This is the golden age of bullshit because there has been no accountability for lying assholes for far too long. Unlike 2008, I predict the rampant con men in this era won't be seeing another bailout...
The greatest lie the masses have been told in this era is that the shortest bear market in history, 16 days, corrected the longest bull market in history, 11 years. Hence this is an all new bull market. In order to believe that asinine lie we must also believe that decade high inflation is attending the beginning of a new cycle. Apparently some people can't remember back as far as 2008 when we were told the same lies.
Then as now, this will be a lethal delusion.
May 12, 2021:
"The increase in the headline CPI rate was the fastest since September 2008"
September 2008 of course was the Lehman collapse. Up until that time, despite all of the collapsing dominoes (Bear Stearns, Fannie/Freddy, WashMu, Merrill Lynch etc.) everyone thought the Fed had everything under control. Even the Fed thought everything was under control. But of course it was merely an illusion that had been brought about by the ample stimulus they were providing to markets. They were artificially suppressing volatility and then it exploded at a time when "inflation" was cycle high driven by the Fed's own policy:
Back then there was plenty of inflation hysteria but nothing like what we are seeing now. This year's high CPI numbers have been amplified by the "base effects" of last year's low price readings. Which is why when we look at the chart above, the oil price at $140 in 2008 had only slightly more "inflation" impact than the $65 oil price today. The CPI reading under these post-lockdown conditions is extremely misleading. As we see above, one year ago in April crude oil dipped negative for the first time in history. On a closing basis, the price is up almost 1,000% year over year from the daily closing lows.
Copper recently hit a new all time high, which garnered significant media attention. However, when we look at the price of copper divided by the CPI we see that it's far more subdued than it was a decade ago. Which indicates that this recovery is weaker than the post financial crisis recovery.
In addition, it's already rolling over because the CPI is lagged whereas the copper price has been skyrocketing lately. As the CPI data catches up with recent prices this indicator will roll over even faster:
We are very likely seeing peak "reflation" now:
The Gold / CPI ratio is another indicator calling bullshit on this entire fraud.
Just as it did in 2008 when inflation hysteria was at a cycle high:
There are those who have a vested interest in having everyone believe that prices are going to sky-rocket aka. salesmen trying to convince people to buy now instead of later.
What we have witnessed over the past year is a rotating buying panic from toilet paper to Tesla stock, to Ark ETFs, to cryptos, to reflation trades, and now of course commodities. On the East Coast there is currently a buying frenzy at gas stations due to the pipeline outage. Deja vu of the toilet paper shortage last year, which of course was temporary.
Much of this inflation hysteria of course is politically motivated, to discredit Biden's economic policies. However, it's all going to backfire when these reflation trades explode with extreme dislocation.
We live in the golden age of bullshit. And it's going to end exactly as it should - amid mass surprise and soiled underwear, followed by biblical rage at the asshole class who believe it's their right to lie constantly.
In summary, is this a good time to be long cyclicals?
Not really.
