Tuesday, October 27, 2020

The Walls Are Closing In On Donny

Trump's reign will be remembered as a non-stop circus of arrogant bullshit. His time in office will cost his true believers everything: Their health, their wealth, and their fraudulent way of life. Sanctimonious hypocrites got their Supreme Court nomination, now they are going to pay with their lives...

Regardless of who gets elected next week, Trump's presidency is effectively over, duly monkey hammered by COVID, and his incompetent response to the crisis. Trump's entire presidency can be summed up by his chaotic and ultimately lethal approach to this pandemic. At first he was in signature denial. We now know via Bob Woodward that Trump knew COVID was far more deadly than the regular flu, and yet he insisted it was the same as the regular flu. Then, when seniors started to get worried, he panicked and ordered a nationwide shutdown in early March. When markets crashed, he panicked and ordered a nationwide re-opening in April.

As the pandemic wore on, he ignored the advice of ALL experts, preferring to rely upon his own totally uninformed opinion. Like most of his mentally challenged followers, he considers himself an expert in every subject through sheer ignorance and wishful thinking. Over the summer, Goldman Sachs studied the benefits of widespread mask usage and concluded that they save lives and they could have saved the economy as well:

"Goldman Sachs found that a face mask mandate could potentially substitute for lockdowns that would otherwise subtract nearly 5% from GDP"

A national mask mandate could save an estimated 130,000 lives by February. 

Trump completely ignored the mask advice and ended up getting COVID for himself and his family, but he was cured thanks to a multi-million dollar treatment regimen at taxpayer expense. All while he was plotting to take healthcare away from millions of Americans during a pandemic. This week, in the confirmation of Amy Coney Barrett to the Supreme Court, he took a major step forward in that direction:

"While it’s hard to say exactly how Barrett will rule, it’s possible the ACA might be completely overturned, which could leave more than 20 million Americans uninsured"

Republicans have made over 70 unsuccessful attempts to repeal Obamacare"

Here we are in late 2020 with the Fed printing trillions of dollars to prop up billionaires, while the GOP is figuring out how to take healthcare away from people who no longer have jobs. During a pandemic. History will say that Republicans were godless criminals to the very end. Nothing more nothing less.

CNBC: 10/26

Getting back to Trump Casino, the illusion of Tech invincibility is beginning to crumble. It started with Cisco back in August. Now in this latest quarter, Intel, IBM, and yesterday SAP was the latest Tech bellwether to report a disappointing forecast:

"In a surprise release late Sunday, SAP, one of Europe’s largest tech companies, cut its revenue forecast for the full year and said it expected the fresh wave of Covid-19 lockdowns to hurt demand through the first half of 2021. The results caused shares to fall the most ever in a single day, according to data compiled by Bloomberg since 1989."

Enterprise software:



After hours on Tuesday:

"Microsoft shares moved 2% lower in extended trading on Tuesday after the company reported quarterly revenue guidance that fell short of analysts’ expectations"

So far, the frogs in boiling water are buying the 1929 pre-crash dip.

Notice the difference in volume for the Tech sector in September versus now. Back in September gamblers sold hard and then got near record short the Nasdaq futures. Now in the third wave down, there is nothing but complacency, camped at the 50 day moving average: 

The reflation trade is also imploding ahead of the election as Trump admitted today that any deal is dead. 

He is now promising to cut a deal from his jail cell:

"Putting off votes on a stimulus package until after the election raises the risk that the Trump administration will be less inclined or able to push a package through the GOP Senate. If Trump loses to Democrat Joe Biden and Republicans lose their Senate majority — it would mean that any stimulus package for the pandemic-stricken U.S. economy would be delayed until late January, at the earliest."

Here on the hourly chart we see the Tech/deflation trade above the cyclical / reflation trade. Notice there is a similar pattern between September and October. When Tech weakened in September, cyclicals rallied, but then they both rolled over late in the month. The same thing is happening now:

For the first time since March, the volatility term structure is in backwardation, meaning the spot Vix is above the futures. This indicates that large hedgers are getting nervous ahead of the election.

The MAGA Kingdom will be remembered as human history's biggest circus. And its true believers nothing but clowns.