Blow-Off Circus Top

Weak bears are now capitulating. This can't all explode spectacularly until they are out of the way...

Looking at the massively manipulated S&P 500 below, we can make several observations. First off, Skynet is STILL attempting to close the open gap (down) from two weeks ago post-FOMC. I don't know if the algos can make it, but they are giving it a mighty try. The casino is at the same level as it was one week ago on Tuesday. AND, if this count is correct, wave ii (of 2) is currently at the same level as wave ii of 1 from March. 

The equal weight S&P 500 gives a more accurate depiction of what is taking place in the broader market:

Here we see the VIX is three wave corrective from the post-FOMC explosion two weeks ago:

While the broader market struggles, Internet Tech powers further into outer space. The lower pane is Nasdaq new highs.

According to this article, five stocks (FAANG) now make up 40% of the Nasdaq. Throw in Microsoft, and six stocks make up a cool 50% of a 3,300 stock index. 

The COVID shutdown cemented the Idiocracy's over-riding faith in artificial intelligence. Which is now pervasive in computers and people alike. 

Outside of IT stocks, Biotech stocks are soaring as well, deja vu of 2015 just prior to smash crash:

Speaking of which, the last time we saw Chinese Tech stocks going parabolic was also in 2015. What Hugh Hendry called imagined realities. It was a great central bank funded pump and dump then, and it's an even bigger one now. 

When Chinese stocks imploded in 2015, the PBOC did everything possible to stop the crash - they banned short-selling, they halted the market for days, they injected massive amounts of liquidity - nothing worked. The Shanghai Composite imploded -60% in a few weeks.

The same thing is going to happen now to the Nasdaq.

Zooming out to a longer-term perspective, we see that the Global Dow (including U.S.), is now three wave corrective at all degrees of trend.

Which is why this crash will make the March crash look like a picnic. 

According to JP Morgan (via Zerohedge), global cross-asset correlations are at an all time high. All it took was $18 trillion in global stimulus to make idiots appear to be geniuses. 

ZH: When Risk Asset Correlations Are At Record Highs, Why Not Use Scrabble to Buy Anything?

In summary, central banks were highly successful in convincing gamblers to double down on global depression. However, they were not successful in resuscitating the economy which is now wholly dependent upon fiscal (monetized) stimulus, and hence the clowns in Congress.

Which is why the adults in the Treasury market are not impressed. Last night the clowns in the White House canceled the Chinese trade agreement and then reinstated it on Twitter a few minutes later. 

For now, all of the clowns are laughing. 

However, the impending dislocation will be of sufficient magnitude to ensure that no clowns are laughing when this circus ends.

The super dumbfuck everything bubble is terminal Idiocracy.

The overnight limit down moves and day session circuit breakers we saw in March were child's play compared to what is coming. Global market outages are coming. The Robinhood platform which was offline several times in March will soon be permanently offline. A generation of new gamblers is about to get wiped off the map.

2020: The Year Of Living Dangerously

This society is now boxed in by a lifetime of bad choices. The noose is tight...

I attempt to approximate the political center - people who just want to get on with their lives amid a sensationalist spectacle that has enraptured the media. Ahead of the election, the nutjob level has been turned up to level '11'. Just when we think it can't get any worse, it gets worse.

First on the COVID hoax. Via Visual Capitalist, below are the average daily deaths from all causes, heart disease (leading cause of death), and COVID. As the linked facts show, over-consumption is the leading cause of death via the two key vectors of heart disease and cancer. 

In other words, McDonald's likely kills more people per day than COVID. But because heart disease and other lifestyle-related diseases are self-inflicted, we ignore those risks. It's clear on the COVID hoax that the old age home panicked. We are constantly told that the shutdown was ordered by the "experts". Which explains why it was officially history's biggest clusterfuck. Every country, state, and locality has different "experts" on pandemics. Recall that the global consensus on climate change was viewed as stifling denialist viewpoints. This gong show is denialist reward for a complete lack of consensus. I hope they're enjoying it. 

But don't worry, the re-opening is on the way to becoming the new greatest clusterfuck of all time. 

