Tuesday, November 24, 2020

Black Friday Coming Up

The iron clad rule of bubbles is that they only become obvious to those throwing their money at them, when they explode spectacularly. This largest and most popular bubble in human history is no exception...

Black Friday is the day historically when U.S. retailers finally turn a profit for the year. For retailers the Christmas season is crucial to profitability. Which is why this massive COVID spike is catastrophic for brick and mortar retailers. And yet these are the stocks that have been leading this end-of-cycle short-covering mania.

After hours on Tuesday, Gap reported worse than "expected" collapsed earnings:

"The San Francisco-based retailer reported a net income of $95 million, or 25 cents per share, for the three months ended Oct. 31, down from a profit of $140 million, or 37 cents per share, a year earlier"

Profit is down -33% year over year. The stock is up 60% year over year. Meanwhile, COVID hospitalizations (lower pane) reached 88,000 today. This one stock shows everything that's fucked up in Disney markets. Nevertheless, it's clear that capitulating bears are fueling this last phase of the melt-up.

Let's say that a large number of Americans ignore the CDC recommendations and decide to stack and pack themselves into airports and homes this week, as is occurring at this very moment. Then, that will bring about the "stunning number of deaths" Dr. Fauci is now predicting:

That will bring a super spike in COVID on top of the parabolic increase we are seeing now. We will know the full result about two weeks from now, which is peak shopping season.

So what to do, shoppers will of course just switch to online, which they seem to prefer now anyways. The only problem is that the vaccine distribution is gearing up in December:

"FedEx and United Parcel Service could make space for those shipments on cargo planes by bumping off packages from Amazon.com, Walmart, Target and other retailers."

In other words the online retail bubble is about to get imploded by global vaccine distribution. Where will consumers get all their junk for presents this year? I have no idea, maybe their own basement, there is plenty of junk down there. 

Moving right along...

On a weekly basis small cap value stocks are now record overbought:

One of my predictions is already coming true. And yes I have a position in this asset class, and it's not long.

The overthrow of the 2011 all time gold high was a headfake. A bull trap that was attended by record gold ETF inflows during 2020. The gold volatility index is in the lower pane. If this is record inflows, imagine what record outflows will look like:

Moving on to the other invisible bubbles. None is larger than the green energy ESG movement. This week we are seeing massive volume as that bubble goes supernova:

On the topic of overnight holiday risk, Emerging Markets have now reached the same level of overbought that attended VixPlosion 2018:

The almighty Dow finally reached 30k today. An event that Trump called "sacred" in a bizarre one minute press conference to celebrate human history's biggest bubble. Who would know better than the Anti-Christ?

“The stock market’s just broken 30,000 — never been broken, that number. That’s a sacred number, 30,000, and nobody thought they’d ever see it,” Trump said."

All it took was the largest combined stimulus in human history. Next time they should just hand out the money instead. Would take a fraction of the time. 

Trump is now officially an illegal squatter in the White House. And why not, he is getting free food, free limos, free plane rides, free golf, all paid for by American tax payers. He loves his reality TV show and he doesn't want it to end. Trump's golfing alone has cost taxpayers $140 million. Yes, you read that right.  

"President Donald Trump has played golf or visited one of his 17 owned-or-operated golf properties on approximately 22 percent of the days he has been in office, dating back to Jan. 20, 2017"

Trump's golf rounds cost the American taxpayer approximately $600,000 on average."

Nevertheless, Trump's own eviction moratorium ceases December 31st, which means he is about to get the same treatment he has imposed on millions of Americans. 

He is right about one thing: