1930 Fool's Rally

The 1930 rally continued just long enough to convince the vast majority that the worst was over. As it turns out, the worst hadn't even started yet...

Central banks are out of economic ammo aka. interest rate cuts. All they can do is bid up asset bubbles and create the optimal conditions for global asset crash. The banquet of consequences has been set. Meanwhile, as any blind man can see, social mood is turning down hard, amid protests and rioting. Archaeologists won't understand how mass protests due to extreme inequality attended a vertical stock market rally. They will conclude, as I have, that this society is a late stage Idiocracy in full blown self-destruct mode.

Good times.

Without getting too politically incorrect and risk pissing off everyone, I would suggest that George Floyd was not the first black man to suffer Running Man brutality, nor will he be the last. He was merely the catalyst for the latest round of race riots. In the American tradition. In the background is the unquestioned global "system" that exploits anyone and everyone who is in poverty. There is no ladder out of poverty under the current paradigm of economic oppression, regardless of colour or race. However, the system becomes inherently more oppressive the darker the skin.

Be that as it may, as with global warming, it took a virus hoax to collapse the carbon levels down to previously unthinkable levels. And it will take the lingering state of fear to now level the economic playing field between the "haves" and the "have nots". So far, so good. There are currently millions of low wage Americans getting paid almost double their working wage to enjoy a free vacation. And they well deserve it. Should Congress fail to rollover their benefits, we will see rioting that makes the current unrest seem like a picnic. 

Which gets us back to social mood. Any blind man can see that America's long overdue socioeconomic rioting is well underway. Attended by stock market gamblers going late stage manic due to stay-at-home cabin fever. Essentially losing their minds and throwing all of their stimulus money away in Trump Casino.

Which sets up a lethal finale, as this combination of melt-up events has created a massive air pocket beneath the casino, which as been backfilled by wholesale bullshit.

The global Dow is giving a very clear warning wave count, which is corrective at two degrees of trend. The lower high at red "c" in early 2020 WARNED that global markets were heading for a crash. This post-crash rally is also a clear three wave retracement. 

It's a bear market rally. Also known as a sucker's rally.

"Speculative excess has surged to the highest in at least 20 years among U.S. options traders"

Traders established fresh bullish positions last week by buying 35.6 million new call options on equities, according to Sundial founder Jason Goepfert. That’s up from a peak of 28.7 million in February, when speculative activity was rampant"

I call this next chart "Ponzi reflation". Because whenever gamblers get fully lathered up - as they are now - they create a three wave reflationary retracement due to their misallocation of capital. No ACTUAL economic reflation exists, however they throw enough money at the oil futures to give the illusion of economic reflation. In the process they get further self-lubricated and start to buy up banks and other cyclicals under the self-fulfilling illusion of economic recovery. 

Note the difference from 2009 when China was pulling the world out of deflation with 9% GDP growth, versus 1% today.

To summarize:

Gamblers are late stage manic, while broader social mood turns dark. 

In addition, central banks are totally out of interest rate cut ammunition. All they can do now is feed asset bubbles and create the optimal conditions for global asset crash. Good job everybody. 

However they can also monetize deficits and otherwise enable fiscal stimulus on a previously unfathomed scale. However, the current political environment ahead of the election is growing acrimonious to say the least. Both sides are slinging mud and otherwise maneuvering to inflict maximum pain. In the background is this thing called the imploded economy.

Bearing in mind that these political fools change their mind every second - at present there is no "agreement" on further dramatic expansion of monetized fiscal insanity. Which means that the current political environment is highly deflationary.

Once again, what I predict next is an epic crash and epic rioting. And then a newfound political consensus on further dramatic monetization of fiscal insanity aka. Heli money for the middle class.

All we are waiting for now, is the last glue fumes to wear off.

FOMC: Fear Of Missing Crash

In a week that saw the worst rioting in over 50 years fueled by record wealth inequality, the U.S. stock market soared, generating even greater inequality. In the American tradition...

We are now witnessing lethal amounts of monetary euthanasia. I mean "Easy Money".

Let's see: 2018 VixPlosion, 2018 December crash, COVID super crash - can you believe these morons STILL haven't learned their lesson? Yes? Ok, so can I, just checking.

First off, we see below what the excitement was about today via non-farm payrolls. Economists as usual guessed wrong on today's jobs number. The "re-opening" of the economy unexpectedly created jobs, because what dunce couldn't predict that happening? This below is what Trump gloated about at a news conference. This is what Joe Kernen jacked himself off over. And this is what caused Wall Street shorts to self-implode today.

Non-farm payrolls, total jobs, millions:

That blip in the lower right, if you can see it is the "grand re-opening" of the U.S. economy:

All we witnessed this week was the dumb money longs and the "smart money" shorts go head to head, with the end result being Wall Street idiots getting stampeded by Main Street idiots, and algos. Artificial intelligence all around. 

Why anyone would short consensus dumb money longs shows why the self-proclaimed smart money is not that bright. Everyone knew that these were the most beloved stocks on Robinhood. Therefore shorting airlines and energy stocks was a consensus trade for Team Groupthink aka. hedge funds. Which got annihilated this week. All due to a nominal uptick in economic activity. 

This is the first false economic dawn but by no means the last. We can look forward to many more of these headfake rallies before the true bottom is found. Each will be fueled by the same fake hopium and the same short-covering. These are people on both sides of this fake reflation trade, who have the attention span of a dead fly and who extrapolate a single data point into NeverNeverLand.

Where this gets "interesting" is that now because of this single jobs number, the Fed will be on hold AND Congress will be less likely to pass new stimulus. Which means the real economic deflation is about to begin. The only lasting effects of this headfake rally was to create a false sense of complacency, widen the inequality gap, and reduce the future flow of stimulus to the real economy. We are now seeing a record divergence between the fate of large publicly traded companies and small business in America. The former is picking up market share at the latter's expense. Think Amazon and Costco versus small retailers. And McDonald's and Chipotle versus small restaurants.

This monetary euthanasia has now created even larger divergences and will likely throttle the flow of new income to laid off workers. I am referring to the additional $600/week in unemployment benefits which ends in July.

As I wrote in my last post, this massive false rally has set up the biggest shock and awe event in history. Somehow even more lunatic than the COVID crash. Take a look at high beta cyclicals, below. Due to massive short-covering they almost made it back to the February highs. These are sectors that have been blighted by the virus and social distancing. Many of them are on the verge of bankruptcy. Looking at these stocks, one would have no way of knowing the carnage that took place to the economy over the past three months. One would have no way of knowing that almost one third of workers are now wholly dependent upon unemployment insurance:

Aside from driving even greater inequality, the net effect of today's fake reflation rally was to implode the gold trade - which was predicated upon further dramatic monetary euthanasia. 

Gold just broke two month support and the 50 day moving average. No more further dramatic monetary expansion will be forthcoming until AFTER the impending asset crash.

Just like March:

But the more lethal effect of today's rally was to implode the "stay-at-home" bubble. Those stocks have been underperforming all week. 

Here we see Momo Tech:

In summary, while the country was burning to the ground, clueless gamblers were bidding up their own stocks this week. A process I call "Shanghai Surprise". Their risk exposure hit multi-year highs (see chart below). Meanwhile the smart money self-imploded on consensus short trades. 

Which leaves just us skeptics of idiocy and buffoonery. Because as I said in February, it's lonely at the top.

My advice is, get used to it. As long as our society is run by fakes and frauds on behalf of gullible sheeple, the con job won't end. 

This is a 100% Fed driven fantasy fueled by FOMC: Fear of Missing Crash.

MAGA Crash 2.0: Fixing Inequality In America

I predicted that the March crash would be the biggest in world history. I was right for about three months, but now I expect this one will be far bigger. If I am right, then this is going to fix inequality, just not how anyone expected...

It appears that all of the "stimulus" bypassed the real economy and went straight into guns and stocks. In the American tradition. 

This crash has all of the insanity and risks of the last crash except with the following added risks: 40+ million job losses, the worst economic data since the Great Depression, an all new China-U.S. trade war, U.S. rioting and anarchy, monetary lubrication 3x larger than March, an even larger Tech bubble, AND a massive inflow of neophyte speculators using their stimulus checks to trade stocks. We now have both a monetary and fiscal stimulus fueled bubble. Really, what could go wrong?

This mega crash is going to give the white people something to riot about.

