Slaves To Deception

In the future this era will be the benchmark for mass deception and willful delusion. When the people finally realize that today's economic "experts" specialize in creating poverty, the spell will be broken. In the meantime, central banks will continue to do what they do best - create wealth inflation for the ultra-wealthy...

It's that time of year when we are updated on how many synthetic billionaires were minted by central banks in the past year. We are informed that the best way to solve exploding global mass poverty is to inflate the wealth of the ultra wealthy. 

You have to be a chimpanzee to believe it. 

"A record 493 people joined Forbes’ World’s Billionaires list this year—meaning the world on average gained a new billionaire every 17 hours"

"Jackpot"

One thing all of Wall Street's financial "innovations" have in common is that the insider owners of financial assets benefit at the expense of the general public. Whether we are talking about stock buyback cashouts, over-priced IPOs, or fraudulent SPACs - this era's stock market version of subprime mortgages. Wall Street couldn't survive if they couldn't sell packaged crap into public markets.

And for that to work, they need mass deception. When corporations eliminated company pensions they adopted the do-it-yourself retirement plan. Whereas previously professional money managers managed pension money, now everyone regardless of their financial education manages their own retirement. It's a con man's paradise. And at the center of it is the insider cash out scheme known as the stock market. 

Over the past decades the stock market has eclipsed the shriveled economy in terms of the public's perception of national prosperity. Since 2008, that trend has gone into overdrive as the moribund economy was stuck in low gear and the only perceived "upside" came from financial markets. The fact that stocks were benefiting at the expense of the economy never came into question. Instant gratification became more important than sustainable long-term wealth. 

We can blame central banks, billionaires, and all of the other "elites" for this mass deception. But make no mistake, the aging public is fully bought into this delusion now. The elderly take their income primarily from capital markets and for this super bubble to end now and expose the underlying economic fraud would be quite devastating. This is PEAK Baby Boomer retirement, hence it must also be peak delusion.

So it is that under the rules of Japanification, today's failed economists and failed policy-makers can kick the can down the road over and over again without any perceived consequence. 

The price that is paid however is in the fact that each recovery becomes weaker and weaker. Which means the divergence between asset prices and the economy grows larger and larger. Today's Madoff-acolyte central bankers can only "save" the bubble by making it bigger.

On the credit side it gets even riskier. As global debt explodes, absent deleveraging, the economic speed limit must go lower and lower. What only a decade ago was considered a crisis level floor for interest rates is now considered a crisis-level ceiling for interest rates. Therefore, it's very useful that today's financial con artists have trained the chimpanzee public to believe that the slightest increase in "prices" aka. wages, portends instant hyperinflation. We are slaves to the bond market now, and the entire financial class questions none of it. 

If all of this sounds desperately stupid, it's because it is.

Make no mistake every single economist and policy-maker who does not question this level of deception now, will have ZERO credibility in the near future. Especially when the sheeple realize today's "experts" specialize in getting us into poverty, not out of it. 

And then we will learn that there are no developed economies anymore, there are only developing economies now.  

Misleading Indicators

For Millennials, this will be their first time getting muppetized by Wall Street. For everyone else, this will be their last. The full force of post-2008 criminality is now at work...

In the spirit of Police Squad, oblivious central banks have never cared who got exploded by their liquidity driven pump and dump schemes. And for Wall Street, monetizing useful idiots is their main line of business. They will continue selling gamblers down the river, until the last muppet is found. Or until the casino breaks, which is one and the same. This new quarter's year-over-year look back period to a pandemic-imploded economy is a con man's paradise.

There are two types of muppets buying into this biblical scale fraud right now. There are those who believe that the longest bull market in U.S. history (11 years) was corrected by the shortest bear market in history (16 days). And then there are those who believe that the longest bull market in history is just getting started. Which one is the greater fool is obvious. Both.

The Dow broadening top has been fully realized. According to the most recent NAIIM active manager survey, the smart money is out and according to the AAII retail survey, the dumb money is ALL IN.

