FOMC: FEAR OF MISSING CRASH

The consensus RISK ON stagflation trade is not only lethally crowded, it's lethally cornered. Entering the lowest liquidity period of this CYCLE, gamblers are piled into end of cycle dead end trades...

By sheer coincidence, the stagflation hypothesis is the only market prediction that could keep the stock market RISK ON this late in the cycle. It's the same theory that abided in 2008 and we know how that turned out. Or do we? Apparently, most people have amnesia or dementia these days. 

Zerohedge didn't exist back in 2008, which is why they can recycle this stagflation CRAP with plausible deniability. 

The stagflation trade means buying stocks and dumping bonds because only stocks can "grow" their earnings in this environment. Leave aside the fact that profit margins are already at a record high. The stagflation trade means carrying minimum cash balances. It also means that MASSIVE Fed rate hikes will slow growth but will NOT create a recession.

Act now and you will get 6 free ginsu knives...

But that's not all:

We are now to believe as a worst case scenario that the Fed will raise rates 12-16 times in 2022, followed by a mild recession in 2023. Conveniently, by that time the Fed will have normalized policy enough to start cutting rates and therefore moderate the recession. In the meantime ALL asset prices will stay permanently high as will store prices, crude oil, commodities, real estate, and most importantly record corporate profits. 

It's the Cinderella story propagated by Wall Street and the mainstream financial media. Questioned by almost no one. 

What they are ignoring of course is RECORD policy divergence between the U.S. and China and Japan. Europe sliding towards recession with the ECB tightening and the EU attempting to embargo Russian gas and oil. Emerging Markets imploding due to the sky-rocketing dollar.

And they lived happily ever after.

Here is MY alternative prediction: I see a Third Wave asset meltdown across all risk assets at the same time coinciding with a Fed intent on tightening liquidity at the fastest pace in U.S. history. 

In other words, I predict that all of this end of cycle profiteering will backfire disastrously, leaving a totally bidless market. Which will cause asset shock on top of oil shock, inflation shock, rate shock leaving the "consumer" imploded.

You see, once again, ALL of today's "experts" forgot the most important variable in their economic models: The middle class. 

These elitist assholes have not even the slightest clue how much pain the average household is experiencing right now. So of course they assume that the U.S. can embargo Russia, implode China, and take money in from Emerging Markets ad infinitum. While households double down on end of cycle risk. 

It's the biggest con job ever bought and sold.

These fools have already forgotten that last year was the biggest growth stock pump and dump in history. RECORD IPO and SPAC issuance for record Wall Street profit. In addition to Crypto Ponzi schemes and myriad other Social Media ordered scams. 

However, THIS year it's all about the inflation scam. Which, is 10x larger in magnitude.

Already we are seeing a consumer slowdown in durable goods AND a nascent slowdown in the housing market. 

Notice where "Current conditions" sentiment was at during the last two real estate bubbles. It was only AFTER the bubble popped that sentiment collapsed. This time, sentiment is collapsing BEFORE the bubble has popped. Which means all of that new housing supply will be dumped onto a collapsing market:

Now consider stock market liquidity vis-a-vis the S&P (eMini) futures. When today's investors finally realize that "stonks" are not a safe haven from meltdown, who will be on the other side of the trade?

No one. 

These people are all now cornered into a massively crowded panic trade.

This chart shows the past two FOMCs (blue circles) and then the second Thursday prior to the meeting, where we are today (blue down arrows). 

I see this as wave i (blue) of 3 (red). 4x Tightening means the Fed PLANS to double tighten on the short end and the long end at the same time. Currently, there is a 95% chance of double rate hike in May, which is the first double rate hike since May 2000.

Momentum stocks are even more dire as they now have a corrective fractal very similar to the one that imploded in January AND the final stages of a one year head and shoulders top:

Crude oil:

The March rate hike is circled.

Gold 

The March rate hike is circled:

The world (stocks) ex-U.S., crashed both times prior to the FOMC meeting (circled):

In summary, this week is Earth week and the hairless monkeys have ignored all warnings. 

