2020 Rich Man's Panic

Today's billionaires are nothing more than monetary welfare queens and Treasury thieves. Those who go along with "the system" are their disposable accomplices. For over a decade straight being a consensus idiot has been highly lucrative. When central banks lose control over their Jedi Mind Trick for weak minded fools, consensus opinion will be lethal. Few people will successfully navigate the deflationary/inflationary gauntlet we are about to experience, considering that not one of them even knows it's coming...

What has been missing for 12 years straight is a reality check to rein in the excesses. Central banks have sponsored a bubble of delusion that has grown ever more manic since 2008. That bubble has sponsored mass corruption and mass denial on a biblical scale. It has created ephemeral paper gains massively leveraged to ignorance and arrogance, while it ridiculed any semblance of caution.

There has been zero accountability since the DotCom era prosecutions of Worldcom, Enron, and Global Crossing. During the Global Financial Crisis, regulators jailed Bernie Madoff for his miniature Ponzi scheme while they were bailing out Wall Street for imploding the global economy.

Fast forward more than a decade of moral hazard and now, insanity has been normalized. To question this Bonfire of the Sanities is strictly anti-social. The sheeple at large are fully euthanized by ludicrous amounts of fiscal and monetary stimulus. Which is why arrogance always snaps back immediately once the monetary dopium starts flowing. Back in February, there was a fleeting moment of fear as markets reached their nadir, but as soon as the momentum reversed, the fear dissipated and back came the buffoonish arrogance with a vengeance.

Which is also why there is always the same fall back on inequality. The GOP can't possibly solve inequality, because exploiting inequality is the very basis of their capitalist "system".  The system that has been on emergency monetary life support continuously since 2008. Fortunately for today's bailout junkies, they have a base of useful idiots who keep voting for their own demise, in order to protect the sacred system - which is now 100% con job at their expense. 

The worst part of all of this of course is the river of toxic bullshit that flows incessantly from Faux News and its various NewsMax copycats, out to the demented hillbillies who propagate it in every spam email and every family get together.

The solution to all of this denial and buffoonery is fear and lots of it. The central bank veil of invincibility is finally about to be pierced once and for all. The bubble of delusion is about to collapse like a cheap tent. And when it does, the revelation of fraud and criminality will bring rage and fear. And ultimately, humility where now there is only Roman Circus equivalent hubris. When the Kool-Aid drinkers realize they've been conned by their own trusted con men, they will finally begin to question "the system".

At that point, they will demand accountability and incarceration. The ad-sponsored bullshit will be silenced, along with the purveyors of non-stop lying.

And then will come the middle class bailout. Following the 2008 analog - likely sometime in the Spring timeframe. When that happens, the dollar's days as a "store of value" will be numbered. Today's sheeple will become convinced that cash is king, right at the point it becomes lethal. 

But, there's a lot of (asset) deflation between now and then, as over a decade of criminal rots gets exposed. 

"While few could have foreseen the pandemic’s toll on the economy, the depth of investors’ pain from corporate distress was all too predictable. Desperate to generate higher returns during a decade of rock-bottom interest rates, money managers bargained away legal protections, accepted ever-widening loopholes, and turned a blind eye to questionable earnings projections. Corporations, for their part, took full advantage and gorged on astronomical amounts of debt that many now cannot repay or refinance"

Corporate Debt, % of GDP

The Walls Are Closing In On Donny

Trump's reign will be remembered as a non-stop circus of arrogant bullshit. His time in office will cost his true believers everything: Their health, their wealth, and their fraudulent way of life. Sanctimonious hypocrites got their Supreme Court nomination, now they are going to pay with their lives...

Regardless of who gets elected next week, Trump's presidency is effectively over, duly monkey hammered by COVID, and his incompetent response to the crisis. Trump's entire presidency can be summed up by his chaotic and ultimately lethal approach to this pandemic. At first he was in signature denial. We now know via Bob Woodward that Trump knew COVID was far more deadly than the regular flu, and yet he insisted it was the same as the regular flu. Then, when seniors started to get worried, he panicked and ordered a nationwide shutdown in early March. When markets crashed, he panicked and ordered a nationwide re-opening in April.

As the pandemic wore on, he ignored the advice of ALL experts, preferring to rely upon his own totally uninformed opinion. Like most of his mentally challenged followers, he considers himself an expert in every subject through sheer ignorance and wishful thinking. Over the summer, Goldman Sachs studied the benefits of widespread mask usage and concluded that they save lives and they could have saved the economy as well:

"Goldman Sachs found that a face mask mandate could potentially substitute for lockdowns that would otherwise subtract nearly 5% from GDP"

A national mask mandate could save an estimated 130,000 lives by February. 

