The stay-at-home deflation bubble is now competing with the hyper-inflation bubble. The one thing they both have in common is that they are both about to explode.
In the spirit of Hugh Hendry, Disney markets fully lived up to their reputation this past week. Providing all comfort-seeking denialists exactly what they paid for with their own misallocated capital.
Disney's earnings are a case study for how Wall Street manipulates investor expectations. Earnings down, stock up:
"The Burbank entertainment giant posted a net loss of $4.72 billion for the three months that ended in June, Disney said Tuesday. That’s compared with the $1.43 billion in net income the company reported for the same period in 2019. However, the media and entertainment titan did better in terms of profit than analysts expected"
Any questions?
Note that the last time Disney popped - in June - the market rolled over. This entire rally in cyclicals is all short-covering by bears who think that bad news for the company should be bad news for the stock:
That explains why cyclicals are rallying. As I said at the top of this post, the hyper-deflationary stay-at-home bubble is competing with the hyper-inflation precious metals rally for supremacy.
BOTH will lose.
THIS was the week in which extended unemployment benefits officially ran out, leaving millions of families in the lurch. So it's very fitting that both of this era's dumbfuck bubbles went parabolic this past week. Apparently they are all of the mind that when household finances collapse, that's bullish for risk assets.
On Thursday in my last post I noted that consumption sentiment had collapsed in July and the U.S. misery index took the largest leap of any country. Consider that was BEFORE the extended unemployment ran out.
Care to guess what those figures would look like now?
On Friday we got the official jobs report which was painted with a happy spin because it was "better than expected". And yet zooming out to the big picture, here we see that the number of jobs lost still substantially outnumbers the jobs gained back since re-opening.
Massive job losses AND declining unemployment benefits. All very inflationary, I know:
The dollar destruction theory hyped constantly on Zerohedge is a groupthink delusion of lethal proportions. Most of the world's debt is priced in dollars, which makes all dollar borrowers implicitly short dollars. Imagine what happens when the debt collectors come calling? Human history's biggest asset fire sale will take place as over-leveraged borrowers scramble for cash.
This week we learned that for some reason Euro bets reached a record high against the dollar.
In addition, silver officially joined the fake reflation rally.
Below we see silver on the 15 year chart vis-a-vis all commodities. We note that silver is decade overbought via MACD (top pane). We note that silver, which is considered also to be an industrial metal, is far outpacing regular commodities.
All delusion.
Of course, ground zero for delusion is the stay-at-home Tech bubble. Which ran into some problems late in the week:
In summary:
Super Dunce is about to collapse his Super Bubble and the crash will be biblical in scale and divine intervention
