Wednesday, April 8, 2020

Beware False Prophets

Today's ubiquitous con men are narrative story tellers devoid of fact. It's the Faux News formula for controlling simple minds - focus on the minor details, ignore the major issues. Trump has perfected this form of deception. Like this deadly virus, Trump preys on the weak, the elderly, and the gullible. Which the MAGA Kingdom has in spades. He is this era's false prophet. Those who trust him are doomed...

Tuesday saw the largest intra-day reversal since October 2008. The market gapped up massively and closed red. Wednesday morning the market is opening up green again. The hallmark of a bear market is strong opens weak closes.

There are a few things we've learned in the past decade about 
Disney Markets. First off, all this hot money has to go somewhere, which is why someone is always inventing a new narrative to attract capital to the next corner of the market. The fact that they are front-running everyone else is the key point. Fraud is the new capitalism.

In a zero interest rate environment in which everything is commodified - including capital itself - there is no true economic yield. Money is essentially "free". Therefore the only "return" per se is that which can be garnered at everyone else's expense. We've seen this over and over again from one asset class to another. Just one big pump and dump. Another thing we haven't learned is that crowded trades never work. The ONLY crowded trade that worked for any length of time was the dumb money bubble which exploded in late February. It reached its apex a full month after the Coronavirus went viral in China. Just to put an exclamation point on the dumb money moniker. 

The disconnect between financial market fantasy and economic reality keeps growing wider, because the fundamentals have collapsed far faster than the official narratives can be changed. This two week Fed sugar rally has only served to build more divergence between asset valuations and economic implosion. A short-covering recess to bring the market back to overbought condition, nullifying all of the selling to date. A new opportunity to collapse lower, sans bailout.

Now that policy-makers have gone ALL IN, it's time for today's fake capitalists to enjoy real capitalism, sans safety net. Given their addiction to bailouts we know for certain they won't like it.

Here we see via Semiconductors - one of the strongest sectors - now we have a three wave retracement off the lows, almost back to 61.8% Fibonacci:

Three waves of 5g speculation:

Throughout this sugar rally, the crash ratio never improved, showing that gamblers are still hiding out in the MAGA cap tech names:

According to the Global Dow and the 2008 analog, still another -50% to go.

You can't be too bearish right now:

The Dow just back-tested the 200 day. Confirming the -50% lower hypothesis. At minimum:

Small caps and economic cyclicals warned the MAGA Kingdom was a fraud.

But, the Trump lovers wouldn't listen. One and the same with their man of fraud. 

Human history's biggest circle jerk of like-minded criminals