Buy And Explode

This is the second COVIDIOT top in three months. For the second time since the global pandemic began, gamblers are about to learn that printed money is NOT the secret to effortless wealth. But who knew?

The 1930s analog is right on track, as Herbert Hoover is falling back on his signature election-rigging strategy:

There are no long-term investments on the face of this planet. Everything is now a dumb money trade -  Look around to figure out where the dumb money is heading, get in first and get out before the stampede. Is this unethical? Only if you are one of the psychopaths counseling buy and explode. As I've said, the casino is going to trade in a wide Japanified range for years to come. Which means buy the dips and sell the rips.

Just like Suze Orman:

Orman in her own account buys the dips and sells the rips while recommending that everyone else dollar cost average into a depression. Warren Buffett gives the same advice - buy and hold index funds for the long-term. However, right now he is sitting on RECORD cash. Both are intrinsically using the same strategy: buy low, sell high. The sheeple who buy and hold just happen to be the bagholders on the other side of their trades. It's the perfect system. 

Looking at the S&P 500, we can see that this rally started running out of glue fumes several weeks ago. Recently it's been levitated by fewer and fewer over-crowded bubble stocks.

Having made two unsuccessful attempts to close above the 200 dma, Skynet just rinsed the bears above the 200 day at wave ('2'), the exact same way as at wave (ii): 

Here is year-to-date performance by major market sector. As we see, only Tech has been moving higher for the past month:

There are several dumb money bubbles taking place right now - some of which I comment on regularly. 

One bubble that has really taken off in the past week is the junk Biotech rally which is predicated upon the theory that every revenueless Biotech stock will invent the first COVID vaccine:

Among the companies going parabolic is Novavax which was at $4 per share at the beginning of this year and hit $61 yesterday:

Of course video games are on fire as a generation of boy-men have figured out they now have a new "career" playing xBox. 

I would point out that this mega Tech bubble is now a global rally, led by eCommerce "stay at home" stocks. 

Pop goes the bubble:

Silver confirms that precious metals are about to get monkey hammered. Gold (futures) peaked April 14th, although the gold stocks have been making new highs. 

I would be remiss if I did not show the central bank managed internet index again, chock full of the "big names"

Here we see the VIX back-testing the 200 day with the internet index in the background.

I think we all see where I'm going with this:

One thing you have to have in any pandemic is lots of guns

Now we know where all of the stimulus money went:

Here we see that options risk exposure is similar on the right shoulder as it was on the left:

In summary, the 1930s analog is right on track. This week, the U.S. made moves to implode Huawei, to increase scrutiny of Chinese-listed companies, and to fan the flames in Taiwan.

All moves to get China to react and therefore invite further trade sanctions.


As it was in May 1930, this rebound rally was just enough to embolden policy-makers to do something really stupid:

Here is the long-term count:

Belief In Printed Money Dies Hard

Central banks bought this Idiocracy a tree a horse and a rope to see what they would do with it...


Which makes this a con man's paradise. While Trump's base sits around jacking each other off over "Obamagate", Super Dunce is getting set to explode them, for good. 

"Ill-fated" will be the term that is most often used to describe America's first mentally challenged President and his like-minded followers. 

In a hyper optimistic society constantly sniffing glue fumes, no one wants to be the bearer of bad news. So when it comes to predicting the future, today's money-for-hire pundits all take the most fantastical interpretation possible.

Some say that no one can predict the future. This is the standard belief of today's used-car-salesmen investment advisors. Stay the course. Don't panic.

However, as Robert Louis Stevenson famously wrote:

"Sooner or later everyone sits down to a banquet of consequences"

This blog was never about "predicting" the future, it was merely about acknowledging the past. Past failures and bad decisions that had systematically winnowed down the future  state to an inevitable banquet of consequences the likes of which we are experiencing right now.

Today's recovery mirage all hangs on Fed Chief Jerome Powell and his magical money printing capabilities. The ability to resurrect an entire economy solely by injecting liquidity into financial markets. The ultimate endgame for Supply Side Voodoo economics.