"It is a common saying that smart money is out of market in such formation and market is out of control."

Zerohedge just forwarded another piece of Wall Street propaganda claiming that we will now see the greatest economic boom of our lifetimes. It's all part of the narrative that this is the stock market buying opportunity of a lifetime. Of course nothing could be further from the truth. Does anyone really believe that the old ways will instantly bounce back after the worst pandemic in 100 years? Relative to last year, it may SEEM like a major improvement, but everyone isn't going to now take two trips to Disneyland to make up for the one they missed last year. The head of IATA (International Air Transport Association) recently predicted that global air travel in 2021 will be at 38% of 2019 levels under their most optimistic scenario. And overall, the service sector remains blighted due to mass small business closures. A recent Fed survey indicates that 30% of U.S. small business may not survive 2021. Long lines at Olive Garden won't produce an economic boom in an economy that is firing on 4 out of 8 cylinders. 

 

Consumer sentiment should serve as a warning that there has been substantial damage to this economy:

Over in retail land, there was yet another year of record store closures in 2020:

And yet, below we see the massive disconnect via the retail sector which has been ground zero for record short covering. 

How can this happen? Easy, forward earnings estimates have never been murkier and year over year comparisons look fantastic. Everything from economic growth to Wall Street profit predictions are now benefiting from massive % increases on an annualized basis. All of which is allowing a mountain of fraud to take place. 

As another example, we are told that cars are to 2021 what toilet paper was to 2020. Everyone needs to stock up in case there is a shortage of F-150s. 

"To better illustrate the strong demand dealers are experiencing, Erich Merkle, Ford U.S. sales analyst, pointed out that the company's retail sales are up 23.1% over a year ago. "

Sales went from zero to 23.1% of zero. It was the biggest increase in history on a percentage basis. Sadly, not everyone gets the joke. The autos index went nowhere for 13 years and then exploded this year due to the pandemic: 

On a macro level consider the U.S. growth rate this year will be as high or possibly higher than China's for the first time in DECADES. Which sounds great - U.S. growth is expected to clock in at 6% year over year. However, relative to 2019, U.S. growth is up 4%, which is less than 2% compounded per annum, whereas the deficit will be up 20% of GDP. All of a sudden Goldman's asshole predictions don't sound so hot. 

Globally, it gets even worse. Economists are calling it a "two track" recovery. One in the U.S., based on well-cultivated smoke and mirrors, and the other outside the U.S. based on unmistakable collapse:

This is the third and weakest fake global recovery since 2008:

Worse yet of course, the U.S. deficit is now driving up borrowing costs across the globe. Not a good situation when global debt in 2020 skyrocketed due to the pandemic:

"The U.S. bond tantrum is sending a chill through indebted countries which have for years paid less to borrow more."

Nash says the “canary in the coal mine” is the developing world, already feeling the impact of rising costs to borrow in U.S. dollars."

In summary, we have been warned, and the warning has been ignored. 

And the speculators who ignored the warning are about to be imploded by misleading indicators and the assholes who propagate them. 

The Secular Bull Market Is Over

This current rally is a 100% stimulus-driven sugar rally. The first, but by no means the last. The boom and bust cycle has begun. The U.S. is about to learn the hard way what Japan and China have already learned. You can rent delusion, but you can't own it...

My assertion is that the ninety year secular rally from the early 1930 lows ended in 2020 with the COVID pandemic. Unfortunately, most people never got the memo. It makes perfect sense that this fifth wave blow-off top was by far the fakest and most fraudulent rally of our lifetimes. One could make the case that the secular bull lasted for one more year, however, this will be a lethal rally. A bull trap of multi-decade proportions, awaiting those who didn't know when the party was over. No one in the future will believe that a pandemic that blighted the economy could fuel a manic risk on stock rally.

Sheer lunacy is lethally contagious. Far more dangerous than COVID. 

Unfortunately, the sheeple have been conditioned to expect the future to be the exact same as the past. Now we are seeing the full divergence of fantasy over reality. 

 

In 2020, the U.S. became 100% Japanified. Meaning that the economy and markets are now fully dependent on dramatic and ongoing stimulus. This means that the U.S. is now locked in a perpetual boom and bust cycle similar to Japan and China. This rally from the March 2020 lows is merely the first sugar rally, but by no means the last. This year, the U.S. national debt will grow four times faster than borrowed "GDP". Yes, you read that right. Currently, most of Wall Street is betting that the secular bull market in bonds is over. Nothing could be further from the truth. Per the rules of Japanification, U.S. long-term bond yields will soon be heading to zero, although not necessarily in a straight line. First, the two most crowded trades of this era - long stocks, short bonds - must be reversed. The volatility will be epic.

 

Of course, most people don't see this coming. Why? Because this era represents the pinnacle of Wall Street fraud and the pinnacle of Main Street gullibility. It's sheer arrogance to believe that the U.S. will escape the same fate that met Japan and China while taking the exact same path of stimulus dependency. Arrogance, stupidity, gullibility. Call it what you want. Most people today don't see anything wrong with this current level of widely accepted deception, because this is by far the most corrupt and decadent society in U.S. history.

Back in late 2014, erstwhile hedge fund manager Hugh Hendry called this stimulus-driven delusion "imagined realities". Meaning it's all just sugar-addled gamblers front-running false narratives. In this era, mass deception has been fully normalized. When Congress held hearings on the Gamestop debacle, their only concern was that everyone had equal access to the pump and dump scheme. In this era, we have democratized access to fraud. 

Japan's stock market peaked way back in 1990 (not shown). They have been in a sideways boom and bust cycle ever since, and yet they still lack the fortitude to reform their economy. At this point in time given the global COVID depression, it's possible that it's too late. A possibility that the U.S. will soon contend with - a global poverty trap. Competitive currency debasement. 

China's stock market peaked back in 2008. Since then they've been in a boom and bust cycle similar to Japan. Each boom and bust weaker than the previous one. 

Of all of the rallies in U.S. history, this one is by far the fakest and most fraudulent. You pretty much have to be brain dead to believe in it. Hence it goes largely unquestioned. When this fraud ends, this society will realize that the "experts" are the con men, and the cassandras were right all along. 

At which point their incipient mental breakdown will be fully realized. For those considering a new profession in therapy, bear in mind there is no market for telling people to grow the fuck up. I've tried.

THE SUM OF ALL RISKS

Only by extrapolating the past into the indefinite future can today's financial Ponzi schemers ignore this stupid level of risk. Fortunately for them, their job is made easy by the fact that the sheeple only want to be told that the future will be exactly like the past. They are not capable of believing anything else. 

Of course when this epic mass deception spontaneously explodes "without warning", that will be a different question. 

What follows is a summary of the risks that have been growing to extremes over the past year since the March 2020 low:

First and foremost global markets have been fully "Gamestopped"  by central banks. Meaning we are watching a continuously rotating pump and dump from one sector to the next. Last year, the crowded trade was Tech stocks. The narrative at the time is that we were in a secular bull market for the new virtual economy. Gamblers flocked en masse to the "Money Tree" Cathy Wood and her Ark investment ETFs only to realize it was a mirage. Tech is only part way through its bear market. Wall Street deserves a lot of credit for collapsing the Tech bull market, because when Biden was elected they said the deflation trade is over and the re-opening reflation trade is the next bull market. We went from having a massive Tech bubble to now having a massive cyclical bubble. Based on the exact same specious narrative that valuations don't matter. Valuations mattered in Tech, and they are starting to bring down cyclicals. 

You know the financial system is fatally weak when a pump and dump scheme in a pissant stock can almost crash the system.

"We have come dangerously close to the collapse of the entire system and the public seems to be completely unaware of that"

The first leg down of the Tech wreck saw record Nasdaq down volume. A minor taste of what is coming. 

The next widely ignored risk is Japanification - the use and abuse of stimulus gimmicks as a proxy for a real economy. This is a synthetic recovery currently running on 27% combined fiscal and monetary stimulus. It's the full virtual simulation of prosperity. Today's bulls have no thought or concern for the chasmic and ever-increasing deficit. Worse yet, the fiscal multiplier has collapsed, meaning that fiscal stimulus is having an ever decreasing impact on the economy. In the tradition of Japan, the economy is now dependent upon continuing massive deficits. It's not "stimulus", it's life support. 

While fiscal policy is having a lessening impact on the economy, monetary policy is having no effect on the economy. Monetary policy's only use now is to juice markets. At the 0% bound, there is nowhere to go with interest rates, which means there is NO monetary safety net for when this mega bubble explodes. This stimulus dependency has led to stimulus overload in the markets. All global risk assets are now massively overvalued. Another risk is that the Fed has now lost control over Treasury bond yields. They can't rein them in because more QE will cause inflation expectations to rise. This week saw the largest stock to bond rotation in a decade. And yet bond yields STILL rose on the week. Bond yields will continue rising until the stock market explodes, led by Tech stocks. 

Speaking of rising bond yields, back in 2018 Trump's tax cut caused U.S. bond yields to rise which monkey hammered Emerging Markets. Now, the same thing is happening due to Biden's stimulus package and the impending Infrastructure program. It's sucking money out of global markets back to the U.S. and driving a massive dollar rally. It will be extreme irony when this next meltdown originates in China, as it did in 2015 with the Yuan devaluation. 

No discussion of risk would be complete without the discussion of margin leverage and overall extreme speculative appetite. Global gamblers are under the belief that central banks are invincible and hence there is zero hedging taking place right now. Complacency is rampant, and there is a stupid amount of risk being chased. Nevertheless, the dominoes are already falling in SPACs/IPOs, pot stocks, Chinese stocks, work from home stocks, Biotech, cloud internets, Fintech, and electric vehicles.

Of the three major rallies in the past five years, this rally has been the narrowest in terms of new highs participation. This is a sign of a market that is under constant churn and sector rotation. Each sector getting pumped and dumped until there is nowhere left to hide.

Another risk that Cramer raised earlier this week and then forgot about later in the week, is the MASSIVE amount of stock issuance coming to market via SPACs and IPOs. As he put it, this glut of supply is already overloading the market, and it will keep coming until the market breaks. SPACs are this era's subprime, they are riddled with fraud - and deja vu of 2008 regulators are arriving too late. 

"The SEC is looking into potentially illegal activity related to SPACs, according to people with knowledge of the inquiry"

Imagine getting this far down the page without talking about massive unemployment. It speaks to the total alchemization of markets that the economy is always a distant consideration. One year from the pandemic onset and there are still five years worth of jobs missing. Non-farm payrolls are at 2015 levels. Due to Globalization, the U.S. economy is now in a state of structural deflation. Which means that profits are now taking a disproportionately large share of GDP, and wages are taking a record low amount of GDP. Wages can't rise due to the high unemployment and extreme global deflation that is being imported. Neither political party currently has a plan to acknowledge this issue, much less fix it. See stimulus dependency above.

Another risk that is seldom mentioned by today's Madoff-acolyte financial pundits is the fact that corporations have been gorging on debt for the past year. Unlike every other cycle in U.S. history there has been no deleveraging during this recession. We are to believe that this *new* cycle will merely pile on to the debt super bubble from the longest cycle in U.S. history.

Sure. 

In summary, getting back to the first topic of fragile markets. In momentum markets such as these, the buyers are above the market, and the sellers are below the market. Central banks have ensured that everyone is on the same side of the boat - they just sponsored human history's biggest short covering rally, led by beaten down retailers which may or may not even be in existence a year from now. One year from the March lows and due to the massive margin leverage that has accumulated in the meantime, the machines can no longer handle a RISK OFF event. They will step aside, and the market will go bidless. The margin clerks will be in charge and stonks will be sold at any price to raise liquidity aka. "cash", which will soon be in very short supply. 

Last week we got a preview of what's coming. 

Stonks will be dumped by brokers at any price. Why? Because if they don't, another broker will front-run them out the door to avoid the billions in broker losses that were reported this week.

$10 billion from one minor hedge fund. 

The biggest risk of all of course is what I call "bailout risk". Which means that when the middle class gets wiped out in stonks again, the amount of rage will be quite unfathomable.

After all, who told them this was the beginning of a whole new cycle?

Inflation peaks at the END of the cycle, that's Econ 101. These people can be conned over and over again. 

April Fools

The difference between 2008 and now, is that back then there was only one Bernie Madoff running amok. This post-COVID recovery period will be viewed as a time when the full arsenal of Wall Street criminality was used against the public. It's a con man's paradise. Biblical meltdown is base case scenario...

First, for some perspective, we should bear in mind that ALL bubbles end badly. There have been no exceptions. Not even Bitcoin, which has already enjoyed multiple -50% drawdowns in its short lifespan. Why people are crowding back into something that has proven to be spectacularly unstable, is not for me to say. Call it the power of eternal delusion.

As relative strength shows (top pane), this thing is running out of gas, despite the fact that it has finally garnered Wall Street's full adoption. Recall that the last massive crash (-80%) in 2017 took place after the CME and CBOE implemented Bitcoin futures. That was the top. Now Goldman just announced they are selling Bitcoins to their base of useful muppets. 

 

Recall that for most of 2020, Tech stocks were deemed the most crowded trade. As we know, that super bubble is already well on its way to re-tracing the path of the Dotcom crash, about one month ahead of schedule. In addition, the Biotech vaccine bubble is imploding. The EV/SPAC bubble is imploding. Pot stocks, Gamestop and Reddit pump and dumps, and of course Chinese stocks. China led the recovery out of the pandemic and now they are leading the decline, as the sugar high wears off. There are more bubbles in this timeframe than we've seen at any time in past decades. All as a result of the central bank sponsored sugar high. The losses are mounting. 

Here we see via the Nasdaq that the Fed's bailout in 2020 looks almost identical to the 2019 bailout:

There is one final bubble that is the most crowded bubble of them all. Far more crowded than Bitcoin. That is the cyclical recovery bubble. This is where all of the new money is now headed in this new quarter beginning April Fools Day. 

Bulls will make the case that the much dreaded end of quarter rotation did not explode the stock market. That the transition from Tech stocks to cyclicals and from stocks to bonds was "seamless". From this point forward, all new money will be flowing in one direction towards the most overbought and overowned bubble still standing. The bubble that now takes the crown from Tech for the most crowded bubble. A sector that is so in favor, that these "beaten down" stocks are now considered momentum plays. From this point forward, momentum quants will be crowded into high beta cyclicals.

It's a disaster wanting to happen.

"As investors continue to rotate their exposure into value sectors, stocks in that corner of the market starting to take on characteristics of the momentum factor, an uncommon combination that bodes well for investors"

“This is the holy grail of quant and Value investing!”

This is the holy grail of meltdown. No surprise, Jim Cramer is all over it. The same guy who said two days ago that Wall Street is dumping too many SPACs and IPOs, and that they will implode the market. Now he advises crowding into cyclicals. His argument is that large funds need more "beta" so they are crowding into cyclicals to get more leverage relative to the economy. 

"Money managers don’t care about the most exciting long-term growth stories … they want the companies that can deliver the biggest upside surprises right here,” Cramer said. “In a booming economy, that means owning boom-and-bust cyclicals"

Boom and bust cyclicals indeed. As this chart shows, boom and bust cyclicals have been crowded since the election. Goldman put out their first call to buy cyclicals way back in October, almost six months ago. This trade is crowded and it's already rolling over, despite becoming the go to stock trade on Wall Street. 