"Once I stood to lose her

When I saw what I had done

Bowed down and threw away the hours

Of her garden and her sun

So I tried to warn her

I turned to see her weep

Forty days and forty nights

And it's still coming down on me"

ON THE EDGE OF EXPLOSION

This Disney society is trapped by their own hubristic idiocy. And there is no way out...

Ahead of near certain 4x tightening of liquidity at both ends of the yield curve AND the fastest bond crash in world history, the Fed stress index is STILL NEGATIVE. 

Does anyone really believe the Fed will double tighten on the long end and the short end at the same time in two weeks? Of course, all the zombies do, but given the Fed's proven skill at imploding markets, some amount of caution may be in order. Fed tightening has preceded every recession since WWII. There were only a handful of times the Fed tightened and it DIDN'T cause recession and so therefore this clearly is one of THOSE times again. 

As I pointed out on Twitter, global markets have crashed ahead of the last four FOMCs. Similar to January, we are now in the earnings blackout period which means no stock buybacks. And we are soon entering the Fed blackout period which means no more Fedspeak.

I've been fairly reticent lately as my rage has been subsiding the closer we get to the inevitable explosion. For the zombies unfortunately, it will be the exact opposite. A very rude awakening from their narcoleptic coma, followed by mass rage on a scale I am not adequately describing right now. 

One could not possibly envision a set of circumstances more dire than these ones: Non-stop hysteria over rising prices, followed by a collapse in EVERYTHING at the same time. And then global credit crisis.

Below, in this chart we see via banks and U.S. total debt that the cycle was ending prior to the pandemic. However, the epic pandemic stimulus tacked on two more years of debt-fueled mass consumption:

The Fed is at the furthest policy extreme from market bailout, in HISTORY:

What can you say about a society that NEVER learns that cheap debt is dangerous? What can you say about policy-makers always incentivizing the masses to borrow as much money as possible ahead of recession? First they tell people that prices can only go up and then they bury them under a mountain of debt. 

AGAIN. 

Recall that Fed chief Greenspan exhorted borrowers to take out Adjustable Rate Mortgates (ARMs) in 2004 and then he raised interest rates 17 times in a row. Everyone who took his advice got financially obliterated. 

This is the ZERO bound version of 2008. The one in which the Fed can't lower rates from 5.25% to zero. And therefore the one in which bailouts fail and the losses fall where they may. 

Which will be a rude awakening for the bailout class to be sure.

In summary, we are living in Disney World now. The masses have been thankfully relieved of the burden of reality, as they receive their daily infotainment enema via subscription delivery. One thing that BOTH the left and right have mastered is mind control. 

To date, the herd has been the inertia behind this slow motion disaster. Unfortunately, no amount of bullshit can protect them from what comes next. Which is why I plan to keep a safe distance when their Disneyfied illusion collapses. Because they will quickly come to realize they have emulated personal failure and they have perfected a dead end way of life.

Above all else, the thundering herd believes in the strength of numbers. They deem what is "right and wrong" solely based upon what other people are doing. And in doing so they have sacrificed their mental health at the altar of competitive conformity and consumption addiction. 

They will soon learn that some things should never be sold. 

THE END OF GLOBALIZATION

The day many of us thought would never arrive is finally at hand. It took fourteen years of continuous failure to bring about what was painfully obvious in 2008 - Globalization is over...

"Leading investors are coming to the same view. BlackRock chief Larry Fink writes in a new letter to shareholders that the Ukraine war "has put an end to the globalization" experienced in recent decades"

Let's see, global financial meltdown. Serial monetary bailouts. Near collapse in China. Brexit. Trump. A pandemic. These were all the warning signs it was all ending.

Unfortunately, this will not be a seamless transition. Not ONE job has been brought back from China, and yet these people are already screaming hyperinflation. Why? Because they are ALL now addicted to cheap junk at Walmart. 

Sure, Trump acolytes hate China and want to re-gain economic independence, BUT they won't pay ONE DIME more for it. Meanwhile here we are with corporate profits at all time highs, which have nowhere to go but down under the paradigm of "deglobalization". 

Which brings up the other massive addiction - artificially inflated wealth. That problem is about to get solved by the Fed's tightening rampage. And yet none of these people see it coming. They are all solely preoccupied by price inflation while BUYING asset inflation with both hands. Today's so-called "inflation" is painless compared to the deflationary collapse about to come.   

Recipe for TOTAL disaster at the zero bound. 

Throughout all of this chicanery, various politicians have received extreme opprobrium, whereas corporations have gotten a free pass. Why? Because today's so-called opponents of Globalization are corporate stooges. After all, they make no connection between economic dependence, "free trade", chasmic deficits, environmental decimation and the corporate beneficiaries of it all. They are easily fooled into blaming Mitch McConnell and Nancy Pelosi, not realizing they are merely interchangeable widgets. As is the corporate media that will cast blame high and low EXCEPT where it belongs:

"The level of profit that large corporations experienced in 2021 was unparalleled in American history, as consumers faced the worst price inflation the U.S. has seen in decades"

Records dating back to the late 1940s show that after-tax corporate profits in relation to gross domestic product are at all-time highs"

Wall Street still expects a higher net profit margin for the S&P 500 this year, and the next two after that"

Today's financial pundits are now complicit in the biggest con job in human history. As is anyone else who propagates this colossal lie. Meaning the entire overwhelmingly bullish cohort of investors. 

The lesson NOT learned from Y2K and 2008 is that the Fed can't use stimulus to bailout gamblers from the collapse of an asset bubble caused by excessive stimulus. DUH. This should be extremely obvious, yet somehow third grade logic is now beyond the grasp of even our highest placed economists. 

It's only fitting that Walmart made a new all time high this week, deja vu of 2008. Why? Because we now have "stagflation". 

Do you know what stagflation meant in 1980 after Volcker pulled the plug on inflation? It meant deep asset burial in stocks, commodities, and real estate as inflationists went through the windshield.

For some reason, inflation alarmists DON'T remember that part of the story. 

This time around, the Fed is double tightening at both ends of the yield curve at the same time - for the first time in history. 

DOUBLE the stimulus reduction that caused crash in 2000 and in 2018. 

AND in addition, stock market valuations are at all time highs, whereas in 1980, valuations were at decade lows.

This society has extreme survivor bias and has grown far too comfortable ignoring poverty.

In the Third World tradition. 

History will say that Globalization was intended to raise the standard of living of everyone. But instead it made a few people ultra-wealthy and collapsed everyone else down to Third World standards. 

Because in the end, printed money was NOT the secret to effortless wealth. AND there was no way to realize gains for those who had bid up their own assets in an asset bubble.

But who knew? Bernie Madoff was not around to tell them. 

He died in jail while the greatest Ponzi scheme in world history was going on in broad daylight. Fully sanctioned by the SEC.

BURIED BY BULLSHIT

Investor confusion is extreme, making this a con man's paradise, exploited for maximum profit. Which is why this is the worst case scenario - a maxed out consumer hoarding merchandise ahead of a binary asset crash into extreme deflation at the zero bound. This event will make 2008 seem like a picnic by comparison...

When the housing bubble crashed, the Fed had 5.25% of interest rate cushion. Now, when this global hyper bubble implodes, the Fed will have .25% of rate cushion.

Making this the HARDEST landing:

Watching CNBC this morning ahead of the CPI report, I couldn't help but be amazed at the level of idiotic hubris in comparing this current set-up to the 1970s. The middle class has been systematically demolished by Supply Side policies for the past four decades, and yet conservative pundits are in unanimous consensus that we're in for stagflation.

And then Reagan gets elected, in their acid trip flashback.  

The sickest part is when they say they are only concerned for the middle class in regards to inflation. Where have they been for the last four decades while the economy was outsourced to Asia? You have to have late stage hubristic dementia to believe any of it. Worse yet, now hyper-partisan politics are driving this mass deception ahead of the mid-term elections. Which is another key factor that has trapped record capital in dead end inflation trades. 

