Monday, December 21, 2020

Naughty Or Nice?

I think we all see where I'm going with this...

'Tis NOT the season to throw fellow citizens under the economic bus while doubling down on Ponzi markets. So far the casino is concluding that the so-called "stimulus" is a lump of coal in the Christmas stocking:

Writing late afternoon on Monday, the anticipated super crash appears to be underway, however shorts are covering ahead of the all important stimulus vote. As I wrote way back on Monday February 24th: "Buy The Fucking Crash", the very start of the meltdown back then was also met with the standard BTFD. Little did they know that they were buying at the top of a -35% crash.

No, I did not expect a new mutant virus to monkey hammer Europe overnight. However, if you think of the denial around COVID in general, was it really so hard to predict? None of today's risks are unknown, they've merely been ignored: COVID, Brexit, lockdowns, economic collapse. It's amazing when stock prices are going higher what can be ignored.

I will try not get too fancy with my prediction for what happens next, only to say that it should be more explosive than the decline in March. Writing ahead of the stimulus vote, so far, we are seeing the "two way" volatility I predicted over the weekend. If the bill passes, I still expect cyclicals to get monkey hammered, as this bill is too little too late. However, if it doesn't pass, the casino will spontaneously explode. In other words TARP 2.0. 

So far, cyclicals are going the way of June, however, they've been rallying all day since the morning crash, in anticipation of the all important stimulus vote:

Here we see the complacency versus June:

The Fed banking stress test concluded on Friday, which included the approval to resume returning capital to shareholders. Because what else to do in a pandemic depression?

Which is why banks are actually up on the day. I suspect this will conclude their wave 'c' rally:

Where the comparison with June ends is with this last rotation to the virtual economy stocks. As Cramer recommended last week amid nascent lockdowns, it's time to rotate back to the most obscenely overvalued stocks in human history's largest asset super bubble. Because these are the safe havens from economic meltdown. Think Tesla with a 1500 P/E ratio.

You have to be delusional to believe this rotation will work out as well as it did back in June:

The true safe havens have left the building

In summary, some people have to learn the hard way that Go Daddy is not a safe haven. And Fed bailouts only start working AFTER margin calls.

You know, the people who don't know a bear market when they are buying one with both hands.