.

.

The farewell performance of Ben
As his band of the Swindlermen
These thieves have made good
A reverse Robin Hood
It’s time to say: “Never Again!”
The Limerick King

 

Behold, Robber Ben and his Seven Merry Swindlermen of Moral Hazard, led by the Maestro of Financial Mayhem himself, Alan Greedspam.

We can all shake our heads in wonderment and disgust at the showers of tributes and accolades now being bestowed on the newly departed Chairsatan of Fraud, Robber Ben Bernanke. The man who saved the global economy by enabling the greatest upward transfer of wealth in history. He who printed enough shitty QE paper to allow the financial swindling class to kick the subprime can by ZIRPing their tracks in mountains of cheap fiat.

We all know what the end of this will be. Precisely when, who can predict? Last time I checked on Twitter and Instagram, the laws of financial gravity have not been rewritten.

Those of us who know better (and our numbers are growing), will not stand by and allow this thieving crew of serial PhD liars, conniving Harvard Soviets and crony corporatists to quietly waltz off the stage of history into their Wall Street feathered nests of sociopathetic self aggrandisement.

Their day to be called to the people’s carpet to answer for their shameful crimes against future generations will finally come.

Until that day, look at this picture and remember just “who stole the people’s money.”

Judge Rackoff recently published a very thoughtful article titled: The Financial Crisis: Why Have No High-Level Executives Been Prosecuted? This is highly recommended reading.

The following excerpts are apropos in relation to the miserable lot depicted above:

“Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former—if the recession was due, at worst, to a lack of caution—then the criminal law has no role to play in the aftermath. For in all but a few circumstances (not here relevant), the fierce and fiery weapon called criminal prosecution is directed at intentional misconduct, and nothing less. If the Great Recession was in no part the handiwork of intentionally fraudulent practices by high-level executives, then to prosecute such executives criminally would be “scapegoating” of the most shallow and despicable kind.

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years…

I submit, one of the reasons the financial fraud cases have not been brought, especially cases against high-level individuals that would take many years, many investigators, and a great deal of expertise to investigate. But a second, and less salutary, reason for not bringing such cases is the government’s own involvement in the underlying circumstances that led to the financial crisis…

Please do not misunderstand me. I am not suggesting that the government knowingly participated in any of the fraudulent practices alleged by the Financial Inquiry Crisis Commission and others. But what I am suggesting is that the government was deeply involved, from beginning to end, in helping create the conditions that could lead to such fraud, and that this would give a prudent prosecutor pause in deciding whether to indict a CEO who might, with some justice, claim that he was only doing what he fairly believed the government wanted him to do.”

Link: http://ift.tt/1fGuOxo…

Intermediate that Squid Face!

WB7

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via Zero Hedge http://ift.tt/1nJ4TJK williambanzai7

A few days ago Bloomberg made a big splash with a story about an unknown trader who was so enamored in the BTFD mentality, or for whatever other reason, that he sold a substantial $18 million in VIX calls, betting that the market downdraft would promptly normalize. Alas, while he may have pocketed the cash up front, since then things have not worked out quite as expected for the variation margin requirements of the intrepid seller of vol.

From Bloomberg:

The trade included the sale of 250,000 February 22 calls for about 70 cents each, according to data compiled by Bloomberg and Trade Alert LLC. It happened after the VIX reached an intraday high of 18.99 around 12:20 p.m. New York time. The investor will keep the proceeds if the VIX stays below 22 and the calls expire worthless

We can only suspect the seller believed that the EM FX debacle was a storm in a teacup and that the Turkish rate hike would solve things as he entered the position soon after news broke of the Turkish Central Bank’s emergency meeting’s timeline.

While the big seller must have been cock-a-hoop for a day, his MTM is starting to hurt now…

 

and today saw some volume going through but nothing compared to the 250,000 call position he entered…

(click image for large legible version)

 

As the implied vol of VIX surges.

 

Of course – only one thing matters…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1bVZOFB Tyler Durden

The price cycle is the path prices take from low to high and back to low again. I use investor sentiment to define the price cycle. At market lows, investors are typically bearish, and at market highs, they are overly bullish. For 6 weeks now investors have been extremely bullish, and while it does pay to run with the bulls, investors will eventually bail on the markets marking an end to the up portion of the price cycle. This is what happened last week as the market finished lower for a second consecutive week!

TACTICALBETA is 100% FREE….see our strategies on GOLD, TREASURY BONDS, and EQUITIES….GO NOW!!

