BLACK FRIDAY

The countdown to year-end has begun. There are only 25 trading days of widely ignored criminality left in 2022. Bears have put our credibility on the line, calling for meltdown. Bulls have put their everything on the line, calling for meltup...

This past week's Fed minutes changed nothing - another 1% rate hikes are expected between now and March. However, low volume algo manipulation is very easy around the holidays. Which begs the key question asked by bulls and bears alike - is this the beginning of the annual year-end meltup?

First off, it should be noted that as I showed on Twitter, the past two months has been the largest two month Dow rally since 1975, despite record risk.  Still, Zerohedge aka. Wall Street expect this year-end meltup to continue:

"While fundamentals remain bearish and will likely drag stocks to the low 3000s in early 2023 as recession fears overtake inflation concerns, the market technicals are extremely bullish, and growing even more so with every passing day"

Where to begin. 

First off, FYI to Zerohedge, BofA already bailed on this year-end rally last week when global stock inflows hit an eight month high. Because they view the technicals as now having become bearish.

Case in point, the Dow's biggest two month rally in almost 50 years brings the market back to the August high and ironically back to last year's low, circa Dec. 1st, 2021 which is where the year-end rally began. So you have to be hitting the crack pipe hard to believe that this year's Santa rally is just getting started.

Meanwhile, the retail sector is drowning in inventory this year. I did some personal shopping this past Monday, and I bought $150 of clothing which was marked down to $100 at the register. For once it was me who could brag about how much money "we" saved by going shopping. The wife was not amused.  

Nevertheless, investors were informed this past week that retail earnings were "better than expected". Now compare this November to last November and you can see why I am a tad skeptical:

CNBC: Best Buy Shares Surge On Raised Outlook

"It raised its full-year forecast, saying it expects comparable sales to decline about 10%"

  

"Major retailers are under intense pressure to deliver on Black Friday after several of them reported a slowdown in sales heading into the do-or-die holiday shopping season"

Retail deflation is a widely ignored warning sign of what's coming. For now however, just the middle class is imploding, while the casino class keeps buying every dip. They are oblivious to the fact that stock multiples keep getting more expensive as earnings reality very slowly reaches the market. FOMO (Fear of Missing Out) is the ultimate inflationary mindset. Panic buying before prices go higher. Clearly, bulls are still well entrenched in the inflationary mindset for now, but the technical warning signs are piling up. Whereas the Dow has round-tripped back to the August high, the Nasdaq is lagging badly. Here we see the Nasdaq 100 is well below the 200 dma while the % of stocks above the 200 dma is the SAME as late March earlier this year. That is a major bearish technical divergence. It's visual confirmation that Tech lost a staggering $7.4 trillion in market cap during the past year:

"It seems like an eternity ago, but it’s just been a year. At this time in 2021, the Nasdaq Composite  had just peaked, doubling since the early days of the pandemic"

"For the first time in nearly two decades, the Nasdaq is on the cusp of losing to the S&P 500 in consecutive years"

The Global Dow has also round-tripped back to the August high, and the RSI pattern (top pane) is very similar to the one last December. In other words, Santa Claus came two months early this year and has handily exceeded last year's fourth quarter return, but now we are to believe that this year's melt-up rally will BEGIN where last year's ended. 

Sure.

In summary, the theme of 2023 will be deflation, as frugality is already coming back into style with a vengeance for the middle class. Meanwhile, investor FOMO is about to explode with extreme dislocation. 

This past week's Fed minutes confirm that a December rate hike is a lock, which means 2022 will see the EXACT same level of Fed rate hikes that took place between 2003-2006. The last time the Fed imploded the middle class.

In other words, +4.25% (Equivalent to 17 1/4 pt rate hikes). 

And yet, the majority of today's pundits are assuming this time will work out better than last time. Given the lags in monetary policy, they have literally no basis to reach that asinine conclusion. 

They are exploiting the vacuum of lagged data which has become a con man's paradise.  

Lastly, the World ex-U.S. has already rallied off the lows as much as it did in 2019 AFTER December rate hike AND after Fed pivot.

FOMC: Fear Of Missing Crash.

ALL ONE PONZI SCHEME

Now we're just waiting for the moment when global risk markets go into what I call "FTX Mode". The point at which a declining asset class spontaneously explodes, totally unexpectedly...

