Thursday, May 14, 2020

WARNING: MAGA Crash In Progress

Those who are wed to lies are about to self-destruct...

As you can see I am blogging less often lately because we are now in the last stage burial phase of this Roman orgy of lying known as "MAGA". The alt-right is spewing conspiracy theories out their ass constantly in order to win the upcoming election. No wonder no one takes them seriously - even when they get their facts right, it's merely a drop in a sewer of toxic disinformation.

Suffice to say, Trump is the right president for this time - a profoundly ignorant sociopathic denialist hellbent on using others to get what HE wants...

There is no point in crying over spilled milk, however not a day goes by when alt-libertarians are not informing us that this pandemic is just another Democratic hoax or conspiracy. One such article on Zerohedge recounts the 1968 Hong Kong flu as the closest analog of a global pandemic mirroring Coronavirus. The author notes that the flu passed almost unnoticed in the U.S. despite being even deadlier on a per capita basis. That particular flu also targeted the population over age 65. Most of these type of conspiracy articles point out that this mass hysteria is amplified by the media, and I have to agree. I would specifically note that the alt-right bullshit factory is particularly adept at spreading mass disinformation, mass confusion, and mass hysteria. Therefore, it's highly ironic that the very time they really should be heeded, they are TOTALLY ignored even by their own aging base. That's what happens when you spew crap non-stop, you lose ALL credibility. Incidentally, there are two factors that differentiate 1968 Hong Flu to Coronavirus - first off, the Baby Boomers were in their youth back then and now they are in their frail latter years. Back in 1968 they were too busy fighting for or against the Vietnam war to notice a global pandemic. Secondly, obesity has exploded in the past half century compliments of corporate junk food. Meaning that the two main risk vectors - age and obesity are nothing like 1968.

Trump knows that he can't get re-elected if the economy doesn't come back strong by November so he has staked this entire election on maximum re-opening. If it happens to kill a few million people, so be it. As expected, Republicans have already declared the latest Democratic stimulus proposal is dead on arrival. Anything that could possibly slow the re-opening of the economy is going to be seen as detrimental to Trump's re-election. The battle lines are drawn. However, another hampering factor for today's zero economic multiplier is the tsunami of lawsuits and overall massive liability now faced by businesses attempting to re-open. Which is leading to a new set of arcane rules around social distancing. None of which will be accretive to GDP.

Getting back to the casino and the topic of disinformation,  among the many lethal aspects of this era are these ubiquitous investment psychopaths who keep advising the herd to ride out the new greater depression in stocks, on the basis that "there is no alternative". Global poverty deflation has collapsed interest rates to 700 year lows and hence the only option is to "buy stocks". Because everyone knows they never go down. On a 100 year timeframe. 

Yesterday, two well known hedge fund titans - David Tepper and Stanley Druckenmiller - declared that today's market valuations are to paraphrase, ludicrous. Druckenmiller called the v-shaped recovery theory an outright fantasy. No wonder it's the standard assumption among investment advisors. 

All this week, the rhetoric between the U.S. and China has been heating up. It's Trump's latest gambit to direct attention from his sheer incompetence and rampant corruption. Trump's entire life strategy is to re-direct blame from himself to others. It's the infantile "I know you are, but what am I?" strategy. His followers are fully onboard with it because he tells them exactly what they need to hear, regardless of how fake and fraudulent the message may be. Meanwhile, re-direction is a Faux News core strategy as well. Remember Benghazi? That minor fiasco was exploded out of all proportion in order to deflect attention away from the multi-decade mass murder taking place in Iraq and Afghanistan. At least that's what history will say. 

Be that as it may, all of this chicanery is why, after a two day heavy selloff (Tuesday/Wednesday), gamblers rudely were awakened to this headline:

"President Donald Trump said he’s “looking at” Chinese companies that trade on ⁦the NYSE and Nasdaq exchanges but do not follow U.S. accounting rules.

“We are looking at that very strongly,” Trump told Fox Business host Maria Bartiromo"

Trump followed up by saying that getting tough on Chinese companies on the exchanges could backfire."

Indeed. Where this gets interesting is that I noticed this week that cross-listed (U.S./China) Chinese Tech stocks have been leading this last gasp Tech rally. In addition, they are now almost 100% correlated with U.S. Tech.

In other words, Big Donny just imploded the global Tech bubble:

Zooming out to look at mass delusion from a decade perspective, here we see the crash ratio overlaid with the internet index (gray), top pane. This week, the crash ratio just made a new cycle low below the March crash level. In the bottom pane we see retail (small investor) cash balances. Whereas in 2008, the extreme breadth divergence attended a decline in Tech stocks, this time it attends a rally:

Writing as of Thursday morning, post another ~3 million jobless claims, the S&P is through all support and now heading for a re-test:

This time the MAGA caps will be joining the ride (Microsoft, Apple, Google, Amazon):

Which is why I am now calling this hardest of all landings, the MAGA Crash. Because those who believe Trump and his cabal of liars are about to shit a brick