Trump completely ignored the mask advice and ended up getting COVID for himself and his family, but he was cured thanks to a multi-million dollar treatment regimen at taxpayer expense. All while he was plotting to take healthcare away from millions of Americans during a pandemic. This week, in the confirmation of Amy Coney Barrett to the Supreme Court, he took a major step forward in that direction:

"While it’s hard to say exactly how Barrett will rule, it’s possible the ACA might be completely overturned, which could leave more than 20 million Americans uninsured"

Republicans have made over 70 unsuccessful attempts to repeal Obamacare"

Here we are in late 2020 with the Fed printing trillions of dollars to prop up billionaires, while the GOP is figuring out how to take healthcare away from people who no longer have jobs. During a pandemic. History will say that Republicans were godless criminals to the very end. Nothing more nothing less.

CNBC: 10/26

U.S. On Verge Of Exponential Increase In COVID Cases

Getting back to Trump Casino, the illusion of Tech invincibility is beginning to crumble. It started with Cisco back in August. Now in this latest quarter, Intel, IBM, and yesterday SAP was the latest Tech bellwether to report a disappointing forecast:

"In a surprise release late Sunday, SAP, one of Europe’s largest tech companies, cut its revenue forecast for the full year and said it expected the fresh wave of Covid-19 lockdowns to hurt demand through the first half of 2021. The results caused shares to fall the most ever in a single day, according to data compiled by Bloomberg since 1989."

Enterprise software:

Networking:

Semiconductors:

After hours on Tuesday:

"Microsoft shares moved 2% lower in extended trading on Tuesday after the company reported quarterly revenue guidance that fell short of analysts’ expectations"

So far, the frogs in boiling water are buying the 1929 pre-crash dip.

Notice the difference in volume for the Tech sector in September versus now. Back in September gamblers sold hard and then got near record short the Nasdaq futures. Now in the third wave down, there is nothing but complacency, camped at the 50 day moving average: 

The reflation trade is also imploding ahead of the election as Trump admitted today that any deal is dead. 

He is now promising to cut a deal from his jail cell:

"Putting off votes on a stimulus package until after the election raises the risk that the Trump administration will be less inclined or able to push a package through the GOP Senate. If Trump loses to Democrat Joe Biden and Republicans lose their Senate majority — it would mean that any stimulus package for the pandemic-stricken U.S. economy would be delayed until late January, at the earliest."

Here on the hourly chart we see the Tech/deflation trade above the cyclical / reflation trade. Notice there is a similar pattern between September and October. When Tech weakened in September, cyclicals rallied, but then they both rolled over late in the month. The same thing is happening now:

For the first time since March, the volatility term structure is in backwardation, meaning the spot Vix is above the futures. This indicates that large hedgers are getting nervous ahead of the election.

The MAGA Kingdom will be remembered as human history's biggest circus. And its true believers nothing but clowns.

Artificial Intelligence To The Very End

Henry Ford: "Walter, how are you going to get those assembly line machines to pay union dues?"

Walter Reuther: "Henry, how are you going to get them to buy cars?"

The consumption Borg has been fully assimilated. Thinking has been fully outsourced to dumbphones and trusted idiots...

Technology/growth investing has become the only game in town, as value/cyclical investing implodes along with the economy. We are in the latest stages of this self-destructing delusion:

"Value, tracked in part by the iShares S&P 500 Value ETF (IVE), has lagged growth substantially over the last 10 years"

Growth dominance sounds innocuous enough, except the root cause - deflation, due to lack of middle class spending power - is a cancer now metastasizing the entire economy. Jobs are being destroyed at an unprecedented rate, as this deflationary disaster heads towards full unemployment. The death of value/cyclical investing parallels the implosion of the economy. They are one and the same. Recession has been eliminated, and replaced with ludicrous amounts of stimulus "GDP" currently running at 30% annualized fiscal and monetary heroin. It's the biggest fucking fantasy/fraud ever bought and sold. The Pyrrhic victory of corporate automation for maximum profit. The largest corporate oligopolies are now profiting at the wholesale demise of small business.

The reason gamblers are willing to write off the entire economy is because Tech stocks are now viewed as safe havens. Microsoft, Apple, Google, Amazon, Facebook and the rest of the Tech oligarchy are now being priced as constant annuities. With interest rates at 0%, the theoretical present value of these annuities approaches infinity. Judged vis-a-vis companies having cyclical risk, these Tech monopolists are now perceived as "safe havens" from collapse. 

