Thursday, October 15, 2020

Humility Or Humiliation. Choose One.

Under Trump, Banana Republicans took their trademark arrogance and ignorance to level '11' Full Circus. Because anything less than pathological lying would be antithetical to their cherished values. What defines the modern political divide is "we" versus "me". For those steeped in the exceptional "fuck you Jack, I'm Ok" ideology, change would require growing up and taking responsibility for someone other than themselves. Why start now? Better to brainwash the usual idiots into believing that plundering the Treasury is capitalism, and anything that benefits them is socialism. Works every time. Those taught to believe that socialism is the worst case scenario are in for the lesson of a lifetime...

Speaking of which:
Here we see what I call borrowed/stolen GDP - meaning the Federal surplus/deficit as % of GDP. The low point was WWII however as we see we are trending in that direction. The only country that has benefited from GOP policy is the Cayman Islands.

Just over two weeks until the existential election and deja vu of 2016, the Democrats are leading in the polls. Nevertheless, we all know they specialize in giving away elections. In addition, according to the stock market barometer - which has been 87% accurate going back to 1928, Trump will win based upon the current Casino level:

"The S&P 500 stock index’s performance in the three-month period ahead of Election Day, which is Nov. 3 this year, has proven accurate over the past nearly four decades. The equity-market performance measure has been the best predictor of U.S. presidential elections since 1984, proving 87% accurate since 1928"

Got that? Policies don't matter, hooker payoffs don't matter, cheating on wives and taxes - we all make mistakes. Only the Casino matters.

Which means that as long as Trump's decade overbought Tech bubble remains inflated for another two weeks, all bodes well for Trump.

What could go wrong?

“I have friends and clients and colleagues who come to me and say, ‘Should I hedge? Should I get out ahead of this election?’ And I say no”

"...the tech boom of 2000 has been exceeded in terms of the relative outperformance of technology into the S&P,” Gordon said. “So, I say stay with the trend.”

Because what could go wrong?

Here is another take on today's casino:

“They are buying bullish call options that expire inside two weeks. There was ($500 billion) of bullish call options bought in a four-week stretch by small retail traders,” Smead said. “In ’99 it was $100 billion, in ’07, it was $100 billion.”

It’s not just the younger generations fault, however. Smead says baby boomers certainly deserve some of the blame for riding “the index to a fault”

Which gets us to positioning ahead of this major event.

New Active Manager positioning data shows that active managers - who turned massively bearish in September, have now bought into the blue wave fantasy. The delusion that this election will bring instant stimulus and a COVID vaccine at the same time. 

Here we see Team Groupthink is long in the 103rd percentile which is back to multi-year highs. In other words, when Trump fell in the polls that was bearish, but when Biden surged that was bullish. Because all "uncertainty" has been removed. Civil war can be averted, except these fools bid up their own stocks making a contested election now more likely. 


Next we look at market manipulation using options. Here we see via the 5 day call/put ratio, animal spirits have surged back to the same record level from June and September. As we know, June was the cyclical/value peak and September was the Nasdaq/growth peak. This marks a counter-trend high for both:

In summary, as I've said many times, Trump "deserves" to win and have his house of cards collapse all around him like a cheap tent. That said, I am not personally betting that the Trump Casino endorses another four years of Circus Donny.

I never liked the circus. Too many fucking clowns. 

Can you imagine a stock market bubble in a depression pandemic? Only a proven Idiocracy could believe in such a thing.

After the 1929 crash it took 25 years (1955) to breakeven. Not everyone has that kind of time.