Saturday, January 22, 2022

Fool Me All The Time, Shame On Me

Three decades worth of criminality got crammed into one pandemic asset super bubble, but today's casino gamblers only fear a long overdue wage increase. Today's con men are now boxed in by their own bullshit...

This coming week is setting up deja vu of September 2008. A Fed dicking around worrying about inflation while markets are imploding all around them in real-time. Either the market final implodes ahead of the FOMC causing them to pivot, or the Fed will final implode markets during their meeting. Either way, all signs point to collapse. 

Breadth has been imploding for a full year now. While Nasdaq lows to end the week, were the worst since 2008. 

The dawn of 2022 is revealing a lethal hangover from history's largest monetary heroin bubble:

This week, Tech earnings from Netflix and Peloton reminded us that the pandemic caused a one-time massive over-investment in stay-at-home technology reminiscent of the Y2K date change. Tech stocks were already weak due to Fed actions, but now gamblers must navigate an earnings season that will reveal declining growth. 

In addition, peak IPO/SPAC issuance on an order of magnitude 400% what it was pre-pandemic is now causing Wall Street banks and brokers to implode. Retail trading activity peaked a full year ago. Meanwhile, record IPO issuance has left a 2022 insider lockup expiration of lethal magnitude. And of course with peak valuation, we have now seen peak M&A activity. All of which is now imploding financials which is where investors have been rotating for months. 

Can't you tell?

Whereas the median return for IPOs since 1990 is +14%, in 2021 it was -14%. A mere 28% difference. 

Rivian Automotive cited in the above article is just one of many  unprofitable billion dollar IPOs that are now going bidless. Even Jim Cramer is warning investors to AVOID profitless stocks. The same ones he was endorsing during the rally.

Bulls will have to explain to me how everyone can own something on the way up and NOT own it on the way down. 

Next there's the now one year running Millennial margin call which is the locus of widely ignored collapse. It was one year ago that the Gamestop pump and dump scheme lured a generation into gamified markets where they could get bilked by known con men. What jackass pundits far and wide called the "democratization of markets" has now been revealed as the democratization of fraud. 

One growth sector after another is now imploding back to the pre-pandemic level on their way to the pandemic lows. The Global Nasdaq ended the week right at the pre-pandemic collapse level.

Also under the radar is this era's record global housing bubble. Which is already imploding in China. Recently we learned that U.S. housing construction is at the highest level in 50 years. And yet, home buyer sentiment remains mired at 40 year lows. This set-up is even WORSE than in 2007 which was the last time the Fed imploded a housing bubble they helped create. They don't get full credit however, because it's the housing industry that is once again telling us that high home prices are a "supply" problem. 

Fool me all the time, shame on me. 

Fittingly, heading into an FOMC meeting that is all about "inflation", the vaunted Crypto "inflation safe haven" trade is imploding in real-time.

Another MASSIVE lie bought and believed by today's ubiquitous army of useful idiots at the behest of today's quasi-criminal financial pundits. 

In other words, markets are already doing the Fed's job for them. They are collapsing the fake wealth effect that was behind this "inflation" blip this entire time. 

Of course CPI is a lagged indicator, so bulls need to now wonder how long it will take for the Fed to realize they are making a MASSIVE mistake. 

How "long" measured in percentage terms.

I'm guessing TOO long, because Nasdaq lows are ALREADY worse than they were in December 2018 when the Fed last reversed.


In summary, the pandemic and the mega asset bubble it spawned was a con man's paradise. The past three decade's equivalent corruption was unleashed on Millennials at the end of the cycle. 

Nevertheless, there comes a point at which the con man fools himself. We have now reached that juncture. If these people now want to tighten liquidity in the midst of a collapsing global asset bubble all because they fear a long overdue working class wage increase, I say go for it.