Tuesday, January 19, 2021

The Last Trump Rally

Today is the last day of the epic gong show known as the Trump Administration. The experiment with having the most morally and mentally challenged people running the country has ended badly, as any intelligent person would expect. Which is why no sheeple see this record Ponzi bubble ending...

The Republican party is now fractured into multiple competing factions, and is entirely leaderless. The never-Trump faction jumped ship four years ago and are now guest speakers on MSNBC, where they get paid to denounce their former party. What mainline Republicans remain within the party are now cowering in fear from Trump's rabid mob. Which means that the Qanon mob is now leading the party. A conspiracy of idiots following their reality TV game show host into the political twilight zone. Going forward, in order to galvanize these cult followers into actual votes, the Republican party will be obliged to pay tribute to the Qanon leader and his cult followers. Trump's last remaining advisor is the My Pillow Guy, who informs Trump on all matters foreign and domestic and how to get a good night's sleep. 

We are told that those of us NOT wanting any part in this insane gong show are silently aiding and abetting cannibalistic pedophiles. We can't win.  

Bringing this all back to the economy and markets, history will say that Trump's tax cuts and trillion dollar deficits set the U.S. on an irreversible path towards dollar hyperinflation. For now, the forces of inflation are held in check due to the COVID lockdowns and mass job loss. However, Trump's election tempter tantrum gifted full control of the Federal government to the Democrats. Trump believes so little in conservative values that he preferred to cede all control to the Democrats rather than to admit defeat. Like a five year old taking his ball home. Trump's base, equally vicious and demented, supported him the entire way - now trusting the U.S. election system only when Republicans are elected. Any other outcome is rigged. What used to be useful idiots to the Republican party are now useful idiots to the Democrats. The well-cultivated GOP advantage has now turned against them. Thirty+ years of Faux News down the drain. 

The bottom line is that Trump paved the way for full scale "socialism", which means bailouts for the middle class at the expense of the rich. Instead of the other way around.

What about the Disney market explosion? Good question.

This impending crash will be a big headfake. Right now, the reflation trades are all crowded trades. This crash will clear out the weak hands. The rotation to cash will take place just as the money printer gets started in earnest. I expect the reflation trades - specifically gold and commodities to bottom first and rally the hardest. Deja vu of 2009. 

Recall that this entire Trump mega bubble got started with Trump cautioning that the Obama bubble would be exploded by higher interest rates. Well, as usual Trump had a kernel of truth wrapped up in a load of bullshit. It's HIS bubble that will be exploded by higher interest rates. And as biblical irony would have it, Janet Yellen who was fired by Trump will explode his signature bubble. And everyone who believes in it. 

Fortunately there is no later with this generation. There is only one long never-ending fire drill called "now". Interspersed by non-stop campaigning. 

Which explains how Trump and everyone else got sucked into human history's largest bubble. They knew it exists, but they didn't want to be left behind. The magnitude of a bubble is not measured in terms of dollars, it's measured in terms of numbers of eager participants. In the era of social media, investing has become a group activity. The Borg decides the next trending sector, and the Borg turns it into reality. If they decided white flour is the next hot investment they would corner the wheat market and send it into the stratosphere. Unfortunately, that's not how investing works. Investments are not supposed to be defined in terms of their magnitude of asset inflows.

All I can say is that when Trump goes off to the golf course which he never really left - his signature bubble will explode. And it won't matter what day or hour that happens, because it will be sufficiently cataclysmic to inform even the dullest of observers that this was all a bad idea. 

When it comes to biblical lessons, it's better late than never.