Quantitative easing is what I call the Jedi Mind Trick for weak minded fools. Hugh Hendry called it Disney Markets. Take your pick. 

This time, the PhD money printers have their work cut out for them to be sure, as the stock market is now inversely correlated with U.S. GDP. Every time jobless claims come out in the multi-millions, stocks rally, due to the well-trained Pavlovian expectation of further dramatic monetary euthanasia.

This past week (Friday), House Democrats passed their latest version of a "go big or go home" fantasy stimulus package. An even bigger version of the last monstrosity. However, the GOP is having none of it. The partisan divide is widening into the election, as both sides smell blood. The Democrats are ALL IN stimulus and cautious re-opening. The GOP is ALL IN unlocking the economy and ramping the economy. They view further stimulus as an extension of lockdown. 

Which means we will get some clusterfucked version of neither scenario. Inadequate stimulus attended by a lackluster re-opening.

Mark Cuban laid it out very well yesterday. He said that the paycheck protection program was a failure. And more middle class stimulus will be needed:

The "big catch" according to his plan is that the money must be spent within 10 days and not used to pay bills:

"It's time to face the fact that PPP didn't work. Great plan, difficult execution. No one's fault. The only thing that will save businesses is consumer demand.  No amount of loans to businesses will save them or jobs if their customers aren't buying."

“We have to get to that point where the White House standard becomes the national standard, I think, in order for consumers to feel safe going out, in order for employers to feel completely safe bringing people back to work,”

On this last point, there is a chasmic divide between the White House and the blue states run by Democratic governors. We could not be further from a "national standard" on re-opening.

Whether Mark Cuban's stimulus gimmicks are dumb ideas or not, the fact is that he is right, short-term loans to small business are pointless if there are no customers.

Through his Shark Tank ventures, Mark Cuban has invested in 85 small businesses so he knows better than anyone that the stimulus programs to date have FAILED. The money is not circulating within the economy. Unlike the economists I cited yesterday, he didn't need to conduct a survey to figure this all out.

We are in the eye of the storm, which is a con man's paradise. All nature of fantasies are being bought and believed. However, the most lethal narrative is "stay the course". The Titanic is sinking to the bottom, those who don't figure this out in time, are never getting out.

For those who say this is like groundhog day, it is, except the stakes keep growing with every passing day.

“We’re not out of ammunition by a long shot,” the Fed chairman told CBS’s “60 Minutes” show in an interview aired Sunday. “We can enlarge our existing lending programs. We can start new lending programs if need be.”

Who to believe, a Trump-installed stooge at the Federal Reserve or Mark Cuban who is watching small businesses die in real time. These are the last days of Supply Side Ponzinomics. Time is running out as once again the Jedi Mind Trick is wearing off.

When this last COVIDIOT rally explodes, everything will implode at the same time

Of all of the fake rallies we've had to contend with, this one is by far the fakest

"Trump needs distractions from his mismanagement of the Covid crisis and his strategy looks straightforward: distract and “flood the zone.” So expect the “Obamagate” trope to recur endlessly and the relentless portrayal of China as an economic enemy. Economists will have to factor poor bilateral relations into their growth forecasts for this year and beyond, because it will impair growth no matter how transparent and cynical the tactic. Markets want a V-shaped rebound but the fiercer the rhetoric, the flatter that recovery curve will be."



Overnight risk is back

"We have to factor in implosion of the world's second largest economy"

"For the win"

Watch Super Dunce pull the plug on his entire gong show. You know it's inevitable. 

The New Permanent Plateau of Delusion

The Elliott Wave Theory posits that human beings will do the same stupid things over and over again until they explode spectacularly. It's a tradition, dating back centuries...

In summary, the only people who are fooled by this con job are all economists, media dumbfucks, politicians and 7.5 billion hairless monkeys, plus or minus.

The algo-driven S&P has been oscillating between the 50 day and 200 day moving average for six weeks, but who's counting. Today is the third back-test of the 200 day moving average.

The machinations keeping the casino pinned at this new "permanent" level of delusion are central banks, momentum algos, denialistic idiots, and too many weak bears getting rinsed constantly.

