It's Trump's world, we just live in it. To hear his true believers tell the tale, he is the new saviour. They have nothing left to sell. Meanwhile, the Pope's message this year was don't confuse religion with God, since they rarely have anything to do with each other. Something I've said all along.
Quite a year indeed.
Now, with scarcely three trading days left it's clear that the algos are pinning this year's winners to the stratosphere to avoid taxable gains. Which will create a massive air pocket under the market at the beginning of January.
At the latest.
Bears on Wall Street are non-existent. To be "wrong" this late in the year is to be wrong forever, from a bonus/P&L standpoint - the only thing that matters to them.
Bears in general are non-existent. Again, a function of the capitulation to Trumptopia and the belief in simulated prosperity. To be bearish today requires a political point-of-view that this is all merely an election rigging gambit on a biblical scale. Something today's Lost Boys will never admit. Which is why they blame the Fed instead of their beloved avatar for this contrivance. The Fed was bent and broken in 2019, twisted to Trump's own use. An abuse of economic power unprecedented in U.S. history. In addition to the rate cuts demanded by Trump, his chasmic deficit and the repo crisis it created, was the direct causation of RECORD balance sheet expansion, all a Trump invention.
The double standard between what Trump can get away with versus any Democratic president is ludicrous.
Be that as it may, the reign of global dictators is running on glue fumes. Teetering at the precipice of historic implosion.
Today's "success" at keeping their illegitimate power intact is measured solely in the numbers conned and accompanying misallocation of capital on an EPIC scale.
Sadly, voting to overturn democracy with misallocated dollars won't work. The bidding up of asset values to extreme valuation has been tried before - in 2008. Back then it was the buying up of subprime CDOs and CDS contracts which had the shelf life of a rotten banana. Today's compression of yield spreads is deja vu of that era, as warned about in the article above. This idea that low volatility and risk yield compression are indicators of "low risk" amid record asset prices, should have been FULLY discredited after 2008. This time around, the lesson will be much more permanent.
2019 will be viewed in hindsight as the year that global investors mistook recession as a buying opportunity. Having been trained via Pavlovian response to view interest rate and yield collapse as a reason to seek risk. As predicted by Hugh Hendry five years ago this week:
"The worse the reality of the economy becomes, the more we take on the reflexive belief in further and dramatic monetary expansion and the more attractive the stock market looks."
