The magnitude of what's coming will far exceed what any current mainstream pundit is predicting, as they all strive to maintain extreme complacency in the face of extreme risk...
This week, Charles Hugh Smith perfectly captured the zeitgeist of the moment when he predicted that a "Bat Dung Crazy" NEW HIGH was on its way. New crack highs all around. Intentionally or not, he did an excellent job summarizing the EMPTY delusion that now attends this Disney market. I would refute the facts, but there are none to refute, other than the fundamental premise of the article that "everyone is bearish". And his central thesis that dollar rally and Emerging Market collapse is bullish for U.S. investors. Which I addressed in my last blog post as being the GREATEST proximate risk.
It turns out that retail investors have been lying on sentiment surveys and saying they are "bearish" when their positioning remains net bullish. Why they are lying is not for me to say. Perhaps they wanted to participate in the largest and most egregious lies in modern human history. They had fear of missing out aka. "FOMO"...
It's clear that the pandemic was an end of cycle bull trap. And nothing lies more than trapped capital.
We've seen a record number of lies during these past two years. Back at the height of the pandemic, the lie was that of a "New virtual economy". From that point forward, all business would be conducted over the internet. That set loose the largest IPO pump and dump in history during 2021. And then it all collapsed like a cheap tent.
Then we were told that the Gamestop/Robinhood revolution signified the "Democratization of markets". Consensus investing had arrived. Bernie Madoff was a man before his time. That delusion spontaneously exploded last year during the Gamestop debacle.
Next we were told that Crypto currencies heralded the "Decentralization of Finance" aka. "Defi". Remember that?
ZH: Oct. 31st, 2021
ZH: Mar. 25th, 2022
The kiss of death.
Next we were told we are in a commodity "super cycle", when in fact it was merely another crowded Ponzi trade:
BBG Jan. 6, 2022
Base metals are now collapsing at the fastest pace since 2008. 15 months of gains gone:
Next we were told there is a massive housing shortage which is driving prices higher. Now we learn there is ALREADY a housing glut:
June 30th, 2022:
"The costs of owning the median-priced home in the second quarter required 31.5% of the average U.S. wage...That’s the highest percentage since 2007 and up from 24% the year before, marking the biggest jump in more than two decades. Lenders generally see a 28% debt-to-income ratio as the ceiling for approving a mortgage"
A lot of people seem to forget that we were told the EXACT SAME MASSIVE LIE in 2007 as well.
Here we see the current median home price is twice as far from the trendline as in 2007. And in the lower pane we see that housing under construction is higher as well.
But the biggest lie of all has been reserved for this economy. This total fantasy that the Fed can engineer a soft landing. It's becoming clear the Fed DOESN'T want a soft landing. The Fed wants to collapse the job market because they are concerned it's a job seeker's market. Therefore they would rather collapse the economy than to allow job seekers to maintain the upper hand. This is the Volcker Gambit at the ZERO bound.
Nevertheless, it's OVERWHELMINGLY clear that investors are in no way positioned for what is coming, because over the past 14 years, central banks have systematically cultivated ever greater magical thinking from investors.
Which is why the Fed's financial stress index which includes 18 different indicators of financial market risk is still NEGATIVE despite recession concerns at a 15 year high.
They are now INVERSELY correlated:
In summary, Millennials have bought into EVERY lie of the past four decades at the same time. Which makes you wonder what kind of YOUNGER generation would BELIEVE so many lies.
And then you realize, only the kind of generation raised by an OLDER generation that would TELL so many lies.