The Minsky Moment:

"Over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values"

The era of financialization began with the U.S. abandoning the Bretton-Woods Gold exchange standard in 1971. It was a constraint on unlimited U.S. borrowing, so it had to go. In the event, the U.S. dollar became the world's first fiat reserve currency. Now, decades later we learn that nothing could be more lethal than an unlimited credit card collateralized by "free trade", in the hands of a generation that inherited the greatest economy in history. There goes the industrial sector and the middle class. 

What we got in return was secular deflation. Meaning that global supply far exceeds demand. Yes, even now. What passes for inflation now is end of cycle Ponzi inflation already imploding in broad daylight.

Today's inflation is the very definition of transitory - nevertheless it has been inadvertently conflated as the 1970s horror show "Return Of The Middle Class". Leading to what I call the Volcker gambit - raising rates at the fastest pace in history in the midst of a record global asset bubble collapse. Without question, the dumbest economic event we've witnessed in our lifetimes.

What's holding up the CPI at this late stage is a record increase in home carrying costs (price * interest rate) and record corporate profits. The Fed inflated the housing bubble and then they jacked up rates to make housing totally unaffordable. Driving rents through the roof and back into CPI, where the Fed concludes that rates must go higher.

 

The Fed is locked in a death spiral of their own making. Far more willing to implode the middle class than the casino class. 

Once again, Milton Friedman's assertion that "All inflation is monetary" was proven right. However, not in the traditional sense. Most economists assume that inflation is due to the expansion of the underlying currency base. Quantitative Easing was devised as a way to inject liquidity into asset markets without directly impacting the economy. The indirect effect of course is via the wealth effect which was put on steroids during the pandemic. 

One of the side effects of this multi-decade experiment in mass financialization is that at the zero bound no idea is too stupid for investment. The entire investment sector has now been 100% Ponzified. Meaning that rate of return is solely predicated upon the number of fools to follow. Therefore, it can come as no surprise that we are surrounded by a surfeit of Bernie Madoff acolytes seeking to steer the marginal dollar into THEIR preferred asset class. EVERY investment class is now a zero sum game.

Today's financial media is a direct reflection of our society - morally weak and inherently corrupt. 

Consider all of that in the context of what is about to happen. 

What I call "FTX mode". The moment at which ALL Ponzified markets meet their Minsky Moment. 

And when it all ends, we can be certain of one thing, there will be nothing left to bailout. 

YEAR-END BONUS

In my last blog post I demolished the fundamental hypothesis. Now I will tackle the technical hypothesis. In a nutshell, the entire bullish thesis is predicated upon the ongoing misallocation of capital to the stock market, just as it is with every other Ponzi asset class...

First off, many pundits are now questioning why the Fed is over-tightening. The reason the Fed is over-tightening is because the jobs market remains inordinately strong due to the fact that low paid service workers are extremely scarce and in high demand. However, at the same time we are witnessing the beginning of a white collar recession centered in the Tech sector, which is what Michael Burry has been predicting for the past year.

Which means there is a severe mismatch in the jobs market: High demand/low supply for service workers. Low demand/high supply for Tech workers. These two labour markets are totally separate and yet they lead the Fed to the same conclusion - keep tightening. It's not as if Tech workers are going to take jobs at Chipotle. At least not yet. And if they do, the collapse in total consumption will be highly deflationary. Similar to what happened when laid off manufacturing workers took jobs at Home Depot. What we are witnessing is the last stage of the decimation of the middle class.

Now on to the casino...

Stories abound as to what caused the collapse of the FTX Ponzi scheme. Because what could go wrong? What these exchanges all have in common is that they issue their own proprietary Crypto currency which they use as the medium of exchange for all trades. The FTX coin (FTT) was one of the best performing cryptos of the past two years because FTX was laundering all client cash through their own currency in order to keep it artificially inflated. The other thing they were doing is what's called "burning Crypto", meaning destroying large amounts of their own currency float in order to keep it artificially scarce. Making it easier for speculators to manipulate it higher. Then they were taking this artificial wealth and they were squandering it on everything from penthouses and drugs to political bribes to ensure their scam stayed unregulated. 

And it worked great.  

But it was all doomed to collapse because the entire business model was not built upon creating value, it was predicated upon the greater fool theory. And so it was DOOMED to collapse. 

What's more interesting is that the wave pattern for FTX coin has been 90% correlated to the Nasdaq for most of 2022. Which proves that social mood is driving ALL markets now. 

For those who are not familiar with Elliot Wave Theory, it merely posits that wave patterns are the manifestation of investor emotion in markets - greed and fear. Much of the time wave patterns are not clear, particularly when markets are not trending. Other times, they are crystal clear. 

What is the most clear is when a market is declining and rallying in a three wave correction. This pattern is highly reliable because it indicates a waning level of speculative appetite and waning momentum.

Here we see FTX coin overlaid on top of the Nasdaq. FTX peaked ahead of the Nasdaq, but since then, every correction has been synchronized, with each correction weaker than the last. 

Until implosion.

Asking why FTX imploded, is like asking why Bernie Madoff imploded.

"The man who had to clean up the mess at Enron says the situation at FTX is even worse, describing what he calls a “complete failure” of corporate control"

Which gets us to the end of year bonus meltdown. This is normally the time of year when Wall Street does everything possible to keep markets levitated into early January. For obvious reasons. There are only a few weeks left in the year which can make or break their annual bonus. Historically betting on a market crash at this time of the year is a very bad bet. The seasonal rally tendency is strong. 

Be that as it may, December rate hikes are ALSO extremely rare in history. Only five in the past fifty years. Two of those rate hikes came in the past seven years, and they were BOTH disasters. In 2015, the global markets had been monkey hammered by the August China devaluation. So when Yellen raised rates .25% in December, the market crashed at the start of January. In 2018, global markets had been monkey hammered by Fed rate hikes, QT, and Trump's trade war with China. The rest of the world was much weaker than the U.S. UNTIL October when U.S. markets imploded as well. The U.S. market bounced weakly in November and then imploded in December. When Powell delivered a rate hike in December the wheels came off the bus. 

So it is that we find the Nasdaq has the same coiled spring pattern that failed late in 2021. Back then, Thanksgiving was the beginning of the pattern, whereas this year Thanksgiving appears to be the end of the pattern. 

Bank of America asserts that this rally is now running on glue fumes. To paraphrase this article, global stock inflows are the highest in eight months, marking a likely end to this latest bear market bounce:

 

As we see also, the oscillator is back in overbought territory and rolling over deja vu of prior rallies this year:

On the other end of the spectrum is the reflation trade, featuring financials, industrials, transports and other economic cyclicals. Financials do not like inverted yield curves, because it makes it impossible for banks to make money since they borrow short and lend long. Which doesn't make money when short-term rates are higher than long-term rates. 

Here we see another clear example of Elliot Wave correction, which happens to be distinctly reminiscent of the pandemic. 

 

In summary, risks have increased massively year over year. 

However, complacency has attended this entire decline, now featuring eight month high stock inflows. Here we see VIX 2nd derivative volatility at pre-pandemic lows. What's coming is an FTX style meltdown that will include ALL global risk assets imploding at the same time.

The Nasdaq now has the exact same wave pattern as an Enron-eclipsing Crypto Ponzi scheme. The bull thesis is that the exact same wave pattern that imploded FTX, is precursor to a new bull stock market. 

Anyone who believes that, deserves their fate. 

 

THE LIGHT AT THE END OF THE TUNNEL

Wall Street has weaponized denial against the stoned masses, and they wouldn't have it any other way. Everyone gets to invent their own ending.

For now...

Once again, the end of year lull is a con man's paradise. Ahead of the New Year reality check, Wall Street is free to futurecast whatever science fiction they want, unquestioned by CNBC, which is now competing with Disney+ for viewers. 

It's that time of the year when Wall Street issues their annual forecast for the coming year. Unfortunately, it's also that point in the cycle, when Wall Street's annually extrapolated forward earnings estimates have the veracity of a Magic 8 Ball. No surprise, Wall Street consensus calls for an INCREASE in profits during the coming year of roughly 5%. Yes, you read that right. Ed Yardeni is hitting the crack pipe even harder this year with a +9% forecast.

Here's what Wall Street consensus estimates "forgot" to include:

1) Fed over-tightening

2) Housing collapse

3) De-leveraging

4) Recession

In other words, there is no cycle risk embedded in these predictions. 

As a proposed antidote to this level of impending criminality, Zerohedge this week posited what they believe to be "The Most Bearish" prediction for 2023. I leave to the reader the pleasure of parsing Wall Street bull shit inter-laced with Zerohedge bull shit to obtain your own conclusion. Suffice to say, the "most bearish" prediction also omits all of the risks I mentioned above.  At worst it predicts 15% additional downside for stocks from this year's low and 11% downside for earnings from this year's earnings. 

