Friday, May 22, 2020

Now For The REAL Meltdown

Central bank actions gave gamblers a last chance to get out, before the REAL crash...

The bailout for the wealthy is complete. Implosion may now resume.

"Let them eat stocks"

It portends ominously ahead of a three day long weekend in the U.S. that the S&P is once again camped on the 200 day moving average. As we see at the February top, the first wave down (i) exploded through both the 50 day and the 200 day moving average. Now of course, the moving averages are reversed due to the death cross that took place back in March.

After the close Friday:

U.S. Gamblers have been chasing risk all week ahead of the long weekend.

Complacency is extreme:

"Securities trading was among the most common uses for the government stimulus checks in nearly every income bracket"

The coronavirus rout brought a copious amount of new accounts to online brokers in the first quarter"

“The rush of retail investors into U.S. equities is at least partly a function of a world with no casinos, no sports betting to speak of, and little to do outside the home,” DataTrek co-founder Nick Colas said. “The dopamine rush of a full house is the same as holding a hat-sized stock into an up 3% open on the S&P.”

Now we know where the stimulus went - guns and stocks. Where else? 

Outside is America

Treasury issuance:

Tech is in a rising wedge and when it breaks volatility will explode. Stop losses will be hit.

ETFs will implode.

Amazon had a massive key reversal late this week:

Retail cash balances have now reached a new record low

Dual-listed Chinese Tech stocks are getting obliterated in multiple time zones ahead of the impending trade war escalation AND potential MASS U.S. exchange delistings. Baidu is the first major Chinese company to consider delisting in the U.S.

"According to, a service of law firm Harris Bricken, "the likelihood that the Chinese government will comply with this demand is at most two percent." And assuming China does not comply, that means that "all Chinese companies currently listed on the U.S. markets will be delisted and no future listings from Chinese companies will be permitted on the U.S. markets."  

The Wall Street Journal, which calls HFCA a "nuclear option," notes that passage of the law "would require the SEC to prohibit trading in any shares" that fail to meet the law's requirements -- which is to say, potentially all Chinese stocks. Nasdaq says passage could "torch" the value of "around $1.8 trillion" worth of Chinese stock, which would no longer be nearly as easy to trade in the U.S. "

CNBC: Bill That Could Delist Chinese Companies Is Moving At Warp Speed Through Congress

The equal weight S&P peaked three weeks ago:

This virtual "rally" is 100% virtual economy

Gasoline demand remains our best real-time proxy for the REAL economy; however, demand fell week over week and is currently down -28% year over year. Which is interesting because this is the first week when every state took steps towards re-opening.

Somewhere along the road to reopening:

The central bank Jedi Mind trick is wearing off:

This next leg down will not test liquidity, it will test solvency.

"On the first day of China’s biggest political event of the year, Xi Jinping sent a clear message to Donald Trump: We’re going to do what we want in Hong Kong, and we’re not scared of the consequences."

China refrained from setting an economic growth target for the first time in decades, triggered immediate calls for fresh protests and sent the MSCI Hong Kong index to its worst loss since 2008."

Trump Administration Warns New Security Law Will End Hong Kong's Special Trading Status