For Millennials, this will be their first time getting muppetized by Wall Street. For everyone else, this will be their last. The full force of post-2008 criminality is now at work...
In the spirit of Police Squad, oblivious central banks have never cared who got exploded by their liquidity driven pump and dump schemes. And for Wall Street, monetizing useful idiots is their main line of business. They will continue selling gamblers down the river, until the last muppet is found. Or until the casino breaks, which is one and the same. This new quarter's year-over-year look back period to a pandemic-imploded economy is a con man's paradise.
There are two types of muppets buying into this biblical scale fraud right now. There are those who believe that the longest bull market in U.S. history (11 years) was corrected by the shortest bear market in history (16 days). And then there are those who believe that the longest bull market in history is just getting started. Which one is the greater fool is obvious. Both.
The Dow broadening top has been fully realized. According to the most recent NAIIM active manager survey, the smart money is out and according to the AAII retail survey, the dumb money is ALL IN.
"It is a common saying that smart money is out of market in such formation and market is out of control."
Zerohedge just forwarded another piece of Wall Street propaganda claiming that we will now see the greatest economic boom of our lifetimes. It's all part of the narrative that this is the stock market buying opportunity of a lifetime. Of course nothing could be further from the truth. Does anyone really believe that the old ways will instantly bounce back after the worst pandemic in 100 years? Relative to last year, it may SEEM like a major improvement, but everyone isn't going to now take two trips to Disneyland to make up for the one they missed last year. The head of IATA (International Air Transport Association) recently predicted that global air travel in 2021 will be at 38% of 2019 levels under their most optimistic scenario. And overall, the service sector remains blighted due to mass small business closures. A recent Fed survey indicates that 30% of U.S. small business may not survive 2021. Long lines at Olive Garden won't produce an economic boom in an economy that is firing on 4 out of 8 cylinders.
Consumer sentiment should serve as a warning that there has been substantial damage to this economy:
Over in retail land, there was yet another year of record store closures in 2020:
And yet, below we see the massive disconnect via the retail sector which has been ground zero for record short covering.
How can this happen? Easy, forward earnings estimates have never been murkier and year over year comparisons look fantastic. Everything from economic growth to Wall Street profit predictions are now benefiting from massive % increases on an annualized basis. All of which is allowing a mountain of fraud to take place.
As another example, we are told that cars are to 2021 what toilet paper was to 2020. Everyone needs to stock up in case there is a shortage of F-150s.
"To better illustrate the strong demand dealers are experiencing, Erich Merkle, Ford U.S. sales analyst, pointed out that the company's retail sales are up 23.1% over a year ago. "
Sales went from zero to 23.1% of zero. It was the biggest increase in history on a percentage basis. Sadly, not everyone gets the joke. The autos index went nowhere for 13 years and then exploded this year due to the pandemic:
On a macro level consider the U.S. growth rate this year will be as high or possibly higher than China's for the first time in DECADES. Which sounds great - U.S. growth is expected to clock in at 6% year over year. However, relative to 2019, U.S. growth is up 4%, which is less than 2% compounded per annum, whereas the deficit will be up 20% of GDP. All of a sudden Goldman's asshole predictions don't sound so hot.
Globally, it gets even worse. Economists are calling it a "two track" recovery. One in the U.S., based on well-cultivated smoke and mirrors, and the other outside the U.S. based on unmistakable collapse:
This is the third and weakest fake global recovery since 2008:
Worse yet of course, the U.S. deficit is now driving up borrowing costs across the globe. Not a good situation when global debt in 2020 skyrocketed due to the pandemic:
"The U.S. bond tantrum is sending a chill through indebted countries which have for years paid less to borrow more."
Nash says the “canary in the coal mine” is the developing world, already feeling the impact of rising costs to borrow in U.S. dollars."
In summary, we have been warned, and the warning has been ignored.
And the speculators who ignored the warning are about to be imploded by misleading indicators and the assholes who propagate them.
