Saturday, February 29, 2020

The Reign Of Denial Is Crashing In Denial

Until global capitalism succeeds in creating global prosperity instead of generating global poverty, NOTHING will improve on this planet. Anyone attempting to cash in on this exploitation scheme is going to learn that lesson the hardest way possible. In an age of relentless poverty-fueled deflation, that's all 0% ever meant - zero sum con game. Make no mistake, we live in a Super Idiocracy that is massively leveraged to a known dumbfuck and serial bankruptcy expert.

Trump is going to take down the Republican party, which will forever be known as the party of greedy, arrogant idiots. Desecrators.

"Ninety-five percent of participants in a Deutsche Bank survey of investors, economists and other market participants released earlier this month said Trump, a Republican, was either “extremely likely” or “slightly likely” to win the general election."

If Bernie runs the table and suddenly he becomes unstoppable, I think we’re going to see the jitters again"

“I think most of my clients pretty much are like me, thinking Trump is going win,” 

Got that? 95% of today's pundits don't see this coming.

They're a groupthink Terminal Idiocracy trapped in a MAGA circle jerk. Which is why NONE of them can be trusted anymore.

In retrospect, economists will realize that the Coronavirus pushed the world into recession, but they didn't recognize it at the time. Why? Because they never realize it at the time. They have a perfect track record of epic failure to maintain.

One year ago, the Fed was "pivoting" from tightening to easing, the U.S. yield curve was inverting and the U.S. data was pointing to recession. Many pundits, myself included, said that recession was imminent. CFO confidence was at a decade low. In response, the Fed cut rates three times and the Trump administration "borrowed" a ludicrous 5% of GDP to give the illusion of expansion, which sucked so much liquidity out of bond markets that the Fed was forced to print money at a 5% annualized rate. The largest combined pro-cyclical stimulus in U.S. history without any comparison. Which of course created the largest super bubble in U.S. history. 

In other words, the U.S. is in a recession now, merely covered over with record borrowing, record printed money, and record speculation which exploded this past week.

Worse yet, global central banks ALREADY front-loaded stimulus ahead of the true recession. Which means they have NO dry powder left for an economic downturn. Contrary to popular belief, artificially bidding up stocks does not benefit the economy.

Central banks have lost control over the economy. Now, they only have control over mass delusion. And very soon they are going to lose that control as well. 

Which is why this is by far the most obvious global downturn in world history, and yet due to the chasmic divergence between fantasy and reality no one sees it coming. Least of all MAGA denialists who can't admit that their reign of denial is ending. Go figure.

Therefore as the collapsing data rolls in now, they are merely writing it all off as temporary due to Coronavirus.  

Here we see via Australia that fantasy finally rolled over this week in the direction of inconvenient reality.

The entire Energy sector is heading for collapse:

What we are about to see is global deflation on an epic scale.

Cash will be king. Meaning treasury bills and any instrument that still has a central bank bid to it are the only safe havens. Safe being a relative term. 

The price of EVERYTHING else is about to go down.

Some would say that central banks still have one more option, the nuclear MMT option of handing out free money to the general public. Universal income and so forth.

However, that is a political calculation that has many more months to come to fruition possibly in November. In the meantime, we can rest assured that the Trump administration will be slow to nuke credit markets. Because any spike in interest rates at these levels will cause financial armageddon.

There is no room for reflation now. 


Because as it was in 2008 on the verge of implosion, bond investors went ALL IN this week. Meaning they totally ignored cycle risk. At the point in the cycle when defaults are now increasing, they bought the riskiest bonds with both hands merely to keep their monthly income streams high at the end of the cycle.

Amid insane levels of global risk, the Fed's own "stress index" reached a record low this month due to the global hunt for yield. This is the analog moment during the subprime crisis when global investors were buying recession with both hands as central banks eased interest rates. Fully ignoring cycle risk.

Which gave EVERYONE a totally false sense of complacency. 

Just as it is right now.

I normally don't discuss gold because I consider it to be more of a religion than an asset class. And I assiduously avoid cults and sanctimonious hypocrites in general.

I believe that gold is a monumental fool's trap right now. Featuring record net speculative and an abiding belief that it's a safe haven at all times. I believe it's a safe haven from inflation, but not deflation.

Of course, for those who have long time horizons and don't care about short-term margin calls, then this won't be a problem. It's the leveraged speculators who are at risk of getting wiped out. Anecdotally, I've heard that this is the latest Millennial-crowded trade.

"Investors rushed to sell the precious metal to generate cash to cover losses in the stock market"

“Investors absolutely see gold as a safe-haven, but the yellow metal is now succumbing to deleveraging pressure...This is when investors sell profitable positions to raise cash during a market rout. Frequently the cash is used to cover margin calls in other markets.”

In other words, gold is now MASSIVELY leveraged to Tesla so position accordingly. I have no position currently.

As long as Tesla doesn't take out the 50 day, gold will be fine. Otherwise they will explode in tandem as RECORD Tesla margin calls trigger RECORD gold margin calls. 

In summary:

The events of this past week are eerily similar to 2015 China smash crash. 

Although this of course is China Super Crash. An order of magnitude larger in scale and impact.

The Central banks that inflated the Super Bubble have their work cut out for them now that it's in the process of Super Crashing.

Should they fail to forestall further downside momentum, China Super Smash Crash 2020 will be biblical in magnitude.

Because now there is truly ZERO HEDGE

Davos January 2020, the same week as Coronavirus pandemic: 

"More bailout please"