"It's the new permanent plateau"
This aging Idiocracy traded jobs and industries for "markets": Return on capital overwhelmingly favoured over return on labour. What they apparently don't know, is that in the absence of revenue, historically inflated profit margins no longer function as expected. What they also clearly don't know is that when everyone is on the same side of the trade, "markets" no longer function as expected. In summary, what we've learned since 2008 is that an Idiocracy doesn't learn...
This week we were informed that Caterpillar reported profits and revenue that "handily" beat Wall Street's expectations. As it turns out December 2017's quarterly revenue of $12.9 billion was the exact same as it was in December 2008. Yes, you read that right. Meaning that all of the stock gains in the past 10 years were compliments of stock buybacks. Stock buyback alchemy has been the primary driver of stock market gains since 2008, funded of course by mass layoffs.
As we see from commodities, global "reflation" is an asinine farce, believed by 7.5 billion zombies. Ironically, they were conned by their own self-destructing alchemy. Globalization was only ever a recipe for self-destruction.
"The secret to global recovery is mass layoffs"
And we can thank global central banks for sponsoring this massive con job, which they are unfortunately now unwinding post haste. They are taking full advantage of the sheeple's relentless late stage manic reach for risk, to take down liquidity:
ZH: Bonds Get It. Stocks Don't. Yet
" the ongoing decline in CB assets is starting to have an adverse impact on investment grade spreads which have been pushing wider in recent days
stocks have - for now - de-correlated from central bank balance sheet"
It's as if the entire world is expecting a tax cut.
But instead, they're about to get a haircut.
And no, they don't see it coming.
Why? Because the Central Bank low volatility Jedi Mind trick meant that for the first time in stock market history, breadth deterioration was not "priced in" ahead of the market decline:
"recent retail capitulation which has seen retail investors unleashed across stock markets, buying at a pace not seen since just before both the 1987 and 2008 crash, helps explain why stocks have - for now - de-correlated from central bank balance sheets"
if the Citi correlation extrapolation is accurate, and historically it has been, it would imply that by mid-2019, equities are facing a nearly 50% drop to keep up with central bank asset shrinkage"
Global stocks (light blue). Combined CB assets (dark blue):
"It's called Ponzi reflation. You wouldn't understand it"