First off, I want to give Mark Zandi full props for being the biggest crack smoker in human history. Anyone can walk down any Main Street in the U.S. and see that the economy is not open.

I am currently visiting one of the most wide open (red) states in the U.S. hence the world, and I am surprised at how unopen it is in actuality. Most people are still wearing masks inside, and most restaurants are take out only. The local mall is still shut down, and I have eaten at the same burger joint four nights in a row because it's the only place that feels quasi normal even though the place is never more than a quarter full. It's either this or sit on the curb to eat my Big Mac for the good of society. Homeless people now have to walk through the drive thru to get take out. We're so compassionate.

We will never get to anything approaching "normal" when people have to prep for surgery in order to go shopping. This is an economic depression in which people tell themselves it's a pandemic. Because it makes them feel better apparently. My advice to Mark Zandi and all of the other economists who are of the exact same failed mindset, is to put down the crack pipe, son. As the saying goes, a recession is when your neighbour loses their job, a depression is when YOU lose your job. I suggest there will be very few employed economists before this is all over. The term "redundant" has never been more applicable. 

One of the key catalysts behind these protests is the fact that low income service sector workers have been disproportionately affected by the shutdown. Whereas, most white collar workers have been nominally affected. To many "knowledge workers" this has been merely an extended staycation. It's divergences such as these that allow economists to blithely declare the recession is over with 40+ million people newly unemployed.

Which is where this gets interesting, because the theme of this post is that the extended gambling vacation is about to come to a thunderous ending. All of this newfound "stimulus" is about to get margin called away.

Wednesday, the Nasdaq 100 made it back to the February record high level. However, we can see in the lower pane the chasmic new highs divergence, as ironically "inequality" is a major problem in the stock market as well. 

Thursday morning another rally fueled by exploding joblessness:

The mega caps blew through the February top a full month ago:

It was a well known fact that mega caps were dominating the market at the February top. This time around, it's even worse.

Ironically, Chinese Tech stocks have been leading the global rally lately. Now through the February high:

The world has been playing catchup recently, however, still far below the February high. This is the clearest wave count we are going to see for social mood:

As measured by the call/put ratio, as of Wednesday close, market froth has never been higher:

In summary, inequality is about to get "fixed". And when it does, the REAL rioting will begin.

IT'S OVER. FYI.

The great reckoning has arrived. Those who don't see it coming were not meant to see it coming. MAGA is the biggest dumb money bubble in human history...

FAR too much time has been wasted on this failed way of life. For those drones who followed it to their logical conclusion we can only feel sorry for them. This combination of COVID hoax, global depression, and grapes of wrath anarchy is not the buying opportunity it appears to be. It's human history's biggest dumb money bubble without any question. 

For me personally, I am 100% zen. As far as I am concerned righteous reality has returned with a biblical vengeance. Martin Luther King famously declared that the "arc of the moral universe is long, but it bends toward justice". Long indeed. Many of today's pundits see parallels with 1968 the year King was assassinated: An eerily similar global virus, extreme racial tensions, and of course plenty of rioting. And my birth year, let's not forget that. At that time, the country lurched to the right to elect Richard Nixon. I don't see that happening this time around.

This time around, the Republicons are on the ropes grasping their failed ideologies. History will say that Nixon was the beginning of the fraud, and Trump was the end of the fraud. Book-ended criminals. Nixon, to his downfall, kept recorded tapes of himself fully admitting Watergate malfeasance. Like Trump, he enjoyed the sound of his own voice. Trump has incriminated himself over and over again. Whereas Biden isn't allowed any pussy whatsoever - he is married after all - Trump's evangelical base allows him to grab as much pussy as he wants. I've decided I'm evangelical now. I haven't told my wife yet, because she will kill me without hesitation.

In other words, it's quite a double standard that we've become FAR to used to, thanks to the rabid right. So much so that the alt-left is prepared to pass on an imperfect candidate, and hand re-election back to Super Dunce, while they wait for Mrs. right to never appear. There are enough fucking morons to go around. The Anti-Christ-in-Chief gained props from his acolyte base yesterday when he posed in front of a Washington church holding a bible. It's the same type of meaningless spectacle they've built their entire lives upon. So of course they loved it. I was surprised he didn't explode on the spot. History will say that his base were the last ones to know this was all ending extraordinarily badly. What they perceive as a new beginning happens to be the end of their entire Faustian way of life. The only question from an historical perspective will be, how many demented hillbillies were there at that time?

Global central banks have now administered lethal doses of monetary euthanasia. So much so that global asset prices are now heading in the opposite direction of global GDP for the first time ever. It's the largest misallocation of capital in human history. Today's masses are now fully convinced that printed money is the secret to effortless wealth and far more important than jobs, industries, and economic output. According to these people, economic output could fall to zero and it would make no difference to asset prices. As of this week, over 40 million (27%) of U.S. jobs have been lost and an estimated HALF of all small businesses.


Globally the picture is as bad or worse. And yet today's economists still see a "v-shaped" recovery. 

Small investors always rush into stocks in droves at the end of bull markets, and this time is no exception. This is the second COVIDIOT top in three months, and yet this one is even frothier and more lethal than the last one. This time gamblers are crowded into the most speculative and over-owned Tech stocks. At the last top, most sectors made new highs. This time it's Tech and Biotech alone making new highs.

Gambling through a pandemic has now become a widespread preoccupation:

"A global pandemic has thrown the world’s economy into a terrifying tailspin. The stock market’s gyrations, which often seem wholly disconnected from the actual economy, are more unpredictable than ever — and no less an investment wizard than Warren Buffet says his fund remains on the sidelines because “we don’t see anything that attractive” to buy. Yet somehow an app designed to encourage inexperienced young Main Streeters to play the market, and that has been dogged by reliability issues, is a smash hit, bolstered by the smartest Silicon Valley investors."

Any questions?

Add in dumb money index allocations, fund managers chasing performance, and momentum-chasing algos to create the largest dumb money bubble in human history.

Sadly, the corporate simulation of everything is ending. Badly. Now what to do, live life, what's that? Life outside of spectacle, where to begin. If you think about these social media giants that dominate the stock market, what are they dispensing other than personal reality TV shows, laced with ad-sponsored disinformation. While cable TV can boast 2,000 channels of mindless crap, Facebook has a million times that amount of bullshit. Zuckerborg was on the hot seat this week for giving license to Trumptopian fraud. Unfortunately, what regulators don't understand is that enabling disinformation IS the Facebook model. And what can Google say when their entire business is ad-sponsored bullshit. Sure they have profitless side ventures, but 99% of their revenue is paid disinformation. When Morgan Stanley installed their CFO at Google, the corporate motto changed from "do no harm" to "never miss the quarter again".

History will say that between Faux News and Facebook, America's last business model was a massive river of bullshit. That got bought with both hands. Right before the total collapse.

No one saw it coming. Mass bullshit had substituted for everything real. 

FOMA: Fear Of Missing Anarchy

Blogging in the apocalypse. Where to begin...

I was planning to call this post: THIS is Running Man, whereby the Game-Show-Host-in-Chief will now impose martial law to save the day. But, he beat me to it...

Trump's new election pivot is to become the "law and disorder" president. He needed a new schtick after his China/Hong Kong implosion scheme was hijacked by mass protests. He is now threatening to bring in the U.S. military to quell the protests. 

Since the COVID outbreak we have witnessed the wholesale collapse of civil liberties. First featuring a fiat-ordered shutdown, and now featuring nightly curfews. Libertarians are going batshit crazy right now. After all, their own beloved saviour will be the one who completes the authoritarian takeover of the United States. They better than anyone know that the U.S. military was never intended to police the domestic populace. This would be an unprecedented foray into Third World martial law, as I predicted a few months ago.

Meanwhile, Trump just threw Hong Kong under the bus because his threats of military force are precisely what the Hong Kong security bill was threatening last week. No sooner had the high and mighty EU, UK, and Canadian governments criticized China for abuse of power, than Trump does the exact same thing only days later. Do you think these sackless puppet governments will ever criticize Trump? No way. Just as they all pander to Saudi Arabia, they have no problem ignoring civil rights when there is real money on the line. 

"Throughout the protests in Hong Kong last year, the US was consistent in its support of people's right to take to the streets and have their voice heard, and that sporadic violence or illegality did not undermine the core demands or legitimacy of the movement.

