Prepare For Hardest Landing

The Banana Republican playbook is a total disaster: geopolitical, economic, financial, environmental, healthcare - just greed all around. The lesson NOT learned from 2008. The party of greed, hate, war, and circus clowns has one more lesson to learn: GAME OVER, MAN...

I am 100% convinced Trump is the Anti-Christ. Although aside from his sordid personal life, ongoing tax evasion, serial bankruptcy, hate mongering, incessant lying, and abuse of power, I have no actual proof. Nevertheless, every time the casino hits a new all time high he comes out with some Black Swan announcement that tanks the market. This time it was war with Iran. The one country in the Middle East the U.S. hasn't tried invading. It would be highly ironic and yet fitting if this is the event that begins meltdown. After all, most of the Faux News audience couldn't find Iran on a map if their life depended on it. They just know that we are the good guys and they are the bad guys...

Prepare for Keynesian bombing of foreigners

aka. Republican Second Term Election Strategy 101:

This is the end of the oil rally

As of mid-day Friday WWIII is getting bought with both hands in the U.S., but the overnight is where the damage will be done...

It took several months but Zerohedge finally admitted that the Fed is monetizing Trump's deficit. This has been obvious from the first day's of the repo crisis, and something the Fed themselves have admitted. There is something about being a Trump supporter, a gold hoarder, and an ad-sponsored conspiracy propagator that prevents the truth from seeing the light of day. I can't put my finger on it. 

Nevertheless, contrary to Zerohedge assertion, this is not true "helicopter money", since none of it has been made available to the masses. This same type of monetization of the deficit took place back in 2009 during the darkest days of the recession, however, it has never been attempted at record over-valuations and in a Tech mega bubble.

A fool's errand of the highest order.

We are still very much in a deflationary environment, which is about to be made 10x worse when the mega bubble explodes. At that point, I expect it will take some time before the Republicans decide to bail out the middle class, if ever.

Time, and rioting.

In the meantime, the death of the Treasury bull market has been greatly exaggerated. I expect a new plunge in long-term bond yields to all time lows approaching the zero bound.

Full disclosure, I am not long Treasuries at this juncture. And as we see from 2009, I would consider such a position a rental.

This is my opinion, not advice.

I also expect the very crowded gold trade to get duly monkey hammered. These speculators have been front running central banks all year, under the premise of imminent "reflation".

We've seen this movie before and it doesn't end well for gold.

More importantly from an economic standpoint, after the crash and the rioting, I expect a sea change in political mindset. Eventually.

When today's mega bubble in arrogance explodes, today's exceptional Idiocracy will realize they are not too good for "socialism" after all. Quite the other way around. How could they know anything about "socialism", when they think that capitalism is a decade of monetary bailouts for the rich. What I mean in any case is merely a rebalancing of the economy back to where it was in the two hundred years before Supply Side criminality became the order of the day.

When they finally admit that they don't know anything about anything, that is when I expect real helicopter money to arrive. Around the same time that Sean Hannity is no longer the most popular vacuous blowhard on television, and Big Donny is wearing an orange jumpsuit. Handed to him by his own party of delinquents.  

In the meantime, one of these bailouts is not like the others:

Prepare for hard landing

President Madoff 2020

Those who don't see anything wrong with non-stop lying, are about to learn the lesson of a lifetime...

I assert full copyright to the book and movie of the name "The Big Long". Should be a huge hit - exact same plot as last time except Donald Trump as lead con man. Once again starring the same guy who became famous by predicting the last crash. 

Ignored all over again by a society deep in narcoleptic coma...

Imagine if there was a guy, call him Michael Burry, who warned about the 2008 subprime time bomb, made millions of dollars shorting it, and then was featured in a book and movie about it - would anyone believe him the next time he warned of a bubble? Of course not. We live in a total fucking Idiocracy...

New all time high for extreme greed:

https://money.cnn.com/data/fear-and-greed/

Unlike perma-bears such as myself who have warned for a decade straight that simulated prosperity will end extraordinarily badly, Burry only warned six months ago about the index bubble. And yet he too has been assiduously ignored.

"Do ETFs threaten the market's structure by making it too easy to pile into — or bail out of — the same stocks or bonds at lightning speed?

That's the public claim of Michael Burry. Burry is famous for appearing in "The Big Short," a book about his bet against mortgages ahead of the 2008 crisis. Burry, who ran Scion Asset Management, has called ETFs and passive investing a "bubble." He says ETFs put too much fast money into too few concentrated positions."

That assertion is "fake news," Matt Bartolini, head of ETF provider SPDR Americas Research, told a gathering of financial advisors at the Schwab Impact conference in San Diego"


No conflict of interest there...

