Picking Up Pennies In Front Of The Steamroller—–The VIX Short Trade Gone Berserk
Wall Street’s “fear gauge” has neared all-time lows this year. That hasn’t stopped retail investor Jason Miller from making a nice chunk of change betting it will go even lower. The Boca Raton, Fla., day trader says he has made $53,000 since the start of the year by effectively shorting the CBOE Volatility Index, nicknamed the VIX. That includes a white-knuckle day on May 17, when the VIX spiked 46% following reports that President Donald Trump had pressured former FBI Director James Comey to drop an investigation into former National Security Advisor Michael Flynn. As the 40-year-old Mr. Miller recalls, he rode out the storm, confident the market would revert to its torpid ways—which it did. “One person’s fear is another person’s opportunity,” says Mr. Miller. Volatility—or the lack of it—has become the central obsession of the markets as the S&P 500 trades around its all-time high. Invented 24 years ago as a way to warn investors of an imminent crash, the VIX has morphed into a giant casino of its own.
The Friday Tech Fright—–A Short Across The Bow For “Passive Indexers”
Both Discretionary and Technology plunged on Friday as a headline from Goldman Sachs questioning ‘tech valuations’ sent algo’s running wild. The plunge was extremely sharp but fortunately regained composure and shares rebounded. A ‘flash crash.’ One day, we will not be so lucky. But the point I want to highlight here is this is an example of the ‘price vacuum’ that can occur when computers lose control. I can not stress this enough. This is THE REASON why the next major crash will be worse than the last.”
Three Charts Which Prove The Market Is At Peak Over-Valuation
…..we’ll show you a few charts that not only demonstrate our point, but also show the magnitude of the stock market’s overvaluation and, more importantly, put it into historical context. Each chart examines stock market valuation from a slightly differently perspective, but each arrives at the same conclusion: the average stock is overvalued somewhere between tremendously and enormously. If you don’t know whether “enormously” is greater than “tremendously” or vice versa, don’t worry, we don’t know either. But this is our point exactly: When an asset class is significantly overvalued and continues to get overvalued, quantifying its overvaluation brings little value.
Central Bankers’ Rotten Legacy—-Retirees Desperate Reach For Yield
Ben Bernanke’s creativity inspired a generation of economists and central bankers. QE, ZIRP and NIRP established a new class of economics that is mathematically sound but practically disastrous. Billions of dollars were transferred from savers to investors to boost the economy, but the wizards of quant forgot that something has to give. In this case, it was the formation of a pension crisis that threatens the golden years of millions of retirees across the world. None of the econometrics models provide a solution for the growing gap in pension funding, other than unsustainable debt accumulation.
Record “Wealth In America”, But Don’t Call It Real
The Federal Reserve in the United States just released a new report showing that “Total Household Wealth” in the United States has reached a record $94.8 trillion. That’s an impressive figure……this means that a whopping 72% of all US businesses are NOT profitable…….Shifting gears, there’s the little factoid that an astounding 40% of young Americans are living with their parents– the highest percentage in the last 75 years. And who can blame them considering student debt in the Land of the Free also hit a record $1.4 trillion three months ago, more than double the amount since the Great Recession. Speaking of record debt, US credit card debt passed a record $1 trillion, and total US consumer credit hit a record $3.8 trillion last month.
Albertson’s Reveals Supermarket Meltdown as Global Deep-Discounters Promise Price War in Stagnating US Market
Today, Albertson’s explained in an amended S-4 filing for a debt exchange offering just how tough things have gotten for traditional supermarket chains. As is so often the case, there is a private equity angle to it. Albertson’s was acquired in a 2005 LBO by a group of PE firms led by Cerberus. In January 2015, it acquired Safeway to eliminate some competition. It then wanted to sell its shares to the public. But in October 2015, as brick-and-mortar retail began to melt down, it scrapped its IPO.
Subprime Auto Bonds From 2015 May End Up Worst Ever, Fitch Says
Subprime auto bonds issued in 2015 are by one key measure on track to become the worst performing in the history of car-loan securitizations, according to Fitch Ratings. This group of securities is experiencing cumulative net losses at a rate projected to reach 15 percent, which is higher even than for bonds in the 2007, Fitch analysts Hylton Heard and John Bella Jr. wrote in a report Thursday.
Red Ponzi Update: People’s Bank Of China’s Balance Sheet Steady At $5 Trillion—Up 10X Since 2002
Investors who fret about when and how global central banks will run down their crisis-era balance sheets can be relaxed about the biggest of them all — China’s. Whereas the Federal Reserve’s $4.5 trillion asset pile is set to be shrunk and the European Central Bank’s should stop growing by the end of this year as the outlook brightens, China’s $5 trillion hoard is here to stay for the time being — and could even still expand, according to the majority of respondents in a Bloomberg survey of People’s Bank of China watchers.
That Was Quick: Trump’s “Arab NATO” is Gone And The Persian Gulf More Unstable Than Ever
That “Arab NATO” didn’t last very long, did it? The break with Qatar by some of its Arab brethren, including its nearest neighbors, is impressively comprehensive, involving a breach of diplomatic relations and an economic and transportation embargo. It reflects sharp divisions not only within the Arab world but even among the half dozen monarchies that constitute the Gulf Cooperation Council (GCC). The break is a resounding refutation of the notion, which was a leitmotif of President Trump’s recent trip to the region, that significant lines of conflict in the region can all be reduced to some simplistic grand division, such as of evil versus good, Shia versus Sunni, or Iran versus everyone else.
The Dead Giveaways of Imperial Decline
Identifying the tell-tale signs of Imperial decay and decline is a bit of a parlor game. The hubris of an increasingly incestuous and out-of-touch leadership, dismaying extremes of wealth inequality, self-serving, avaricious Elites, rising dependency of the lower classes on free Bread and Circuses provided by a government careening toward insolvency due to stagnating tax revenues and vast over-reach–these are par for the course of self-reinforcing Imperial decay.
