Tuesday, January 25, 2022

Here Comes "Common Prosperity"

Globalization failed to create common prosperity, so now we're going to do this the hard way. Super bubble meltdown at the zero bound. It's amazing how few people want to see it coming...

"It's time to pull the plug on inflation!"

It's shocking how clueless people are at this juncture. No one would believe this extended "cycle" began with a global financial meltdown caused by the laundering of cheap global capital through the U.S. housing ATM machine. Weaponized 10x, Wall Street subprime time bombs were sold to global banks desperately attempting to avoid 0% interest rates at the end of the cycle.


Now here we are in sudden death overtime of the longest cycle of all time watching the Fed "pivot" from expanding the world's largest asset bubble on record, to exploding it in record time. Standing around like we're watching a tornado in a trailer park.

Today's bulls are functioning solely on their standard model of mass ignorance. The less they know, the better. Today's pundits have as their job to sugar coat every bad piece of information and ensure that the only resulting conclusion is to buy more stock. If Bernie Madoff were alive today he would have to be released from prison and installed as head of the SEC so he could oversee the smooth functioning of this epic mass deception.

So it is hugely ironic that China is the FIRST country in the entire world to begin turning their back on this epic human and environmental disaster via the policy they call "Common prosperity". Meaning, no more bailouts for the rich.

Already this no bailout policy has drawn the derision of GOP and Democrats alike. It's UnAmerican to turn your back on fellow billionaires. So say wealthy politicians trading stocks in their spare time. The only way anyone could believe any of this is "normal" is if Walt Disney is your national historian. 

Of course, the term "Common prosperity" is loaded with irony. For me it's a euphism for super crash sans bailout. One so big and so bad that the rich head straight to their yachts and flee to the Cayman Islands. 

There are random times when I actually agree with Jim Cramer. By that I mean down days, because that's when he's bearish. Between his bullish days of exhorting his flock to buy stocks, he  like me somewhat acknowledges that the amount of junk paper dumped in 2021 is deja vu of 2008. My words, not his.

SPACs/IPOs and Cryptos are this era's suprime, only ~5x larger in magnitude. 

“I want to believe that many of last year’s 600 IPOs are better than the 300 that we got in the dot-com era. But the recent action tells me they aren’t,”

I can’t even find 15 good companies out of the whole 600 odd enterprises that came public last year"

“These broken IPOs have emptied the pockets of investors, and yet they’re selling their winners to fund the over-hyped losers"

Got that? According to Cramer, this era has twice as many junk IPOs as there were in Y2K. 

As it was in Y2K, the meltdown began with the junk companies, but eventually those imploding stocks dragged down the good companies with them.

The vast majority of growth stocks are deep in a bear market, and now the Fed is about to implode cyclicals. Yesterday's gap reversal rally was the largest since October 10th, 2008 which was the acceleration point for the Lehman meltdown. At that point stocks were already in a bear market, but they fell 40% further. Although, the article below doesn't mention any of that. It just makes it sound like a great (one day) comeback.

Not only did both the S&P and Nasdaq stage massive one day reversals yesterday, but as I showed on Twitter today Nasdaq highs-lows were the worst since the pandemic and before that...

October 10th, 2008.

However, unlike that era when the Fed was working overtime to keep markets from final imploding (Hint: It didn't work). This time we are told that the Fed MUST raise interest rates in the middle of a meltdown. 

To restore credibility:

This should do it.

One year ago, the Gamestop pump and dump scheme almost imploded the stock market. Too many newbies who didn't know what they were doing were buying and selling stocks for the first time. That debacle took place amid record Fed liquidity. Now one year later we are witnessing the Millennial margin call amid maximum Fed liquidity withdrawal. 

Nasdaq down volume has been trending up for the past five years:

Of course this reckoning is long overdue. The real question is how is it that so few people see this coming. And I realized recently the reason why bearish commentary doesn't reach the masses, and it isn't for lack of trying. It's because we're not responsible for teaching people right from wrong. That biblical responsibility has been clearly neglected. Today, we have religion without values.

Some think I'm a preacher, I'm not. I see things more from an historical perspective. This cycle of ignoring record inequality has taken place over and over again throughout history. And it always ends the same way. 

"Common prosperity"