The Crash Chronicles

[Uncle Festivus]

Comrades, capitalists & corporatists.

It's that time of the cycle again when extraordinary becomes the new norm.

Here cometh the piper?

http://www.visualcapitalist.com/63-trillion-world-debt-one-visualization/

 

[Uncle Festivus]

Irrational exuberance exhibits.....

A bowl from China's Song Dynasty sold at auction for $37.7 million on Tuesday, breaking the record for Chinese porcelain, auction house Sotheby’s said.

 

[Uncle Festivus]

Back in the real world, with several hard data prints indicating structural peaks and rolling over, perhaps it's time to trend the NFP for the usual once a month hullaballoo over a statistic that isn't a statistic - it's a guess. They will get their bounce and all will be fine again.....




Everyone? has a job but get paid a pittance. The globalists are ecstatic!

 

[explod]

Very timely Hunk, the stars are certainly allovadaplace.

Finding it hard to look so just keep saving the old silver coins. Hope alls good up in them hills

 

[Uncle Festivus]

Yes, bunkered down & ready for the fireworks, very soon. The swamp critters are completely in charge now so the hubris of invincibility with the perpetual central bank Put will blow the top off regardless of any other measure(s) indicating, yet again, a multitude of bubbles that only benefit the 1% er's.

I'm surprised that there hasn't been a decent tantrum to try and stay the not so invisible hand of the Fed to raising rates and, ahem, reducing their balance sheet, which is a contradiction in terms if ever there was one - it's hardly balanced.

I guess this one will be the doozy of all flash crashes and corrections when it does come, and I think we are closer to that time than most think, although there will be all sorts of circuit breakers going off and wringing of hands as to what will happen when said circuit breakers are 'reset'.

The fatherly CB's will once again step up with their bazookas and 'whatever it takes' but this time it's game over, the end of this episode of 'I owe you nothings' fiat? And we won't even go to virtual currencies - another bubble to be burst....

It's going to get messy....

 

[Uncle Festivus]

Even bubbles are relative to reality - they burst at extremes of complacency.

11 Charts

 

[Uncle Festivus]

Are you ready for reality?

Nuff said.

 

[Uncle Festivus]

Global debt soared to a record $US233 trillion in the third quarter of 2017, according to a report from the Institute of International Finance.

That marked a $US16.5 trillion – or 8% – increase from the end of 2016. It also reflected record highs for private nonfinancial sector debt in Canada, France, Hong Kong, Korea, Switzerland, and Turkey.

One possible side effect of this massive debt burden could be a reluctance from central banks to tighten lending conditions, the IIF says. It points out in the report that because a prolonged low-interest-rate environment contributed to the swelling of debt levels, sovereign banks may be reluctant to rock the boat by hiking.

“High debt levels could limit the pace and scale of policy tightening, with central banks proceeding cautiously in an effort to support growth,” a group of IIF analysts led by the executive managing director Hung Tran wrote in the report.


Read more at https://www.businessinsider.com/glo...ebt-to-gdp-falling-2018-1#vokya3HlAoQYR40c.99

 

[Uncle Festivus]

NYSE Margin Debt.

It could be argued that the NBER will/should eventually agree that there was a mild recession in 2016, as shown by several data sets eg transports/freight rail etc.

Spikey bits followed by down bits......trigger?

 

[Uncle Festivus]

Trump IS the Black Swan

Trade deficit getting bigger, and will blow out even more with the USD falling, which will also give the Fed their much missed and confused 2% inflation through increased imported goods prices (paid for by more consumer debt no doubt).

Fiscal deficits about to explode also - the US will be increasingly reliant on the good will of foreign debt buyers to fund an expanded Trump fueled debt binge.

It seems like Trump is trying to extrapolate the same methodology used in his debt based property dealings into some sort of global debt based ponzi? And with all good ponzi schemes, it relies on finding bigger fools to offload on to.

 

[Uncle Festivus]

Leverage up like a good corporatist, be damned the consequences.



Exponential = unsustainable.

 

[Knobby22]

Trump IS the Black Swan

Trade deficit getting bigger, and will blow out even more with the USD falling, which will also give the Fed their much missed and confused 2% inflation through increased imported goods prices (paid for by more consumer debt no doubt).

Fiscal deficits about to explode also - the US will be increasingly reliant on the good will of foreign debt buyers to fund an expanded Trump fueled debt binge.

It seems like Trump is trying to extrapolate the same methodology used in his debt based property dealings into some sort of global debt based ponzi? And with all good ponzi schemes, it relies on finding bigger fools to offload on to.

I agree 100% however as with Bond, Greece, etc. the debt binge leads to a big bubble first. Considering that he has only just past the tax cut and is yet to start the infrastructure, I reckon this bubble is only halfway.

 

[Uncle Festivus]

I agree 100% however as with Bond, Greece, etc. the debt binge leads to a big bubble first. Considering that he has only just past the tax cut and is yet to start the infrastructure, I reckon this bubble is only halfway.

I'm not so sure - it's looking like the last stages of the last fake bull run on fake Fed liquidity back in 2008 - it's going vertical = unsustainable!

He's not saying how he's going to pay for all of it, but the treasury does - with foreign debt at higher rates! $Trillion dollar deficits forever, until it breaks.

Mostly irrational FOMO right now, they will take it till it breaks.....

Global markets are not only priced for perfection, on a P/E basis it will have to last for several more decades without any recession at all?

Unlike the old days (like 2008) things will move far faster this time around due to tech - it could all be over in a matter of days, if it were not for circuit breaker rules kicking in. If a market is suspended they won't be able to sell, and when it does open all hell will break lose immediately.

At the rate it's going, the reckoning is close?

 

[So_Cynical]

Markets are forward looking so one could argue that the continuing run up in the US was in expectation of the infrastructure spend and tax cut, buy the rumour sell the fact, Trump is a nut after all..no getting around that.

 

[Uncle Festivus]

Markets are forward looking so one could argue that the continuing run up in the US was in expectation of the infrastructure spend and tax cut, buy the rumour sell the fact, Trump is a nut after all..no getting around that.

Yes, but how much is to be 'priced in' based on future maybe's? Several people have done the sums - it should add about 10% to index values, and that was back when the Dow was circa 20K. So we are well and truly passed the 'actual' value stage and into the topping phase - I've seen it back in 1987, 2000, and 2007 - all the same just different actors at the helm of the savior society's eg CB's.

What has been priced in is that the tax & infrastructure biz will improve the economy, which is not a certainty, esp when they will have to pay for it by printing or donations? As of right now all the tax receipts received only cover health, defense and education so any reduction in tax will mean someone misses out, most likely health & education? Treasury issuance will explode!

The new figure going around is 12/1 - that's how much the various central bank balance sheet expansions cost V return ie for every $12 in 'assistance' they get $1 in 'growth'.

Then there are the bond guys sitting on the edge ready to pull the trigger if it does in fact become a bond bear - one sided massive leverage hanging round the exit door - not going to end well.

 

[Uncle Festivus]

OK, so it's Dow 1K per week now??

Meanwhile, back in the real world - nothing to see here?

 

[Uncle Festivus]

Paying more for your leverage - good luck with that!

The two-year Treasury yield jumped above 2 percent, marking a rebound to a key psychological level last seen just as the U.S. sank into the depths of the financial crisis in September 2008.

Now, in a development that may have seemed unthinkable during much of the economic recovery, the two-year note provides investors with more income than dividends on the S&P 500 Index.

 

[Uncle Festivus]

Super Mario - yikes! Why do all central bankers look like death?

 

[Uncle Festivus]

Some people understand it and some do not?

Investors stand to lose a lot if inflation rises further over the next few years because today’s still low yields won’t compensate them for the loss of purchasing power. And they’re getting just a wee-bit nervous about it.

This nervousness will be one of the factors driving the 10-year yield higher. There are other factors too, including the increased supply of government bonds needed to finance the larger deficits following the tax cuts, and the biggie: The Fed’s QE Unwind, or “balance sheet normalization.” The scheduled balance-sheet shrinkage accelerates this year to:

Q1: $60 billion
Q2 $90 billion
Q3 $120 billion
Q4 $150 billion
For a total of $420 billion in 2018. This is scheduled to increase to $600 billion in 2019.

https://wolfstreet.com/2018/01/12/m...e-fed-dudley-gets-nervous-fires-warning-shot/

Balance-sheet shrinkage since the October announcement - so far, the Fed allowed $17.5 billion of Treasuries to roll off. Yeh right, essentially zero! No wonder nobody listens to Fed speak anymore and are blowing up the markets!

The Chinese 'not buying US T's anymore' rumour was quickly downplayed and refuted, yet for any creditor to the US the weakening USD is starting to get painfull - watch bonds flip to a full blown bear....Treasury will have to find, or print, another $500B this year alone, for a total of over $1Trillion for deficit funding - ad infinitum and compounded by the GOP tax 'gift for the wealthy'.

Even normalized interest rates would crush the US budget under interest payments. Analysts have calculated that if the interest rate on Treasury debt stood at 6.2% – their level in 2000 – the annual interest payment on the current debt would nearly triple to $1.3 trillion annually.

When the bears have not only capitulated but have also gone long the bubble, and the bulls are actively calling for a 'healthy' correction, you know there are a lot of itchy trigger fingers ready to dump bigly.......perhaps any week/day now? Closer to the end of the GFC than to the beginning?

 

[CanOz]

https://www.themacrotourist.com/posts/2018/01/16/fang/