It's A Bullshit Market Everywhere You Look

My 2020 prediction for super crash followed by rioting and Trump incarceration, took a massive leap forward this past week. And it's only February. In the Wall Street tradition, I may have to upgrade my yearly price target to change of underwear from a mere -60% previously...

Only one generation has an excuse not to see this coming. The rest of today's cybernetic organisms have been programmed for self-destruct mode. Twenty years ago via the Dotcom bubble. Ten years ago via the housing bubble. Now, at the pinnacle of maximum "I should have seen it coming" Boomer retirement pain, it's the everything super bubble, compliments of Donald Trump. These people never miss an opportunity to self-implode. It's a tradition. For the past ten years, the stampeding crowd has been right en masse. Now, they will self-destruct en masse. Sadly, in a mindless Borg there is no strength in numbers. 

The only asset class today is momentum of useful carbon from one bubble to the next. 

This week in summary:

Any questions?

"The latest effort on this front came this past week when Morgan Stanley (ticker: MS) unveiled a $13 billion all-stock deal to buy E*Trade Financial"


The two year market top is ending the exact same way it started amid record stimulus-lubricated "FOMO" - fear of missing out. In every cycle, the usual bagholders come in at the end. 

"At Charles Schwab, trading volumes, which Sundial measured through daily average revenue trades, are up 74%"

"Retail traders have become manic" 

"The preliminary February results fell just short of a 101.4 reading two years ago that set the high watermark during the current economic expansion that began in the middle of 2009."

"Looking at data back to 1916, the researchers said that the index was a reliable recession indicator since it rose leading up to every prior recession"

In summary, it's a bullshit market everywhere you look.

What this pundit calls "good news", anyone with a brain would call "nowhere to hide":

"In the week just past, we witnessed record-high prices in risky assets—including U.S. stocks and corporate bonds, both investment- and speculative-grade. At the same time, havens from risk—gold and long-term Treasury bonds—also registered records."

"The prospect of a democratic socialist facing off against the incumbent U.S. president in November's election is viewed positively by Wall Street. The odds of President Trump's re-election are seen as better if he were opposed by Bernie Sanders"




What I say is don't count your money while you're still in Trump Casino. That has never worked out well for anyone.

"Trump economist Larry Kudlow says you can ignore record low long-term bond yields, but they're a leading indicator of a stock market crash"

Yes, This Is "Meltdown As Usual"

The high altitude explosion of super stimulus ignited by arrogant bullshit at all time lies. Unforeseen by a society of zombies drugged by the virtual simulation of prosperity and its acolyte QE. A stoned old age home in which constantly lowered expectations are the secret to success. 

An ill-fated strategy culminating in soiled underwear:

As always, we are informed that today's persistently lower bond yields are solely due to the rest of the world imploding. The U.S. now being its own separate planet.  

"Move along, nothing to see here"

“America is working and there is a blue-collar boom,” he continued. “This a fundamentally very sound economy.”


History will say that under Forrest Trump, the unquestioning Borg borrowed their way into oblivion while being told the 'Conomy is fantastic. 

Debt was the new "GDP".

Getting back to the casino, yesterday (Thursday), the market flash crashed just before noon, in a minor taste of what is about to come. Then the BTFD team rallied the casino back in a three wave correction. However, overnight on Friday (today), the futures opened down and the casino closed near the lows of the day (updated after the close). 

Which puts into play my Efficient Implosion Hypothesis regarding options expiration. Also known as, "You know you're an optimist when..."

Here we see semiconductors rolling over again this week deja vu of late January when the casino gapped down on Corona Monday. The blue arrow was Friday. As we see, today's volume is already higher than it was on big Monday (Jan. 27th) gap open day.

This was a classic headfake overthrow, "designed" to show just how much risk these free money addled morons would buy. It turns out, all of it. Recall the news from Tuesday:

As the dollar rips higher, the Rest of the World (dollar terms) has been warning of what is to come.

A warning that as we see above, Lying Larry and others have assiduously ignored. This is setting up very much like 2015 smash crash. 

