Mind the gap:
As I've said, as circumstances evolve I will continue to update my future state economic model. Which is what we see below. My overall summary of events per date is mass denial and complacency in the face of dire economic collapse. Basically stock market speculation amid a sprinkle of unrest. Central banks have done a fantastic job of sponsoring mass delusion. So good that the vast majority will not see this coming. They had plenty of assistance from Trump and today's glue sniffing economic pundits. However, this entire delusion was propagated on social media, the cerebral cortex of today's mindless and obedient corporate Borg.
My view of what comes next follows a similar pattern to what we saw in March, only this time a much deeper dive into extreme deflation. Once again, market crash will kick things off in style any day or week now.
This time, as the last "safe havens" implode - MAGA Tech, gold, recession stocks etc. I suggest that central banks will fail in their bid to keep asset prices pinned to the Disney level. Hence this entire fraud will explode on a global basis taking all risk assets down with it.
From that point, I suggest that societal acrimony will explode in latent rage, in conjunction with the phased out social distancing measures. At that point appetite for corporate bailouts will reach the level it should have achieved a long time ago - ZERO.
Which will force Occupied Wall Street to update their financial models to price in mass defaults. Layoffs will accelerate, reaching into the managerial class who to date have been the ones wielding the axe rather than receiving the axe. As the model above shows, food insecurity will grow acute leading to desperate measures - looting and hoarding of food and other necessities. COVID deaths will re-accelerate and martial law will attend the next shut down.
At some point in this long hot summer, policy-makers will reach for MMT for the masses, which will arrive amid a zero economic multiplier. Hence it will have no reflationary impact. Over time, into the fall and winter, unrest will abate, social distancing will eventually relax and nascent reflation will begin, albeit from a much collapsed economic level. By the end of this year, no one will be in denial as to whether or not we are in depression.
On the bright side, those who can live on the stipend provided by government will be fine. Meaning that FINALLY the working class will be better off than the casino class on average. Those who can't fit their bloated lifestyles inside an average American income will of course implode with only a decade of warning.
Getting to the charts, as I've said, I believe that gasoline demand is a good proxy for economic activity in the absence of real-time economic data. This week, gasoline demand ticked up, but still remains -37% below year ago levels. In the end, no amount of soaring virtual economy and simulated prosperity can replace the REAL thing. Hard to believe, I know.
FULL Disclosure, I am once again long brick shitting volatility and still short gold via put options. I will buy gold when the Casino class pukes it out of their over-margined accounts.
Gamble in Trump Casino at your own risk. You never know when it might go bankrupt.
The virtual economy was soaring this week as the real economy imploded
In summary, today's casino class had the choice to close the economic divide the easy way. Now, however, America's Grand Canyon economic divide is about to be closed, the hard way.