Way back in Y2K, the exact opposite economic situation attended that infamous Tech bubble. GDP was booming at 7%, the employment-population rate was the highest in U.S. history. The Federal government was running a surplus. Everything was going great, and then the bubble collapsed. Why? No reason other than overvaluation and a Fed taking minor steps to tighten liquidity. 

Today, Tech stocks are not booming due to extreme reflation, they are booming due to extreme deflation. The belief that today's Tech earnings are immune to the economy and therefore deserve infinite valuation.

What could go wrong?

For one thing, deja vu of the 1930s, today's robber barons are now in the sights of anti-trust regulators. This past week, Google was targeted for long anticipated anti-trust action. The stock gained on the news, as apparently investors don't believe the government will take meaningful action.

Nevertheless, gamblers have now crowded into this Tech delusion at a rate that eclipses Y2K.

"On a yearly basis, flows into ETFs with a technology focus have already surpassed 2000"

Back in Y2K, Warren Buffett lagged the S&P benchmark because he eschewed ALL Tech stocks as not having defensible long term market dominance. He was right. The Tech sector is constantly creatively destroying itself, hence no Tech company has been able to maintain long-term dominance. This time around, Buffett has half his invested portfolio in Apple, meaning he was smarter twenty years ago than he is today.

As always, the dumb money comes in at the end of the party.

FOMC: Fear Of Missing Crash

Ahead of the existential election, stimulus addicts are fully lubed up for more stimulation. Real or imagined...

Stoned gamblers, high on monetary heroin, have a perfect track record of never seeing it coming to maintain. 

The past four years has been one hell of a roller coaster ride for gamblers. Going into the 2016 election, gamblers were tentative as to what an assumed Clinton victory would bring. When Trump got elected, the overnight futures crashed but then rallied back to open green when gamblers were assured of impending de-regulated corruption and massive plundering of the Treasury. The Trump rally lasted over a year, right up until the tax cut came into effect, Feb. 2018. Here we see the MAGA rollercoaster vis-a-vis the Ameritrade Investor Movement Index:

"The Investor Movement Index, or the IMX, is a proprietary, behavior-based index created by TD Ameritrade designed to indicate the sentiment of individual investors’ portfolios. It measures what investors are actually doing, and how they are actually positioned in the markets."

We notice that positioning generally follows the path of the average U.S. stock which peaked in 2018:

Then they got pounded by VixPlosion and took their exposure down substantially. As the rally resumed into the 2018 election, they increased their exposure. Then the market tanked in the fourth quarter of 2018.

Which is where this all gets interesting. Going back two years ago, gamblers were assured that stocks always go up after the election:

Nov. 2nd, 2018

100% Chance Of Rally After Election

The market tanked. Investors got out. Throughout 2019 as the market rallied back gamblers were reluctant until the top in February 2020. They got long just as COVID was spiking. The market crashed. Now, we see above a similar rally back to the same level of allocation.

In addition, throughout the past several months, gamblers have been using record call options to manipulate the market higher. Forcing options dealers to hedge their call option exposure by buying stock. We've seen this every month since June, with the exception of September. It always ends badly. Every moron since the beginning of time believed they could bid up their own stocks. 

Here we see via the one day call/put ratio, the reason the market is still holding up, is because options gamblers have been BTFD:

Semiconductors are at the happy intersection of Technology and cyclicals. Which is why they have outperformed the Tech sector overall, because they benefit from both the deflation and reflation trades.

And yet we see they are rolling over. 

The leading ETF of 2020, Solar stocks, got pounded this week on massive volume:

What's coming next is Global Financial Crisis 2.0. The misallocation of capital at the end of the cycle.

Corporate debt, quarterly change, $billions:

As a crude measure of economic activity, we can use crude oil demand as an indicator. Currently back at 1994 levels:

The MAGA Circle Jerk Is Ready To Explode

This election is only about one thing - more free money for the rich, or assistance for the majority sliding into poverty. Those who vote for the Criminal-in-Chief are accomplices in human history's greatest theft...

AP: Oct. 16th, 2020

U.S. Posts Record $3.1 trillion Federal deficit

The Cayman Islands posts record windfall.

I will now make my prediction for the election and the remainder of this year:

This election wiil be a referendum on criminality. With respect to these failed stimulus talks, no one with a brain really believes that McConnell wants to help the middle class. Everyone knows that Pelosi gave them the easy way out and they wouldn't take it because their "principle" per se, is solely to steal from the poor to give to rapacious criminals. She outplayed all of them, and they will pay a heavy price for it in the election. She wanted them to say no to her generous offer. And she was not disappointed. 