Morons who keep putting stop losses at the 200 day:

On the topic of extreme delusion, this is the most deflationary event in human history which is why the fake reflation trade remains well bid. For now. This is the exact same pattern we saw in February. Featuring a tall wick on the daily:

Alongside the fake reflation fantasy, leadership is shared by the extreme deflationary Jim Cramer stay-at-home "COVID-19" virtual economy index.

(No actual index exists called the COVID-19 yet, however, I expect a new ETF any day now).

However, most of these new Tech stocks are recent IPOs, which is very handy when it comes to getting the all-important Wall Street IPO pump and dump back on track. Think Zoom, Peloton, Wayfair, revenueless Biotechs etc. etc...

What took 14 months during the last rally, just took 2 months now:

"That's not FOMO, THIS is FOMO"

The only stocks NOT taking part in this grand re-opening rally are the stocks representing the actual economy. Although they are up almost 9% today compliments of Energy. Which is further indication that this rally is running on glue fumes. 

Those who believe this is 2009 deja vu and hence the beginning of a new bull market, either were not around in 2009, or are sniffing glue.

Or, are working on Wall Street and afraid they are about to lose their jobs, which is the case of this capitulated perma-bear who decided now is a great time to buy stocks:

Among other mistakes, Wall Street analysts are still in massive denial as to how many companies are about to go bankrupt. They are driving forward by looking in the rear view mirror. Wall Street future projections are never anything more than an extrapolation of the recent past. 

"This is 2009 all over again"

Has anyone figured out why economists are such fools? And why the public at large continues believing them? These will be among the biggest questions of this entire age - how can so many university trained "experts" be so fucking dumb. It's Groupthink on a massive scale. They can never admit that their life's work is a COLOSSAL failure. These will be the next people to lose their jobs as college enrollment collapses like a cheap tent. The $200k four year college frat party is ending.

This study looked at how the $1200 stimulus checks were being spent. The economists believed that people would use them to buy cars and appliances - despite the fact that car dealerships and shopping malls are on lockdown. They were shocked to find that people spent the money on rent and food. 

Here Is How Americans Are Spending Their Stimulus Checks

“Given the size of the 2020 stimulus checks, we might have expected large impacts on categories like automobile spending, electronics, appliances, and home furnishings”

“Instead, it seems that individuals are catching up with rent and bill payments as well as engaging in spending on food, personal care, and nondurables.”

Where do you buy a $1200 car online, Amazon?

These people only know about the economic multiplier only in the most superficial text book sense of the term. This is a year over year comparison of the 2019 rally versus this current rally - the S&P has traveled roughly the same distance. This was entirely a Tech led rally, the rest of the economy is dead:

I still predict that semiconductors will ultimately lead the market higher from the true low, as they usually do. However, now they are lagging badly due to the newly re-ignited trade war.

Given his eroding re-election prospects, Trump must now once again dust off his patented strategy of using China as his scapegoat for all problems.

Meaning the much vaunted "trade deal" is over. He had to tear up this fake trade deal in order to get to the next fake trade deal.

Here is the longer-term view of semiconductors for perspective. The first crash in Y2K wasn't that bad. However, those of us who thought the retracement rally was a new bull market were in for a real treat as the Nasdaq tanked -80% in two years.

Good times.

One exception to semiconductor underperformance is Nvidia which is part of the video game stay-at-home trade. Now in parabolic blow-off mode. As it was in February. 

So-called safe haven stocks are ready to re-implode.

Bueller?

In summary, JC Penney is now officially bankrupt, meaning Amazon "won" the war of the 100% virtual economy.

NOW, the casino class is going to partake in the Pyrrhic spoils of victory. And learn the hardest way possible that there is no such thing as a virtual economy.

And that only total fucking morons would believe otherwise.

Today's economists who collectively exhibit the IQ of a dead gopher, will NEVER be trusted again.

Nature Won. Thank God.

Because of nature, we will no longer be imprisoned by morally challenged sanctimonious hypocrites with a compulsion for electing morons, in their own image...

The Trump carbon tax is due. Payable in denialistic dumbfucks. The ONLY thing that made sense over this past decade's failed bailout gimmickry was that the stakes kept getting raised higher and higher, until now - it all makes perfect sense. 2008 didn't finish the job, so we upped the ante 10x for this next round of rational self-implosion, in the Ayn Randian tradition.

"Once I stood to lose her

When I saw what I had done

Bound down and flew away the hours

Of her garden and her sun

So I tried to warn her

I'll turn to see her weep

Forty days and forty nights

And it's still coming down on me"

I think we all see where I'm going with this:

There's no audience for reality anymore. Because there never was one, in the history of humanity. Which is how we ended up with 8,000 religions, but who's counting. Everyone smoking their own brand of bullshit while enjoying extreme conviction in what won't happen. Ending with an Evangelical movement that uses Jesus as a shield for their nefarious acts. Not the first to use this trick by any means. The iron cross was a prominent feature in all Nazi propaganda. 

“Evangelicals have lost all moral authority”

Jones said he came to realize that a “massive sea change” had occurred among conservative Christians. They had abandoned their traditional self-understanding as “values voters” to become “nostalgia voters”"


If we can't be great again, we at least have to pretend.

These Trump zealots have a right to be worried. Their entire way of life is circling the toilet, like a massive turd, while they watch, mesmerized. 

Fortunately for us realists i.e. all five of us, the world is not ending - far from it, only a failed way of life is ending. And those who cling to it will go down with the ship. So it can come as no surprise that today's geezers are living in fear - after all, this disaster that was supposed to blow up on future generations is blowing up on THEM. Just when you think everyone else is about to get fucked over, come to find out, you ARE everyone else. 

For her part, Mother Nature could not be happier. The birds are singing, the sun is shining, and the world is still turning. Everything else is a minor detail. A self-inflicted crisis fabricated by hairless monkeys.

When I think of the biggest disinformers of this age, of course the Anti-Christ tops the list. This era wouldn't be the end times without him. However, not far below him are Sean Hannity & Friends and Rush Limbaugh. All are one stop shopping for what is entirely wrong with this era - loud, crass, arrogant, morally and intellectually dead. On a similar scale, Joe Kernen is the reason why my TV remains on mute all morning until Jim Cramer updates us on which stocks I should buy in a depression, per his proprietary COVID-19 index, which had another great week. 

“Almost everybody else in the industry is shut and it’s crushing the economy,” Cramer said. “I’d be okay with that if our leaders had a plan” but it “increasingly feels like that’s not an option” for the country."

“The whole point of the lockdown is to buy time for the federal government to build out testing and contact tracing, but if the government’s not doing that with alacrity, we’re buying time for nothing”

We are now seeing the downsides of having a total fucking idiot for president. The price will be paid in carbon tax.


History will say they were accomplices to mass murder - first in Vietnam, then in Iraq/Afghanistan, and then in the USA.

But as Howard Stern pointed out this week, it's not Trump's fault he got elected. The exact same people who re-elected George W. Bush after they KNEW he lied about WMDs in Iraq were the same ones who got blown up by Wall Street de-regulation in 2008. AND the same idiots who elected Trump, who ALSO de-regulated Wall Street as his first order of business.

For those who didn't see this as being long overdue, make no mistake, these ARE the end times.

WARNING: MAGA Crash In Progress

Those who are wed to lies are about to self-destruct...

As you can see I am blogging less often lately because we are now in the last stage burial phase of this Roman orgy of lying known as "MAGA". The alt-right is spewing conspiracy theories out their ass constantly in order to win the upcoming election. No wonder no one takes them seriously - even when they get their facts right, it's merely a drop in a sewer of toxic disinformation.

Suffice to say, Trump is the right president for this time - a profoundly ignorant sociopathic denialist hellbent on using others to get what HE wants...

There is no point in crying over spilled milk, however not a day goes by when alt-libertarians are not informing us that this pandemic is just another Democratic hoax or conspiracy. One such article on Zerohedge recounts the 1968 Hong Kong flu as the closest analog of a global pandemic mirroring Coronavirus. The author notes that the flu passed almost unnoticed in the U.S. despite being even deadlier on a per capita basis. That particular flu also targeted the population over age 65. Most of these type of conspiracy articles point out that this mass hysteria is amplified by the media, and I have to agree. I would specifically note that the alt-right bullshit factory is particularly adept at spreading mass disinformation, mass confusion, and mass hysteria. Therefore, it's highly ironic that the very time they really should be heeded, they are TOTALLY ignored even by their own aging base. That's what happens when you spew crap non-stop, you lose ALL credibility. Incidentally, there are two factors that differentiate 1968 Hong Flu to Coronavirus - first off, the Baby Boomers were in their youth back then and now they are in their frail latter years. Back in 1968 they were too busy fighting for or against the Vietnam war to notice a global pandemic. Secondly, obesity has exploded in the past half century compliments of corporate junk food. Meaning that the two main risk vectors - age and obesity are nothing like 1968.

Trump knows that he can't get re-elected if the economy doesn't come back strong by November so he has staked this entire election on maximum re-opening. If it happens to kill a few million people, so be it. As expected, Republicans have already declared the latest Democratic stimulus proposal is dead on arrival. Anything that could possibly slow the re-opening of the economy is going to be seen as detrimental to Trump's re-election. The battle lines are drawn. However, another hampering factor for today's zero economic multiplier is the tsunami of lawsuits and overall massive liability now faced by businesses attempting to re-open. Which is leading to a new set of arcane rules around social distancing. None of which will be accretive to GDP.

Getting back to the casino and the topic of disinformation,  among the many lethal aspects of this era are these ubiquitous investment psychopaths who keep advising the herd to ride out the new greater depression in stocks, on the basis that "there is no alternative". Global poverty deflation has collapsed interest rates to 700 year lows and hence the only option is to "buy stocks". Because everyone knows they never go down. On a 100 year timeframe. 

Yesterday, two well known hedge fund titans - David Tepper and Stanley Druckenmiller - declared that today's market valuations are to paraphrase, ludicrous. Druckenmiller called the v-shaped recovery theory an outright fantasy. No wonder it's the standard assumption among investment advisors. 

All this week, the rhetoric between the U.S. and China has been heating up. It's Trump's latest gambit to direct attention from his sheer incompetence and rampant corruption. Trump's entire life strategy is to re-direct blame from himself to others. It's the infantile "I know you are, but what am I?" strategy. His followers are fully onboard with it because he tells them exactly what they need to hear, regardless of how fake and fraudulent the message may be. Meanwhile, re-direction is a Faux News core strategy as well. Remember Benghazi? That minor fiasco was exploded out of all proportion in order to deflect attention away from the multi-decade mass murder taking place in Iraq and Afghanistan. At least that's what history will say. 

Be that as it may, all of this chicanery is why, after a two day heavy selloff (Tuesday/Wednesday), gamblers rudely were awakened to this headline:

"President Donald Trump said he’s “looking at” Chinese companies that trade on ⁦the NYSE and Nasdaq exchanges but do not follow U.S. accounting rules.

“We are looking at that very strongly,” Trump told Fox Business host Maria Bartiromo"

Trump followed up by saying that getting tough on Chinese companies on the exchanges could backfire."

Indeed. Where this gets interesting is that I noticed this week that cross-listed (U.S./China) Chinese Tech stocks have been leading this last gasp Tech rally. In addition, they are now almost 100% correlated with U.S. Tech.

In other words, Big Donny just imploded the global Tech bubble:

Zooming out to look at mass delusion from a decade perspective, here we see the crash ratio overlaid with the internet index (gray), top pane. This week, the crash ratio just made a new cycle low below the March crash level. In the bottom pane we see retail (small investor) cash balances. Whereas in 2008, the extreme breadth divergence attended a decline in Tech stocks, this time it attends a rally:

Writing as of Thursday morning, post another ~3 million jobless claims, the S&P is through all support and now heading for a re-test:

This time the MAGA caps will be joining the ride (Microsoft, Apple, Google, Amazon):

Which is why I am now calling this hardest of all landings, the MAGA Crash. Because those who believe Trump and his cabal of liars are about to shit a brick