Tuesday, October 13, 2020

Market Manipulation To The Very End

At the end, criminality wasn't illegal, it was in the White House...

What do I mean by commonly accepted market manipulation?

I mean central banks flooding the system with liquidity to inflate all risk assets and encourage speculation. Now featuring a depressionary economy amid record high stock market valuations.

Market cap/GDP:

Trump talking up stocks on Twitter for four years straight, including at the top in February and again at the top in September. Human history's greatest con man.

Feb. 24th, 2020:

Corporations bankrupting themselves to buy back stock from insiders cashing out. While laying off employees at the rate of 800,000 per week.

Corp Debt / GDP:

Wall Street putting out one bullish forecast after another during a pandemic depression. Never once considering giving the advice to sell. Also conflating debt with "GDP" so that copious idiots can pretend the recession is over, despite a -17% budget deficit.

Why didn't we think of this sooner?

I mean, well known manipulation of the options market to bid up Tech stocks. Which is what led to the blow-off top last month, and is driving the market this month as well:

"a large buyer of tech calls dubbed the Nasdaq whale recently resurfaced, purchasing around $200 million worth of call contracts on tech stocks in a single day. The Nasdaq 100 Index has gained in all but two sessions this month and just notched its best week since July after last month’s sharp drop."

Trading in options showed itself capable of influencing share movement in August and September, when dealer hedging -- demand from people who sell options for the underlying stock -- created feedback loops that helped drive the Nasdaq 100 higher. That dynamic can also add fuel to downside moves as well as sellers adjust positions."

Try this again...

The last monthly options expiration before the election is this Friday. What could go wrong?

I mean an IPO market going vertical as Wall Street dumps record numbers of "blank check" SPAC IPOs into a yield-starved market:

"Spacs raise money from investors, via a public listing, and then merge with a private company, in effect taking it public while avoiding a traditional initial public offering.

The current statistics around Spacs are startling: so far this year 133 Spacs have been floated in the US, raising $51.1bn, nearly four times last year’s volume"

Move along, nothing to see here:

Here are some other things that are wrong with this casino:

Thanks to central banks, shorting volatility is now an asset class. Why? Because central banks want everyone to be fat and happy.

Which is why volatility positioning never went net long once during the March meltdown. There was unquestioned belief in central banks.

A belief that is about to explode spectacularly.

For the past two years, the Tech bubble has become more and more manic into the existential election, fed by record amounts of stimulus:

In summary, all of the above widely embraced chicanery has euthanized gamblers to today's overwhelming risks. Which will only serve to spectacularly implode more people, who never ever see it coming. 

With the economy in shambles, markets are now addicted to stimulus. Which is why political gridlock is the biggest risk gamblers face. Trump's Twitter feed looks like the National Enquirer with all of the conspiracy theories regarding the election. His base of useful idiots is getting very agitated. A blue wave is far from assured, and any stimulus is at best months away. Meanwhile, without a widespread vaccine, the stimulus is only reaching a subset of the total economy. A combined stimulus + ubiquitous vaccine could be six months or more away.

All of which is why the lying has been ratcheted up to level '11'. Today's psychopaths are using copious bullshit to "bridge" the gap until something more tangible comes along. But it won't work. We are in a bear market in a depression. Anyone who says anything to the contrary is lying. The very wealthy have been well euthanized by central bank asset inflation. However, the middle class is under the bus and sinking with each passing day. When the Trump bubble explodes, everyone will be on the same page. And the stimulus will flow to the people who actually need it. 

And then four decades of supply side economics will be over, as will the political future for those who bound their fate to it.

What we learn from history is that idiots never learn from history.