Saturday, March 13, 2021

2021: The Age Of Assholes Is Ending

Social media has provided a false sense of groupthink invincibility around markets. It's a con man's paradise marked by an extremely casual attitude towards fraud and an unquestioned faith in central banks, last seen at the 2007 market top...

July 2007:

"The Citigroup chief executive told the Financial Times that the party would end at some point but there was so much liquidity it would not be disrupted by the turmoil in the US subprime mortgage market."

Per the title of this post, for four years straight we were ruled by greatness seeking Neo-Nazi Qanon acolytes. Now we are overrun with left wing cancel culture snowflakes re-ordering reality to ease their accelerating mental breakdown. The one inexorable bond they have in common, they are all assholes. Granted, one year ago it looked as though COVID was the reality check. COVID accelerated the demise of the legacy economy. It collapsed carbon down to 1993 levels, and it ended the reign of McDonald Trump. Then, Biden ushered in the era of the middle class bailout, however somehow the stonk market came along for the ride. A turn of events that Karl Marx himself would have never predicted. Here is a downtrodden, beleaguered middle class gambling their Willy Wonka ticket in the casino to garner a bigger payout.

Skeptics of Disney markets be on the lookout, asset inflation is imminent:

I've read many articles recently talking about the hyper-inflation about to be unleashed by Biden's stimulus. Now we learn that almost 40% of the stimulus money is heading for the stock market in order to front-run inflation. The rest will be spent on credit card bills, past due rent, hookers, and blow. None of it will be "reflationary". 

I will go out on a limb and suggest that credit crisis is priced in to empty shopping malls and empty stores:

Of the money headed for stonks, most of it will go into various Reddit organized pump and dump schemes. The rest will go into Tech stocks so that large institutions can finish cashing out of the most crowded trade of 2020. It's called distribution, and it means dumping large amounts of unwanted stocks on late cycle bagholders while they still believe every dip should be bought. 

"Retail investors are likely to flock towards meme stocks with their stimulus money, as they are more likely to take on risk for a potentially big reward."

Reddit traders are also paying close attention to Cathie Wood, CEO and CIO of ARK Investment"

Of the pump and dumps listed in the linked article above, not even one of them is near a new all time high GME, AMC, RBLX, PLTR, TLSA, RKT, AAPL, IPO, AMD, NIO

Stimulus scams are sky-rocketing, however, this era's biggest scams have ETFs associated with them. And in the case of Reddit pump and dumps, Congressional oversight to ensure equal access to all retail bagholders.

"Tech had its time in the sun. The group has had the strongest annual average return since 2007 of all 11 S&P 500 sectors and led the overall market in three of the last four years"

The dichotomy between the smart money and the dumb money grew to an epic divergence this week. 

Here we see that active managers have taken down their risk exposure to last March levels, and before that December 2018:

On the other hand, the retail sentiment American Association of Individual Investors (AAII) shows bears near cycle lows.

The arrow points to this month last year:

The weekly chart of momentum stocks shows the similarity to last year, and the year before that. 

Deja vu of Y2K, the Nasdaq peaked a month ago and the cyclical heavy Dow is now leading. This is now the largest one year gain for the Dow since 1933. 

This is the largest one year gain preceding an all time high in market history.

In summary, it's getting very late in the pump and dump cycle.