So investor sentiment has rolled over as the “dumb money” indicator (see figure 2 below) has crossed below the upper trading band. Investors are no longer extremely bullish. The price cycle has likely peaked, and the next buying opportunity should come when investors turn extremely bearish in their outlook. The price cycle “dictates” that every sell signal should be followed by a buy signal and so forth. But before we get to that eventuality (i.e., the next buy signal), we need to exit our current equity positions. When I backtested the “best” exit strategy, there were two things that I found. One, it was best to wait for sentiment to unwind (like it has with the “dumb money” indicator crossing below the upper trading band), and two, we had to wait for the first week where the closing price was greater than the opening price. This is what we determined as “best” as in optimal, and it should not be construed as meaning this is what is going to happen this week or next. In essence, you need to be selling strength or the “dead cat” bounce that is likely to happen as prices are short term oversold.

We turned bullish 21 weeks ago when investors were extremely bearish on the stock market. This marked the bottom of the current price cycle and the lows of the current market move. We are now looking to sell that position as we believe the price cycle has peaked. It is our expectation that lower prices will be required to turn investors bearish. This will provide us with another buying opportunity which will most likely reset the price cycle once again. Wash, rinse, repeat. There you have it.

This market narrative, whatever it may be, is only starting to play out. There will be both bullish and bearish talk. The investing mindset remains such that investors belief in the Federal Reserve or other central banks has yet to be shattered. I think that moment is a long ways off, and will coincide with a technical failure in the markets. So what do I mean by this? The markets will sell off at some point in the future and investor sentiment will turn bearish. We will become buyers when everyone else is bearish. The markets will lift like they do 80% of the time under such dynamics, and there might even be an announcement by the Fed that supports the markets and investors beliefs that the Fed has their back. But for whatever reason, the bounce will fail and the markets will move (crash?) lower not only violating those important technical levels that brought in the buyers in the first place but also destroy the notion that the Fed has control. That’s how I see a top in the markets. For now, I view the current top as an intermediate term top. It is too early to determine if this is going to be “the top”.

As a reminder, we have moved our stop loss up to SP500 1706.92.

The Sentimeter

Figure 1 is our composite sentiment indicator. This is the data behind the “Sentimeter”. This is our most comprehensive equity market sentiment indicator, and it is constructed from 10 different variables that assess investor sentiment and behavior. It utilizes opinion data (i.e., Investors Intelligence) as well as asset data and money flows (i.e., Rydex and insider buying). The indicator goes back to 2004. (Editor’s note: Subscribers to the TacticalBeta Gold Service have this data available for download.) This composite sentiment indicator moved to its most extreme position 10 weeks ago, and prior extremes since the 2009 are noted with the pink vertical bars. The March, 2010, February, 2011, and February, 2012 signals were spot on — warning of a market top. The November, 2010 and December, 2012 signals were failures in the sense that prices continued significantly higher. The current reading is neutral but heading towards bearish (as in too many bullish investors).

Figure 1. The Sentimeter

Dumb Money/ Smart Money

The “Dumb Money” indicator (see figure 2) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. The indicator shows that investors are NEUTRAL.

Figure 2. The “Dumb Money”

Figure 3 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: “Market-wide sentiment continues to move further into Neutral territory, away from a Sell Bias, as transactional volume continues a seasonal decline. With earnings season beginning shortly, most companies have closed trading windows, limiting the ability of insiders to transact non-10b5-1 purchases and sales.”

Figure 3. InsiderScore “Entire Market” value/ weekly

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via Zero Hedge http://ift.tt/1bVZLcJ thetechnicaltake

We touched upon the disappointing GM car sales number reported earlier, which were promptly blamed on snow in the winter in some part of the country, which supposedly also meant that California’s ravenous car buyers didn’t purchase vehicles due to drought or something. Either way, one thing is clear: there was a big drop in auto demand which was to be expected from an overextended consumer whose plight we have been following for years. However, where GM did surprise, is that despite its apparent realization of climatic conditions, the company decided to plough through with abnormal production levels and flooded its dealer network with inventory. So much inventory, in fact, that in January, GM’s channel stuffing pipeline rose by another 42K cars (a quarter of total sales in January), increasing the stock of cars parked at dealer lots and collecting dust to 780K from 748K in December, the second highest ever!

Shown otherwise, post-reorg GM had a record 114 days supply in inventory, compared to “only” 81 at the end of the year.

via Zero Hedge http://ift.tt/1bVSx8w Tyler Durden

Submitted by Pater Tenebrarum of Acting-Man blog,

We recently opined that it takes a decline of between 1,500 to 2,000 points in the Nikkei to raise doubts about 'Abenomics' (i.e., hoary inflationism combined with deficit spending). In order to test that hypothesis we surveyed a few headlines that have appeared in the press between November and January. Apparently even smaller declines in the Nikkei tend to sow doubt. It is really quite amazing how the stock market almost literally 'writes the news'. The same goes of course for the US and Europe – all the talk about 'recovery' is mainly motivated by rising asset prices. In other words, people mistake the temporary effects of massive monetary inflation for a sign of 'growth'. It isn't. Rather, it is a sign that scarce capital is likely being consumed.

