Saturday, July 3, 2021

A One Way Trip To The Sun

The biggest (%) rally since 1933 powered to new all time highs this week, now unconfirmed by Dow Theory. Today's gamblers are convinced that printed money is the secret to effortless wealth. Which makes them willing accomplices to record fraud. When their Ponzi scheme explodes they will all be lining up for their own personal Goldman Sachs style Fed bailout, and they will be shocked to learn it's not forthcoming...

The trolls were very active this week on my Twitter feed. I've been tweeting more often lately in lieu of blogging, since there are only so many ways of describing out of control lunacy. In the event, I rankled a few troglodytes who complained I was spamming them. So I did them a favour and blocked them from my Twitter feed. You have to wonder who camps out on someone's site just to inform them they are wrong. Is it not enough to be an all knowing genius? And isn't there copious rivers of bullshit they should be assimilating from their like-minded Borg?

Only a total jackass who's never been through a bear market would tempt fate by assuming this gong show will last forever. Those of us who endured the Dotcom bubble and the housing bubble know what happens once you reach that point of assumed invincibility. Maximum pain. 

Nevertheless, the over-confidence of today's bulls represents the Pyrrhic victory of one way markets. Consensus markets are the inevitable result of centrally planned Ponzi schemes. This market is the perfect adjunct to Globalization - it takes in copious amounts of hard earned money and redistributes it to the ultra wealthy. It's reverse redistribution. Welfare for billionaires.

It's also the perfect recipe for a bidless market. Consensus and markets are two things that are lethal together. This is not a sports competition wherein the goal is to convince as many people as possible over to your "side" - yay our team won. Unless you're one of today's ubiquitous con men whose job is to suck as many people into these markets as possible. From real estate to financial investments, monetizing useful idiots is the new standard "business model".

Now that Reddit pump and dump schemes have been officially sanctioned by Congress, short sellers have been wiped off the map. I showed this chart on Twitter which indicates that the COVID-decimated retail stocks are not only leading this entire rally, but they are exhibiting a rising wedge that is inversely identical to the VIX falling wedge. Hedging is now impossible. This market is now totally out of control. When the selling begins the algos will step aside and there will be no one on the other side of the trade. 

Many of today's critics of Disney markets believe that central banks deserve all of the blame. They seem to forget that even the Fed recently warned that speculation is out of control and now poses a systemic risk to financial markets. 

May 6th, 2021:

"Rising asset prices in the stock market and elsewhere are posing increasing threats to the financial system, the Federal Reserve warned in a report Thursday"

When the entire financial system collapsed in 2008, the public expected the Fed to bailout "the system" at any cost. That has entailed non-stop monetary bailouts for the past decade. In the spirit of Japanification, the illusion of prosperity must be maintained at all cost. Even if it means that an entire society now has the investing acumen of Bernie Madoff. And yet for some reason, pundits who assiduously believe in personal freedom, don't believe in personal responsibility. They also don't question today's ubiquitous mass media subscription model which is capitalism's answer to Pravda. Apparently, the unvarnished truth plays no role in valid decision making. Sugar coated bullshit is all we need. It's the same thing with these anti-vaxxers - they trust McDonald's more than they trust NIH. 

100% Idiocracy.

To solely blame the Fed is to assume that a handful of shall we say oblivious technocrats are the entire scope of today's problem. When in fact the real problem is societal moral collapse on a biblical scale. The magnitude of a bubble is in direct proportion to the number of morons who believe in it. And by that standard this is the biggest bubble in human history. How many pump and dumps have we witnessed just in the past year - Ark funds, Biotechs, Chinese stocks, Cryptos, Gamestop, electric vehicles, SPACs, IPOs. More in one year than we've seen in the past decade. And yet still the masses are unfazed - willing accomplices to record fraud.

Let's take a look at the big "winners" from the first half with focus on the well known names:

Reddit-sponsored AMC cinemas is the leading % gainer. From a low of $2 at the start of the year, to a high of ~$60. The blue arrow shows where it was at the beginning of the pandemic. 

Vaccine biotech Moderna now has a market cap of $90 billion and a price/sales ratio of 35:

Another big winner is Applied Materials which was flat in 2020 and has skyrocketed 200% since November:

But the stock that has been really powering the Nasdaq lately is Nvidia, which is up 170% since the start of the pandemic.