"With the pace of talks dragging, resistance from Senate Republicans is building, and Trump’s ability to twist arms into supporting a deal appears to be waning. Now some House Democrats are telling Pelosi that they don’t want to vote on legislation before the election if the Senate won’t do so, according to a party official."

Therefore, I predict a MASSIVE Democratic landslide across the board. Wholesale repudiation of MAGA, Trump, McConnell, CEO Criminals, Wall Street, non-stop lying, and useful idiots.

With respect to Trump Casino, I predict that the blue wave is already "priced in", therefore the election will elicit a sell the news reaction deja vu of the TARP bailout circa 2008:

Hence, I see a Super Crash on or before the election, leaving Banana Republicans right back where they were 12 years ago in 2008, at the same juncture they were at when their last criminal left office in shame. However, this time I predict no bailouts for the rich and a lot of scumbags in prison.

The age of criminality will be over. 

I also predict that COVID cases will spike massively after the election which will be the largest superspreader event of 2020 in Trump Country. The Old Age home, sequestered by Zoom funerals, will finally come to understand that Trump buried their generation. And they will NEVER recover. 

"The rising numbers put the nation on the precipice of what could be its worst stretch to date in the pandemic with some hospitals in the West and Midwest already overwhelmed and death counts beginning to rise."

Even as hundreds of people are dying each day, “there’s this false sense of calm right now,” said Tom Inglesby, director of the Johns Hopkins Center for Health Security. “We have the president saying, ‘We’re rounding the corner.’ We have state leaders openly defying public health guidances.”

https://covidtracking.com/data/national

Any questions?

ALL of the MAGA Tech stocks report this coming week:

https://www.cnbc.com/2020/10/23/cramer-week-ahead-a-tough-week-a-prelude-to-election-day.html

The Moment Of Truth

We live in a society of denialistic zombies refusing to change, because the crushing effects of today's failed policies keep falling on the same ignored people over and over again. This bubble of insanity must end before anything gets better...

Many of us have attempted to shake this society from its stupor, to no avail. No matter how bad things get, somehow the old habits return in force the moment the imminent danger passes. These people are expert denialists. The latest gambit is bidding up stocks during a pandemic depression. This deception started after 2008 using monetary policy. Under Trump it switched to fiscal profligacy madness. Now, it's running on combined fiscal and monetary eight ball. Because everyone knows that the solution to all problems is asset bubbles. The virtual simulation of prosperity.

In addition, we are getting buried by disinformation. The alt-right conspiracy model is proliferating. You have to ask yourself, what kind of cave troll enjoys propagating lies and disinformation. This is a con man's paradise. One of the side effects of the age of Trump is the continuous attack on reality and the truth. MAGA is 100% false witness. It is the intentional continual distortion of the truth. It is an assault on intellectualism, intelligence, commonsense, and rationality. It is the total absence of sanity.

The lamestream media fights back meekly with their own echo chamber of outrage which only fuels the fire of disinformation. In reading Bob Woodward's book, Rage, my main criticism is that he recycles the same cherished assumptions and delusions now held by the mainstream media. He is politely cordoned off from the truth by his unwillingness to challenge conventional wisdom. We just have to keep pretending that disintegration is exceptional. 

You can drive a truck through the holes in today's standard assumptions, which has given rise to legions of disinformers propagating conspiracy theories. All of this is a huge victory for Vladimir Putin - in great measure revenge for the marginalization and humiliation Russia suffered after the collapse of the Soviet Union thirty years ago. Now, he has his own base of useful idiots in the U.S. and a Manchurian Candidate in the White House to do his bidding. Quite a turn of events. 

America's intelligence agencies have been downgraded to Deep State propaganda. Half the country no longer trusts the U.S. intelligence establishment. Untold billions of dollars of intelligence goes down the drain every day in an empire wracked by distrust and disinformation. Putin now has free rein to interfere with the election, because he has the U.S. president on a tight leash. It's abundantly clear that the U.S. education system is a factory churning out millions of idiots every year. South Park can claim more A students than the school system.

Getting back to Trump Casino, approaching this existential election one would never believe that such giddy ambivalence could abide today's gamblers. Apparently, no matter who wins, they win so we are to believe. So far, the casino remains well bid because there has been a rush into risk ahead of this election. The opposite of what we saw in 2016.

The hook is set.

The Casino remains Vixplosion level overbought due to record call option speculation not seen since Flash Crash 2010.

What could go wrong?

Ponzi reflation strikes again.

New highs NYSE and Nasdaq deja vu of the February top:

You know you're a denialist when...