Anyway, here is a chart of the Nikkei with accompanying newspaper headlines – it is really quite funny:

 

---

 

Abenomics: lauded when the Nikkei rallies, doubted as soon as it begins to correct – click to enlarge.

 

---

 

Of the articles listed in the chart above, the following struck us as especially interesting, as it reflects the  current consensus view quite well: “Abenomics Needs a Booster Shot”. Note that the article fails to mention a very important point: the rate of growth of Japan's money supply remains subdued, as the BoJ's 'QE' modus operandi tends to massively increase bank reserves, but fails to boost the money supply directly. Other than that, the article points out that further measures from the BoJ should be expected, as it will attempt to 'balance out' the effect of the coming sales tax increase. That it is basically sheer lunacy to expect genuine growth to result from a combination of inflationism and mercantilism is of course not discussed.

The Nikkei has meanwhile arrived at a crucial support level – a bounce from here seems likely. Conversely, if this support level fails, it would have to be seen as a big short to medium term negative in our opinion:

 

---

 

The Nikkei currently resides near converging support lines – click to enlarge.

 

---

 

JGB and Yen

We just came across an article published in 2009 about the 'impending big crash in the  JGB market'. The risks to JGBs are currently no doubt greater than they have been in quite some time, but this example shows why shorting JGBs has become widely known as the 'widow-maker trade'. Time and again the crash of this market has been expected and speculated on – and yet, JGBs remain only a smidgen below their all time high:

 

---

 

10 year JGB: at 144.86, it is only a little over one point below its all time closing high – click to enlarge.

 

---

 

So far, there's still only one JGB crash:

 

---

 

'Crash' – a novel by JG Ballard (or JGB for short).

 

---

 

Clearly, the JGB market doubts that 'Abenomics' will manage to produce a lasting increase in inflation, in spite of the recent uptick in consumer prices on account of yen weakness.

It also seems that the yen continues to move closer to the minimum target range for the upward correction we recently discussed:

 

---

 

The yen continues to look perky. Money supply growth in Japan remains very low compared to that in other developed nations, and the entire decline in the yen seems to have been driven by a change in sentiment alone – click to enlarge.

 

---

 

Conclusion:

We are still wondering what Abenomics is supposed to achieve. With a graying population and consequently a shrinking work force, inflationary policies seem especially ill-conceived in Japan. Given that
unemployment was already very low when Abe came to power, there seems to be no point in employing the Keynesian trick of lowering the real incomes of workers even from the point of view of those who normally support such policies (which sadly includes most of the economic mainstream). 

If the BoJ were to alter its modus operandi and actually boost the money supply directly, an upset in the the JGB market would become increasingly likely.  Maintaining the market's calm is predicated on the belief that the inflationary policy pursued  by Abe/Kuroda will actually fail. Moreover, Japan's government can simply not afford higher borrowing costs, as 25% of its tax revenue is already going toward merely servicing interest costs on its current outstanding debt. In other words, Japan's government bond market is a glaring example of a Ponzi scheme (actually, all government bond markets are, but Japan's is topping the list among industrialized nations). If the BoJ 'succeeds', this might ultimately be the consequence:

 

---

 

Elbonian inflation: purchasing a potato becomes a complex task.

via Zero Hedge http://ift.tt/1k49zcT Tyler Durden

Submitted by Pater Tenebrarum of Acting-Man blog,

We recently opined that it takes a decline of between 1,500 to 2,000 points in the Nikkei to raise doubts about 'Abenomics' (i.e., hoary inflationism combined with deficit spending). In order to test that hypothesis we surveyed a few headlines that have appeared in the press between November and January. Apparently even smaller declines in the Nikkei tend to sow doubt. It is really quite amazing how the stock market almost literally 'writes the news'. The same goes of course for the US and Europe – all the talk about 'recovery' is mainly motivated by rising asset prices. In other words, people mistake the temporary effects of massive monetary inflation for a sign of 'growth'. It isn't. Rather, it is a sign that scarce capital is likely being consumed.

Anyway, here is a chart of the Nikkei with accompanying newspaper headlines – it is really quite funny:

 

---

 

Abenomics: lauded when the Nikkei rallies, doubted as soon as it begins to correct – click to enlarge.

 

---

 

Of the articles listed in the chart above, the following struck us as especially interesting, as it reflects the  current consensus view quite well: “Abenomics Needs a Booster Shot”. Note that the article fails to mention a very important point: the rate of growth of Japan's money supply remains subdued, as the BoJ's 'QE' modus operandi tends to massively increase bank reserves, but fails to boost the money supply directly. Other than that, the article points out that further measures from the BoJ should be expected, as it will attempt to 'balance out' the effect of the coming sales tax increase. That it is basically sheer lunacy to expect genuine growth to result from a combination of inflationism and mercantilism is of course not discussed.

