Fortunately, or unfortunately, depending on your evolutionary point of view - the cure for idiocy is idiocy...
The trolls are swarming my Twitter feed, which usually means the market is ready to make another leg down. Most criticize me for being too biased towards bearish news. Which is fine, because I have no interest in taking part in the biggest scam in history. Everyone in the mainstream media is now pro-deception. Embedding delusional assumptions in economic forecasts is the new "objectivity". We live in the age of rampant fraud, and if you question the modus operandi of mass delusion, you become an automatic outcast.
The fact that CNBC is STILL interviewing Cathie Wood shows that scams are now openly accepted. Investor losses from just ONE of her Ark ETFs now equal all of Bernie Madoff's Ponzi scheme losses i.e. $20 billion.
Bloomberg June 2022:
"ARKK currently holds $8.5 billion, down from a high-water mark of around $28 billion in February 2021.
Notably, the drawdown in assets is a result of weak performance rather than investors yanking out cash...while such a dismal showing would normally prompt an investor exodus, Wood has cultivated a loyal following on social media"
Inflation just happens to be the LAST and most widely embraced fraud. Almost everyone in the business media is a "supply sider" so they view inflation as an existential risk to corporate profits and stock prices. Didn't they fight for forty years to implode the middle class? We can't have all of that hard work unwound now. Hence they are complicit in a Fed policy error of BIBLICAL magnitude. After all, if you need people to buy your product - be that homes, cars, stocks or cryptos then what you do is you tell them that the prices are going up. No salesmen ever tells someone the price is going DOWN.
As I've said many times, measuring inflation as a year over year rate of change while exiting a pandemic lockdown, is the height of idiocy. And now it has set off an UNCONTROLLED GLOBAL inflation hysteria.
"30+ central banks have hiked rates by at least one percentage point at one time in 2022"
policy makers are willing to countenance triggering a recession if that is the extent to which they need to shift the demand curve in order to meet this aim"
Refusing to go along with the trend is the Bank of Japan, with Governor Haruhiko Kuroda dismissing a pickup in inflation in his country as being mainly driven by commodities -- not the kind of stable price increases he’s been seeking"
Indeed. The Japanese have been doing this much longer than everyone else and they know transitory asset inflation when they see it. Thirty+ central banks are now competing to trigger synchronized global meltdown on a scale that monetary policy can't solve.
The Fed is putting on a show as how NOT to manage monetary policy. Right now, they should be putting rate hikes on hold to give time for their recent hikes to take effect. But instead, they are ONCE AGAIN panic reacting to the CPI and leaning towards a 1% rate hike. The biggest one since Volcker imploded the economy.
However, in the absence of wage inflation, nothing cures high prices like high prices. Consumers don't have the spending power to buy EVERYTHING at inflated prices. Money spent on higher gasoline bills must be taken from somewhere else.
Collapse is NOT the true definition of inflation.
Here we see last week's average hourly earnings divided by this week's CPI. There is nothing sustainable about this equation:
All of which leaves investors trapped between recession and inflation. Which is why cash balances are near all time lows. They've been drinking the inflation Kool-Aid.
There is NO LIE today's bulls won't believe. And no truth they will believe. They call this approach "contrarian" investing. He who believes in the least truth wins. Currently, the U.S.-centric "TINA" ("There is no alternative") trade is oft-cited as the primary reason to own U.S. risk assets. Which is ironic, because that is exactly what I define to be the greatest single risk at this juncture - the outflows of money from the rest of the world to the U.S.
In other words, the greatest bull argument is also the greatest bear argument. Who to believe?
The people who don't believe in the truth of course.
Here is what I see happening next:
The magnitude of this global collapse will be on such a scale that 32+ years of Japanification will end. The Japanese have been using cheap money to AVOID economic reform for over three decades. Now, the last false prophet of economic reform - Shinzo Abe was just assassinated. Coincidence? No. He and his ilk have propagated an era of monetary mass delusion. He was supposed to be a reformer but he turned out to just be another cleverly disguised stimulus addict.
Here in the U.S., Millennial meltdown will ensure things "change". Meaning there will be no more bailouts for the wealthy. Nothing is too big to fail this time around.
That doesn't mean the end of the world, but it does mean the end of rampant lying.
People ask what do I mean when I say that stocks will become "dead money". What I mean is that central banks will do everything possible to prevent true price discovery. And as long as they are trying to reinflate their collapsed bubble, that will zombify the stock market. It will trade in a wide slow range.
The generational highs are in. Our lies are only "exceptional" in their magnitude.