In other words, the Fed are by no means alone in their epic fool's errand. The conservative media are deeply complicit in forcing RECORD policy error. Any dunce can see this is nothing like 1980. Nevertheless, Powell is going to slam on the brakes and then all of the inflation acolytes will go straight through the windshield in their cyclical inflation trades. 

All of which makes this by far the worst case scenario: Consumers came out of the pandemic beset by supply chain shortages. Then they started panic buying during the end of cycle inflation phase. Now they are facing wholesale asset collapse and extreme deflation amid EXPLODING real yields.  Which means the burden of debt will grow inexorably. Soon they will be wishing they had inflation back to boost wages relative to nominal debts.

 

Meanwhile, pundits who think this is 1980 deja vu will be shocked to learn its 2008 sans bailout. The hardest landing since 1930. To be sure, the White House has fallen for this frat boy prank. Unlike in 2018 when Trump demanded the Fed reverse policy, Biden is on board with MAXIMUM tightening. It's all a big conspiracy of dunces. 

Exhibit A of mass deception, consider this article today from Zerohedge:

Mood On Wall Street Is Apocalyptic, But Not Enough to Sell

"The disconnect between global growth and equity allocation remains staggering.  Investors got slightly more bullish on equities"

First of all, it's not their money so why would they sell? Secondly, as the article goes on to explain, they ALL believe the Goldilocks stagflation hypothesis which means high prices of everything and continuing strong consumer, and low growth. BUT if they are wrong, they assume the Fed can bail them out on a timely basis. 

In other words, never before have so many investors been so delusional amid positioning diverging massively from reality. It's called conflict of interest compounded by bailout-driven moral hazard. 

Worse yet, the ad-sponsored media is propagating this mass confusion because bullshit is the most lucrative business model, and the role of the financial media is to spread it far and wide. 

All of which means the consensus of 7, 10, 16 rate hikes - whatever it is today - is absolute and total bullshit.

It's groupthink on steroids. 

Getting back to the casino...

This is a technically driven market now. What does that mean? It means that algos are desperately trying to generate momentum at key support levels however the disintegrating breadth is working against them. Today when the CPI number came out there was a violent vertical algo rally, but by the end of the day the market was negative. We saw the same action in wave '1' down in January - strong opens, weak closes. Bear market action. There is always a headline to attach to these selloffs that allows the Jim Cramer's of the world to say this is why the market tanked in the afternoon when they gave an opposite reason for why it was strong in the morning. Today it was Fed vice-Chair Lael Brainard who tanked the market, deja vu of last Tuesday. Now that's news.

The S&P is between the 50 dma and the 200 dma which is why there is so much two-way volatility. Once it clears the 200 dma on a closing basis, things can get seriously fugly.

The corrective nature of this most recent bounce is clear when compared to the rallies in 2019 and 2020:

Going into the long weekend, risks could not be higher. The market has sold off every week after a holiday since Thanksgiving i.e. Christmas, MLK, and President's Day. In particular the Nasdaq. 

Meanwhile, global markets are even weaker than U.S. markets.

Here is a look at the Nikkei:

 

In summary, investors are getting buried in level '11' bullshit right now. But they don't mind because they far prefer opinion over fact. You can see that plain as day on any partisan news channel aka. talk show. 

Unfortunately, it's highly unlikely this gong show makes it to the next FOMC. Which means instead of sixteen rate hikes, there will be the one wafer thin mint. 

The fewer people who see this coming, the higher will be the "yield" of the detonation. At this stage we're looking at 2008 x 1929 megatons.

 

WARNING: HARD LANDING

The Fed has now officially entered Kamikaze mode. Markets face extreme risk between now and the next FOMC which will feature a double tightening of the short end and long end at the same time. A feat never before attempted. For good reason.

It's idiotic...

A Kamikaze is a WWII Japanese suicide pilot. They would fly planes loaded with bombs and crash them into U.S. Navy ships. Or at least try. Many of them were shot down by ship guns or patrolling U.S. aircraft before they could hit their target. Such as this one shown above. 