In summary, what we have is another Wall Street recovery masquerading as a Main Street recovery. 

It's an end of cyclical dead-end.

There is no way out for those who believe in it.

The momentum algos always get out first. This time will be no exception. 

Deflation Is A Margin Call Away

The consensus calls for asset inflation as far as the eye can see...

Why? Because the IQ bar keeps going lower, and lower, and lower. Morons keep front-running each other to the next level lower, while the crowd feels obliged to follow, for fear of being left out. 

One thing they all have in common, they don't see it coming. Because mass deception has now been normalized. It's a business model. 

"The first quarter of the year has not even ended yet, and Wall Street firms are already building a case for stocks to rise even further in 2021."

Not once has the crowd been right on their inflation prediction. Each time they have imploded:

The reason that Japan hasn't escaped deflation after three decades, is because structurally nothing in their economy has changed. They have spent all this time using and abusing various stimulus gimmicks in order to avoid any true economic reforms.

Sound familiar?

Now we are seeing the exact same thing in the U.S. - bigger and bigger stimulus packages, each having less economic impact. As the chart below shows, most of the stimulus impact has been to the stock market not to the economy. U.S. bond yields are not even back to where they were at the lows of 2009, yet we are told bond yields are approaching the danger zone, NOT because the economy is overheating, NOT because unemployment is fixed, but because the financial markets can no longer stomach normalized interest rates. At no other time in U.S. history would a 2% interest rate be considered "too high".

A 2% yield would get rates just back to the 2009 low. Contrary to popular belief, what has been driving stocks higher IS rising interest rates, pushing banks, industrials, retailers and other cyclicals higher. If rates come down, those sectors crash from record overbought levels.

So, rates can't go up, and rates can't go down:

Forty years of poverty-inducing imported deflation later, and most Americans have now been conned into believing that the definition of inflation means prices they can no longer afford. If their incomes went to zero, they would blame it on inflation. We are now in a vicious poverty trap in which wages can no longer rise, because that would cause "inflation". During the 1970s, true inflation came at a time when wages as a share of the economy were the highest in U.S. history, now wages are the lowest in U.S. history. Unemployment is currently the worst in decades, and under-employment is even worse. Sustained inflation in this broken economy is not even really possible, absent a universal income. Nevertheless, conservatives have successfully redefined inflation as anything that would break this cycle of deflationary interest rates. Why? Because these perpetually low interest rates are great for stonks and bonds. 

This Jedi Mind Trick has led the average American to believe that what we are seeing today is a dangerous level of "inflation".  

For their part, it took forty years, but the Fed has finally figured out that unless they allow the economy to "run hot", there will never be anything approaching full employment ever again. In fact, if we continue in this current deflationary downtrend, eventually there will be full unemployment, because each recovery is weaker than the last. 

The Fed has arrived at this belated conclusion at a time when the Biden Administration is more than primed to take them up on their offer of unlimited free money. Back in the early days of the 2009 great recession, the Obama/Biden administration was stymied by a belligerent Republican Congress. Now, it's payback time. Biden's recent $1.9 trillion mega stimulus combined with his impending mega $2t infrastructure plan is the stimulus equivalent of a middle class economy. However it's an insane amount of stimulus for bond markets to digest. We are fast approaching stimulus overload. So far, rising yields haven't caused a problem for the overall stock market, due to the massive rotation out of Tech/deflation plays into cyclicals. So far, the decimation has been solely in bondland. Many are now saying that the forty year bull market in bonds is now officially over:

BBG: Worst Bond Rout In Decades:

"The selloff put an end to the bull market in long-term U.S. Treasuries that began in the early 1980s. The Bloomberg Barclays U.S. Long Treasury Total Return Index, which tracks bonds maturing in 10 years or longer, has plunged about 20% since its peak in March 2020, putting the market in bear territory."

