Priced For Explosion

What a week in Disney markets. Following a manic year for stock market speculation in 2020, in the first week of 2021 global reach for risk went parabolic led by crypto Ponzi schemes and the Tesla clean energy super bubble...

One can argue that the easy money has been made.

This week started with a major selloff as Wall Street informed us a "blue wave" is not priced in to markets. They were right, but only in the exact opposite way they expected, because when the blue wave arrived on Tuesday markets went vertical up, instead of down. 

My expectation of a Tech explosion almost came to pass on Monday and Wednesday, but then the MAGA caps were bid into weekly opex on Friday. What really happened this week is that all of the volatility collars that were put on around the seminal election in Georgia got monetized creating two way volatility and short covering. Throw in a disastrous jobs report and the recipe for a massive stock market rally was complete.

Per Hendry's Iron Law of Disney markets, the one reliable constant for the past decade+ of non-stop monetary bailouts has been stocks rallying on an imploding economy, in anticipation of further dramatic monetary euthanasia. According to Hendry's Law, when everyone finally loses their job, the stock market will reach infinity. We'll all be rich and we will have all of our money in Bitcoins. You have to be an idiot to believe all of this, which is why it's the consensus view. 

Now that we have a de facto "blue wave", I have been ruminating over the consequences for the economy in 2021. No surprise, Wall Street's expectation for this year is STILL the best of all worlds - fiscal stimulus for the economy, monetary stimulus for stocks, and zero inflation. 

Sure. Whatever. 

Despite this blue wave, my expectation of what happens to the economy in 2021 is now entirely dependent upon what happens to the Financial WMD. When that explodes, I expect far more unemployment accompanied by far more fiscal and monetary stimulus eight ball. However, when people making $200k per year are now living on unemployment benefits one quarter that amount, I highly doubt there will be inflation. In addition, I predict these stimulus gimmicks will create ZERO permanent jobs. Does anyone remember "shovel-ready infrastructure projects" in 2009? Big waste of money. The "good news" is that we are getting desensitized to a high death count, so once the vulnerable population is vaccinated, I expect the economy will re-open by Springtime. Nevertheless, by that time, unemployment will be epic, and the economic depression will take center stage. COVID will continue to reduce the herd in the background, at a high rate all year, thus reducing the Social Security and Medicare deficit. As always, I'm an optimist at heart.

What does all this have to do with Disney markets? Glad you asked.

This week, the uptrend in global risk assets that accelerated throughout 2020, went vertical. 

For example, the Korean Kospi was up 10% this week. The solar ETF (TAN) was up 25% this week. Tesla, up 25%. Pot stocks up 30%. Ethereum crypto currency was up 75% this week. The big story of course was Bitcoin up from $29,000 to $42,000 or 45% in one week. 

Nevertheless, alt-coins - crypto minus Bitcoin - continue to give us a good indication of social mood at this juncture. Alt-coins are BELOW their 2018 high while Bitcoin is far above its 2018 high ($20k), which means that Bitcoin dominance is increasing at the expense of the rest of crypto. 

Bitcoin is also increasing at the expense of gold. In other words, parabolic Bitcoin is the new "safe haven" from socialism. And yet it wasn't Joe Biden making news on the economy this week, it was one single moderate Democrat Senator who threw a monkey wrench into the reflation fantasy. Under the current shaky paradigm, it only takes only one dissenter to block stimulus now:

Meanwhile, aside from U.S. Ponzi risk, Asia is starting to look like another pillar of salt and sand. First off, Trump is doing everything possible to monkey hammer the Chinese stock market. Including delisting major U.S.-listed Chinese companies, now threatening the largest, Alibaba and Tencent.

"There are elements to worry about: Retail buying of stocks has ballooned in South Korea. In the past week, individual investors have regularly transacted the equivalent of more than $30 billion a day in the equity market. In 2019, they didn’t crack $10 billion on any day."