Facing widespread unrest and public anger at home in the wake of the death of George Floyd, an unarmed black man, at the hands of a police officer in Minneapolis, the reaction from US President Donald Trump appeared markedly different."

It was a response that might not have appeared out of place on the pages of China's own government-controlled newspapers"


The arsenal of hypocrisy is on wide open display. Goodbye Hong Kong, we hardly knew ya.

Jim Cramer who has to find something to say every day to explain away mass insanity, informed us yesterday that the market remains bid because Wall Street has no conscience. All they care about is making money. 

No shit.

"At the end of the day, the market has no conscience. Investors are simply trying to make money, and that's why they're crowding into the stay-at-home economy stocks" 

"the stay-at-home economy just got a major extension for many investors [and] right or wrong, thoughtless or cerebral, it's worth exploiting."


Of course Wall Street's lack of empathy for protest movements is not any stretch of imagination. However, believing that Hong Kong doesn't matter, China trade tensions don't matter, and indeed U.S. rioting is more reason to buy "stay at home" stocks, is where things get a tad psychopathic. After all, this entire rally has been touted over and over again as the "economic re-opening" rally. So now we are to believe that martial law is the latest catalyst for rally?

Sure.

As true P/E infinity would suggest, there is no bullish case anymore. There are only weak bears getting crushed by momentum algos fed by monetary euthanasia. A big fat ugly bubble further fueled by stay at home speculators rushing into the junkiest stocks using their stimulus money.

It all makes perfect nonsense.

Here we see the stay-at-home bubble going parabolic:

Cyclicals are stalled at a familiar level:

The Dow just closed above the 200 day, the last senior index to do so:

Here are a few of the recent new highs on Cramer's Anarchy 2020 stock list:

Check out Lululemon

Tesla has a double top similar to February. Shorts once again getting annihilated.

Momo Tech looking similar to the last top:

But the real winners this week are gun stocks

Outside is America

The MAGA Kingdom Is Burning

Trump's Disneytopian bonfire of the sanities is reaching new heights of incendiary combustion. The old age home is trapped and there is no way out...

Let's see, my 2020 predictions were for mega crash and rioting. So far, so bad.

Cutting through the CNN and Faux News 24 hour bullshit cycle, this protest-turned-riot exposes America's profound wealth inequality. According to the CIA factbook, the U.S. has a gini (inequality) coefficient between Mozambique and Cameroon. Essentially a DEEP Third World level of inequality.

And the right Banana Republican dictator for the job.

Trump was all set to level sanctions on China and Hong Kong when these weekend riots blew up his plans. Let's see, Cuba, Russia, Iran, Turkey, North Korea, now China and Hong Kong. Those countries that are NOT on the sanctions list have either been invaded already or are America's vassal states - I am referring of course to Europe, UK, and Canada. Fully complicit in enabling America's arsenal of hypocrisy. Unfortunately, just when America was about to "fix" the wayward factory slaves with sanctions and starvation, all of HER lies were exposed for the entire world to see. No amount of lamestream bullshit could hide the ugly reality of it all. 

Globally, the U.S. and her puppet allies have done far more damage than ALL other countries combined, in the name of "improving" the corporate bottom line.

I'm just saying what history will say about this biblical debauchery that we have the privilege of experiencing in real-time. 

AND, the MAGA Kingdom of course is the Disneytopian fantasy to end this entire era. Believed by a brainwashed Twitter Borg stoned on the glue fumes of ancient mythology and total fucking bullshit. Now culminating in a Potemkin economy and a world of false promises foisted on future generations. What to do? Blame the youth for protesting against their inherited fate. Ungrateful bastards.

History will call the Baby Boomers the Disney generation. Full stop. If I had to start my blog all over again by way of defining this MAGA era, I would call it the "steaming pile of dog shit". Because that is exactly what this farce is turning into.

Remember, had this generation not squandered everything including their own health, then this COVID hoax would have passed unnoticed. Much as the Hong Kong flu did in 1968.

But they panicked. Because Mother Nature had them between a rock and a hard place. 

But here is where it gets interesting. Imagine a situation in which the anarchists who are infiltrating the protests are EXPECTED to wear a mask covering their face. Because if they didn't they would be deemed "irresponsible". Do you see a problem with that?

In other words, if you go down the street wearing the skull and cross bones on a mask on your way to full scale anarchy, you will attract less attention than walking down the street with your face fully uncovered.

What could go wrong? Bank robbers can stand in line at the bank along with everyone else. 

Again, this is not Idiocracy, this is Super Idiocracy.

Getting back to Trump Casino, the S&P futures are now trending higher in direct relation to meltdown. The more the economy implodes, the more gamblers anticipate further dramatic expansion of monetary euthanasia. Which is why the P/E ratio is now infinity.

Whoa, step back. I was told the P/E ratio is 21.50. How do you get infinity? 

The P/E ratio is merely Wall Street's magic 8 ball derived metric for deciding whether or not stocks are overvalued. As it turns out, stocks are NEVER overvalued, interestingly. The ratio is current price divided by imaginary forward earnings. Which means in today's terms it's central bank Kool-aid divided by 1930s depression. Which gets us precisely to 21.50. That, and a frontal lobotomy.

Anytime anyone throws out a P/E ratio under these circumstances, it's because they are a confirmed psychopath. At best , there is right now only fantasy and fiction behind these "fundamentals". At worst, there is conflict of interest.

As I write Sunday night, Hong Kong is LEADING the entire world higher as Trump's promise to revoke their all-important special status on Friday was fortunately overshadowed by rioting and looting and end times prophecy coming true in real-time. 

Meaning, Donny's gaze has shifted from "CHINA" to his own fucked up backyard. Who to blame now? Joe Biden's son? In Trump's world if you're white and plead guilty (Mike Flynn), you receive a get out of jail free card. If you're black, you're convicted when you leave your house. 

This is all making perfect sense in the context of a late stage global empire collapsing like a cheap tent. Clearing the way for reality to once again fill the void of fear.

What will happen in Disney markets this week? No idea. Just realize that when Wall Street's fantasy P/E ratio reaches its maximum extreme divergence between central bank fantasy and economic reality, the crash back to reality will be the most extreme financial event of our lifetimes. Making March look like a picnic.

When Bernankenstein applied MAXIMUM monetary stimulus in October 2008 he figured he had put a bottom in the market. However, when his rally stalled and imploded, he was only off by 5 months and -40% (S&P). I've noticed that Jay Powell put in a call to his mentor in March and it appears that neither one of them have a very good memory.

DENIAL IS LETHAL

For the past decade, being an idiot has paid handsomely. The insanity continued just long enough to convince everyone that ignorance is bliss. Now, unfortunately, being a denialistic fool is no longer an asset, it is mass burial. Because hard to believe but in an Idiocracy there is no strength in numbers. Still, it was a good run with an inevitable ending...

Those who follow Trump to his logical denouement, won't make the return trip. Trump is the past and the past is failure. MAGA is legacy empire recycled for nostalgia sake one more time. But they say: "Trump ran on a platform of neo-isolationism". No he didn't, he is a demagogue who ran on a platform of opportunism and mob mind control. He demanded MORE power than any prior president in U.S. history so he could command and control the entire world on Twitter. Trump is everything that failed about the past - ignorance, arrogance, greed, gluttony, and desecration. Desecrationism is over. And now Mother Nature demands the pound of flesh that is owed, and she will get it, in size. Trump's aged base are between a rock and a hard place: Health versus wealth. However in their minds they are entitled to both.

Which fully explains why the stock market is now held aloft by the stay at home virtual economy bubble, while the real economy implodes in real time. It's the "we can have our cake and eat it too" obligatory delusion. In addition they can surely implode the Chinese while China's imported goods continue to flow to shelves at Walmart uninterrupted.

This week we learned that the "Payroll Protection Program" was a bust.

"...Data from the Small Business Administration shows net weekly PPP lending has actually been negative since mid-May, as fewer firms applied for loans, and some borrowers returned funds"

The money left unborrowed and unspent under the program - represents a lost opportunity. Businesses were supposed to use it to retain workers, but may have been laying them off instead of tapping the money.

Some 38.6 million people have filed for unemployment insurance since the crisis began, and the unemployment rate is expected to near or surpass the 25% record reached in the Great Depression."

Last week, Mitch McConnell was adamant that there would be no more stimulus, because the GOP views stimulus programs to be hindering the re-opening of the economy. However, this week McConnell said more stimulus is likely. Blogging under these conditions of continuous bullshit is challenging at best. The GOP is now in a very difficult situation ahead of the election. More stimulus will only slow the economic re-opening and reduce the economic multiplier. If people are fat and happy at home ordering everything on Amazon they are less likely to go back to work. Whereas a large reduction in stimulus at this point will leave many families exposed to a collapse in incomes. So policy-makers can either pay people to stay at home or they can motivate them to scrounge for jobs that may no longer exist. Either way the economy implodes. However, the stimulus at least gives people a fake sense of security, which is all the Republicans need between now and November. This being an existential election on all sides.

From an economic standpoint, the additional stimulus will merely give a false sense of comfort while allowing wholesale carnage to take place in the background. One by one companies are now going bankrupt quietly but steadily. The government can't bailout everyone at the same time and no amount of Fed loans are going to make a difference. As we see above, the PPP small business loan money was not even fully deployed. There is too much risk and economic uncertainty to be taking on more debt under these perilous conditions. Even debt that came with an escape clause was deemed too risky:

For their part, many large companies have already drawn down their credit lines and are now downsizing in order to survive. The dead money sectors of the economy are (mall) retail, autos, travel, entertainment, financials, energy and real estate. Which from an investment standpoint leaves Utilities, toilet paper stocks, big pharma/biotech, Lockheed Martin & Co, and of course the Super Tech bubble. All of which are overvalued.

This combined fiscal and monetary election rigging voodoo is lethal to anyone who places their full faith and credit in it. Coronavirus has brought full Japanification to the entire planet. Whereas previously printed money was used to simulate stock market prosperity, now printed money is being used as a proxy for jobs and incomes. When GDP hits zero, economists will be shocked at what they have fabricated. A 100% virtual economy, existing in denialistic fantasy alone.

Today marked another 2 million plus initial unemployment claims, meaning new layoffs, however economists highlighted the reduction in continuing unemployment claims as evidence of economic recovery. Picture the entire U.S. economy having been shutdown for two months and then re-opening last week ahead of Memorial Day. How many people would you predict were called back to work?

Three quarters? Half?

Wrong: 16%: This is the best indicator we have for current period REAL GDP or lack thereof:

“The paradox of thrift is a negative feedback loop. The more people save, the less they spend; the less they spend, the worse the recession gets; the worse the recession gets the more they save.”


This is the savings rate going back 60 years:

As I've said, when the middle class bailout arrives, everyone is going to be forced to fit their lifestyle inside an average income plus whatever savings they have left and whatever income they can eke out of the obliterated economy. Everything else is on the table now.

I for one am not worried about the future. We've finally turned the corner to start worrying about this planet and people rather than corporate profit. It's been a long time in coming and an exorbitant cost. However, the final tally is far from over. Those who can't make the adjustment from being loyal corporate drone to human being, will find this next phase difficult to say the least.

Eventually the debts will get inflated away and a new currency paradigm will evolve. The dollar's exploding liabilities are far too onerous to ever be repaid. The same is true for most other global fiat currencies. However, in the deflationary phase, currency destruction can take a long time. Just ask the Japanese who now have debt at 238% of GDP. More than double the U.S. figure.

Facing the future is not easy, but this decrepit society has been avoiding reality for too long already. Why can't we all be Japan for the next 30 years? Because Japan was in deflation when the rest of the world was in expansion. Japan benefited from exports to the U.S. and China. The entire world can't all export their way to prosperity in a global depression. Quite the contrary. 

Denial and delusion got us this far, but it will be excess baggage for the rest of the journey. Under the new paradigm, less is more. From now on being a denialistic idiot is no longer an asset, it is now a colossal liability.

On Wednesday this week, the Trump Administration warned that passing the proposed Hong Kong Security law would bring hard consequences. Today (Thursday), China passed the new law by a 100% majority.  When 2.1 new layoffs were announced, the Dow gapped up 200 points at today's open. Which has been the exact same pattern for six weeks - a Dow rally every time jobless claims rise. Now featuring 40 million souls unemployed.

Trump announced that consequences will be unleashed sometime Friday. Overnight, China announced that once Trump does whatever he is going to do, they are going to retaliate. Which I take as meaning this weekend.

We have now achieved Super Idiocracy. Implode at your own risk.