Except it's not 2015:

To be sure, there have been many market headfakes that have defied the underlying inconvenient truth. 

Which is why today's pundits ALWAYS side with the casino over reality. Gamblers misallocate their own capital and then point to rising asset prices as a sign of low risk. 

Here we see the carry trade just spiked deja vu of October 2018, just prior to the S&P imploding -20%: 

"Risk is low!"

The Australian market (local currency) continues to show the chasmic divergence between fantasy and reality that central banks have now created.

When in doubt, gamblers always choose their own positioning as indication of "truth":

This week, JP Morgan pointed out the fact that there are no more safe havens in the stock market. Traditional safe havens are now the most overvalued sectors.

“Bonds, momentum stocks, and low volatility stocks rallied – pushing the valuation spread between defensive and cyclical stocks to a level 2x worse than during the peak of the late-’90s tech bubble”

JP Morgan obviously can't say sell everything, that would be contrary to their own interest, so they recommend allocation to those stocks that are most highly leveraged to the imploding economy:

"JPMorgan reiterated its call to sell out of defensive assets and rotate into cyclical assets such as value stocks, commodity stocks and emerging markets"


In other words, the stocks that are now going into third wave down, are the new "safe havens". You just can't make this shit up:

"We really like banks here"

Continuing the 2015 analog, we are on the verge of an EM currency crisis, originating in China:

"At TD Ameritrade, million trade days reached 38 in fiscal Q12020 (Sept-December 2019), compared to 23 total million trade days in all of fiscal 2019" 

"Retail traders have become manic"

In summary, global volatility has been feeding through to the S&P VIX for several months now, while being assiduously ignored.  

Bringing the VIX just inches away from triggering VixPlosion 2.0.

At the same time as everything else goes into wholesale meltdown...

Bounding Down The Road To Perdition

In retrospect, the age of Trump will be seen as an age of unprecedented idiocy and buffoonery. A late stage Roman Circus run by and for a court of arrogant jokers and fools lying to themselves constantly, while the world fell apart in real-time...

Trump has been pardoning all manner of criminals this week, softening us up for what comes next - the pardoning of self-proclaimed dirty trickster Roger Stone. If you haven't already watched "Get Me Roger Stone" on Netflix, I highly recommend it. This Nixon-acolyte has been at the heart of GOP chicanery for forty years now. He and Paul Manafort essentially invented the Political Action Committee (PAC) to bypass campaign finance laws. And they took character assassination to a whole new level.

Continuing the theme, Trump will be pardoning Charles Manson by this time next week.

All of this arrogant buffoonery is part and parcel of a late stage empire sagging under the weight of its own past. Totally unable to find a path to the future, still enraptured by the glorious past. A generation incapable of realizing it's over. Why can't the Democrats find a viable candidate under the age of 100? One that people know and trust? What does it say about GenX, that there isn't anyone in the 50-something age range with the will and gravitas to lead? First off, we know that the exigencies of the day require finding someone willing to concoct a fantasy that has absolutely no basis in reality, carry that forward through to the general election and then pivot 180 degrees back towards the moribund status quo. Because no real change is allowed in the old age home. Alternatively, find a serial con man who will commandeer a lathered up mob on Twitter while all of his false promises turn to crap in real-time.

Which, gets me to the point of this post: Reality and the truth don't care what fake promises are made by con men. The willing mob cares, just not reality. Which is how we find ourselves at this parlous juncture where every aspect of Trump's Promised NeverNever Land is turning to shite in real-time, while the masses at large still believe, it's working.

The power of suggestion.

Take climate change as an example. Trump promised that he would make the U.S. energy independent, so he threw open the Federal lands to fracking. This created the second surge in over-investment in the past decade, wholly offsetting OPEC's 2016 supply-reduction agreement, leading to another downleg in prices. 

The law of unintended consequences. More unfettered supply meant more competition, more price-taking action, and hence less control over price. Leading to a second wave of insolvency for frackers.