What changed this week from an economic standpoint, is that NOW in 2021, the U.S. will likely have the World's strongest economy, on a relative basis - back to being the tallest midget in the circus, deja vu of 2018. What that means is that the U.S. will have higher interest rates and a stronger currency. Which will lead to inevitable dollar margin call on EM carry trades.

Which sets up the likelihood of an impending currency crisis in a pandemic depression Tech bubble explosion.

Good times.

Now, for what everyone has been patiently waiting for...chart porn:

"Happy New Year"

Bueller?

Bueller?

The MAGA Kingdom Is Imploding

The reign of idiocy is ending, badly.  Not for lack of trying, mind you. What happened to McDonald Trump this week was a biblical lesson as to what happens to those who embrace false pride. Four years later and alt-Christians finally realized they got punk'd by their supreme asshole...

Trump will forever be known as human history's biggest low class circus clown. It was a pathetic grand finale he put on this week, urging his acolyte clown followers to sack the Capitol, while the world looked on in disgust. In the future, the adjective "Trump" will be synonymous with being a loud, dumb, jackass. Trump is the prodigal son of the Republican Party, three decades of Faux News in the making. All that cultivation of useful idiots and in the end GOP Senators were left hiding under their benches afraid of their own marauding voters. History will say they created a frankenmonster and it got off the leash when a psychopath took control.  

Below will be Trump's legacy - a massive COVID spike while he was attempting to subvert democracy.

The Jim Jones of presidents deftly plying his skills in an old age home. 

The ignominious takedown of Trump this week is a cautionary tale for everyone in this narcissistic society. Whenever Trump found himself backed into a corner of his own lies, he just doubled down on a bigger lie. All the way until the very end when he put on an infantile temper tantrum for all the world to see. Everyone who is pretending to be something they are not in this reality TV social media fake society is on the continuum of a mini Trump. Just waiting to have their entire fraud exposed.

When the U.S. Capitol was sacked this week for the first time since the Civil War, U.S. media coalesced around the same theme - the world is watching and the U.S. must uphold the mantle of the world's greatest democracy. That ship has sailed. The rest of the world is not looking at the U.S. for an example of how to be, they're running in the other direction. That unquestioned arrogance is precisely what created Trump in the first place - the belief that everything in America is better than the rest of the world. U.S. TV "news" for lack of a better word, has devolved into a 24 hour talk show of like-minded apparatchiks. Which is why today's talk show mannequins have not even the slightest clue what the rest of the world is thinking. Being in the U.S. is like being blacked out from world affairs. 

History will say that Trump did more to tarnish America's reputation than any president in U.S. history. He exposed the underlying discontent that has been accumulating in trailer parks for decades. 

It all speaks to a total lack of humility that pervades this society and its inability to accept reality. 

As I see it, going forward as this Roman bacchanalia comes to an end - at a personal level there are only two paths to take now - one is the way of Trump, to double down on smoke and mirrors until the very end. Or, to accept the fact that the World has now been equalized at the Third World standard, and today's billionaires are nothing more than money printed welfare queens. Elon Musk can thank global central banks and gullible Millennials throwing their stimulus money away at the Trump Casino, for increasing his wealth 600% in one year. Today's capitalists say they don't believe in socialism, but you watch, the minute this explodes, they will come running for bailouts. Same as last time. 

Those who do not accept this reality that the "great" past is over, will go down like Trump, clinging to fantasy and delusion to the final day. Never adapting, never seeking nor finding true happiness. In the end, becoming angrier and angrier while blaming others for their unfulfilled delusions of grandeur. 

Speaking of exploding arrogance, having collaborated on human history's largest financial weapon of mass destruction, one has to wonder, what made central banks believe that creating massively destructive asset bubbles was the best way forward. Japan I suppose - the template for how to run a country into the ground. The Fed has learned from the best. Whenever the bubbles they intentionally create get frothy, the Fed always warns that speculation is getting excessive. And yet were it not for excessive speculation, their entire trickle down Jedi Mind trick for weak minded fools would fail. All of which is why a lot of gamblers predict that central banks will start buying stocks directly when this bubble explodes. Create another bubble.