You can't trust those mail-in ballots, but you can trust the idiots in line at the polls who believe that COVID is a hoax. One thing about Trump is that he sequesters a lot of carbon. 

 

Appetite For Self-Destruction

The new Civil War will not end two weeks from now, nor will it last forever. It just feels that way...

There are far too many among us who desperately believe this MAGA fantasy can continue forever. Their depth of delusion is manifest in a sociopathic liar.

We've never seen any developed country as divided as the U.S. is right now. One wonders, how did it come to this and when does it end?

It takes a country in profound disarray to achieve this level of stark divisiveness. Even within families now there is tremendous rancor. Certainly the status quo is most complicit in the disintegration of society. Globalization mixed cultures, ideologies, and races on a scale never before experienced in human history. It destroyed traditional cultures and replaced them with corporate Disney values. All the while it riddled the populace with disease, strip-mined the middle class of economic prosperity, and raped the environment for unprecedented corporate profit. 

And yet, these two political sides see the same problem from a totally different perspective. The side on the right blames the bogeyman of creeping socialism, having been brainwashed to confuse epic greed for the few with a social safety net for the many. The other side blames the cult of greed and self-interest, which is what history will agree was the root cause of this epic downfall. Whatever "socialism" exists today is merely a thin facade to cover the chasmic black hole left by failed capitalism. Nevertheless, it was inevitable that the "roadkill" thrown off by Globalization would come to detest those they believed were the beneficiaries of the system. Perceived or real. It was inevitable that their rage would get hijacked by an opportunistic demagogue. And it's inevitable that today's historical illiterates will be consigned to the dustbin of history as nothing more than an enraged Colosseum mob.

In some ways we will all be implicated in this voracious way of life. Mass consumption addiction tried its best to consume the planet, consumed the middle class, consumed the economy, consumed the government, and left a hollowed out corporate Idiocracy in its wake. One still manifesting the same voracious ways of the past and yet having ever-dwindling resources at their disposal.

Accept less? No way. Blame the foreigners who took this all away from us. Which is the MAGA strategy in a nutshell. Blame everyone else for self-destruction.

COVID shut down their party. For good. They were caught between their consumption addiction and their awakening to the fact that life is more important than money. Not once in their lives had they contemplated that anything could be better than more.  

The Boomers are now straddling the line between employment and retirement. On average 10,000 are reaching the age of 65 EVERY day. We are now at the crossover point between investment and consumption. Meaning as Boomers draw down their life savings in retirement, less savings will be available for investment in the economy and the stock market. Meanwhile, the Social Security surplus was squandered on tax cuts. The buffer this society needed to get past peak retirement no longer exists. From this point forward, Social Security is now running at a cash flow deficit paying out more than it's taking in via paychecks, which means that every new retiree means more debt burden for future generations. On paper the program is still solvent due to the IOUs Congress issued in exchange for tax cuts, however, those IOUs are worthless and now represent new Treasury issuance. New Treasury issuance of course means more monetary expansion. 

Which is where this gets interesting. 

The tax cut criminals miscalculated, because they didn't make a safe getaway to another planet they could destroy. Now under Trump these ludicrous deficits are putting the entire currency at risk. Uncontrolled monetary expansion in the long run destroys wealth, particularly in financial assets. Most of today's fake wealth is unsecured debt which will be vapourized via defaults and inflation, in the fullness of time.

We now stand at the fulcrum of history. The point at which the corporate Idiocracy at large comes to realize this was all a massive con job. The one in which they realized they got used up by their own trusted psychopaths. There is no way this zero sum game can meet the aspirations of the masses while they are being strip-mined to the benefit of the few.  

Republicans know their best days are behind them. Demographically, they've already lost the future. Which is why they cling to the failed past. Mythology is all they have left. It would be better if the Proud Boys rose up against the Deep State sooner rather than later. Netflix has run out of content and we will soon need plenty of spectacle to entertain the masses who will be far more dangerous than a handful of man boys. When these zombies realize their entire way of life is a hoax, the level of rage will be beyond anything we've seen before. 

I don't follow this Bidengate circle jerk because it's all a big load of bullshit. A late stage desperate gambit similar to the Clinton email fiasco that handed the election to Trump four years ago. The masses at large are ignoring it, because they're desensitized to lies after four years of non-stop lying. 

History won't say Trump was the most destructive president in U.S. history. That accolade will be awarded to George W. Bush who initiated the two longest blunders in U.S. history and presided over the global financial crisis - the effects of which are still being felt today. Bush also oversaw the outsourcing of on average 17 factories per day during his tenure. Out of the ashes of that crisis arose the opportunistic Trump to finish the job GWB started.

Any questions?