Here is how that looks graphically for stocks:

What it all comes down to is that Wall Street predictions are ALWAYS linear extrapolated from one year to the next. They use spreadsheet models with assumption parameters and then they plug in whatever numbers they want, in order to reach their conclusion. What passes for serious investing based upon "fundamentals" are blind guesses at the unknown future. Because what else could they be, Nostradamus? And for most of the cycle those guesses are in the ballpark simply because during economic expansion, growth is linear.

Until we reach the end of the cycle. 

Below is what Wall Street's "worst case" scenario for earnings looks like from an historical point of view. It's barely even visible relative to the big jump in earnings post-pandemic. Meanwhile, a repeat of 2008 is not even slightly an option based upon current forecasts and positioning. And yet, we are contending with a CPI at 40 year high and the Fed is still tightening into a Tech wreck/housing collapse. During those two prior debacles, they were ALREADY easing at this point in decline. 

Which gets us to the topic of over-tightening. This week, Fed officials have been taking turns pounding markets lower after last week's "dovish" CPI print of 7.7%. Today it was James Bullard's turn to put the kibosh on the pivot/pause fantasy, going above and beyond the call of implosion:

"Bullard suggested that the rate may have to rise to a level between 5% and 7% in order to quash inflation, which is near a four-decade high"

Not even ONE dunce in the media has pointed out that debt levels have sky-rocketed over the past two years and interest rates have DOUBLED year over year, meanwhile, the Fed balance sheet hasn't changed year over year. Which means they are crushing the middle class to protect the Casino class.

It's history's biggest policy error without any question, taking place in broad daylight. 

Which gets us to recession risk which is currently obscured by the high CPI readings. In the 1970s recessions it took several months of recession BEFORE unemployment began to rise. That is typical inflationary labor hoarding behavior, when real wages are negative and the economy is running at maximum  end of cycle capacity. However, today's pundits always point to the strong jobs market as THE sign that the economy is doing well. This week's retail earnings are another widely ignored warning. 

As is the inversion of the yield curve, now at a 40 year high:

Same article from above, further down:

"On Wednesday, Esther George, president of the Kansas City Fed, said in an interview with the Wall Street Journal that a recession was likely given how rapidly the Fed has tightened credit.

“I have not in my 40 years with the Fed seen a time of this kind of tightening that you didn’t get some painful outcomes” she said.

In summary, who do you believe?

WORSE THAN EXPECTED

Climate inaction is merely another widely ignored warning for a society in latent death spiral. What they need to learn the hard way is that talk is cheap, until all of the hot air explodes with extreme dislocation...

This week is COP 27, which happens to mark the 30th year of UN climate conferences leading to absolutely nowhere. Which is more cynical, to not believe in man made environmental disaster, or to believe that pretending to care will fix the problem? This climate charade is just another warning for a society in latent death spiral, with not even the slightest will or ability to change its ways. The pandemic was the best test for climate activism we will ever get - because it caused the largest carbon collapse in world history. No flights to anywhere. No commuting. A virtual economy. The price of crude oil went NEGATIVE for the first time in history. Green energy/EV investment sky-rocketed. Fossil fuels were divested. At the apex of the bubble, Tesla had a larger market cap than the S&P Energy sector. 

However, upon exiting the pandemic we now learn that all of the predictions for climate apocalypse have been moved up in time from 50 years to next week. More drought, more wildfires, more mega hurricanes, and more empty lakes and rivers. 

In other words, it's far too late to pretend to rearrange the deck chairs on the Titanic. What we don't know, is whether or not global economic collapse will "fix" climate change after the fact. 

But fortunately we are about to find out...

Who says I'm not an optimist?

Now back to the Casino where all manner of economic risks are likewise being ignored:

As we approach the end of the year, investor cries for a pivot keep growing louder. Zerohedge has been predicting imminent pivot for months. Now Cramer is on the pivot bandwagon as well. Recall, it was only a few months ago that ALL pundits were pounding the table that inflation is NOT transitory and the Fed was far behind the curve. It turns out the Fed actually believed them and they are now in full Volcker mode, meaning "keeping at it", as Volcker did for two years straight.

“Pausing (Pivot) is off the table right now. It’s not even part of the discussion”

What it comes down to is the fact that today's pundits are following the POST-2008 playbook, whereas the Fed is following the PRE-2008 playbook. Meaning the Fed won't pivot UNTIL investors panic. And ironically, Team Pivot is preventing them from doing so. All of which is a tale of extreme moral hazard. Gamblers were bailed out for fourteen years straight during economic expansion and bull market. Now, when the economy is imploding, there is no bailout forthcoming.

