"It's called the American Dream for a reason - you have to be asleep to believe it" - George Carlin
I just finished watching the HBO special, George Carlin's American Dream. I thoroughly enjoyed it of course. It confirmed my view of the degeneration of humanity. Throughout Carlin's life his views on society became darker and darker, but then he died in June 2008, just before the big housing collapse and bailout clusterfuck. Imagine if he were alive today what he would be saying about this current gong show? Over the past 15 years since 2008 all of Carlin's self-destruct themes have gone into overdrive. The difference is that in 2008 we discovered Quantitative Easing - printed money - the secret of effortless wealth. Which happens to be just another drug - a financial drug. I call it monetary euthanasia - just hose down markets with enough free money to give everyone the illusion of normalcy. In other words, central bank manipulated markets give the sheeple the illusion of wealth while everything falls apart in real time. Carlin would say that it's all a big fucking conspiracy.
Of dunces.
Which gets us to this coming week's central bank extravaganza. The Fed is widely expected to raise rates again. The ECB is also expected to raise rates again. The BOJ is once again expected to continue massive easing.
The question for the Fed is what do they tell markets going forward? Headline CPI has dropped sharply, but now GDP is re-accelerating and the last time the Fed signaled an impending pause was at their May meeting, at which point markets exploded higher. Which has forced them to put on another rate hike in July. In other words, their dovish commentary at the May meeting made another rate hike necessary. Will they make the same mistake again?
Which gets us to the casino. Since this rate pause rally began late in 2022, mega cap Tech stocks have vaulted 100%. Typically, Tech/growth stocks are the primary beneficiary of a slow growth economy with receding interest rates aka. "The deflation trade". However, the rally was running out of gas in May, but the Fed reignited the rally with their June pause which coincided with the debt ceiling resolution. Those two events AND the AI frenzy led to the recent overthrow high for mega cap Tech.
Which gets us to this week.
At the start of this rally no one expected rate hikes to be continuing into July. Therefore, the bull case is that now with another potential pause coming, Tech stocks should bolt higher again. However, one could make the case that even if the Fed is dovish going forward, much of the "pause" has been priced in already.
If so, then we are looking at history's biggest rope-a-dope, as Tech is now the most crowded trade of 2023.
Making life a bit more complicated for bulls is the fact that this past week Tech earnings were a shit show. Netflix imploded and then Tesla imploded. But it was Taiwan Semiconductor that threw cold water all over the artificial intelligence rally. They guided revenue down for the full year and said that AI demand was not sustainable following the initial surge in orders. In other words, AI is turning out to be just another Tech scam similar to Crypto, Cloud, and Metaverse. Consider that we've now been told that semiconductors went from a shortage in the pandemic, to a glut in early 2022, to a shortage in early 2023, to now a glut again.
Sure.
Here we see the semiconductor sector (weekly) with Taiwan Semiconductor.
This has been the best start to a year for Tech stocks in 30 years of data. Including the Y2K bubble.
Tech stocks are now up seven months in a row, including July.
According to bulls, the bull market is just getting started.
In summary, the sheeple are going to soon awaken to the inconvenient truth that the American Dream is just a big fucking scam.