That failed gambit has already been tried:

Any questions?

When this bubble final explodes, central banks will be exposed as C-grade economic illiterates. And today's PhD economists will be exposed as nothing more than stimulus addicted simpletons. 

And then, the underwear will be mighty stained.

Only dedicated sheeple, who place their trust in known psychopaths, would assume this epic pump and dump is to their benefit.

When it's solely at their expense. 

"For some reason I can't explain

I know Saint Peter won't call my name

Never an honest word

But that was when I ruled the world"

WMMD: Weapon of Monetary Mass Destruction

Hugh Hendry on Disney Markets:

"The enlightened chose the red pill, and so are convinced that they understand everything which has become illusory about today's markets...They know that today's central bankers are spinning a falsehood of recovery; they steadfastly refuse to be suckered in by the euphoria of a monetary boom; and they are convinced that they will therefore be spared the consequences of the inevitable crash. Everyone else, currently drugged by the virtual simulation of prosperity and its acolyte QE, will be destroyed"

Indeed.

By adding a decade worth of monetary heroin to global markets in one year, central banks have over-lubricated markets and created human history's largest financial weapon of mass destruction. For the vast majority of people who now believe that printed money is the secret to effortless wealth, this will be the surprise of a lifetime. Trump has amply proven there are no limits to this society's level of gullibility, especially those who trust known con men with a history of getting bailed out from schemes of greed and corruption...

Step back for perspective. Interest rates are at record lows for a reason - the economy is in a pandemic depression. There is nowhere to go lower. Europe has experimented with negative interest rates, but as anyone would expect, it's been a failure. Paying people to borrow money is a bad idea. Which means there is no economic monetary safety net.

So, what to do? Inject insane amounts of liquidity into global asset markets and create a massive asset bubble. Pull forward five years of priced in economic recovery into 2021. 

What could go wrong? Wall Streeters can't seem to identify any risks for 2021. Incoming sane president. Vaccine rollout. Global sychronized recovery. 

However, the biggest risk to their asset bubble projections is the asset bubble itself.

What we are witnessing right now is an asinine level of speculation the likes of which can only arise when "free money" is handed out at a casino. Except it's not really free. Zero commission gambling on zero percent margin is free on the buy side, and must be paid back in full on the sale. 

The operating assumption in a momentum market as leverage increases in proportion to the asset bubble, is that the sale price will always be greater than the buy price.

Here we see in this chart below that Bitcoin and Tesla are now 95% correlated. Bitcoin is up 110% in three weeks and Tesla is up over 100% since Biden got elected.

Elon Musk has seen his wealth increase from $30 billion one year ago to $180 billion today. 

It was easy money:

Recall that the Ark Funds have seen far and away the largest ETF inflows of any ETF family in the U.S. The largest of these funds (ARKK, ARKW) have Tesla as their largest holding. Another fund, Ark Autonomous/Robotics also has Tesla as its largest holding.

Gamblers are flocking to these momentum ETFs and the massive inflows are driving Tesla into the stratosphere.

Meanwhile, as we recall, Bitcoin is driven primarily by ETF inflows from the Bitcoin Trust. 

Same idea: Massive momentum inflows

"The odds of a Bitcoin correction would increase if the flows into the world’s largest traded cryptocurrency fund slow significantly, according to strategists at JPMorgan Chase & Co."

Clean energy stocks have been up 10 months in a row. Not one down month since the lows in March. 

You know you're an optimist when...

In absence of a true recovery, what central banks have done via asset markets is give the illusion of a recovery. And in the process, they have massively over-liquified markets.

By applying a decade worth of monetary heroin in one year, they have over-lubricated markets and in the process created human history's largest financial WMD.

The question on everyone's mind, knowing that this WMD will explode spectacularly - is when to get out? Because everyone wants to time their exit the day before it explodes.

Which, in aggregate, is not exactly possible. Nevertheless, all bulls believe they alone will exit at the top.

All I can say is that with the Russell 2000 record overbought, we are already in sudden death double overtime.

Here we see that outside of pockets of extreme speculation, most of Momo Tech has already rolled over. Including the MAGA caps (Microsoft, Apple, Google, Amazon) all of which imploded yesterday (not shown).

Back in February 2020 it took three weeks for central banks to get the Casino under control. 

Picture what happens this time:

The Crack Up Boom And Bust

"There is no means of avoiding the final collapse of a boom brought about by credit expansion" - Ludwig Von Mises

The Trump era is over. It officially ends today with Biden's confirmation by Congress. The Founding Fathers would be glad to know that their rule of law prevailed even in the hands of an Idiocracy. It was the ultimate historical test, and one not recommended for any other country. History will say Trump was a known con man tasked with extending the longest expansion in U.S. history forever via massive stimulus and human history's largest asset bubble. His signature policies of robbing the middle class to pay the rich were inherently deflationary, so the bubble grew and grew while the economy imploded. The one thing he got right way back in 2016, is that when interest rates rise, the stock market bubble will come crashing down. Reflation is no longer an option...

One other thing he got right. 

I have said for some time now that credit crisis is the next stop in this debacle. That yes, dollar destruction is inevitable - and just became more of a certainty, but before that happens, we will see human history's largest dollar margin call. When that happens short dollar trades will get monkey hammered, including gold and Bitcoins. The blue wave will be the spark that ignites the Trump bubble. As I write, early on Wednesday, the reflation trades are going late stage parabolic led by Financials. However, as I expected, the Tech trade is getting monkey hammered. I will go out on a limb and say that the Tech bubble is over, with the exception of a few pockets of speculation specifically in green energy. 

Large scale institutions are now rotating massively to cyclicals at what I deem to be the end of the cycle. It's a risky gambit to be sure. The bond markets are already getting monkey hammered as bond yields explode higher. 

This is all very similar to when Trump got elected and promised his big tax cut, except this time it's a blue wave, meaning additional fiscal stimulus is coming much sooner this time around. Some have said that in 2021 the economy will perform better than the stock market. This event makes that outcome far more plausible. Although the bubble explosion will no question affect the economy. 

A back up in yields right now is not really an option, as there has been no deleveraging in this cycle. 2020 saw the largest corporate debt issuance in history.

This is corporate debt as a percentage of GDP:

Gamblers right now believe this is a good time to rotate to Financials and other cyclicals, because they've been told it's the beginning of a new cycle. According to today's Ponzi advisors, this will be the first cycle in U.S. history to begin amid record debt. Sure, whatever. 

AND, in addition, the cycle will kick off with an unprecedented fiscal stimulus and a massive spike in bond yields. It's called "Goldilocks" on crack cocaine. You have to be stoned to believe it. Remember, we were told just two days ago that a blue wave is not priced in and hence would lead to selloff. And yet, this morning the S&P opened down and ripped higher.

No story is too fantastical to believe anymore. Wall Street will never conjure up a narrative in which the future is worse than today, because then they would have to produce price targets with a minus sign.

One would have to be somewhat of an optimist to believe this will continue, when Wall Street soon gets re-regulated now that Democrats are in full control:

The short dollar trade - already the second most crowded trade of 2020, just became overwhelming consensus for 2021. When that reverses, global risk will explode with only the longest cycle in history of warning. 

The Nasdaq is now 100% leveraged to Tesla and the green energy super bubble which kicked off a year ago in January with the ESG/fossil fuel divestment movement. 

This Election Is Rigged. To Explode...

Dollar shorts are making massive (implicit) bets the Democrats win, despite being the long odds. On the other hand, if the Republicans win that would mean Georgian elections are only rigged against Trump. Can you imagine what story these super morons will invent when that happens? It will mean the bipartisan Deep State conspired to keep dumbfucks out of office, having let one accidentally slip by in 2016. Trump's Herculean breaking of the IQ barrier only lasted one cycle...

Ironically if the Democrats do win it will be mostly thanks to Trump. Only McDonald Trump goes to a political rally to sow massive doubt as to the validity of voting:

"Desperate, deluded and dangerous, President Donald Trump drove America deeper into a political abyss on Monday night in his zeal to steal an election he lost and to destroy faith in the democracy that fairly ejected him from office."

From a markets standpoint, bulls will have to be Harry Houdini to get out of this one. Unlike the November election, which saw a sell-off and VIX spike going into the election, this time, volatility is somnolent and bulls are fat and happy.

Here is the set-up going into this all-important election. S&P new highs peaked back in early November, and yet the S&P has continued levitating in this rising wedge, as bulls went ALL IN:

We were informed via Wall Street yesterday, that a "blue wave" is NOT priced into markets. Only the prevailing "Goldilocks" Hunger Games gridlock is priced in to markets. Which means that a true economic recovery is not priced in - only further dramatic monetary multiple expansion is priced in to Disney markets. 

So imagine if the Democrats win, all of a sudden the momentum Tech trade gets monkey hammered deja vu of the vaccine selloff in early November when Pfizer announced their vaccine was 95% effective: The Russell 2000 spiked and the Nasdaq 100 crashed. 

Since the stimulus passed Congress two weeks ago, the ultra-crowded virtual economy Tech trade has been getting monkey hammered. One could argue that a Democrat win will be the last straw:

However, the more likely scenario is a Republican win, which would mean continued deflationary fiscal policy. 

That scenario will monkey hammer the reflation trade and by extension the short dollar carry trade which is now embedded in the most overvalued global markets:

"Rarely, if ever, can a year have started with price levels in emerging markets looking so divorced from the fundamental backdrop"

Developing-nation stocks ended 2020 at the highest level in 13 years while currencies edged closer to their 2018 record"

As it was in 2018, EMs are betting on massive global reflation. For these markets dollar reversal is not an option. Back in 2018, global markets actually believed the Trump tax cut would benefit the middle class. 

What fools. 

So, no matter which way this election goes, someone is about to be very disappointed. If the Democrats win, at least Trump can tell the newly under-employed Mitch McConnell he was right to tell Republicans to avoid the polls, because the election was rigged:

"The Deep State strikes again"

History will not be kind with this experiment of having a mentally challenged president, to give his base a feeling of national inclusion. 

Here is where it gets interesting for Disney markets:

Three years ago this week in 2018, Crypto market cap peaked. Yesterday it reached a new all time high, however, Bitcoin crashed -20% over this past weekend and is now three wave corrective.

The difference between now and 2018 is that three years ago Crypto market cap peaked ahead of stock market speculation, whereas this time it's reversed - stock market speculative indicators peaked two weeks ago. Which means that the crypto surge combined with the EM blow off is marking the end of the global rally:

This next chart shows Nasdaq total volume.

What we notice is that volume tends to rise during selloffs and recede during rallies, however this time - since the November election - volume has been rising to new record highs.

Which means that "Sell" is the new Black Swan event. Because the machines can't handle what comes next.

Then when the machines explode and Bitcoins and Tesla go bidless, and Robinhood goes offline, everyone will realize this is not the beginning of the cycle.

It's the exact other end. The one where the retail bubble newbies rush into markets to become the bagholder of record.

In the Wall Street tradition.

This is Trump helping Republicans in Georgia:

2021: Everything Is Broken

In 2020, the hairless monkeys got monkey hammered by Mother Nature with a message that the party is over. So what did they do? They doubled down on the last Trump Casino, apparently unaware of what happened to all of the other Trump Casinos. What comes next will be a biblical revelation...

"Then they elected a known con man to make them great again, because no one else was up to the task"

COVID exploded the lies of the Globalized Ponzi economy. For several weeks even central banks were on their back foot. The crisis accelerated the wealth inequality that has been growing inexorably since the Global Financial Crisis. However because the distribution of deleterious impacts were the same as always, the warning was ignored. Millions of marginally attached wage slaves entered Third World status in order to further enrich a handful of wealthy billionaires and their Outer Party managerial class.  

Instead of heeding the warning, COVID was used as the excuse to rinse and repeat the exact same mistakes of the past. The generally accepted global assumption going into 2021 is that the economy was doing fine up until the pandemic, and once it passes it will be shits and giggles all over again. 

Hendry's Iron Law of Disney markets must now be updated from the relatively benign post-2008 version:

"The worse the reality of the economy becomes, the more we take on the reflexive belief in further and dramatic monetary expansion and the more attractive the stock market looks"

To the new post-apocalyptic reality:

"The more people who go under the bus and enter Third World marginal subsistence, the wealthier the oligarchs and their corporate stooges become"

When a bailout goes on too long - over a decade of non-stop monetary bailout in this case - it becomes no longer an act of benevolence, it becomes an act of economic exploitation, which is the juncture we have now reached. Our policy-makers and the establishment who abide this Ponzi model are the sole beneficiaries of this "system". Which is now conveniently guarded by a brainwashed mob of useful idiots in the Republican party - who are convinced that this is the model that made America great in the first place. Too busy watching hot rods and aliens on the History channel to know the difference.

For their part, the economics establishment, which is a colossal human failure on a biblical scale, is no longer capable of acknowledging their role in this disaster. By giving their imprimatur to this human disaster, they have forfeited all future credibility. No surprise, these people are among the prime beneficiaries of this Madoff-inspired economic model.

The reason that 2021 economic predictions are so far off base from reality, is because these people don't acknowledge that the "economy" is now completely broken and hence fully dependent upon continuing fiscal and monetary stimulus eight ball. 

Their failed economic models are deflationary. Their lagged economic data is deflationary, their overly-optimistic projections are deflationary, and their stock portfolios will be the prime beneficiaries of their continuous failure. So why change now?

This is the problem with the U.S. economy in a nutshell:

Over the past several decades, Globalization, immigration and outsourcing have collapsed U.S. capacity utilization (see chart below). Underemployment is the greatest crisis of our age, and yet you never hear about it:

As predicted decades ago, in Future Shock:

"People of post-industrial society change their profession and their workplace often. People have to change professions because professions quickly become outdated. People of post-industrial society thus have many careers in a lifetime. The knowledge of an engineer becomes outdated in ten years. People look more and more for temporary jobs."

Temporary, low-paying, marginally attached gig jobs with non-existent benefits. Sound familiar?

Now, looking at this chart, does anyone really believe that "reflation" is the most likely scenario for 2021? 

Not the bond market, that's for sure. Although as we see T-bond shorts have never been more confident:

The worst part of this Third World exploitation scheme is that the sheeple still believe in the American Dream. They still believe that if you work hard and plough your money into stocks, then the dream will become reality. The Japanese learned a long time ago, that a gerontocracy is just one massive inter-generational lie.

The biggest mistake all newbie stock market investors make is trusting facile headlines:

Some think it's "unpatriotic" to bet against the stock market. That being bearish is un-American. I happen to believe that markets that benefit from mass poverty are the real problem. 

History will not be kind to those who believe in this Madoff-inspired exploitation scheme.

And no, Mother Nature will not be denied her due by the hairless monkeys doubled down in Trump Casino. She has them right where she wants them.  

The Millennial Asset Supernova

Central banksters, investment advisors, economists, and over-lubricated gamblers are of the groupthink mind that no amount of monetary heroin overdose is "bad" for Disney markets. That efficient money printing hypothesis is about to get system tested by a Black Swan event called "Sell". Something not one of them has thought about...

Millennials are throwing themselves at their first ever asset bubble, having never experienced a bear market in their lifetimes. They view their total lack of experience as their secret to being expert money managers. Old time pros who stick to arcane measurements such as valuation know nothing in this new world of pandemic investing. McDonald Trump's only legacy is that he turned being an idiot into a virtue for millions of aspiring followers. He broke down the IQ barrier, so now anyone can be president. A pioneer in his time. 

"Why didn't anyone think of this sooner?"

Way back in Y2K when the Dotcom bubble imploded, Tech stocks (Nasdaq) lost -80% of value from high to low in a mere two years. The S&P 500 lost -50%. Now, amid record IPO issuance, record speculative trading volume, and Dotcom valuations, market bulltards are admitting that all signs are as frothy or worse than the Dotcom era, but don't worry, be fat and happy. We have depressionary interest rates to bail us out. What could go wrong?

The main difference between the Dotcom era and now is that during the Dotcom era the recession that resulted from the bursting of the fake wealth bubble was relatively mild. Why? Because the Fed had 6.5% of interest rate cushion and they used most of it to dampen the economic dislocation.

That won't be the case this time around - these same record low interest rates being used to justify infinite valuations, will be like landing on economic pavement when the bubble collapses. 

 

Robert Prechter (EWI) talks about "all one market", meaning that in times of excess speculation all asset classes reach a correlation of 100%. We saw it again in March, when everything crashed at the same time: Stocks, junk bonds, corporate bonds, muni bonds, gold, Bitcoins, even Tesla. It was an everything crash. The Fed as I showed in my prior post, worked hard to get the Treasury bond market under control, because at first even Treasuries got monkey hammered. Everyone was clamoring for "cash" meaning money markets and t-bills.

By creating a far bigger asset bubble than the one that existed prior to COVID, central banks have encouraged Millennials and many others, to throw their precious savings and rent money into junk assets.

The economy that will abide on the other side of the asset explosion will be a depression. The Fed will have no control over that outcome. For many millions of service workers, it is already a depression. However, for the stay-at-home gambling class, this will be their turn to go under the bus.

Under the current deflationary paradigm known as "capitalism", Congress will always be behind the curve on stimulus. It took 7 months to reach a bipartisan agreement on this last stimulus bill, with millions on the brink of starvation.

There is going to have to be serious rioting to get the "system" to change.

So while there are no shortage of cheerleaders right now cheering the fact that Bitcoin keeps going higher, it's only a function of inflows of valuable savings getting thrown away. What is driving Bitcoin right now is a liquidity squeeze and "scarcity". The mantra of Bitcoin cult investors is the same as the mantra of Tesla investors, and for that matter the same for S&P 500 401k buy and holders - one must buy and hold and never sell. As long as you never sell, you never have a (realized) loss. In their view scarcity is what drives the price higher. Underlying valuation has nothing to do with prices. What these people are attempting to do is corner the market for Bitcoins and Tesla stock which has led to the parabolic ascent of both assets.

Unfortunately, these people have no clue how markets work. What some moron pays for an asset yesterday has no bearing on what it will fetch today. Just because someone pays a million dollars for a brick doesn't make all bricks worth a million dollars. 

Scarcity and lack of liquidity cut both ways, which is why large institutions avoid illiquid asset classes. On the way up, illiquidity means that small trades can move the market. However, it works the same way on the way down. Small trades can push prices down very quickly. Lack of liquidity is a lethal proposition for speculative markets. It means that prices are prone to crash. It should come as no surprise that both Tesla and Bitcoin were down -60% in March, almost double the market decline.

"Investment inflows into the world's biggest publicly traded Bitcoin investment trust are pivotal to the price of Bitcoin (BTCUSD), according to a recent report from strategists at JPMorgan"

Whenever inflows are critical to the price of an asset class, you know that it's a Ponzi scheme masquerading as an investment.

"Wood left her closest competitor trailing by 60 percentage points"

She also delivered a total return (income plus appreciation) that is 11 times the gain for the S&P 500"

ARK Genomic Revolution has attracted record monthly inflows in December, bringing the fund's new money total for 2020 to $4.7 billion"

"How does she do it?"

According to the options market, crash risk is the highest since September momentum implosion:

No surprise, Trump's vaccine rollout is a gong show. The entire basis of the fourth quarter melt-up is disintegrating. 

"Romney's statement comes as the federal government's Operation Warp Speed had promised that 20 million doses would be administered before January 1...only 2.79 million have actually been administered."

Jim Jones keeps on stacking up the body count, while his Kool-Aid drinking acolytes cheer his every inaction: