Zerohedge: Hugh Hendry Explains Disney Markets
"Remember the Matrix? Morpheus offered Neo the choice of two pills - blue, to forget about the Matrix and continue to live in the world of illusion, or red, to live in the painful world of reality. They, as the "enlightened", chose red, and so are convinced that they understand everything which has become illusory about today's markets. Their truth is Austrian economics. They know that today's central bankers are spinning a falsehood of recovery; they steadfastly refuse to be suckered in by the euphoria of a monetary boom; and they are convinced that they will therefore be spared the consequences of the inevitable crash. Everyone else, currently drugged by the virtual simulation of prosperity and its acolyte QE, will be destroyed"
We have now reached the point at which Hendry's prediction is coming true. Having become systematically addicted to the virtual simulation of prosperity and its acolyte QE, the gamblers at large are no longer capable of recognizing reality. They now believe that in the absence of an economy, printed money is the secret to effortless wealth. The delusion they were conditioned to believe for a decade straight. Now, entirely sans economy. They are smoking Fed crack straight from the source.
There are several LETHAL assumptions today's investors are making right now, that are a result of the widely accepted lies and corruption of this era. The net effect of which is a gauntlet few gamblers will survive.
1) Assuming the global economy will return to normal when the economy re-opens
2) Assuming the lost jobs will come back when the economy re-opens
3) Assuming that Fed asset buying helps the economy
4) Assuming the Fed can keep all risk assets inflated while the economy implodes
5) Assuming Wall Street predictions can be trusted
6) Assuming Suze Orman and investment advisors can be trusted
7) Assuming the GOP will bail out the Middle Class without proper “inducement”
8) Assuming there are any safe havens outside of t-bills/money markets
9) Assuming the bond market will survive REAL MMT when it finally arrives
Getting back to the casino, the news today was that ALL of the job gains over the past decade have now been erased in just four weeks. And yet, once again stocks were up on the news.
A testament to what is wrong with Disney markets:
22 million jobless claims are overwhelming proof that the "bailout" is a total bust.
Of course the biggest beneficiary of this economic carnage continues to be the grim reaper of retail, Amazon. When this stock rolls over it takes down the entire casino:
The top performing stock of 2019 just returned to the scene of implosion:
Speaking of "safe havens" we now know that there are none. The so-called low volatility stocks underperformed the S&P 500 during the March crash and have underperformed on the rally back:
This week's earnings reports from the largest U.S. banks have tanked those stocks. JP Morgan is down -15% this week.
Deja vu of 2008 post-TARP:
Here we see that cyclicals are following deflation:
Mexico is on the verge of being downgraded to junk status.
As I've said, an EM currency crisis takes the low volatility decline scenario off the table.
It's back to overnight risk.
