Tuesday, February 16, 2021

The Pump And Dump Cycle Is Ending

This week - February 19th - marks the one year anniversary from the COVID pre-crash all time high. We are told by today's psychopathic financial experts that we are in the "early cycle" of recovery. Unfortunately, with respect to pump and dump we are in the glue sniffing end of the cycle...

Today marked the longest rally streak in almost two decades:

What could go wrong?

What could go wrong indeed. If you ask Wall Street, there is nothing to worry about. A pandemic depression papered over with insane levels of debt equals zero risk by today's dumbfuck standards. 

"Institutional investors aren’t finding much to be bearish about these days, according to the latest Bank of America (BofA) survey of global fund managers, an important gauge of sentiment on Wall Street"

The survey, which polled 225 investors with $645 billion in assets under management between Feb. 5 to 11, showed cash levels are down at an 8-year low, while allocations to stocks and equities are the highest since 2011. What’s more, very few see a stock market bubble presently and the firm’s so-called Bull & Bear Indicator “remains anchored at a bullish 7.7.”

These are by far the riskiest markets we've faced in our lifetimes and yet these overpaid zombies can't find any reason for concern. Mass unemployment and exploding Federal debt doesn't meet their definition of risk. Record valuations and rampant speculation, not a risk. Zero monetary interest rate cushion, no risk. 

Reduced money printing, now THAT would be a risk.

All of which deliberate denial and conflict of interest leaves to those of us who don't get paid to implode other people's assets, to determine the true level of risk at this lethal juncture. 

Needless to say, the greatest near term market risk is the fact that the people who should know better don't see any risk and are therefore taking far TOO MUCH risk. Which is a clear indication of where we are in the pump and dump cycle. 

One of the consequences of continual monetary bailouts is that the stock market is now a critical part of the "economy" due to the trickle down fake wealth effect. The prevailing wisdom has it that we are now in the early cycle of a global recovery. However, there has never been a time in human history when speculative reach for risk was at its greatest at the early part of a new cycle. 

Which is why this "early cycle" delusion is just a new lie built on top of the house of cards that has yet to explode.   

Recall that 2020 was the greatest year for IPO, SPAC, and corporate equity issuance on record. 

Below we see how 2020 compared with prior years. Notice that the low point was 2003 which was - 18 years ago. Which means that today marked the longest rally streak since the beginning of the housing bubble cycle.

Also notice the difference in equity issuance from 2003 versus now. We are to believe this is all just getting started.


I am now of the belief that looking back, SPACs will be viewed as the subprime of this era. Not only are we witnessing ludicrous levels of SPAC issuance reminiscent of the late stage Dotcom bubble, but these largely unregulated investment vehicles are now likely hiding insane amounts of fraud:

"SPACs are essentially a pile of money with no set strategic plan beyond 'find something to buy before time runs out'"

[Historically] SPACs were strongly associated with the world of penny stocks and pump-and-dump schemes. More recently, however, they have grown immensely in size"

Where the bottom of the barrel is and when it will be reached is hard to say, but investors should approach SPACs with the same caution they would if these entities were still dealing primarily in penny stocks"

In summary, no they don't see it coming. They are still of the belief that we are in the early stages of a new Ponzi cycle.

Unfortunately instead of getting started, this is all just melting up into a massive explosion deja vu of March 2000. Only this time, the Fed doesn't have 5.5% of interest rate cushion to prevent a severe recession. This time they have 0%, and hence gamblers will be skydiving into economic pavement. The "catalyst" for implosion will be too much junk issuance dumped into a euphoric market. 

Therefore, overall the biggest risk these markets face, is the fact that people today are idiots who will believe anything. They are call options on a doomed Idiocracy. 

Who are running out of time and money.

The Buffett Indicator:
U.S. stocks / GDP