Within the U.S., based upon the average daily death rate, COVID deaths so far equal two weeks of deaths from all causes. Yes you read that right. The worst pandemic in modern history is equal to two weeks of Big Macs. If McDonald's brings back their Supersize menu, the COVID death rate will be a rounding error. 

Which is where this gets interesting, because for those who have over-imbibed on the consumption-oriented deathstyle, the fear is very real and rational. It's not COVID that is putting people at risk, it's a lifetime of bad decisions that has put people at risk. Smoking, diabetes, obesity, and alcoholism are the leading complicating factors. This should be called the Super Sized pandemic.

The rest of us are now hostage to the bad decisions made by this panicked corporate Idiocracy:

Per the CDC: "For most people, the immediate risk of becoming seriously ill from the virus that causes COVID-19 is thought to be low."

Another topic I wanted to touch upon is this new censorship drive coming out of Big Tech as part of the George Floyd protest movement. Zerohedge was recently demonetized or demonized however you want to look at it, by Google, due to their politically incorrect conspiracy theories. That can happen when you cede editorial control to random nutjobs. Fortunately, I can't be demonetized, because I have never been monetized. My opinion is that those who comment on markets should eat their own dog food and make money from the markets. If they really know what they are doing.

Anyways, it's not Big Tech that is censoring the alt-right, it's the advertisers behind Big Tech that are realizing they can't have their lingerie ads posted next to neo-Nazi symbology. As a reminder, we live in a corporate Borg of like-minded idiots. They are not capable of accepting the truth or reality. Now this mindless Borg and their corporate overlords are exercising mob control over what they deem acceptable. Shocking, I know.

Again, the irony of corporate media oppression now impinging upon the conservative movement, can't be overlooked. It's ALL self-inflicted pain from a lifetime of bad choices. 

From an economic standpoint, the Black Lives Matter movement will go nowhere until everyone acknowledges that the current economic paradigm monetizes poverty. This model can't possibly fix poverty, because the corporate model is now wholly dependent upon ever-lower labour costs to increase profits and grow stock prices. Going in reverse would implode the stock market. And we all know that Trump Casino is now America's biggest Church with the largest congregation, and Trump as high priest. The economy can wither and die for all they care, as long as the casino keeps going higher.

So instead of any progress fixing economic inequality which happens to be the de facto business model of the day, we can expect more empty talk. Because after all, that's what this society loves most.

Until it all explodes amid epic rage and margined out stay-at-home gamblers shocked that in every bet there is ALWAYS a winner and a loser. And Dave Portnoy has put them all on the same side of the ledger. The side that gets monetized for fun and profit.

If it wasn't him, it would be some other con man that they were following to their logical conclusion. Which is exactly how Trump became GOP leader following the epic failure GW Bush. He was the next lowest common denominator.

Now, let's get down to some hardcore facts and data and leave the bullshit to everyone else we know.

Year to date returns by major sector.

Here we see that mega cap internet stocks are up over 20% on the year and the average U.S. stock is down -20% on the year.

The S&P peaked two weeks ago, since then it's been all mega cap Tech stocks and junk stocks. Here we see Mega Caps up six days in a row:

Here we see the difference between the market low in 2009 versus now.

The crash ratio is currently still in extreme territory and cash balances remain near all time lows:

Biotechs were on fire today, and we now have a new best performing lockdown stock:

Dave Portnoy's latest scrabble pick was "RTX" Raytheon Technologies (United Tech + Raytheon):

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

History's biggest out-of-control ego trip is about to explode with great farce. 

Betting On A Crash

It's totally impossible to sum up the insanity taking place in Disney markets at this latent juncture. We have now achieved FULL CASINO. Getting in was a lot easier than will be getting out...

What does $18 trillion in global stimulus buy? Epic delusion and late stage participation from retail bagholders. How ALL bull markets end.  

Last week, the self-appointed Lord of the day-trading Flies, Dave Portnoy proclaimed that he is a greater investor than Warren Buffett. Notably, he did not compare himself to the legendary investor in his heyday, but to the incumbent geriatric, who is now 25 years beyond conventional retirement age. A sleight of hand that went unnoticed by the lamestream media. When Buffett is dead, I assure you we will all outperform him handily in money market funds.

The bar is low and the arrogance is high:

DDTG = Davey Day Trading Global

Portnoy's "new army" of day traders and their circle jerk leader are nothing more than lucky dumbfucks who, having been deprived of their usual sports gambling addiction, turned instead to stay-at-home day trading at the nadir of the COVID crash. Aided and abetted by (ZH:) $18 trillion in global stimulus. A ludicrous mind boggling unprecedented amount of casino sugar money.

The difference between the soaring Portnoy and the faltering Buffett is where things get interesting - while both fancy themselves deep value investors, Buffett can't find anything to buy, while Portnoy can't find anything not to buy. In other words, one is schooled in fundamental analysis and the newcomer is merely a fortunate momentum gambler who is now using Scrabble tiles to pick his "investments":

During the March COVID crash, Buffett sold off all of his airline holdings, whereas Portnoy bottom fished those stocks at the lows for large % gains. Here we see via the airlines sector, how two different investors can view the exact same sector from opposite standpoints:

The true investor sees a sector that is enjoying a dead cat bounce after a massive crash. The newcomer sees a new bull market in airlines. The real investor understands fundamentals and is investing for the long haul, the charlatan is merely leading an army of short-term momentum followers off a cliff.


"Everything is up a BAZILL, when we count gains starting 12 weeks ago"

There is no question Buffett has lost a step. As he admitted recently, it took his entire lifetime dating back to his birth date in 1930 for him to see this kind of economic carnage.

Buffett's own stock, Berkshire Hathaway, is a very good bellwether for how things are going in the real economy away from MAGA cap Tech:

Any questions?

Here we see via banks what $18 trillion in stimulus buys.

It buys a massive sugar rally and late stage participation from retail dumb money.

Ironically, both Buffett and Portnoy's Robinhood acolytes missed the real move in the Nasdaq Tech bubble.

The gamblers playing Cramer's COVID-19 stay-at-home index are the ones enjoying the real market highs. There is no ETF yet, but there is an index on CNBC. 

The closest I can approximate is the "CLIX" long stay-at-home, short mall retail ETF. 

Basically a bet that the economy is set to implode. Mind you it will be a hard bet to collect upon. Only this Idiocracy would track an index of economic implosion and cheer as it went higher.

And then create an ETF to bet on it:

There is no stock that represents Portnoy's company, however casino company Penn National Gaming bought a large stake in January of this year. A very timely entry into the digital sports betting bubble. This stock has also been a beneficiary of the stay-at-home craze.

This stock top ticked the February high and also top ticked last week's S&P high:

Doing things in reverse with this blog post - casino first, economy second - below is my latest model depicting the economic future.

Needless to say, my 2020 prediction of epic market crash and rioting is right on track so far featuring the largest market crash in history and the largest protests in 50 years. 

However, what I was predicting was far greater in biblical scale. What we've seen so far is a minor preview of what's coming.

In summary, it's time to buy more toilet paper.

The Last Trump Casino

Banana Republicans seem to forget that many successful billionaires sought the job of president: Mike Bloomberg, Howard Schultz, Tom Steyer etc. However, the GOP chose a fake billionaire instead. One with a track record for blowing up casinos. That fatal decision caps off several decades of disastrous decisions in the realm of economics and finance. For true believers in proven con men, 2020 will be a fatal year for BOTH health and wealth...

Where to begin...

The din of the outraged alt-right and alt-left going toe to toe in existential mortal kombat is now deafening. Both sides fatally incompetent, and yet convinced they know everything and the other side knows nothing. Those of us centrists have no representation. The center of the political spectrum is merely a last minute campaign stop at the end of the election campaign. In 2020 we get to choose between the libtard thought police running amok, and alt-right neo-nazis. The 24 hour news media has devolved into an entertainment spectacle of political opinion, bereft of fact and reality. Both sides seeing this election as existential to their withering cause. Neither side honest enough to admit that we live in a Corporate Idiocracy hell bent on self-destruction. 

At this parlous juncture, the stock market casino is now wholly dependent upon monetary stimulus, meanwhile the economy is now wholly dependent upon fiscal policy. Which is where this all turns lethal. Heading into the election, the political divergence is widening and hence the prospect for further fiscal stimulus is fading fast. The paycheck protection program is winding down, having largely failed to forestall the feared explosion in jobless claims. Which portends a second wave of layoffs as small businesses now realize that "re-opening" is an overwhelming dud. 

"The predicament is a familiar one to owners of restaurants, bars and those in areas that depend heavily on tourist travel. Stay-at-home orders mostly forced them to close, and even as restrictions lift, sales and foot-traffic are still down — and the pot of PPP cash is nearly dry."


In addition, the GOP is dead set against extending the $600/week enhanced unemployment benefits, favoring instead a "back to work bonus" and a payroll tax cut. Their goal is to reward the lucky few who still have jobs while punishing those who are unemployed in the worst economic crisis since the Great Depression. It won't work. For obvious reasons. However, these people are not half intelligent enough to figure out why.

The GOP's signature policy of giving ever-more money to the wealthiest Americans, now has an economic multiplier of zero:

Make no mistake, the people backing these fatal decisions are not intelligent people. And they elected a president to prove it beyond all doubt. 

Which gets us back to Trump's last casino.

It's a well known fact on Wall Street that bull markets don't end until retail (small) investors finally come off the sidelines and embrace stocks:

"...Easy access to zero-commission and fractional trading across multiple platforms, has sparked a surge in retail investing...Notably, the Barstool Sports founder David Portnoy, who goes by the nickname Davey Day Trader, now captains an "army" of day traders, or "retail bros."

"When you talk to them or read the Reddit boards, the word 'Fed' always comes up — that they are not going to allow the market to go down"

"There's been a massive flood of money" from retail investors, he said, because they believe that markets "always go up, you can't lose, the Fed is there."


So far this week, notwithstanding tomorrows massive options expiration, last week's Nasdaq highs still hold:

The S&P and Dow never confirmed the Nasdaq's new high

The equal weight S&P is deja vu of March meltdown phase:

No surprise, Wall Street's IPO pump and dump has continued into this week, far outpacing the S&P and Nasdaq.

The junkiest stocks are leading the market:

Dual-listed Chinese internet stocks are leading the charge as ironically Trump's threats to delist Chinese stocks is forcing many companies to dual list in Hong Kong.

The same Tech stocks are getting double pumped

As we see, gamblers across ALL asset classes are now assuming that the Fed is invincible.

What they will all learn the hardest way possible is that now all risk assets are correlated to margin calls.

And Retail Bros.

You Can Lead A Horse To Water

I've been remiss in my (lack of) commentary on today's aspirational Idiocracy. Unfortunately, one grows bored of finding new ways to explain how and why ludicrously misallocated capital and delusion are ending badly...

The second stage of epic meltdown has commenced, as the chasmic divergence between intelligence and stupidity has never been wider.

Any questions?

Last week, post-FOMC witnessed the reversal of fortune we had been anticipating. Thursday was a 90% down day, attended by extreme volatility carrying over into Friday and now Monday. The algos are going berserk, featuring alternating jaw dropping rallies and crashes. The S&P finally found support at the 200 day this morning (Monday). We can see the big open gap from last week deja vu of the February top. We can also see that when the 200 day fails, the 50 day will fail at the same time. It's a two for one explosion:

Stepping back to the economy, the lagged economic data is surprising to the upside as it wobbles back from depressionary levels. My overall thesis remains the same - the combined effects of social distancing, lingering COVID fear, disorganized re-opening clusterfuck, and general anxiety have combined to collapse overall capacity utilization. None of which will get remedied any time soon. As COVID deaths begin to rise in lockstep with economic liberation, the calls to shutdown the economy will return. This aged corporate Idiocracy is caught between the Scylla and Charybdis of health and wealth. 

As a gauge of overall demand, here we see that gasoline demand at the service station level is still -20% year over year. The largest decline in our lifetimes. 

The insanity of the past several weeks somehow survived last week's turmoil and arrived this week fully unscathed. Seizing upon the home gamer zeal for bankrupt stocks, it was only a matter of minutes before Wall Street jumped on the opportunity to dump more worthless stock.

These are the types of headlines that make blogging somewhat redundant:

"Hertz Global Holdings warned potential buyers in its common stock offering that it’s almost certain that the equity will become worthless"



Remember, this has been the most popular stock on Robinhood for the past week (Hertz split off from its parent company in 2016):

The other breaking news this week is that the same home gamers who are chasing bankrupt companies are vastly outperforming active managers so far this year. Which brings to mind the Y2K bubble,when the lament among active managers was: the dumber the money, the bigger the return. 

As I recall, that didn't work out so well.

You can read the article, but I will tell you what they are buying - junk stocks, bankrupt companies, and crowded MAGA caps.

All of which makes this just another massive pump and dump.

In summary, we are getting buried with non-stop bullshit. First off because this is an election year, but also because we are surrounded by sociopathic salesmen desperate to make the quarter. A feat that is growing more difficult with every passing day. Under the calm surface of the Dow Jones Illusional Average, lies the ugly truth: The economy has been imploded and QE money printing can only drive a larger chasmic gap between reality and fantasy.

And between rich and poor.

“The downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the most affected,” Federal Reserve chair Jerome Powell said this week."



Ironically, the Fed itself has massively increased the divergence between rich and poor by way of their Japanified monetary asset pumping:

"Black and Hispanic families accumulate proportionately less in real estate, stocks, business assets and other forms of wealth than white families."


However, contrary to the disinformers of the day, the Fed didn't create economic inequality in the first instance. Decades of free trade and mass outsourcing created extreme inequality. When all of that exploded in 2008, the Fed was enlisted to paper over obvious failure with printed money. A process that has now gone into asinine overdrive.


In the near future EVERYONE will know what we know.

And they will be a hell of a lot poorer for it.

100% Moron Bubble. Accept No Substitutes

History will say that the Banana Republican party needed a con man to make them great again. No one else was up to the task...

Over the past decade, central banks have made being an ignorant fool extremely lucrative. However, all of that free largesse is about to come to a totally unexpected ending.


"No one saw it coming"

We have now achieved a 100% virtual economy, a figment of the imagination. And it's attended by a 100% Ponzi stock market. Central banks have succeeded in achieving FULL monetary euthanasia. The alt-right views this pump and dump as a big conspiracy. I view it as a conspiracy of dunces. There will be no beneficiaries when this house of cards collapses. When capitalism failed to achieve global prosperity and inadvertently wiped out the middle class instead, the con men of the day had to come up with something. What we are witnessing is market manipulation on a biblical scale. 

We now live in a society that has not even the slightest concept of basic economic reality. I am referring of course to today's economists. 

Among the gambling class, it gets even worse. This week, the hottest stocks were all bankrupt companies:

"In this day and age, as small day traders salivate at any opportunity to get rich quick, a bankruptcy filing has apparently become a buy signal for many of them"

In a market as bizarre as this, it seems only fitting that the next step would be a growing affinity for companies that can’t pay their debts"



Today's pundits consider this type of action "bizarre", however they have no reluctance in recommending the S&P 500 with its infinite P/E ratio, zero earnings visibility, and the largest impending corporate credit crisis in world history.



Enter the virtual economy, because for those who eschew bankrupt car rental companies, and near-bankrupt airlines and cruise lines, they can always buy the stay-at-home mega bubble. Hence it's fitting that as all of this insanity reaches climax, the leading stock is...

Amazon:

Here we see Amazon went vertical ahead of the FOMC and now sports a tall wick on the daily (and weekly) candle:

All of the MAGA stocks (Microsoft, Amazon, Google, Apple) are going parabolic. New all time highs all around except Google.

Compliments of MAGA caps, today the S&P Tech sector broke through the February high. This COVID rally was three times more rapid than the last melt-up:

Whereas the rest of the market is rolling over. Hard.

Volatility is getting set to explode post-FOMC as the largest cap MAGA stocks finally roll over and join reality.

Sadly, central banks can't handle what comes next. 

They had no problem getting copious fools into the insolvency bubble, but they can't get them out. Soon we will be limit down across every risk asset class globally, at the same time. When today's Idiocracy realizes that their leaders are as dumb as they are, then the underwear will be mighty stained.