Wednesday, July 1, 2020

There's No Way Out Of Trump Casino

“The great enemy of truth is very often not the lie--deliberate, contrived and dishonest--but the myth--persistent, persuasive and unrealistic. Too often we hold fast to the cliches of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought."
- John F. Kennedy

Profound, and yet we are constantly besieged with Trump's asinine lies. Eagerly propagated by his loyal base of useful idiots. These lies are all predicated upon the myth, and hence they are persistent, persuasive, and extraordinarily arrogant. Far too much, to their own demise, Trumpfuckistan enjoys the comfort of bullshit without the discomfort of inconvenient reality. 

This COVID pandemonium is going to fix all of that. And it's going to fix them too. There has NEVER been as much arrogance and stupidity in one place as there is right now, and it's all about to get harvested for fun and profit. And no small amount of sequestered carbon. Those denialistic MAGA geezers who ignore the COVID risk, are putting their own lives in extreme jeopardy. The remaining greedy geezers who STILL believe in Trumponomics, are right now flushing their financial assets down the toilet. Either way, the price of this arrogant delusion will be wholly unaffordable to those who believe in it.

Now, back to the Casino:

A Tech bubble inflated by unprecedented fiscal and monetary policy during a global depression. What's not to like?

It's easy money...

The algos have had a great time this week crushing short sellers amid holiday thin volume and end of quarter window dressing. Every headline is another excuse to ramp the illiquid S&P futures to drive more momentum.

Any questions?

Unfortunately, under the surface of this greatest fraud of all time, things are starting to disintegrate. Here we see a chasmic divergence between the Tech heavy Nasdaq and the cyclical heavy NYSE. Even within the Nasdaq, as we see in the lower pane, new highs are lagging badly:

It's this chasmic divergence that ensures this crash will be even bigger than the March implosion:

Within Tech, there are of course many smaller junk stocks going parabolic, but among the big names one stands tall among the rest. The stock that embodies the virtual economy better than any other:

The other "must own" stock of course is Tesla. Taken together, Amazon and Tesla traded 4x more dollar volume than the Nasdaq 100 index ETF (QQQ):

Move along, nothing to see here:

Most Tech ETFs hold the same group of momentum stocks, but a look at the Cloud internet ETF gives an idea of the froth. What took over a year last time took only three and a half months to eclipse, this time:

While Tech mania is robbing all of the media attention, banks got crushed today and are late stage imploding:

This is the long-term view of the above chart:

In summary, it's a bifurcated market consisting of bidless cyclicals and parabolic Tech stocks.

When it explodes, the fireworks will be phenomenal and well worth the wait.