Which is why bulls are doomed to explode. 

The primary assumption bullish pundits are making is that Tech stocks will resume their bull market when the deflation trade returns. However, below the Y2K experience shows the Fed pivot effect was very short-lived. 

Nevertheless, today's investors are eagerly waiting for the melt-up to begin. 

The other major assumption that today's bullish forecasters are making is that there will be NO deleveraging caused by Fed tightening. And yet we also see above that in 2007 the Fed pivot  preceded the housing bubble implosion. 

Which makes yesterday's headline very timely. The largest jump in household debt since 2008:

 

In other words, despite massive interest rate increases, household debt is STILL increasing. Which means that as the various bubbles collapse, households will be stuck with massively inflated liabilities. Which, will be highly deflationary.

In summary, the recent collapse of the FTX Crypto Ponzi scheme was merely a warning for what is coming. The CEO claims he had no idea how much leverage had accumulated in customer accounts. So far, there have been NO arrests. Why? Because what used to be considered corruption is now merely accepted as fraud-as-usual. Over the course of the past several decades, this society has systematically de-regulated criminality.  

The same can be said for the global economy - central banks have no clue how much leverage exists in all of its derivative forms. However, they are going to tighten until we find out who has been misallocating free capital. Or as Warren Buffett says:

"When the tide goes out, we discover who has been swimming naked".  

And when that happens, trapped bulls who ignored a decade of warnings are going to need a time machine.

To go back to when they still had a chance to change their ways. 

Before it was way too late. 

PIVOT IS JUST A CRASH AWAY

Today's bulls have FOMC: Fear of Missing Crash...

For the purposes of this discussion I will be referring to the chart below. Best case scenario, bulls stage a short-covering rally each time they implode closer to full bailout. Worst case scenario, they panic and implode straight down to the bottom. 

Either way, until they panic, there will be no Fed bailout. 

What bulls call the impending bailout, I call the impending clusterfuck. 

What we got this week was not a pivot on rates, it was an impending taper on rates. The current Fed funds rate is 3.75% and it's expected to increase .5% in December and another .5% by March which is when the Fed would pivot to neutral. Which means that bulls are front-running the Fed by a full four months on the pivot, which makes this rally a taper rally.

This week, Wharton Professor Jeremy Siegel was saying that if the Fed pivots in December then this rally is for real. 

Siegel:

Inflation Is Over. It's Rally Time

"There's still a chance we can avoid a hard landing if the Fed pivots in December"

Today (Sunday), the Fed came out and said they are not planning to pivot in December. Why? Because every time risk assets rally, they are forced to move back their pivot in terms of timing and magnitude of rate hikes:

"The U.S. Federal Reserve may consider slowing the pace of rate increases at its next meeting but that should not be seen as a "softening" in its commitment to lower inflation, Federal Reserve Gov. Christopher Waller said on Sunday"

Markets should now pay attention to the "endpoint" of rate increases, not the pace of each move, and that endpoint is likely still "a ways off"

What no bullish pundit is considering right now is what will happen when in fact the Fed does pivot from hiking to neutral which will only come amid MASSIVE market turmoil. They are all using the 2018 playbook of massive face ripping rally. However, what they ignore is that the inflation trade has been the dominant theme of 2022. These are the most successful trades of the year. I am of course referring to value stocks, commodity trades, dollar carry trades, and long stock short bond trades. Picture what will happen when all of those trades implode. There will be no leadership in the market. UNLESS one believes that Tech will exit its bear market and lead the market higher once again. 

What today's pundits don't seem to know is that overvalued Tech stocks are now dead money, and will be dead money for years to come. There hasn't been a single bubble in history that popped and then immediately resumed its ascent. After Y2K, it took 17 years for the Nasdaq to make a new high.

Still, investors are in no way giving up on the Tech trade, as recent unprecedented VXN flash crashes have proven:

 

 

In addition, when U.S. bond yields fall then the carry trades will unwind and the vaunted "TINA" trade will implode. A process that has already started as we see below, the $USDJPY having it's biggest collapse since the START of the pandemic. This means that the hot money that flooded the U.S. due to hawkish Fed policy, is already leaving the U.S. ahead of the pivot. Meanwhile, bullish gamblers are piling into the casino ahead of the pivot. 