In addition, Trump removed the U.S. from the Paris Climate Agreement. Hence, a large group of U.S. University students took matters into their own hands and demanded divestment by college endowment funds in big oil. Meanwhile, the ESG (Environmental, Social Governance) sustainable investing theme skyrocketed as private citizens voted with their own dollars. The next thing you know, the world's largest asset manager, BlackRock, announced in January of this year that they are divesting from fossil fuels. All of which has led to a mass exodus out of Big Oil.

Again, all the unintended consequences of arrogant buffoons who believed that they could control the world on Twitter. When all they could control was the colossal misallocation of capital of their own useful base.

Now, Bill Gates comes out and proclaims that divestment will not affect climate change. Which means that the world's richest man doesn't understand basic economics. The inevitable result of being wholly dependent upon central banks for his inflated wealth. A billionaire welfare queen who believes that printed money is the secret to effortless wealth.

Quite the contrary, Econ 101 suggests that lower investment will shift the supply curve to the left, meaning lower output at every level of price. Imagine if there was NO investment in fossil fuels, how much would be produced under that scenario at any price? None.

Add in oil speculators and investors sitting on a decade of losses. Oil nations running record deficits. A late stage global economy teetering on mega collapse. And of course Trump's old age home massively leveraged to delusion.

It's all quite a recipe for carbon collapse on a biblical scale.

And what did any poltical candidate have to do to make it happen?

Just lie constantly. And make sure no one bolted from the casino ahead of time.

Stimulus Driven Explosion At All Time Lies

Options speculators have poured RECORD Nitrous Oxide on the most overbought and overowned stocks in the casino to complete their moonshots into orbit. Bidless re-entry will test the Efficient Implosion Hypothesis...

All major crashes in the past several decades were due to excess stimulus and rampant speculation. This super crash will make the others pale by comparison. The current melt-up is capping off a decade of global Japanification in which central banks, at the behest of an aging society, cultivated an unquestioned belief in the virtual simulation of prosperity and its acolyte QE. The inevitable result of protecting gamblers from risk...

The cause of the 1987 crash was the Reagan tax cut which fueled excessive speculation. The cause of the Dotcom crash was easy Fed policy and excessive speculation. Smash crash 2010 occurred during the post-2009 melt-up amid record global monetary stimulus. The cause of the VolPlosion in February 2018 was Trump's tax cut and excessive speculation, which exploded the exact week the tax cut came into effect. The cause of this super crash will be due to the monetization of the Trump deficit at record stimulus, global central bank decade-high stimulus, China stimulus to offset Coronavirus, and of course excessive speculation. Which has now reached manic levels:

What happens to the Nasdaq when these most active stocks by dollar volume all implode at the same time?

System meltdown, that's what. Overnight futures limit down, mass margin calls, flash crashes, brokers offline, panic and so forth. We've never seen this much risk concentrated in so few stocks at the same time:

All of these most actives are on the list of stocks that have driven record options volume:
Here Are The 15 Stocks That Have Driven Record Options Volume

The (options) tail is now wagging the dog:

Before we get to Tesla, a new bubble just formed. Appropriately, it's a space stock now in outer orbit on 10x average volume:

"Fidelity told CNBC that Virgin Galactic was bought more than any other stock on Tuesday — topping Apple, Tesla and others"

Getting back to Tesla which is leading the overall bubble in clean energy. Recall, 2020 is the year of Big Oil divestment. As we see, this manic run began when all U.S. brokers cut casino commissions to zero:

"Free gambling"

Clean Energy ETFs are in vertical ascent on heavy volume

Within the Semiconductor space, despite the supply china disruptions in China, AMD is making new highs.

This stock has doubled since November:

The last time Nvidia imploded back through its 200 day, the S&P lost -20%:

Momo Tech has entered outer orbit

This week is monthly opex which means that a record number of lottery tickets will expire COB Friday...

Position accordingly 

We can see via the hedge fund holdings that the top performing stocks are losing relative momentum (RSI, top pane)

"Low volatility" safe havens are likewise overbought

Nasdaq divergences are similar to last May

NYSE divergence similar to VolPlosion

The stock bond ratio is warning that this is a headfake rally, based solely upon momentum junk stocks:

This is what they are told to believe: