and need to be adjusted. We need to reinvent our whole system of life."

But for now, let's party like it's 2008
Jan. 23rd
"Developed World Carry Trade"
Short Euro, JPY, Swiss Franc. Long Aussie, Kiwi, Norwegian Krone

Realistic job destruction? At least he didn't say things have never been better...

Brown Swan Events: Expect the 'Unexpected'

Front-Running: Wall Street's Favourite Game
ZH: Jan. 23, 2015

The Euro has been front-running Draghi for a year now:

Shorting the Euro: The most crowded (carry) trade in human history...

Thursday, January 22, 2015

All Shorts Must Exit Prior To Collapse

Thanks to Central Banks for their cooperation in this effort
It's Davos week, so no less than six Central Banks took actions this week: ECB, BOE, BOJ, BOC, Denmark, China. (The Fed meets next week). China, Switzerland, Canada and India's Central banks all "shocked" markets with unexpected actions in the past seven days alone.  Clearly, in preparing for this week, the Davos organizers ordered 6,000 cases of champagne, 4 metric tonnes of cocaine, 5,000 lady boys, and $10 trillion in Central Bank cash. And they got it all.

Where was I...
Oh right, airlines are up a mere 71% since the October lows:

"Breadcrumbs Keep Falling on My Head"

The people at the bottom of this Globalized clusterfuck suffer in complete silence. Tens of thousands die every day while CNN is tracking missing airliners for weeks on end.
The people further up the ladder who represent what used to be the middle class, they suffer in stoned silence as well. They take their new McJob at half pay with no benefits apparently as a sign of personal failure. Just another "loser" in the fair game of capitalism. It's all good. They self-medicate with Happy Meals, Prozac and The Unlearning Channel.

"Thank you Sir, May I have another"
All of that silence and acceptance of the status quo tells the game show hosts in politics and their apologists in the media that the status quo is working just fine. Roll out the Manchurian Candidate President for another round of applause while he blows smoke up our asses about his concern for the long ago decimated middle class.

What will it take for the game show hosts to finally get the message that enriching billionaires at the expense of everyone else, is not working? What will it take for them to start working for the majority rather than the miniscule minority? Because until they get the message loud and clear that "this" isn't working, we can just assume that the program will continue as is.

The problem with self-medication is that you don't feel it when they amputate your life.