Here we see the net effect of passive indexing - a chasmic gap between market breadth and the senior market indices. What happens when ETFs put too much fast money into too few concentrated positions:

Recall, the Rydex asset positioning ratio is warning as to what's coming:

The Hindenburg Omens are warning what is coming.

Hindenburg Omens warn of a bifurcated market consisting of significant new highs and new lows at the same time:

On a volatility adjusted basis, the market peaked a month ago. New highs peaked several weeks ago:

"Safe havens" are entering third wave down:

Gamblers are thoroughly drugged by the virtual simulation of prosperity and its acolyte QE.

Whereas the 2018 top was led by pot stocks, this top is led by real drugs.

The kind that kill you:

Emerging Markets are leading today:

The weekly view

Another year of trade war, leading to higher tariffs, another truce, and a completed three wave correction:

AMD was the best performing stock in the S&P 500 two years in a row. Now in parabolic blowoff mode:

Move along, nothing to see here

Fool Me All The Time, Shame On Me

Trump is the Bernie Madoff of this era. Nothing more, nothing less. The only difference is that everyone knows in advance that Trump is a con man. This time there is NO excuse...

Apparently when this became the longest bull market in U.S. history, that's all it took to convince everyone this would go on forever. Because prior to Trump's non-stop bullshit, they had their doubts. Today marks two decades of asset bubbles and crashes. Yet somehow the same morons keep getting fooled by the same psychopaths. This time with help from a renowned expert at bilking casino gamblers. Because they couldn't do it without him...

"We need Trump this time"

What history will say about the decade of bailouts for the ultra-wealthy:

Seven years of maximum monetary stimulus. Implosion (2016). Two years of maximum fiscal stimulus. Implosion (2018). And for the grand finale, one year of ($2 trillion) combined fiscal and monetary stimulus (~10% of GDP). 

No one saw it coming.

Today's Bernie Madoff acolytes at central banks and the financial services crime syndicate have herded this society off a cliff. Over the past several decades, corporations found ever-new and "innovative" ways to maximize profit at the economy's expense. Cannibalizing the economy to make the quarter, while using debt to backfill the demand crater. A relentless middle class strip mining operation that has led to greater and greater deflation and lower and lower interest rates. Having dispensed with real pensions, companies found a new and creative way to generate simulated retirement - 401k retirement savings plans to expedite the final transfer of middle class wealth to ultra-wealthy corporate insiders cashing out. In conjunction with corporate-funded stock buybacks to give the illusion of profit growth. When in fact aggregate profits haven't grown for years.

Aggregate pre-tax profits peaked five years ago:

This entire fraud, happily propagated by the media via the Dow Jones Illusional Average - which in no way represents the average stock - has done a fantastic job of concealing the damage to the underlying economy. Now featuring a U.S. stock market "at all time highs" excluding ALL of the economically cyclical industries: Banks, homebuilders, transports, autos, industrials (ex-defense), energy, retail, construction. None at all time highs.

This has never happened before in U.S. history. A one year+ Dow Theory divergence:

It's the "miracle of indexing", we are told. The idea that a handful of stocks bid up to unprecedented valuations can continue elevating the permanent plateau while everything else implodes in real time.

We have been told this same fairy tale three times in the past two decades. Each time, the exact same morons believe it.

All this to say that social mood will be the final arbiter of this con job, when greed turns to fear on its way to panic and stained underwear.

Bonus is in the bank, it's time for real selling.

Here we see $USDJPY carry on the verge of risk off for only the second time in a year. Aligning with the global third wave down.

Recall one year ago this week, $USDJPY flash crashed at the end of wave '1' down. 

Leaving this much of the market behind is recipe for wholesale collapse without a safety net:

As it was in 2008, rails are outperforming trucks. For now...

Party Like It's 1929

Hard to believe at this new permanent plateau of insanity, but the days of the Trump Super Idiocracy are numbered. The MAGA vacation from responsibility is now running on glue fumes and existential lying. Cynics of climate change efforts will be happy to know that the magnitude of this con job will be measured not in dollars but in carbon footprint...

Twenty years ago as the clocks changed from 1999 to 2000 everyone expected the world to end. Fast forward two decades with the same risks multiplied 10x, complacency is rampant. It took an entire decade, but the world finally borrowed its way out of a debt crisis.

Way back in 1999 we all thought that the Millennial year change would crash legacy computer systems that had been written to store only two digit years, excluding the century. Which means that all computers that were not fixed in time would assume the year 2000 was 1900. Of course the problem was manifest well ahead of the actual century change due to forward dating etc. For those of us in the IT industry that meant spending the second half of the 1990s, re-writing, upgrading, or entirely replacing legacy computer systems. When New Year's rolled around, we were all on the porch with shotguns bracing for global darkness. However, by the time Australia celebrated New Year's without a hitch, everyone started wondering, in what time zone does Armageddon begin?

Good times.

Fast forward to this epic gong show: 

A Fed easing into a mega Tech bubble. Check. Stock market concentrated into a handful of massively overvalued tech stocks. Check. Profitless IPO pump and dump. Check. Longest bull market in U.S. history. Check. The prior longest bull market being the one that ended abruptly in 2000.

December 27th, 2019:

Ironically, Apple almost went out of business in 1997 and was only resuscitated due to a lifeline investment from Bill Gates. Gates feared that if Apple went out of business, anti-trust regulators would say that the Microsoft monopoly destroyed Apple, because it almost did. However, Steve Jobs returned to Apple at its nadir, and reinvented the company. From which point Apple then rallied back from near zero valuation to become the most valuable company in human history. Now, this super-duopoly have a combined market cap greater than the fourth largest economy in the world.

The difference today of course is that there is no such thing as anti-trust regulation anymore. That was a luxury of a bygone era that protected existing industries and workers from predatory competition. This past decade of "free money" cast that quaint notion aside, as the predominant Silicon Valley model became "Blitzscaling" - the use of unlimited free money to annihilate existing industries, using automation and technology. Whether or not these new "disruptor" companies are actual businesses that turn a profit, remains to be seen. For the first time in U.S. history, venture capital is cheaper than public capital. Historically, startup companies were forced to court VCs to obtain funding. During the past decade, that model was inverted by a tsunami of capital competing to invest in the next Uber, long before it goes public and tanks -40%.

All of this "disruption" merely portends mass bankruptcy on an epic scale, both for the new entrants and for the legacy businesses forced to compete with unlimited subsidized losses.

Nowhere is the free money binge closer to implosion than in the shale oil and gas industry. The same industry that was near death in 2016, was re-capitalized, and is now imploding again.

"A bankruptcy boom has hit the oil and gas industry, and it’s just getting started. Investors have lost their appetite for shale, and energy debt has become among the least desirable in the market. 


The industry has been teetering on the verge of mass hysteria for much of 2019 as a record number of energy companies folded."


The industry was making a comeback in 2016 by rationalizing over-investment, but then Trump gave the industry an unlimited rope for over-production, which they wrapped around their neck and went bungee jumping off a cliff. They will now produce themselves into oblivion at a price point well below break-even.

All praying that prices rise before the cash runs out. Good luck with that. 

XOP is the oil and gas exploration and production ETF:

Add in existential global trade wars. Global slowdown. Record low interest rates. Central banks at maximum stimulus. Overnight liquidity collapse. Confirmed Brexit. Super Dunce leading the free world.

What's not to like?

All of this obvious corruption and chicanery will get unwound post haste when the MAGA Kindgom spontaneously explodes. 

At that point, everyone will realize that conflict of interest, non-stop lying, generational theft, predatory competition, election-rigging, tax evasion, and grabbing pussy are not traditional American values.

However, it will be far too late to remember the difference between right and wrong by that time. 

Fairy Tales of Infinite Simulated Growth

History will show that the Trump tax cut drove two self-imploding melt-ups - each one bookending the two year market top. Why? Because there is no such thing as free money. Today's casino class only believes in the conjoining of fiscal and monetary policy when it's used to create record asset bubbles. When used for any other purpose, it's clearly "socialism"...

The IBD 50 best shows the two year top

These are the fastest growing companies listed on U.S. markets, with respect to real earnings:

Previously I showed asset allocation via the equity call/put ratio and the Rydex bull / bear ratio. Both now exceed the early 2018 melt-up. Recent VIX short positioning (not updated this week, due to the holiday), also exceeds Jan. '18. 

Which means that the magnitude of risk-seeking exceeds the early 2018 melt-up, and is focused on the riskiest stocks. Revenueless Biotech stocks are back at 2015 highs:

Within semiconductors, AMD's run is reminiscent of last October:

Contrary to popular belief, global risk assets are still far below their two year old high, in U.S. dollars.

2019 is the inverse of 2018 - the melt-up in 2018 came at the beginning of the year, whereas the melt-up now is coming at the end of the year:

Oil is trending lower:

Tesla exhibits the power of short-covering

To be clear, it's not Trump who is to blame for this epic con job. 

After all, he didn't elect himself.

2020: Year Of Rage

One could not possibly imagine a more cataclysmic ending to this bonfire of the sanities than the one setting up now. Record stimulus, record complacency, record misallocation of capital, record risk exposure, record over-valuations.

All thanks to belief in Donald Trump. You can't make this shit up...

So far, the Trump impeachment has been a mere slap on the wrist. The Republican-controlled Senate is unwilling to consider Trump's censure, much less removal. Not a man of conscience among them. Not one willing to stand up for democracy. An entire party devoted to protecting corruption. My prediction for 2020 is that they will ALL regret that decision. Sooner rather than later. 