Next, we talk about the value trades which are led by the Energy sector. This sector already imploded back in June and has enjoyed a three wave rally. Including Exxon and Chevron, the XLE is at new all time highs. However, on an equal weight basis the Energy sector is three wave corrective. What this chart shows us is that the 'b' wave retraced all of the 'a' wave gains, which means it's a weak rally. Confirmed by the fact that NYSE lows spiked each time Energy came down to the origin of the rally. 

To confirm this theory, we look at Warren Buffett's Berkshire Hathaway conglomerate which is considered the best deep value fund in the market. It's heavily weighted with bank stocks and other cyclicals, and of course a heavy allocation to Apple. 

Look up to the chart above, and look below. They are the same wave pattern on the same timeline only Berkshire is an even weaker version of the Energy trade, the stock has gone nowhere for six months.

All of which means that social mood peaked earlier in the year and is now making a new lower high in speculative appetite.  

In summary, for fourteen years straight, central banks bailed out stock market bulls. Now they are saying you are on your own. Which leaves bulls praying for a crash and a recession, so they get their long awaited pivot. However, the ongoing delay in capitulation means that by the time it arrives it will be far too late for "soft landing". And what will the Wharton Professor say?

Oh well, I was wrong. It wasn't the beginning of a new bull market, it was the end of the cycle, and at the end of the cycle, low rates come with a caveat: careful what you wish for.

DOUBLED DOWN ON COLLAPSE

The one thing this market has going for it in spades is mandatory delusion. The current level of delusion is indicative of imminent financial and mental breakdown...

The mid-term elections came and went as expected. Impending gridlock is widely considered to be bullish for stocks, which is the theory I debunked in my last blog post. Bulls are now citing the exact same historical market statistics they data mined back in 2018 to rationalize a year-end rally. The latest CPI shows that inflation is beginning to roll over, albeit very slowly. Back in 2018, the CPI was 1.7%, today it's 7.7%. Fed futures predict there will be another full 1% of rate hikes between now and March. All of which makes this set-up far more lethal than the one that imploded markets back in 2018. Nevertheless, gamblers are wasting no time going ALL IN on expectations of a big year-end rally. Today is the biggest rally since December 2018 which took place AFTER the Fed pivoted. In other words, bulls are doubling down on collapse.

The operating theory behind a pivot rally is that once the Fed stops raising rates, gamblers have a period of time to enjoy one last melt-up rally before the wheels come off the bus due to rate hikes. It never enters their minds that the melt-up already occurred and now they are sitting in a bull trap.

The year-end melt-up was a bust in both 2007 and 2008 but never mind those inconvenient facts. 

Another risk factor that raised its head this week is the renewed collapse of the Crypto Ponzi sector. Recall that Bitcoin had been seeing the lowest volatility of the year recently, then it headfake rallied last week, prior to imploding lower this week. Something called an "FTX" had been buying up all of the other collapsed Crypto Ponzi schemes earlier this year when it too caught the collapse contagion. It turns out that combining multiple Ponzi schemes into one big one does not diversify risk. Echoes of the  lesson NOT learned during the subprime disaster circa 2007, when Goldman Sachs would package up toxic subprime mortgages from all corners of the country and package them as AAA rated securities. No one on Wall Street thought it was a bad idea. Bear in mind, today's Crypto-loving Wall Street analysts were all playing Halo in the 8th grade back in 2007.

So how could they know that all of this is 100% idiotic? 

All of which merely leaves another technical stock rally now running on glue fumes. Make no mistake that hedge funds are no longer hedged and therefore the put wall that has held up this market up until this point in the year is now substantially non-existent.

A necessary and sufficient condition for final collapse. 

Option skew is the lowest since 2008:

In summary, this is either a year-end Wall Street bonus rally, or the biggest bull trap in history. In technical terms, the quality of this rally is dog shit - my own proprietary definition. This is merely the latest short-covering rally now running on glue fumes. Led of course by the Nasdaq which is on the way to becoming totally bidless. This latest overbought notion of an impending Fed pivot being once again pure fantasy.

One year ago the Fed warned investors that risky assets were set to implode. They specifically mentioned Crypto Ponzi schemes. So trapped gamblers have ignored their warnings for a full year now.

Nov. 8th, 2021:

“Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate"

"The central bank also said stablecoins pose an emerging threat, that fragility in China’s commercial real-estate sector could spread to the U.S. if it deteriorated dramatically, and that “difficult-to-predict” volatility similar to this year’s meme-stock frenzy could become more frequent as social media increasingly influences trading"