Thursday, October 8, 2020

Make Lying Great Again

Trump has told more lies than all other U.S. presidents combined. He is aided and abetted by like-minded acolytes who have no respect for the truth. To say that their vacation from responsibility will end badly, is an asinine understatement. History is closing in for the kill...

These people learned nothing from Bush who exited the White House at the lowest point in the cycle. Trump will suffer the exact same fate. 

"It was all going so well"

On Tuesday this week Trump had a temper tantrum and said there will be no further stimulus talks until after the election. When markets tanked he walked back his comments after hours and promised a targeted stimulus bill. This morning on Fox News he said that talks are going great. Nancy Pelosi just came out and said that talks on a targeted stimulus bill are not on the table. We've never encountered anyone who lies as casually as Trump. Nor have we been held captive by a cabal that sold their soul to a sociopathic liar in order to achieve greatness.

Typical headlines these days:

Over the past week, the market has been monkey hammered by this series of Trump lies, and of course his miraculous COVID U-turn. Nevertheless, the casino has maintained its overall bid led by a vertical robo rally in small caps. Tracing back to the start of this melt-up rally, it began two weeks ago when Biden surged in the polls. That surge kicked off a massive rotation out of growth into cyclicals/value, which has continued this week even through all of the negative headlines. 

I looked back for another time when we had this level of economic risk, a critical election, political impasse, a sidelined Fed, and a reflationary headfake rally. 

The last time was October 2008. 

Then as now, gamblers didn't see it coming. Why? Because there were too many liars in the Financial Services cartel talking up stocks in the face of imminent collapse. As there are right now. According to these serial psychopaths, you have to dance while the music is playing. And with record debt issuance and muti-year high IPO issuance taking place right now, the music is loud.

These people always say no one can predict the future.

These people have a unique inability to predict the present as well. 

Despite the overwhelming and well known risks, today's gamblers are massively complacent. Convinced they can ride out depression. They have been fully euthanized by central banks and the virtual simulation of prosperity. Everyone knows the economy is in shambles - far worse than 2008. Everyone knows the political environment is gridlocked, and yet they still believe in fake reflation. All a testament to the fact that today's sheeple far prefer fairy tales over anything approaching reality. No one can sell them something they don't want. 

The market is now pricing in a Biden win and MASSIVE stimulus to follow soon after. However, here again the 2008 analog is instructive, because it took over a month past inauguration to deliver enough stimulus to put a floor under the market. Which is exactly what we should expect now.

In the meantime, it appears that higher reflation expectations have monkey hammered the bloated bond market.

Moving to a closer timeframe, this Biden surge is the second melt-up we've seen in the past two months. The first melt-up was in late August during the RNC when Trump shot up in the polls. Betting odds had Trump tied at 50% for the first time. Since that peak September 1st which coincided with the S&P 500/Nasdaq peak, his odds have collapsed down to 35%, versus 65% Biden. It's a testament to today's Financial Services cabal that they have managed to flip the script and keep this party going, compliments of sector rotation.

It won't work. Absent immediate stimulus, the deflationary pulse will return with a vengeance. Which will coincide with a bond market explosion, and layoffs on a scale we've never seen before. As it was in 2008, by the end of the year the underwear will be mighty stained.

Good times.