Friday, April 28, 2017

Prepare For "Disruption" aka. Competitive Self-Destruction

Today's "best and brightest" are neither, but better to let them find that out on their own...

The term "disruption" was concocted in Ivy League MBA schools and propagated in Silicon Valley boardrooms to sugar coat the obliteration of the erstwhile economy, for fun and profit. Borrowing heavily from the concept behind Creative Destruction - wherein old businesses die and new ones take their place. Unfortunately, disruption today simply means wiping out the economy and replacing it with cheap foreign imports then recycling the resulting deflationary poverty into 0% capital to automate even more jobs. In other words, without Ponzi debt accumulation, the moronic concept of "disruption" would not exist. It's industrial arbitrage masquerading as "innovation".  

Unfortunately, we live in the twilight of a reserve currency hegemony which has sheltered all of the accumulated asinine ideas and people who've never known any concept of reality. All of which has resulted in the Hail Mary election of Donald Trump whose job is to reconfigure the deck chairs on the Titanic in such a way that America comes out "first", while of course preserving record high corporate profits. In other words, Trump bears the collective delusions of a generation that liquidated the future in exchange for special dividends and yet desperately needs to believe that a reality TV saviour can rescue them from competitive self-destruction.

Now, at this late juncture, Wall Street is 100% shorting everything Trump does and says and instead places their full faith and confidence in the last handful of stocks still growing - at the expense of every other company...

Somehow, 23 years after its inception, Wall Street has reinvented as a "disruptive" technology. As if buying things on the internet was somehow a novel concept two decades later. Sure, whatever.

The fact is that the jobless consumer is withering at the end of another debt accumulation cycle and Wall Street has to explain why the retail pie keeps getting smaller and smaller.

"Americans increased spending in the first three months of 2017 by the smallest amount since 2009, marking the U.S. economy’s worst performance in three years. Terrible news, right?"

"Not really."

Speaking of disruption



Equal weight / cap weight S&P

Thursday, April 27, 2017

In Donny Trump We Trust

Skew/Vix ratio (red) with Energy stocks

Energy Stocks with Technology stocks

Energy % bullish

The Age Of Competitive Self-Destruction

Now that the Trump trade is going in reverse, gamblers are free to focus on the last five four massively overowned Tech stocks still holding up the market...

Rule #1 of investing, don't put all of your eggs in one internet Tech basket, because you never know when it might smash crash:

Amazon is soaring after hours on news that its miniscule profit margins are still obliterating the rest of retail:

Collapse having been conflated with the MBA mega-dunce buzz word of this pathetic era aka. "disruption". Wait until they learn the hard way the true meaning of that word...

Amazon versus JC Penney

The VIX has only been this low one other time since 2007 i.e. in 2014 when global stocks and oil peaked and imploded:

Oil is clinging to the trend line

Large Banks

Fewer and fewer stocks holding up this fantasy

Equal weight / cap weight

The last time the Russell 2000 had this level of short-covering was in 2011 right before that crash

R2K Commitment of traders (red)


The First Blundered Days

National Post/Toronto:
"The extraordinary thing about Donald Trump’s presidency is this: as low as expectations of him were going in — as ignorant, unstable, and corrupt as he seemed likely to be, in advance — he has still managed to come in under them. It is impossible, indeed, to imagine how his first 100 days could have been worse, short of — well, I was going to say short of starting a war, but stay tuned."


But enough about Trump's least favourite sector, what about Trump's most favoured economic sectors?

First, a lesson in Econ 101 for Trump's economic advisors:

"Crowding out can refer to when government borrowing absorbs all the available lending capacity in the economy. This causes interest rates to rise."

Loan growth rate (red) with short-term Treasury yields (black):

Lesson #2: Bullshit that precedes concrete actions by months or years or never, can be deleterious to GDP in the meantime...

"The final GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.2 percent on April 27, down from 0.5 percent on April 18"

Fracking stocks

U.S. Oil (ETF)

U.S. Steel




As long as these stocks don't all get sold post-earnings, this will all be fine, otherwise, there is a lot more than $2 trillion on the line...

Wednesday, April 26, 2017

Betting It ALL On Magic Unicorns In Fairyland

The current risk set-up consists of a 2008 short-covering rally in banks, a Y2K blow-off top in Tech, and a 2014 meltdown in Commodities...

Shorts are covering ahead of tonight's BOJ meeting and tomorrow's ECB meeting. In the meantime, Trump just unveiled his magic unicorn...

"Not only can that not pass Congress, it cannot even begin to move through Congress. This is something that actually cannot be done."




Since my latest wave count was fragged by Skynet and Magic Unicorns, I'm falling back on the old school gap 'n crap:

Bets On A Crash: Record High

Out of the money option bets on a crash are the highest since the last crash...

"Since an increase in perceived tail risk increases the relative demand for low strike puts, increases in SKEW also correspond to an overall steepening of the curve of implied volatilities, familiar to option traders as the "skew"."

Option skew 12 week moving average:

Circled is December 2015 the last FedPlosion:

The divergence between the out-of-the-money skew (crash bets) and the near-the-money VIX (hedging) is the highest since the last fall in Oil in 2014:

Energy (red) with Skew/VIX ratio:

Money (Out) flow confirms

Breadth confirms

Northern Trust


Coal (stocks)


Consumer Staples with % bullish (red)

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