It appears that all of the "stimulus" bypassed the real economy and went straight into guns and stocks. In the American tradition.
This crash has all of the insanity and risks of the last crash except with the following added risks: 40+ million job losses, the worst economic data since the Great Depression, an all new China-U.S. trade war, U.S. rioting and anarchy, monetary lubrication 3x larger than March, an even larger Tech bubble, AND a massive inflow of neophyte speculators using their stimulus checks to trade stocks. We now have both a monetary and fiscal stimulus fueled bubble. Really, what could go wrong?
This mega crash is going to give the white people something to riot about.
First off, I want to give Mark Zandi full props for being the biggest crack smoker in human history. Anyone can walk down any Main Street in the U.S. and see that the economy is not open.
I am currently visiting one of the most wide open (red) states in the U.S. hence the world, and I am surprised at how unopen it is in actuality. Most people are still wearing masks inside, and most restaurants are take out only. The local mall is still shut down, and I have eaten at the same burger joint four nights in a row because it's the only place that feels quasi normal even though the place is never more than a quarter full. It's either this or sit on the curb to eat my Big Mac for the good of society. Homeless people now have to walk through the drive thru to get take out. We're so compassionate.
We will never get to anything approaching "normal" when people have to prep for surgery in order to go shopping. This is an economic depression in which people tell themselves it's a pandemic. Because it makes them feel better apparently. My advice to Mark Zandi and all of the other economists who are of the exact same failed mindset, is to put down the crack pipe, son. As the saying goes, a recession is when your neighbour loses their job, a depression is when YOU lose your job. I suggest there will be very few employed economists before this is all over. The term "redundant" has never been more applicable.
One of the key catalysts behind these protests is the fact that low income service sector workers have been disproportionately affected by the shutdown. Whereas, most white collar workers have been nominally affected. To many "knowledge workers" this has been merely an extended staycation. It's divergences such as these that allow economists to blithely declare the recession is over with 40+ million people newly unemployed.
Which is where this gets interesting, because the theme of this post is that the extended gambling vacation is about to come to a thunderous ending. All of this newfound "stimulus" is about to get margin called away.
Wednesday, the Nasdaq 100 made it back to the February record high level. However, we can see in the lower pane the chasmic new highs divergence, as ironically "inequality" is a major problem in the stock market as well.
Thursday morning another rally fueled by exploding joblessness:
The mega caps blew through the February top a full month ago:
It was a well known fact that mega caps were dominating the market at the February top. This time around, it's even worse.
Ironically, Chinese Tech stocks have been leading the global rally lately. Now through the February high:
The world has been playing catchup recently, however, still far below the February high. This is the clearest wave count we are going to see for social mood:
As measured by the call/put ratio, as of Wednesday close, market froth has never been higher:
In summary, inequality is about to get "fixed". And when it does, the REAL rioting will begin.