The bullshit is flowing like a river, because today's gamblers are heavily positioned for ROI: Return on Imagination. This week, faith in simulated prosperity will be tested to the maximum:
Sadly, I noticed that NorthmanTrader has lost all conviction. One more quasi-bear has capitulated to Disney markets:
"Be clear: I’m not calling for a top here, that’s a fool’s errand. After all so far all we’ve seen is a minor pullback off of very overbought conditions. Heck, tech hasn’t even begun to correct yet."
Got that? It's a fool's errand to believe that Trump's bigger, fatter, uglier bubble will end any time soon. Apparently, it's the wise man who bets Trump's mega bubble will grow to the sky. This from a bearish blogger. The Wall Street river of crap, is far worse.
"Tech hasn't even begun to correct yet"
I suggest that's not true. The leading sector for the past year is in hard reversal of fortune:
It's a fool's errand to try to be a two-way trader in a one-way market. This one-way trip was only about believing that Trump's ever-expanding bullshit bubble would grow to NeverNeverLand, OR believing it would crash with biblical dislocation. There was never any middle ground. Which is why today's traders lack all conviction, while Trump's true believers are massively over-positioned for Return On Imagination.
Of fools or the ones that follow, consider that Trump ran on a platform of Wall Street reform, paying down the debt, and monetary sanity. That's what he promised in 2016. Subsequently, his major accomplishment has been to invert ALL of those promises and instead weaponize record stimulus and record Wall Street complicity in order to generate human history's largest bubble. The exact opposite of what he promised. Something no Democrat could ever get away with. Why? Because Republicans are still the self-proclaimed party of business. Today's business leaders still trust Trump. The same way they trusted Herbert Hoover in 1929 and GW Bush in 2008.
The markets haven't even opened yet, and the central bank bailouts are already in motion. Beginning of course in China. This week will be a very good test of faith in central banks.
"It is the first time that the central bank has made such an announcement and also marks the largest single-day reverse repo operation it has ever conducted.
According to Reuters calculations, 1.05 trillion yuan (US$151 billion) worth of reverse repos are set to mature on Monday, meaning that 150 billion yuan in net cash will be injected."
In other words 85% of the stimulus is merely to roll over existing repos. I'm not sure if that is going to work.
Picture a scenario in which global investors begin to lose confidence in central banks. At that point, all hell will break loose. My worst case scenario wouldn't be bad enough if that happens. Markets will break. The same way China's stock market broke in 2015, amid non-stop PBOC bailouts. Shut down.
Which is the point of this post, gamblers walked into this buzzsaw way overloaded on ROI.
Here we see via the options markets, gamblers starting to take down their impeachment euphoria:
Active managers deja vu of the October 2018 top:
The third Rydex asset positioning reversal from extreme bullish levels:
Crude oil speculative bets, still massively positive (not shown).
Despite oil at critical support:
Skew peaked in December, black swan bets were falling into the black swan event:
Volatility speculators still have more than DOUBLE the short position (lower pane) they had two years ago prior to VixPlosion:
Once the 50 day breaks, it's another 6% to the 200 day.
The bailout King said the same thing in 2018, right before the crash:
It can come as no surprise that the bullshit is flowing like a river. Gamblers were caught totally off guard and out of position.
Which means that central banks have their work cut out for them. Because if they fail to levitate every risk asset from EM currencies to oil to USDJPY carry trades etc. 100% correlated global markets will go limit down. And stay down.
This unprecedented super bubble was only made possible by the double standard under which Janet Yellen was fired for perceived easy monetary policy under Obama, while Jerome Powell was threatened to be fired if he didn't ease on a record scale for Trump.
Because every fool knows that only Republicans are allowed to make big, fat, ugly bubbles.
Explode.