Monday, October 12, 2020

Super Cycle Crash

Conditions are perfect for a bidless market...

Begin with the all important Tech sector. The Nasdaq, along with all of the major U.S. indices, has a three wave corrective appearance. It's a deep correction indicative of the level of shock and awe to come. Similar to the February top, new highs (lower pane) diverging:

As measured by the number of 1.5% days or greater, the Nasdaq (100) has never been more volatile in the past decade than it has been in the past three weeks:


Apple is now leading this rally again, with its new product launch tomorrow of Dumbphone 12, which is one better than 11.

The other big mover was Amazon ahead of Prime day tomorrow:

Of course the Biden rally is supposedly all about the growth to value rotation. What I call the value trap.

Major banks report earnings this week, and no sector more clearly demonstrates the end-of-cycle economic damage:

Here I show banks with volatility going back to 2008:

Large cap value "leading" back to June levels:

Regional banks

We've seen this movie three times now - every two months like clockwork:

At least the TARP was real. This current stimulus rally is running on glue fumes:

In summary, the last asset classes are peaking now:

The decade-long monetary addiction phase is over. The stimulus junkies have now moved on from monetary heroin to something far more deadly - Monetized Fiscal fentanyl. An addiction that will ultimately doom the U.S. dollar. However, between now and then, stands a deflationary margin call on global risk assets.

In the meantime, compliments of unprecedented Federal Ponzi borrowing at 17%/year, gamblers are now pretending that the recession is already over. 

Had all prior U.S. administrations been as profligate as the Trump Administration, there would have been NO recessions in U.S. history, and the Great Depression would have been as ignored as this clusterfuck is being ignored right now. 

The dollar would be already worthless. And Banana Republicans would be living in a country named after their party.