Monday, January 27, 2020


This frenzied MAGA circle jerk has created human history's biggest con job, in the quest to destroy democracy. Sadly, it won't work, but not for lack of lying...

Trump squandered all of the fiscal and monetary stimulus creating human history's biggest asset bubble, which is why confidence in his asset bubble is at a Y2K high. You can't make this shit up. 

The average person today has no idea if this is the greatest economy in twenty years. All they know is what they are told constantly - that this is the greatest economy in U.S. history.

No one in the lamestream media openly questions this fraud. Because to rain on today's confidence parade is not conducive to ad-sponsored popularity. This is human history's greatest example of the emperor has no clothes. Every fool afraid to question the standard narrative for fear of feeling stupid.

Today's gamblers are of the belief that it doesn't matter what drives asset prices higher, so long as asset prices keep going higher. They take their cues from a super asset bubble that everything is going just fine, and then they pump more money into the super asset bubble. Not once stopping to think that maybe valuation matters. Zerohedge and Wall Street have done their part to convince everyone that the central bank safety net will prevent any major dislocation. It didn't work in 2008 and it finally kicked in -20% in 2018, but now drawdowns magically won't exceed -5%:

"this means that the Fed's safety net will prevent a major selloff even if, or rather especially if the coronavirus epidemic results in collapse in economic supply chains and economic devastation"

In other words, the Fed now has the ability to not only create record bubbles, but also to prevent them from ever imploding. The only question for today's Idiocracy, is why didn't anyone try this sooner? This is the type of magical thinking and EXTREME moral hazard one would expect at the end of a decade of non-stop monetary bailouts. The idea that no amount of leverage and speculative risk will be punished. Where have we heard this imagined reality before?

Hugh Hendry, China circa December 2014, just prior to market crash:

"The Chinese state is the largest shareholder in the Chinese financial system. That surely makes its ability to stave off a liquidity crisis pretty much limitless"

If you call a -60% drawdown staved off risk, then that's true.

On the topic of China, that country is seeing its worst GDP growth in 30 years, imploded by the trade war, the swine flu, Hong Kong riots and now a pandemic. Which is coming at the worst possible time. Emerging markets are bidless as Chinese markets are not open this week due to the Lunar Holiday:

"Now for the good news"

This fantastical belief that the U.S. is decoupled from the rest of the world's problems, or better yet the beneficiary of Chinese collapse, is the biggest fantasy of all.

Morgan Stanley specifically favors defensive stocks which have been on a tear lately and are now massively overvalued. The fact that recession stocks are now leading doesn't appear to register as a risk.

"Remarkably, the index is on track for a 7% return for January with a week to go, a 200 basis point beat vs. it’s prior best January return since 2000"

The belief that massively overvalued Utilities can support the entire market in a RISK OFF selloff, is a fantasy. The second smallest sector in the entire market. 

All of which means that unforeseen mega implosion can only come as a super shock to this society. No one has equipped them for what is coming. In fact, according to the same Gallup article above, concerns over the economy are now at a RECORD low.

Risks are at a RECORD high. Concerns at a RECORD low.

Any questions?

"Of the three asset crashes I didn't see coming, I rate this one the highest"