The Nikkei has meanwhile arrived at a crucial support level – a bounce from here seems likely. Conversely, if this support level fails, it would have to be seen as a big short to medium term negative in our opinion:

 

---

 

The Nikkei currently resides near converging support lines – click to enlarge.

 

---

 

JGB and Yen

We just came across an article published in 2009 about the 'impending big crash in the  JGB market'. The risks to JGBs are currently no doubt greater than they have been in quite some time, but this example shows why shorting JGBs has become widely known as the 'widow-maker trade'. Time and again the crash of this market has been expected and speculated on – and yet, JGBs remain only a smidgen below their all time high:

 

---

 

10 year JGB: at 144.86, it is only a little over one point below its all time closing high – click to enlarge.

 

---

 

So far, there's still only one JGB crash:

 

---

 

'Crash' – a novel by JG Ballard (or JGB for short).

 

---

 

Clearly, the JGB market doubts that 'Abenomics' will manage to produce a lasting increase in inflation, in spite of the recent uptick in consumer prices on account of yen weakness.

It also seems that the yen continues to move closer to the minimum target range for the upward correction we recently discussed:

 

---

 

The yen continues to look perky. Money supply growth in Japan remains very low compared to that in other developed nations, and the entire decline in the yen seems to have been driven by a change in sentiment alone – click to enlarge.

 

---

 

Conclusion:

We are still wondering what Abenomics is supposed to achieve. With a graying population and consequently a shrinking work force, inflationary policies seem especially ill-conceived in Japan. Given that unemployment was already very low when Abe came to power, there seems to be no point in employing the Keynesian trick of lowering the real incomes of workers even from the point of view of those who normally support such policies (which sadly includes most of the economic mainstream). 

If the BoJ were to alter its modus operandi and actually boost the money supply directly, an upset in the the JGB market would become increasingly likely.  Maintaining the market's calm is predicated on the belief that the inflationary policy pursued  by Abe/Kuroda will actually fail. Moreover, Japan's government can simply not afford higher borrowing costs, as 25% of its tax revenue is already going toward merely servicing interest costs on its current outstanding debt. In other words, Japan's government bond market is a glaring example of a Ponzi scheme (actually, all government bond markets are, but Japan's is topping the list among industrialized nations). If the BoJ 'succeeds', this might ultimately be the consequence:

 

---

 

Elbonian inflation: purchasing a potato becomes a complex task.

via Zero Hedge http://ift.tt/1k49zcT Tyler Durden

It was only a few days ago that Emerging Market FX was rallying on the back of a Turkish Central Bank rate hike that "fixed" everything. It was only a few days ago that investors were told they were "stupid" if bearish on US stocks because of EM weakness. Things have not gone as planned. That temporary blip has been demolished and EM FX has crumbled lower to fresh 5-year lows with many hitting record lows… and no, this does not mean money will flow back into US stocks (as we exclaim below).

• *COLOMBIAN PESO EXTENDS DROP, FALLS 1.7% TO 2,050.25 PER USD
• *ARGENTINE PESO WEAKENS 0.2% TO 8.0344/USD IN OFFICIAL MARKET
• *TURKISH STOCK INDEX DECLINES 2ND DAY TO LOWEST SINCE JULY 2012
• *YANUKOVYCH SAYS UKRAINE MUST STOP `EXTREMISM AND RADICALISM'

 

EM FX hits fresh 5-year low…

 

As the hope of "fixed" is gone…

 

We suspect the topic of "buying US stocks because money will flow back to the US from EM" will be popular among asset-getherers (and Tom Lee) – we offer the following clarification of that idiocy (from Sean Corrigan):

The ironists among market punters will even attempt to construe all this as a reason to buy more developed world stocks on the premise that the money flooding out of such places as Thailand, the Ukraine, Turkey, and Argentina will be parked in the S&P and the DAX (perhaps overlooking the fact that the purchase price of these now-unwanted positions was most likely borrowed, meaning that their liquidation will also extinguish the associated credit, not re-allocate it).

 

…

 

For their part, the biddable are already trying to drown out the noise of the Cacerolazo by making the fatuous argument that the EMs account for such a piffling portion of world GDP that their fate should be a matter of complete indifference to the rest of us.

 

Needless to say this is a touch disingenuous at best. Their share of end consumption-biased GDP may be lower, but they account for an equivalent fraction, if not a small majority, of global industrial production – and they have been responsible for an even bigger proportion of its growth this past decade. Ditto for trade and ditto for resource use.

 

Spot the difference – one of these is EM FX, one is USDJPY, and one is the S&P 500…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1kFcC9d Tyler Durden