Step back and consider why this is happening. The labor market is extremely tight and companies are freaking out that they have to pay people more money. So business leaders are demanding that the Fed tighten monetary policy as quickly as possible. At every meeting/minutes for the past several months the Fed has become MORE hawkish. 

Unfortunately, tightening monetary policy in the midst of rising prices can only do one thing - collapse demand. In addition, the price signal will ultimately lead to an increase in supply. Meaning the Fed is on verge of creating human history's largest glut. 

There is literally NO comparison between now and 1980. Back then prices had been rising for SEVEN years straight since the oil supply shock of 1973. Any blind man can see that nominal commodity prices are nowhere near an all time high. And relative to the wage CPI (bottom pane) they are near an all time LOW. What we are witnessing is FULL Idiocracy. But no one can stop it because the consensus at this juncture is that this level of tightening is NEEDED. 

Capacity utilization has been falling for forty years straight since the onslaught of Supply Side economics. Cycle after cycle of mass layoffs and outsourcing. As deflation entered the economy via imports, interest rates fell and cheap capital fueled automation. Cheaper capital and more automation. The economy has been locked in a deflationary feedback loop. The official unemployment rate is a lie of BIBLICAL proportion. It first removes all of the long-term unemployed who have given up on finding a job. The employment population ratio is the lowest in U.S. history. If we reached a point of total layoffs and everyone gave up looking for work, according to today's Idiocracy we would reach ZERO unemployment and ZERO employment at the exact same time. 

All of this deflationary impulse went into temporary reverse during the pandemic. Mostly because following 20 million pandemic layoffs in March 2020, three million discouraged Boomers left the workforce. AND because immigration was substantially reduced. Let's not forget that fact:

"Net international migration (NIM) added 247,000 to the nation's population between 2020 and 2021, according to U.S. Census Bureau July 1, 2021 population estimates released today.This is a notable drop from last decade’s high of 1,049,000 between 2015 and 2016"

So now the Fed is under extreme pressure to tighten monetary policy. The Fed minutes revealed that they very likely will increase rates at .5% (double the typical rate hike) AND reduce the balance sheet at double the speed of 2017. In other words double tightening at both ends of the yield curve at the same time. This has never been attempted before.

4x tightening. 

The last .5% rate hike was in May 2000 when the Dotcom bubble was starting to implode. Within one year the Nasdaq was down -60% and eventually fell -80% at the 2002 lows. 

Meanwhile, the market has ALREADY tightened ahead of the Fed. The 2 year has gained as much in 6 month as it did in six years following the Financial crisis. Now this week James Bullard of the St. Louis Fed thinks that rates should go to 3.5% over the next two years.

Currently the 2 year is at 2.5% which is near the decade high. Apparently that rate of change is not steep enough yet. 

Lately Fed members have been competing for who can be the most hawkish. Up until THIS WEEK pundits have been ignoring the Fed's increasing level of hawkishness month after month. Now they are way behind the curve of warning their clients. They've been saying all along that when the yield curve inverts, the market generally rallies for another year. This week however they seemed to have awakened from their stupor and realized that this time is nothing like the past. Too late. Now the sheeple are convinced they can ride it out. They no longer fear the Fed, because they've been brainwashed to believe the Fed can always arrange a timely bailout. They forget that the Fed bailout in 2008 arrived FOUR months before stocks bottomed -40% lower.  

Given all of this information, there is now extreme risk between now and the upcoming May 4th Fed meeting. There have been major global selloffs ahead of the past three FOMC meetings, specifically in the four weeks prior. This week we got a taste of renewed volatility.

The Fed has nowhere to go on rates, except .25% down in case of a recession. The last thing this economy can stand is an asset shock following inflation shock, oil shock, and pandemic shock. And yet that's EXACTLY what the Fed is creating.

A crash landing at the ZERO bound. 

In summary, Shock Doctrine is the policy of capitalizing upon human misery in order to dramatically increase profit. 

This time the shock will bring down the entire house of cards.

Why? Because "more" was never enough. 

GLOBAL CRASH AND EXTREME DEFLATION

In this post I will focus on the commodity markets and the prospects for imminent crash which would be extremely deflationary...

This linked article makes the case that $150/bbl oil is still likely. Let's tackle the bullish argument before we get to the bearish points. The bullish argument is based upon the fact that the global spot oil market is extremely "tight" meaning there is no excess supply. So tight that the market is in backwardation meaning spot prices are higher than future prices, which is extremely unusual. The other part of the bullish argument assumes that Europe will ban Russian oil and therefore global supply will tighten further. These are the exact same arguments that were  used prior to the war. In the months prior to the war, oil was trading in a very wide range between $60 and $90. Volatility was extremely high. When the invasion began, oil sky-rocketed from $100 to $130 in a matter of days. In other words, those who are piled into commodity trades and waiting for the melt-up should be aware that it ALREADY took place. 

On the chart below on the left side we see the post-Crimean war collapse. Followed by the China/Fed policy error collapse. In the middle the 2018 Fed policy error crash followed by pandemic. As we see, realized volatility is at a record. The lower trend-line is -50% lower from high to low.

Does anyone remember August 2014? (see circle with "Crimea"):

“I’ve been surprised at the market and have actually taken a loss on Brent and North Sea crude,” he said. “It seems like the world has accepted war in the Middle East. After a while investors say: ‘OK, that’s the way it’s going to be,’ and production hasn’t been cut off any place.”

That $100 prediction didn't last two weeks. 

So we see this is all very deja vu, nevertheless I will tackle these fundamental arguments:

First off, the tight spot oil market and backwardation are very likely a short-term phenomenon. The futures market is clearly expecting oil to decline. In addition, if there is a global recession, which appears highly likely, demand will fall. At the same time, supply will adjust to the higher prices and reach market at a time when demand is falling. 

We have seen this OVER and OVER again during the past decade. Supply adjusts at the worst possible time. 

This chart shows all of the recent times the oil market was in backwardation meaning the USO ETF (futures-based) was gaining value as it approached the spot (front-month) expiration. Each time USO/WTI rose, the market collapsed:

This chart shows that from a global growth perspective commodities diverged the most from China GDP in 20 years. The last divergence in 2014 resolved to the downside to the surprise of T. Boone Pickens.

The second bullish argument is that soon Europe will ban Russian oil imports. We've heard this many times before. The Germans have recently said that won't happen BEFORE the end of this year. 

"Germany, the continent’s biggest economy, still gets 40 per cent of its gas from Russia, even after cutting its reliance.

It aims to end Russian coal imports this summer, oil imports by the year's end, and be largely independent on gas by 2024, German Economy Minister Robert Habeck said"

Just this week, German bankers warned that cutting off oil and gas imports will cause a deep recession:

Those are the bullish arguments, now here come the bearish ones:

Every commodity shock since 1970 led to a U.S. recession - 1973, 1980, 1990 (Gulf War), 2008. 

Now, both the Fed AND European central banks are in a box. They can't ease policy until they see major economic and financial dislocation. European inflation is running at record levels:

"there are other side-effects from the war, most notably higher energy prices — which are driving up inflation across the bloc. European Central Bank President Christine Lagarde said earlier this week that “three main factors are likely to take inflation higher” going forward"

The global economy cannot AFFORD higher energy prices. Because the current prices are already driving a far too rapid monetary tightening. 

In addition, the dollar is now heading higher into the upcoming FOMC:

Last but not least, the International Energy Agency today announced that they will join the U.S. in releasing oil from their strategic reserves:

"Between the IEA and the United States, 240 million barrels of crude oil is set to be released from the world’s strategic energy stores"

The U.S. release of 180 million barrels will be the equivalent of 1/3rd Russian production for the next six months. However, Russian production is still likely to reach the market. 

Here we see what happened the last time the U.S. released oil from the SPR - it crashed. This time it's far more technically at risk of...

Margin call.

In summary, it's HIGHLY likely we are on the verge of a massive deflationary commodity crash. And when that happens along with the coincident crash of real estate and stocks, everyone will realize that inflation is no longer the problem. 

THE BRICK WALL OF "MORE"

An intelligent life form dropping in from Outer Space would in no way believe the Titanic scale of infantile bullshit being bought and believed at this dire juncture. Only a society in late stage dementia could buy the current ludicrous promises being made about the future. The "solution" to our environmental catastrophe is coming straight at us - it's the brick wall of "More", which was financed for over a decade at 0% and is now facing facing imminent global margin call...

Don't look down.

"U.N. Secretary-General Antonio Guterres said the report by the Intergovernmental Panel on Climate Change revealed “a litany of broken climate promises” by governments and corporations, accusing them of stoking global warming by clinging to harmful fossil fuels.

“It is a file of shame, cataloguing the empty pledges that put us firmly on track toward an unlivable world”

I used to worry about climate change. It was at the top of my list of existential worries. But since the pandemic, I finally realized all of this risk is outside of my span of control. The pandemic caused the largest collapse in carbon output in our lifetimes. It was temporary, but it showed the potential for what can happen when a species is preoccupied solely with personal preservation. After all, the pandemic was relatively innocuous. The U.S. states that had the lowest vaccination rates, the worst healthcare, and non-existent social distancing measures all fared just fine. By any account Alabama should have imploded. But they're still fat and happy. We were warned that our consumption-oriented way of life was ending, so what did we do, we went on a biblical scale consumption binge.

The pandemic and associated lockdown drove a consumption preference from services to durable goods. This consumption shift combined with the supply chain disruptions, caused inventories to become depleted. As a response retailers began double ordering and they abandoned just in time inventory techniques. This accelerated the "hyperinflationary" hysteria that fueled inordinate above-trend demand. As we see below, it was A MASSIVE consumption binge that is only now starting to abate as evidenced by recent declines in trucker freight rates. 

You don't have to be a genius to see that durable goods consumption went above trend. However, in economics there is a concept known as reversion to the mean. Which holds that forays above the trend are followed by forays BELOW the trend. Looking at 2008 as by comparison, it's certainly not hard to believe. 

Meanwhile, during this hyperinflationary consumption orgy, the Fed was  busy inflating their asset bubble to record levels across every risk asset class on the planet. So now they are slamming on the brakes at the fastest rate in history, which we see below via the thirty year mortgage % change. Of course this is all the PERFECT recipe for total economic collapse. And the first order effect will be financial collapse and credit crisis, both of which already started in Q1.

Fortune: 

"The housing market has gone into a savagely unhealthy stage. Everyone should embrace higher rates to cool off this madness and hope inventory rises," Logan Mohtashami, lead analyst at HousingWire, tells Fortune. "Let higher rates do their thing."

Aiding and abetting this disaster in progress, are all of today's financial pundits who are convincing people to ignore all risk. They have succeeded in convincing the masses that they can ride out a global depression, by hiding in stocks. These pundits have universally been fooled into believing that inflation is the biggest long-term problem facing stocks. None are more deluded than the Fed themselves who are now moving into what I call "Stage 2" global meltdown:

“Given that the recovery has been considerably stronger and faster than in the previous cycle, I expect the balance sheet to shrink considerably more rapidly than in the previous recovery, with significantly larger caps and a much shorter period to phase in the maximum caps compared with 2017-19.”

Below we see via momentum stocks, this was the level of decline at which the Fed pivoted to a dovish stance in 2018. Then in 2019, the Fed cut rates 3 times AND expanded their balance sheet due to the repo market dysfunction.

This time, they're going for FULL meltdown. 

In summary, what's coming is what I call B.S. reduction. There is far too much hot air on this planet right now and most of it is emanating from proven psychopaths. 

What this all points to is hard landing at the zero bound. A non-existent monetary interest rate buffer to offset the fastest demand collapse in world history.

Japanification. 

Which means ZERO economic growth long term. 

And a stock market that can be RENTED, but never OWNED. Because one thing this society will learn the hard way is in the end we are all just renters anyways.