Thursday, June 18, 2020

The Last Trump Casino

Banana Republicans seem to forget that many successful billionaires sought the job of president: Mike Bloomberg, Howard Schultz, Tom Steyer etc. However, the GOP chose a fake billionaire instead. One with a track record for blowing up casinos. That fatal decision caps off several decades of disastrous decisions in the realm of economics and finance. For true believers in proven con men, 2020 will be a fatal year for BOTH health and wealth...

Where to begin...

The din of the outraged alt-right and alt-left going toe to toe in existential mortal kombat is now deafening. Both sides fatally incompetent, and yet convinced they know everything and the other side knows nothing. Those of us centrists have no representation. The center of the political spectrum is merely a last minute campaign stop at the end of the election campaign. In 2020 we get to choose between the libtard thought police running amok, and alt-right neo-nazis. The 24 hour news media has devolved into an entertainment spectacle of political opinion, bereft of fact and reality. Both sides seeing this election as existential to their withering cause. Neither side honest enough to admit that we live in a Corporate Idiocracy hell bent on self-destruction. 

At this parlous juncture, the stock market casino is now wholly dependent upon monetary stimulus, meanwhile the economy is now wholly dependent upon fiscal policy. Which is where this all turns lethal. Heading into the election, the political divergence is widening and hence the prospect for further fiscal stimulus is fading fast. The paycheck protection program is winding down, having largely failed to forestall the feared explosion in jobless claims. Which portends a second wave of layoffs as small businesses now realize that "re-opening" is an overwhelming dud. 

"The predicament is a familiar one to owners of restaurants, bars and those in areas that depend heavily on tourist travel. Stay-at-home orders mostly forced them to close, and even as restrictions lift, sales and foot-traffic are still down — and the pot of PPP cash is nearly dry."

In addition, the GOP is dead set against extending the $600/week enhanced unemployment benefits, favoring instead a "back to work bonus" and a payroll tax cut. Their goal is to reward the lucky few who still have jobs while punishing those who are unemployed in the worst economic crisis since the Great Depression. It won't work. For obvious reasons. However, these people are not half intelligent enough to figure out why.

The GOP's signature policy of giving ever-more money to the wealthiest Americans, now has an economic multiplier of zero:

Make no mistake, the people backing these fatal decisions are not intelligent people. And they elected a president to prove it beyond all doubt. 

Which gets us back to Trump's last casino.

It's a well known fact on Wall Street that bull markets don't end until retail (small) investors finally come off the sidelines and embrace stocks:

"...Easy access to zero-commission and fractional trading across multiple platforms, has sparked a surge in retail investing...Notably, the Barstool Sports founder David Portnoy, who goes by the nickname Davey Day Trader, now captains an "army" of day traders, or "retail bros."

"When you talk to them or read the Reddit boards, the word 'Fed' always comes up — that they are not going to allow the market to go down"

"There's been a massive flood of money" from retail investors, he said, because they believe that markets "always go up, you can't lose, the Fed is there."

So far this week, notwithstanding tomorrows massive options expiration, last week's Nasdaq highs still hold:

The S&P and Dow never confirmed the Nasdaq's new high

The equal weight S&P is deja vu of March meltdown phase:

No surprise, Wall Street's IPO pump and dump has continued into this week, far outpacing the S&P and Nasdaq.

The junkiest stocks are leading the market:

Dual-listed Chinese internet stocks are leading the charge as ironically Trump's threats to delist Chinese stocks is forcing many companies to dual list in Hong Kong.

The same Tech stocks are getting double pumped

As we see, gamblers across ALL asset classes are now assuming that the Fed is invincible.

What they will all learn the hardest way possible is that now all risk assets are correlated to margin calls.

And Retail Bros.