PAINTED INTO EXPLOSION

When I tell people that market explosion is inevitable, they always ask me "when is that?". The fact that most people will get wiped out by it is apparently of no concern...

Most people these days assume the past is the future. They are set in their ways and have no intention of changing. Therefore, they happily extrapolate mass insanity into the indefinite future and sacrifice their mental health on the altar of mass consumption. A lifetime of bad habits doesn't change at the end. The idea of adapting to a new reality of less is more or quality over quantity, is never under consideration. This society has been brainwashed from birth to consume at any cost. 

We see this all around us at the personal level, people consumed by their addictions. But we see it at the societal level as well. No politician or pundit on either side can tell the public what they don't want to hear. There is no market for the truth these days.

Meanwhile, the average IQ has been collapsing, thereby front-running the next level of widely ignored corruption. Which has left us skeptics of rampant fraud constantly playing catch-up to the next level of delusion.  Our many critics claim we have been "wrong" timed in our prediction of the inevitable. Their ONLY concern is "when" NOT "if". The fact that this will all explode one day with extreme dislocation can wait another trading day. In the meantime, THEIR beloved financial weapon of mass destruction grows from one magnitude of destruction to the next.  

Granted, no one can predict the future with 100% accuracy. The best we can do is measure the amount of buffoonery that precedes collapse. Which in the current case is on the scale of biblical. Through necessity, the level of buffoonery has had to increase from one larger bubble to the next, according to the law of magical thinking. Central banks in their infinite hubris have constantly bailed out the masses from impending reality. And in  doing so they have painted this society into a corner. At this latent juncture, rampant corporate profiteering has forced the Fed into record tightening. They are now hellbent on creating a global depression. At the same time, home gamers are widely told to expect a "soft landing". 

Today we got news that Q1 GDP was NEGATIVE. The first quarter of incipient recession. The Dow gained 700 points on the news. 

THIS will be the epitaph for this era:

A Fed worried about inflation expectations becoming embedded in a COLLAPSING economy, oblivious to the fact that inflation expectations are ALREADY embedded in inflated stock market valuations:

"The analysis of SEC filings for 100 US corporations found net profits up by a median of 49%, and in one case by as much as 111,000%. Those increases came as companies saddled customers with higher prices and all but ten executed massive stock buyback programs or bumped dividends to enrich investors"

The level of denial is very similar to 2008. 

We are constantly told "The consumer is strong", but it's a massive lie as anyone can see:

The Nasdaq is at critical support:

Globally things are far more dire, as the relentless dollar rally collapses the various dominoes which are heading inexorably towards U.S. markets:

Beneath this market is a wall of put options. Bearishness is the highest since October 2008. For a time, a high level of hedging can keep the market from imploding, especially around a major event such as this impending FOMC meeting, which is what happened during the TARP bailout of October 2008. Back then, many investors hedged that meeting so the market rallied into the news. Soon after, the puts expired and the market collapsed.

The next major financial event is what I call "Millennial Margin Call" or MMC. It started last year with the Gamestop debacle and so-called "democratization of markets". Which was merely a euphemism for the ensuing RECORD Wall Street pump and dump.

2022 has the dubious distinction of having the WORST Nasdaq breadth (highs - lows) in market history:

So far miraculously across Cryptos, Biotechs, junk IPOs, SPACs, Chinese stocks, and Ark ETFs there has been NO capitulation. These newbie investors have been taught to "HODL" which means hold on and never sell. Because as long as you never sell, you never have a loss. Of course, this theory means nothing to margin clerks: 

"The number of active users fell 8% as compared with December 2021, mostly thanks to users with lower balances engaging “less in the current market environment”

What I see happening next is MMC (Millennial Margin Call) coinciding with FOMC DOUBLE tightening. Which when it occurs will lead to a final reach for protection into a ZERO liquidity market. 

What I call IGNITION.

WORST CASE SCENARIO

Up until now the bullish pundits have been causing all of the problems, with their perpetual Disney World bullshit. However, now it's the latecomer bears with their half-assed predictions who are causing the most confusion...

So allow me to elucidate what's coming:

It's called THE WORST CASE SCENARIO. Featuring a Fed tightening into global meltdown.

