Given the multiplying and shrilling-squawking omens of hubris and overconfidence in today's hyper-extended markets -- a murder of complacencies, if you will -- we conclude we've reached the point in this storyline where the suspense has risen to its zenith, and the real violence then begins.
The spread between the "smart" and "dumb" money confidence is about as wide as it has ever been, and perhaps just as notable, the "Smart Money" is at or near the lowest level of "confidence" in recent history despite, or perhaps due to, the S&P just several days ago hitting new all time highs.
A problem has emerged as Wall Street scrambles to trade on Trump tweets: while HFT strategies can quickly identify that a stock was referenced in a tweet, isolating if the actual message is bullish, bearish or indifferent presents a major challenge.
"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."
"This is much like a Bernie Madoff scheme, if you ask me," said Dallas mayor Miek Rawling discussing the collapse of the local Dallas Police and Fire Pension Fund. The Dallas pension board wants the city to contribute $1.1. billion in 2018, but to do that, they would have to increase the property tax rate by 130%.
Record levels denote the point that previously marked the end of a cycle, not the beginning of a new one. This point is often missed by the mainstream media. Record highs of anything, whether it is economic, fundamental or financial data, are warnings signs of late stage events.