Friday, July 30, 2021

Democratizing Fraud

This society faced two choices - get smarter and fix the mistakes of the past. Or get dumber and double down on the mistakes of the past. We know which path was taken. This society has conflated perpetual decline for exceptionalism...

Traveling the country this long hot summer, one can't help but face the reality that so much of today's false optimism is predicated upon false advertising. A buffoonish sense of over-confidence that now pervades all aspects of society. Those who do not reject this lethal modern Potemkin lifestyle will be destroyed by it sooner rather than later. One way or another.

Consider the fact that the leading companies in this virtual economy make most of their money propagating disinformation. Their hyper lucrative business model is false advertising. Yes I am referring to Facebook and Google. Amazon's main line of business is bypassing the U.S. economy. Likewise, all of Apple's products are now made in China. And Microsoft presides over a software monopoly. Meanwhile, the real economy stocks trade in a wide trading range, going nowhere. The Potemkin stock market mirrors the Potemkin economy and society. None of which would have any inflated value were it not for continuous monetary bailouts. 

Consider the fact that stock buybacks will drive the majority of S&P per earnings "growth" this year as companies buy back record stock at record valuations. They are creating an illusion of profit growth solely by shrinking their outstanding share count. Most companies will further impair their bloated balance sheets to do so. These major corporations are now call options on the longest debt/leverage cycle in U.S. history. They are aided and abetted by record leveraged speculators bidding up the stocks of record leveraged companies.

Here we see corporate debt, annual $ change. The optimists would have us believe this pandemic-driven debt binge will not overshoot like last time. 

Therefore, it's very fitting that this society just launched the IPO of a company that bilks Millennial investors out of their life savings in the name of "democratizing finance". Literally nothing could be further from the truth. Robinhood is a Candy Crush front-end to the largest HFT dark pool on the planet - Citadel. Is it the top? We will find out. As I showed on Twitter, the Coinbase IPO was the exact top for the Crypto Ponzi market. It also happened to be the day that Bernie Madoff died. 

Robinhood is the only major retail stock broker that allows their clients to buy crypto currencies directly. I think we see where I'm going with this - massively leveraged Millennials are now the (weak) link between stocks and Bitcoins. 

Moving on to the big Casino, here we see the Nasdaq (100) broadening top. Another Hindenburg Omen on the Nasdaq as we can see from the jump in new lows earlier this week (lower pane):

The biggest and most ignored story of the week was the obliteration of Chinese and Hong Kong stocks. Deja vu of July 2015 the PBOC stepped in to stem the decline of mainland markets. Back in '15 they finally halted the decline at -60% after several weeks of failed attempts.

However, Hong Kong market aficionados will be quick to point out the HK authorities don't intervene in their free markets. So there is no limit to how much they can crash.

Stay tuned to find out.

The story that did make headlines on Friday was the very rare Amazon revenue miss. Here we see the last time Amazon/Tech imploded was last summer post Fed Jackson Hole meeting.

Which is interesting, because that's where I was this week: