Monday, March 2, 2020

Super Tuesday

Shanghai Accord or Shanghai Surprise? Today's rally was either the last chance to get in, or the last chance to get out of Trump Casino. The stakes have never been higher...

Trump's presidency is now hanging on a Fed bailout.

Unquestioned faith in central bank's ability to cure viruses is about to be system tested. 

Over the past several days, the Fed, BOJ, PBOC, IMF, World Bank have collaborated to calm markets. Now in addition, tomorrow the U.S. will lead an emergency meeting with G7 financial leaders to determine how best to confront this crisis. Treasury Secretary Mnuchin and Fed Chairman Powell are leading the 7am Eastern meeting.

It can come as no surprise that today's epic rally went vertical into the close, featuring the largest rally in a DECADE. 

Clearly, expectations are high. On crack.

Zerohedge is already calling it the Shanghai Accord 2.0 - the repeat of the global coordinated stimulus that bailed out markets four years ago in 2016. 

"The meeting comes as futures markets are betting that the Fed will deliver a big dose of stimulus to shield the U.S. economy from the disease’s impact."

Step back for a moment of sanity.

How will a big dose of stimulus shield the economy from a spreading virus? 

It won't. This has nothing to do with the economy. 

Trump's two stooges are now tasked with keeping an epic asset bubble inflated deep into global depression so that Trump can rig another election. End of story. That's all this is about.

Trump wants to expend ALL of the remaining stimulus reserves to keep his Super Bubble inflated. Who would even consider such an idiotic idea as expending ALL of the stimulus merely to lubricate markets. A narcissistic psychopath that's who. 

Meaning the ONLY thing this meeting can accomplish is to drive an even bigger disconnect between fantasy and reality.

On the surface, having no other facts and data, the concept of another Shanghai Accord is speciously attractive. Assuming we leave aside the fact that it will have zero impact on the real problem at hand, the spreading virus. 

The only question for TRAPPED gamblers is what can it do for Trump Casino? Knowing of course that a fair amount of the good news is likely already priced in. And tomorrow morning pre-open we will find out exactly how much.

First off, we know the technical set-up is perilous.

Here we can see the exact positioning of the S&P 500 relative to the last two major selloffs. And form your own opinion.

We know that the virus is spreading out of control globally and the economic impacts are growing by the minute as the global supply chain shuts down and travel plans are canceled en masse.

We know that gamblers are ALL IN and totally unhedged eagerly anticipating their Fed bailout to make them whole again after last week's pounding.

We know that already multiple brokerages are having technical issues dealing with the current volume levels. Last week it was Schwab, Fidelity, and Ameritrade. Today, on the largest up day in a decade, the Millennial-preferred trading platform RobinHood was down ALL day. I see lawsuits.

However, there are a few other "anomalies" I've noticed recently. One of which is my proprietary Super Crash ratio which reached a new ludicrous extreme today compliments of algos manipulating the S&P futures into the melt-up close.

As the Trump sugar high went into full crack smoking mode:

Nevertheless, here we see the damage wrought last week, as the Nasdaq down volume was decade high:

With all of these combined asinine risks, is it even responsible to speak of a "Shanghai Accord 2.0?"? Of course not, it's 100% imagined reality. Just more stooges doing Trump's bidding of conning the populace to his personal benefit.

Only a useful idiot would believe tomorrow's meeting will spark another two year rally. Which by the way, the February 2016 rally was already fizzling out by July 2016, it was Trump's election and tax cut that extended it by another year.

The real problem if we have to go there, is positioning ahead of the event. Back in February 2016 gamblers had capitulated. They were in a defensive mode. They were not ALL IN junk stocks. They were not anticipating a bailout. The problem with front-running central banks is that when a bailout actually arrives it sparks a sell the news reaction. Because no one has any capital left to deploy. You're certainly not going to get the smart money coming off the sidelines to play bagholder to Trump's re-election rigging gambit.

I will say this much, if this last ditch election rigging gambit DOESN'T work, it's game over for Trump.

And the people who believe in rigged elections.

Here we see some differences between now and 2016:

Circled in blue:

The far better comparison is not 2016, it's 2008, when another very famous bailout was approved.

Of course that was the mother of all sell the news events. 

In summary,

Prepare for Super Tuesday