For some reason, we've become far too comfortable with societal meltdown as usual...
I call it "consumer choice".
Everything that's happening right now was predicted by Ted Kaczynski aka. "The Unabomber" who died two weeks ago in prison. He was a Harvard mathematician turned survivalist who launched a solo campaign against modern industrial society. In his manifesto he warned against the hollowing out of society and environmental destruction by mis-perceived technological "advancements". He was sentenced to life in prison for killing three people and injuring 23 others over the course of three decades. About the same number that are killed by McDonald's and Coca Cola every minute. At all times the COVID pandemic was far less lethal than heart disease and cancer. If we had locked down Burger King, more people would have survived.
Kaczynski was a man ahead of his time, because we are witnessing the late stage meltdown of "modern" society. Eight billion people can't fix the problem, eight billion people ARE the problem. Every problem we face right now on this planet is man made. It's self-harm on a global scale. Personally, I have adopted the Taoist perspective that this was all meant to happen according to the laws of nature - to destroy that which is a threat to the natural world. In the end Kaczynski will get his way after all, but there will be a steep price to pay for true believers. We cannot protect everyone else, we can only protect ourselves. The desire to self-harm is not rooted in technology that's where Kaczynski was wrong. The desire to self-harm via addiction is rooted in human DNA and it will never be altered.
Therefore it's very fitting that this late stage bull trap rally is driven by "Artificial intelligence". AI has been around for decades, it's nothing new. We are the only species that constantly reinvents the wheel while pretending this time will be different. No other species changes its way of life continuously simply because it has no memory of the past.
In my last blog post I noted that July Fed futures were pricing a 75% probability of another rate hike in July. A mere few hours later, Powell confirmed that rate hikes "have a long way to go". It's Volcker 2.0. - a brief pause followed by many more rate hikes.
While headline CPI is coming down along with commodities, the core PCE which the Fed uses, remains stubbornly high. Here we see the core PCE with the Fed balance sheet.
The Fed itself is STILL the primary source of inflation. So they will continue raising interest rates until everything explodes with extreme dislocation.
It gets even more moronic, because just a few hours after Powell said interest rates are going higher for longer, Paul Krugman claimed that there is no sign of recession, unless interest rates go higher for longer. You can't make this shit up.
"Recently, Krugman said any further interest rate hikes by the Fed to tame inflation down to its 2% target risks tipping the US into recession"
In summary:
Markets rallied hard off the October 2022 lows into late January on the belief that rate hikes were ending. Then in early February markets peaked and imploded at extreme overbought. Then in March Powell turned surprisingly uber hawkish again, at which point regional banks spontaneously imploded.
From that point forward, Tech stocks sky-rocketed due to the belief that rate hikes were once again ending. Last week stocks peaked a second time at extreme overbought. This week, Powell turned uber hawkish again.
So, what we have now is a Tech bubble in a banking collapse.
Buy this idiocy at your own risk.
