Monday, March 2, 2020

Bailout Whores. Wanting To Explode

Today's ideologically flexible bailout whores, I mean "capitalists", are one margin call away from embracing "socialism". The Fed and BOJ bailed them out on Blue Monday. Cue Super Tuesday...

Trump is the biggest bailout whore of them all. But then again we all knew that from his casino bankrupting career. After excoriating the Yellen Fed in 2016 for keeping rates low, he has been excoriating her replacement Powell non-stop to lower rates...

Because if it's one thing this guy likes, it's cheap money for casino gambling:

Trump is getting desperate, he knows that pandemonium is closing in:

It should be readily apparent to today's attention deficit gamblers why expending all monetary ammunition BEFORE the actual recession is a bad idea. It's an idiotic idea, which is why Trump likes it so much. Nevertheless, today's gamblers are bailout whores. Here we gain some insight on the downsides to this approach:

Dear Fed, 
On Friday you gave yourself the option to ease and provided a bit of calm to the stock market. It won’t work. Don’t make the mistakes the BoJ and ECB have made in trying to paper over structural problems with liquidity. If you do, your actions will be deflationary and you will devalue your monetary tools. [What little you have left]

"...Moving too early, in order to support confidence (let’s admit it, stocks), will put you in a currency war you cannot win. Other central banks, who are missing their inflation targets will follow swiftly, reducing the FX benefit of your easing. By moving to support “confidence” (stocks) and “transmission” (spreads) you will in fact be generating deflationary forces."

Of course the Fed's soothing words on Friday are what put a bid under the market and got the party started. 

Then, in coordinated fashion on Sunday night the BOJ ALSO promised to support markets and they then injected a massive dose of liquidity which further ramped markets on Monday morning. 

These feel-good sugar rallies have the effect of clearing out the short sellers. But then the high quickly fades and the market falls even faster in the next leg down.

This has been the story of the past week - stair-stepping lower with three wave rallies each of greater size leading to greater declines:

You know you're an optimist when:

In other words, yes the Fed and BOJ saved the day. Monday to be exact. However, they ensured a much bigger implosion when their sugar rally rolls over. Not to be left out, the PBOC will deliver a nice tape bomb for the Nasdaq, compliments of over-lubricated quarantined gamblers. 

On the verge of third wave down at all degrees of overnight panic

But that's a problem for another day. Because if it's one thing this society has proven, if they can put off any minor discomfort for another day, they will do so over and over again until it all explodes with extreme pandemonium.

"The Fed saved the day"
"That's all that really matters"

"It's called the 'Powell put'. It means you don't need to hedge"
"I know"