Should we be surprised they've circled their wagons around Donald Trump? Not at all. This is how the reign of corruption ends. Bolted to a proven con man. It doesn't get any better than this. 

Recall 2008: For the first time in U.S. history, there were no legal repercussions emanating from financial collapse. Unprecedented malfeasance, yet no accountability. Why? Because this ossified society reached the existential conclusion that their dream for the future was too big to fail. They were not willing to reform embedded corruption. So, they turned a blind eye and assumed this next round would all blow up on the next generation. A cynical bet with a lit fuse now set to explode in their faces.

Social mood rollover and crash from a lower high, portends rage on a scale we've never seen before. A society bilked AGAIN by the exact same psychopaths. Going into this, the sheeple are of the belief that everything is going just fine. Consumer sentiment is at a seven month high. Major U.S. stock indices at record highs. They are blissfully unaware that record stimulus gimmicks have been deployed to create this illusion. An asinine 10% of GDP in combined fiscal and monetary stimulus, as we enter 2020. Unprecedented in U.S. history. This is the best con job record amounts of money could buy. Election-rigging on a mind-boggling scale, while Faux News and its acolytes spend every minute claiming Trump is innocent of election rigging. It's this blind spot for "corruption as usual", that will be their biblical undoing. This cynical belief that all of the costs of this failed way of life can be foisted onto the next generation. Having no clue that record stimulus deception is now deployed against THEM. Useful idiots for one more corruption cycle.

"It only took 5% of borrowed GDP. Why didn't anyone think of this sooner? Clearly we've achieved a higher level of intelligence."

TEN YEARS from the 2009 denouement, the stage is set for a round trip back to extreme dislocation. Revisiting those fateful decisions to turn a blind eye to rampant malfeasance. This time at PEAK Boomer retirement. Arguably the worst time in history for an exploded Ponzi bubble.

This political circus is a key reason they don't see this coming. Their belief that if they just protect Trump legally, then all of this malfeasance can achieve its happy ending. How do these Libtards not understand how close we are to corruption nirvana?

The Creator is laughing her ass off at this unbelievable buffoon fest.

Sit back and enjoy the grand finale.

Clear And President Danger

Unfortunately, in Disney World the ride always ends. Everyone will say they didn't see this Ponzi ride ending; however with Trump as president, historians will have a hard time believing they weren't in on the Idiocracy. Happily propagating delusion in a zero sum fraud of global exploitation...

Over the past decade, the vast majority of everyone you know, capitulated to Disney markets. In particular the media, academia, economists, Wall Street, and investment managers. They had no "choice" but to believe in an asset bubble zero sum game. Everyone believing THEY would come out the winner at everyone else's expense. A society with the cumulative IQ of a dead gopher. 

Sadly for them, only perma-bears are right once. When it really matters - at the end of the ride.

Everyone else is drugged by the virtual simulation of prosperity and its acolyte QE. There came a point in the cycle when from a time or money perspective, there was no choice but to capitulate to indefinite delusion.

I get it, not really. I've warned all along, never forfeit sanity to mass delusion. There are some things that are impossible to get back. Capital being the least of them. This society now places all of its fake faith in the corporate dead end way of life. The new religion. Desecration of life. Desecration of planet. Desecration of mind. Desecration of body. Desecration of soul. 

The same way of life that exploded in 2008. The one that first enslaved the developing world and then came home to roost in the "wealthy" nations.

Going back decades, what set the developed world apart from the developing world was labour scarcity. An enviable advantage that remained in place during the colonial era. However after the mid-1960s, the post-colonial era gave rise to globalization and free trade. The desire of the Third World to gain a seat at the big table. Enter corporate arbitrage: buying in one locale and selling in another. Destroying one middle class by preventing another. Moving factories around as necessary to keep profits maximized and dreaded labour scarcity at bay. No surprise, labour cost aka. wages collapsed down to "marginal cost", meaning whoever will do it the cheapest. Productivity is no longer a factor in wage setting. The massive differential between productivity and wages now accrues to multinational corporate profit. 

But a funny thing happened in 2008. Demand collapsed. Debt markets imploded. Suddenly the failed globalized capitalist arbitrage was at risk.

Enter central banks and Disney markets. The serial bailout of globalized capitalism by central banks via zero sum asset bubbles. This just happens to be the biggest asset bubble in human history. Inflated by the greatest amount of Disney money in human history.

There is a reason not to believe in this fraud, that transcends an entire decade worth of wasted money, wasted time, and forfeited sanity: Credibility.

The capacity to know right from wrong, as it pertains to using people up.

Lest one finds out at the end of it all, they were among those being used.