Monday, March 9, 2020

Blue Monday

Trump's criminal accomplices are telling tall tales of imminent bailouts to keep the sheeple from bolting out of Trump Casino. On the 11th anniversary of the 666 S&P low, the Anti-Christ in chief has a death grip on his useful carbon...

Trump's disastrous Energy policy has sparked a global oil war, which is arriving at a critical juncture with Big Oil already in a death spiral of lethal magnitude. Trump has done a fantastic job of imploding the fossil fuel sector.

Sadly, the latest experiment with an idiot as president, is ending the exact same way the last experiment ended. 

Trump's entire economic plan can be summed up as getting interest rates and oil prices to depression levels as fast as possible:

"I called up OPEC, I said you’ve got to bring them down. You’ve got to bring them down,” Trump told reporters"

The Energy sector death spiral accelerated in January with the boom in "ESG" socially responsible investing. And the simultaneous divestment movement kicked off by Blackrock, the world's largest asset manager. From that point forward, shale oil companies lost their source of funding.

The demand collapse arrived via Coronavirus and the hysteria that has spread like wildfire. Much faster than the virus itself. Airlines and cruise ship companies now bidless. Transports annihilated. 

The third death blow arrived over the weekend with the announcement by Saudi Arabia of an oil price war. 

One could not possibly imagine a combination of lethal events taking place in a mere two month timeframe. Not all of this was Trump's fault, just most of it. First off, the divestment movement was in direct response to Trump's abjectly irresponsible policy of environmental desecration on an epic scale. The divestment/ESG movement is a grassroots vote with your wallet movement that has left the Energy sector bidless. To a point at which the world's largest asset manager decided it was no longer worth the PR liability associated with the smallest S&P sector getting smaller by the day. 

Meanwhile, Trump's response to the Coronavirus was to call it a "Democrat hoax". And to otherwise go down the path of abject denial. A lack of response which has allowed the virus to proliferate unchecked. A slow motion trainwreck heading towards widespread pandemonium. 

Thirdly, the Saudi oil price war was in direct response to the uncontrolled Ponzi growth of shale oil: 

As gamblers learned last week, monetary policy is dead from an economic standpoint. The only thing the Fed can do now with its next rate cut, is to confirm recession. We've passed the point of diminished marginal returns from free money.

This chart shows why the Fed's rate cut last week blew up in their faces. It annihilated the reflation trade:

From an asset levitation standpoint, the Fed could use free money to buy the S&P futures, but that isn't going to help when every other global asset class is crashing and the economy itself is imploding. The next real step is MMT and that is a bridge too far from here politically, at the moment. Bulls are now hanging their imagined realities on fiscal policy which is nowhere to be found at the moment. Trump's tax cut was a repo market imploding disaster. Meanwhile, the wheels of Congress don't move fast enough to pass "shovel ready" projects between overnight limit down S&P futures sessions.

Nevertheless, belief in printed money dies hard. Charles Hugh Smith - Of Two Minds blog - believes the Fed still has the magical QE powers to bail out trapped gamblers, even while the world implodes in real-time. Then again, last month he categorically said the Fed CAN'T repair a collapsing bubble. Who to believe?

Sadly, the rules of Shanghai Surprise dictate that central banks cannot repair bubbles once they begin to collapse. As Japan and China found out. And as 3rd grade logic would dictate.

2020's largest balance sheet expansion last week preceded Blue Monday. The third worst market open in history. One can make the case that the Fed has lost control of the Casino:

Fed balance sheet, weekly $ change. 

The only "safety net" now, is an extremely important imaginary one. The one sold to morons to keep them in Trump Casino while it burns to the ground in real-time. Aided and abetted by Trump and his copious accomplices, cashing out as fast as possible.

"Whatever you do, don't panic"