When (Not If) It Cracks.....
The Market Ticker - Commentary on The Capital Markets
2017-11-09 10:48 by Karl Denninger
in Market Musings , 430 references Ignore this thread
When (Not If) It Cracks.....
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Is "this" the one?

Probably not.

But is it a warning you damn well better pay attention to.  The media harpies are screaming about "worst day since", which is rather amusing considering that none of the primary indices are off more than 1%; the DOW is down about a half-percent as is the S&P!

If that brings out the caterwauls what's going to happen when the market drops 2, 3, 4%?

See, you've all gotten the idea drilled into your head (as has the media) that markets never go down and so even a tiny 1/2% move southbound gets the screaming going.

Really folks?

If you look just at the indices you'd think all is ok.  You'd be wrong.

There are a tremendous number of stocks that are way down over the last year and a huge percentage of them are what one would call "customer-facing."  In other words -- businesses that sell things and services to people.

The it's all about your hedonism Zuckerpig enterprise is up massively, of course. So is the we'll cross-subsidize product sales and I walk on water Spamazon.  And, of course, a handful more.

But underneath the market yesterday, for example, was an utterly ugly up/down volume graph.  Same with the day before.  This divergence has shown up before -- twice, specifically, before.

In late 1999 and early 2000 we saw this pattern in tech.  In 2007 and early 2008 we saw this pattern as well.  In neither case did a big break come immediately but in both cases it was a warning that something severe was wrong with the economy.

Specifically, it warned you that the economy was being powered mostly by fraud.  That people were stealing, basically, from an intentionally-drugged public.

In the 2000 timeframe it was companies running loss-making businesses with no rational plan that could turn a profit given the mathematical realities of the population.  In other words they were doing the "lose a little on each sale but make it up in volume" game -- which is a lie.  They came public on that lie, they sold that lie, and it worked to pump their stock price for a good long time -- until it didn't.

In the 2007 timeframe it was the financial markets that ran the loss-making business.  They hid it via complex securitizations which they could not have sold without lying about what was in them; the infamous so-called "good securities" that the people selling were calling "vomit" when talking to their colleagues and friends.  This drove a monstrous bubble in housing and when it blew up so did the economy.  It is arguable that The Fed and Federal Government drove that bubble on purpose to try to "recover" from the 2000 crash.  While I can't get in the head of the people who did it I can look at the results; whether it was intentional I'll leave to you.

Today, here we are.  Supposedly "huge" earnings are being posted and "huge" growth numbers but this is on the back of income growth for those who consume these goods and services that is less than the emission of new credit by the federal government.  In real terms GDP has not gone up at all; it has in fact gone down.  The claim of "no inflation" is also a lie committed by refusing to count things that go up in price -- houses, stocks, health care costs, etc.  The people "counting" inflation, for example, have this to say about "health insurance" cost:

The first column is the percentage of your total spend that is claimed to be "health insurance" and the second figure is the one year change in price.

May I remind you that in Florida the average increase in health insurance cost right now for the coming year is approximately 25%.  Of course the claim is made that since most people get their "health insurance" through their job they thus spend "nothing."  This is a raw lie since if you load up that cost on an employer guess who ultimately pays?  You do in the form of lower wages, and not a little lower either.

There are similar intentional frauds all over the table.  We don't count price increase in houses, we count owners equivalent rent, which is what you could have rented for but didn't.  The problem of course is that if you own a house you didn't rent, you bought and so the price change is what you paid and this figure in the table is a work of pure fiction.  That, by the way, was one of the means by which The Fed avoided, on purpose, raising rates to cut off the housing bubble before it happened and it's happening again, especially in places like Seattle and Silicon Valley.

The car insurance companies all claim there's no "real big problem" with rate-jacking but the CPI says car insurance is up over 8% in the last year.  That's about right, by the way.  How about video and audio "services"? Satellite/cable TV up 7%.  Then there's the laughable claim that college costs are only up 2% (ha!)

I've written on the horsecrap in this report dozens of times and in fact it's covered well in Leverage at a depth I don't really care to repeat here; after all, nobody seems to care in the 'real world' we live in.  But this is exactly how the government and barkers, er, "bankers" blow their bubbles so as to try to paper over the last one -- compounded by finding some form of opium to put in front of the public and get them to consume it in volume.

It sort of works too, I suppose, provided you sell and get out in time.

Almost nobody ever does and I'm sure I'll see plenty of snarky comments on this article as well.

What stops you from thinking about this stuff?  You.  You get on "social media" and allow it to prod you into becoming a drone.  That you're being strangled almost-literally from an economic and personal perspective doesn't matter.  All you do is preen around and when you post your selfies the entire point is to hear how pretty you are in response.  If you don't get enough of that you post more selfies.  If it still doesn't work eventually you commit suicide.  No, I'm not kidding; a fair number of people who "fail" at getting people to tell them how wonderful they are on social media do exactly that.

And by the way, if you think Zuckerpig didn't know what he was building or that this outcome is an accident -- it's not.  All of it was and is intentional and it remains so today yet instead of holding a business BBQ and burning the firm to the ground (legally, of course, by both leaving and eschewing anyone who advertises on it) you post cute pictures every single day and keep on the merry-go-round of expecting people to tell you how pretty you are.

It's sort of like putting heroin in the water in that the point is both for you to feel good and become addicted.... and yet we sit back and not only allow it we reward that behavior by Zuckerpig and others.

Same deal with Spamazon, really, when you get down to it.  And to a large degree with Google and Apple too, which does its level damndest best to infiltrate your life, collect everything it can and sell it to the highest bidder, after filtering it through their preferred social model.  A social model that is, of course, socialist and they're the ones at the top who get all the graft which they steal from you.  You, as a "commoner", get ****ed -- repeatedly -- and yet all you do is mewl forth "please sir, just the tip this time."

It's not just about advertising, you see -- it's about making you at a psychological level conform to their model so you will find ever more ways to go further into the hole and screw yourself.

There is no real difference between what these people are doing and opiate addiction.  Zuckerpig, Hastings, Bezos and more are the pushers and pimps, profiting mightily from destroying you!

Think I'm full of crap?  The founding President of Facebook admits to it and that it's intentional:

"And that means that we need to sort of give you a little dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever. And that's going to get you to contribute more content, and that's going to get you ... more likes and comments."

I thought we threw drug pushers in prison?  Or is it only certain drug pushers, even when they target kids?

Meanwhile those who are screwing others, including kids, get a pass and are funded by these very same creeps instead of watching their company, customer base and stock price detonate when those "indiscretions" (I know, we have to come up with a nice word for "rape" or "molestation" because we can't say THAT) are exposed.

The problem with ignoring math is that it always wins in the end; you can stick your head in the sand and go into debt up to your eyeballs but you can't escape arithmetic and the laws of exponents, and the more selfies you post instead of roasting these jackasses the worse the blowup will be.

Enjoy the decline.

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User Info When (Not If) It Cracks..... in forum [Market-Ticker]
Scb175
Posts: 40
Incept: 2008-11-01


Banned
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All time Highs coming today
Nevertoolate
Posts: 1378
Incept: 2007-08-26
A True American Patriot!
San Antonio de Bexar de runover with illegals, Texas
Online
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Bezos just sold over 1 Billion of Amazon stock. Tick, tick, tick. Soon the floating rats will be looking for another sinking ship to get on.

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Democracy is a conversation between 2 wolves & a sheep discussing what's for dinner. A Constitutional Republic is found when the sheep pulls out a gun & makes clear that his 2nd Amendment Right will be exercised should the wolves attempt to hold such a "vote."-KD 9-29-15
Fedwatcher
Posts: 1959
Incept: 2009-04-07

Southern California
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The shift in who advertises more and who advertises less on financial media is interesting.

On the less side are the traditional ad supporters of outlets like CNBC: stock brokers, mutual fund companies, etf's, and financial advisors. These want you to invest with them to gather their fees.

With the explosion in the number of etf's there also is an explosion in the number of funds closing.

On the plus side are the suppliers of luxury goods: Mercedes, Audis, Infinities, watches, etc. all aimed at the 1% who are heavy into stocks and still have disposable income.

Also on the plus side are those promoting low interest rates and the equivalent to pay-day lending.

Debt is a cancer that keeps on growing.

Thus we see the talking heads on financial media engaged in classic pump and dump.

Yes, Fraud is the business model of choice for too many.


Wa9jml
Posts: 48
Incept: 2017-04-29

DeKalb, Illinois
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Back when I was teaching a public policy course at my once beloved university, I found a website that gave the histories of American financial panics all the way back to the 1780s. The common threads to these events were always fraud, and excessive speculation. But, of course it is different now...
Tickerguy
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A True American Patriot!
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I listed a number of them in Leverage as well, and noted that they are all a function of fraud on a grand scale.....

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Winding it down.
Sandor
Posts: 1996
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Marathon,Fl
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My Obamacare insurance went from $883 to $1488. My subsidy is $870, and I'm not sure if they are going to raise that this year. Silver to bronze for me. I guess.



Quik49
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.hoser Equifax up 1.7% .... all is well

smiley

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Long Vaseline....

Analog
Posts: 1486
Incept: 2010-12-29

arkansas ozarks
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Quote:
hoser Equifax up 1.7% .... all is well


Does this mean anything ?

https://www.marketwatch.com/story/equifa....
Quote:
Equifax Inc. estimates that it has already lost nearly $90 million from the massive data breach that it announced two months ago, but is giving investors and analysts the ability to ignore it.

In its first quarterly earnings report since revealing that data on more than 145 million Americans was put in jeopardy when intruders managed to infiltrate the data-warehousing companys network, Equifax EFX, +1.63% admitted that profit declined 28% from a year ago. However, after wiping away the $87.5 million in costs of the data breach for its adjusted earnings metric, Equifax was able to claim a 6% gain in profit and beat average analyst estimates.


Creative accounting or plain fibbing ?


a.

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Never trust a computer with anything important.
Tickerguy
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"Well now, if we don't count the loss-making things then we made a profit!"

smiley

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Winding it down.
Hamburglar
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citified
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Jesus Christ on a bike Analog that is simply surreal but expected after March 2009 I guess

2018 Recovery Summer X got your shovels ready? Ten ****ing years of this ****

Karl I noticed your totality pic on your Twitter av it looks more like America's event horizon to me #katybarthedoor
Quik49
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Like I said....all is well.

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Long Vaseline....

Mr_clueless
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CalculatedRisk thinks they are not in a bubble.
http://www.calculatedriskblog.com/2017/1....

He has been right about almost everything (predicted no recession through all the ups and downs we've had since March 2009).
Bodhi
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Georgia
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Quote:
"Well now, if we don't count the loss-making things then we made a profit!"


Reminds me of the late 90's when a tech firm would report a quarterly loss not quite as massive as expected and their stock would soar toward the heavens.
Whitehat
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New York City
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speaking of Facebook, i can't believe that i just ****ing read this:

Facebook asks users for nude photos in project to combat revenge porn

https://www.theguardian.com/technology/2....

please tell me that people will not be this stupid, oh, forgot what we discuss here regularly.

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There are two ways to be rich: One is by acquiring much, and the other is by desiring little.
Ckaminski
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Mass-Hole!
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@Whitehat:

That's not actually a bad idea - if they gave out the software to hash the photos versus requiring you to upload them.

But holy **** the audacity!
Flappingeagle
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At 11:41 on Friday morning the indices are all off just a small amount.

That has me wondering. How many consecutive or nearly consecutive slightly down days would it take to break "investor confidence"?

Would it break or would the boiled frog scenario rule the day?

Just some thoughts,

Flap

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Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave the Rat Race to the rats...
Asimov
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East Tennessee Eastern Time
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Quote:
speaking of Facebook, i can't believe that i just ****ing read this:

Facebook asks users for nude photos in project to combat revenge porn

https://www.theguardian.com/technology/2....

please tell me that people will not be this stupid, oh, forgot what we discuss here regularly.


Even better: It's not like facial recognition, you have to send them EVERY image you want them to block.

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It's justifiably immoral to deal morally with an immoral entity.

Festina lente.
Tickerguy
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Wankers-R-Us work at Facesucker.

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Winding it down.
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