Unfortunately, like Japan, we have done nothing to solve the long-term deflationary crisis. In fact, we haven't even admitted it's a crisis. Instead, we are using ludicrous amounts of stimulus to merely pretend it's over. Amounts of stimulus that have primarily found their way into stocks and NOT the economy. At present, all of the economic data looks fantastic due to what economists call "base effects". Meaning we are comparing year over year improvement relative to a shutdown economy one year ago. So, on a relative growth basis everything looks fantastic. These "base effects" are a con man's paradise. Into this chasm of obfuscated economic data, any specious narrative will be bought and believed. 

However, when we look at real-time indicators of true economic activity, we can see that we are a long way from recovery:

Crude oil demand is at a decade low (lower pane). Oil's recovery price is cycle low (main pane). 

The "recovery" CPI is also cycle low and tracking the oil price 1:1. It's central bank sponsored Ponzi inflation. 

In summary, what we have is asset inflation masquerading as economic reflation.

A Jedi Mind Trick for weak minded fools: Those who believe in the virtual simulation of prosperity and its acolyte QE to their peril.

What would it take for the stock/bond ratio to reverse?

"SELL"

Because as risk assets fall so will inflation expectations. Like a rock.

And then this fictional recovery will turn back into a pumpkin.

Overnight. Limit down. 

Big Crowd No Exit

This single hedge fund margin call that rattled global markets was a mere warning as to what is coming. Millennials are about to learn the hard way, they don't have to sell any stonks in order to realize irrecoverable losses...

Just remember this, because you will be hearing it a lot:

"No one warned me"

A relatively obscure hedge fund run by a convicted insider trader named Bill Hwang, just caused the largest and fastest single entity margin call in history. In echoes of LTCM, his Archegos hedge fund was massively levered via derivatives that were underwritten by multiple investment banks. These swap agreements were merely cleverly disguised margin loans. The entire house of cards ironically exploded due to a failed secondary stock issuance in one of the massively levered holdings, ViacomCBS, which was underwritten by Morgan Stanley and Goldman Sachs. They were double dipping and inadvertently imploded their own client. That selloff triggered a margin call in which all of the brokers scrambled to unload their positions and front-run each other out the closing door. In the event, Goldman and Morgan Stanley got out, while Credit Suisse and Nomura sustained massive losses.

In the event ViacomCBS and several other stonks got obliterated, including Credit Suisse and Nomura.

Most pundits wrote off this debacle as a one time ordeal, nothing systemic. What they seem to forget is that this COVID melt-up has funded untold numbers of over-leveraged entities. Including record numbers of latecomer retail traders.

Today, perma-bull Jim Cramer admitted that the IPO/SPAC issuance bubble has gotten way out of hand. He also states that the flood of issuance is now the biggest market risk. And it's not going to abate until something breaks. 

"Between the IPOs and the big SPAC attack and the big secondaries, we’re being flooded with stock right now, so the market’s going to struggle until Wall Street turns off the spigot,” the “Mad Money” host said Monday. “Unfortunately, there’s no sign of that happening yet, so you have to keep being careful.”

You can tell that there’s too much supply because many of these deals have started to fizzle,” Cramer said. “These special purpose acquisition companies just keep coming, even though the whole SPAC ecosystem’s falling apart"

With all this new supply, it’s no wonder the fast-growing tech stocks can’t find a bottom"

The first quarter of 2021 has already seen record IPO issuance in $ proceeds for a single quarter. More than full year 2015, 2016, and 2017:

 

These same Tech stocks coming under pressure from SPACs and IPOs are now about to undergo the biggest sector rotation driven outflow in history as the first quarter ends.

In summary, today's over-leveraged gamblers are going to wake up one day to massive irreversible losses. On that day, their broker will indiscriminately liquidate their accounts, thus locking in those losses permanently. 

Their Reddit-ordered goal of never selling one stonk will be realized. Just not how they expected. 

In the event, they will take part in the largest global margin call in history.  

Stimulus 3.0 is now "priced in"