Friday, April 24, 2020

The Grapes Of Wrath

Useful idiots have no chance of navigating their beloved Scylla and Charybdis of dumb and dumber. Which is why they will exit the sausage factory bereft of health AND wealth. Seeking consensus in these times will be lethal...

For a decade straight those of us realists warned that the day of reckoning was inevitable. Constantly confronted with when exactly is inevitable? The Black Swan of Corona was indeed unforeseen, however the lethal doses of lying and money printing now being applied to the problem, are all too familiar. Those true believers in bullshit and bailouts are doomed.

For aspirational fools, it's time to pay the piper...

I've come to realize that two KEY things will be required for economic "reflation": A vaccine AND an MMT bailout for the middle class. Absent either of those and there is no chance for a reflated economy. This fantasy that we are soon to be re-opening the economy absent those two key factors, is a wholesale central bank sponsored delusion now getting bought with both hands. Current best guess is that a vaccine is at least a year away. 

The biggest economic story of the week was entirely missed by Zerohedge. Too busy tracking down the latest conspiracy fantasy to focus on reality. The downside of supplying ad-sponsored pablum to man-boys.

Recall that the big story LAST week was Trump demanding that governors of key swing states "liberate" the shackled masses from undue lockdown. A call to arms that provoked a mini revolt of machine-gun armed jackasses all of whom have been duly profiled by the NSA. The first of many contestants when Running Man season one begins any day now. The libertarian fantasy of armed revolt jumped the shark from the basement Xbox into the streets this week.

Which is where this gets interesting, because by the end of this week Trump got the memo that his geriatric base is not impressed with non-social distanced rioting. Therefore he flexibly left his useful Idiocracy high and dry when he rolled back his grand re-opening to who the fuck knows when:

"President Donald Trump said Thursday that his administration may extend its national social distancing guidelines until early in the summer or later.

“We may, and we may go beyond that”

In the event, Trump also threw Georgia's Republican governor under the bus for following Trump's own orders. Among the downsides of trusting a known psychopath. Downsides I assiduously chronicle for the archaeologists, knowing full well that most of what I write here is far beyond the comprehension and interest of today's historical illiterates.

The key point is that by "early summer" which is a mere six weeks from now, at this rate jobless claims will be north of 40 million, Grapes of Wrath territory. The fastest onset of economic depression in human history. 

We also got news that consumer confidence plunged by a record amount in April:

Here as in everywhere else, there is a massive partisan divide. Republicans are STILL more optimistic than they were at any time under Obama. A level of over-confidence that explains record low retail cash balances:

Whereas Democrats are back in 2008 territory, corresponding to decade high institutional cash balances:

Meanwhile, the deflationary political impasse that I call "The Clusterfuck" ratcheted up significantly this week as Trump & Friends deemed state and local financial collapse to be solely a blue state issue. McConnell went much further by saying he prefers bankruptcy over bailout. Which sets up the next wave of mass layoffs:

Which means that the middle class MMT $2k/month bailout got moved back in the impasse queue as the GOP were unified in their belief that no additional stimulus is required.

Unfortunately, a full 84% of Americans disagree:

"1 in 3 Americans fear the first stimulus checks won’t sustain them for even a month. The coronavirus has hit income across all wealth brackets"

84% want another wave of stimulus checks, with 43% of respondents saying they plan to use their payment to pay their rent or mortgage."

In other words, ALL of the "stimulus" is going to rent, groceries and utilities. Leaving roughly 60% of GDP in the darkness of lagged economic data also known as "Holy fuck we're in a depression. Why didn't we see this coming?".

Which is why I am constantly in disagreement with the "inflationists" who are convinced that central bank money printing will lead to imminent reflation of their brokerage accounts. 

They have a central bank sponsored circle jerk of like-minded dunces on their side, and all I have on my side is ALL OTHER commodities and inconvenient reality.

So what do I know?

Peter Schiff: Soon The Village Idiots Will Be Buying Gold Stocks

I'm pretty sure that ship has sailed

Newmont was the last stock to peak in March as well, at the minor wave (ii) S&P rally. Right before the wave iii S&P crash. This time it's peaking last at wave 2 S&P. Just ahead of wave 3 S&P meltdown:

When  this first round of bailouts explode spectacularly, then we will see who gets the next round.