Today's masses are in a consensus of insanity. Be careful trying to fit in...
There's no question the pandemic created wealth for the ultra-wealthy - at the expense of everyone else, which is how all Ponzi schemes work. There is a period of time during which asset flows provide the illusion of wealth for everyone. Which keeps them drawing in new cash. For the all time record, 2021 drew over two decades' worth of new cash into the casino:
In this post-pandemic "new cycle", we are also to believe that the shortest bear market in history capped off the longest bull market in history. Looking back to WWII, if we measure the duration of every bull market relative to the duration of the bear market to follow, we would get this ratio for 2020:
The bull market was 132 times longer than the bear market:
In other words, this perpetual Disney cycle is the new Eldorado. The myth of an entirely new cycle WITHOUT the pain of corporate de-leveraging.
Unfortunately, that is where the myth has now run into inconvenient reality in 2022. Because unlike in 2008 when the Fed used its emergency powers to resuscitate a de-leveraged economy, in this pandemic, the Fed used its emergency powers to inflate a MUCH larger asset bubble than what previously obtained prior to the pandemic. In addition, they used interest rate policy to run the economy hot when the goods producing sector was already running hot due to the pandemic lockdown which shifted demand from services to goods.
The Fed's policy error was to believe that the pandemic was a 2008 scale financial emergency before it had manifested into one. They bailed out markets BEFORE they were in crisis instead of after. Which is why now, they are boxed in by the bond market which has been raising rates far ahead of Fed policy, putting the super asset bubble at extreme risk. History will say that over-stimulus in the absence of de-leveraging was the proximate policy-error. Markets became over-lubricated and when they exploded the Fed had no dry powder left for the REAL economic crisis.
In the meantime, unfortunately the apex of post-2008 bailed out criminality is now FULLY arrayed against the public. What I call the de facto policy of buyer be unaware.
Since 2008, today's market pundits have been fully captured by Wall Street and central bank Disney markets. Despite global central banks actively coordinating a global asset collapse, today's pundits are more than happy to monetize useful idiots. They've learned the hard way that an aging populace has no stomach for the truth.
As we see below it took four years in the two prior bear markets for margin debt to reach a new all time high. In 2020, it took a mere eight months.
This is not a new cycle at all. This is merely the blow-off top from the post-2008 bailout rally. Capped off with a similar magnitude bailout at the end of the longest cycle in U.S. history. The depletion of all stimulus at the end of the cycle. How this Disneyfication of markets was always going to end.
i.e. WORST CASE SCENARIO
This past week Cathie Wood said that we are witnessing the largest misallocation of capital in history. She of all people should know, because she is the sum total of everything that's wrong with this era. She is a Wall Street insider who is pretending to be "democratizing" markets. Her funds are the largest bagholders of the 2021 record Wall Street IPO pump and dump. Twice as many profitless junk IPOs were dumped in 2021 than were dumped in Y2K.
All of which widely ignored chicanery is why RISK OFF is no longer an option.
The "black swan event" that awaits this end of cycle Disney market is ANY reason to sell.