Any questions?

Let's see, worst Nasdaq selloff since 2008. Biggest commodity spike since 2008. Worst consumer sentiment since 2008. The most global rate hikes since 2008. The biggest housing bubble since 2008. The most institutional selling since 2008. And the largest recession stock outperformance since 2008.

Therefore, it MUST be a soft landing, with an 11% probability historically:

Below we see U.Michigan one year consumer inflation expectations. Currently at ~5%. Which is the SAME level the public expected DURING the last three largest recessions since 1980. In other words, these people don't even know when they are in a recession. ACTUAL inflation in each case was at or below 2% (bottom pane). In 2009, FAR below i.e. -2%. 

http://www.sca.isr.umich.edu/charts.html

Back in 2008, inflation expectations peaked in July and August. The market collapsed in September. In hindsight, the economy had been in recession for EIGHT MONTHS already:

Then as now, the Fed was SOLELY concerned about public hysteria over inflation:

"On the morning after Lehman Brothers filed for bankruptcy in  September 2008, most Federal Reserve officials still believed that the American economy would keep growing despite the metastasizing financial crisis"

"The transcript for that meeting contains 129 mentions of “inflation” and five of “recession.”

Well, this time around they are making a far greater error. They are actively raising interest rates during an incipient global meltdown. 

Back in August 2015, the Yellen Fed was planning a .25% rate hike in September which caused the Chinese Yuan to implode. That in turn caused a chain reaction crash of global risk assets. Which I called smash crash. It was a limit down gong show that forced the Fed to delay their rate hike. 

This time around, the Fed funds futures have priced in 1.75% of rate hikes between now and July, which is 7x more than what imploded China in 2015. 

And now already, the Yuan is imploding AGAIN: 

  

This time around, China is FAR weaker than 2015. Their zero COVID policy is a TOTAL disaster. Wall Street has been continually downgrading China GDP for 2022, now currently at ~4.5%.

Here we see the largest divergence between China GDP and commodities since the 2014 Crimean invasion. Which was followed by the largest drop in oil prices since 2008. From over $100 in 2014 down to $26/bbl in early 2016. 

Now, all of a sudden new bears are showing up trying to pick a bottom somewhere below this meltdown in progress. There's only one problem, which is that the Fed is nowhere near capitulating on rate hikes. In fact they are planning to "front load" rate hikes over the next three months. A term that has been used multiple times recently by Fed members. 

Unfortunately, the ONLY thing that has turned markets around since 2008 IS the Fed. Case in point 2009, 2011, 2015, 2016, 2018, and 2020. EVERY TIME it was the Fed pivoting from hawkish to dovish. Pausing rate hikes. Cutting rates. Or re-starting QE. 

So I created this chart, showing where the Fed might start getting worried about asset declines. This is strictly hypothetical. I will update it as we get signs that the Fed is starting to change policy. However, given the magnitude of this debacle, risks are skewed to the downside. Once the global margin call gets started, central banks will have no chance to stop it. 

All of which is why I say there are no safe assets right now. The safest is "cash" aka. t-bills and money market funds. This was the lesson from March 2020 that has already been forgotten. Even long-term Treasury bonds imploded (but they recovered first). Gold also imploded, but recovered second after Treasuries, the same sequence as in 2008.

When the Fed reinstated QE on Sunday March 15th, 2020 the S&P opened LIMIT DOWN. March 16th was the biggest down day since 2008. Day session circuit breakers were triggered. 

This time will be FAR WORSE. By the time the Fed pivots, the market will be in FULL panic mode. They will view Fed reversal as confirmation of recession. Which is what it will be. 

Only when the Fed itself panics and JAPANIFIES the bond market, will the stock market eventually find a tradable bottom. In 2008 it took four months. I make no predictions this time around. 

Regardless, the damage will be done.

What no pundit will say then or now is that the low in 1930 was a tradable low. But it was NOT the bottom. The all time high was not exceeded until 1955. TWENTY FIVE YEARS later.

Which is not so bad when you consider the Japanese are on year 32.

In summary, the *new* retirement will be buying FEAR and selling BULLSHIT. And it starts NOW. 

GAMBLE AT YOUR OWN RISK. 

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.