The Dumb Money Is All In Super Crash

Imagine voting for a known con man. How do you explain that after-the-fact: "He cheated on his wives, he cheated on his taxes, he cheated on his creditors, he cheated on democracy, but I didn't think he would cheat on someone he had never met before". The bottom line is that anyone who trusts Trump will trust anyone...

"Cue Gary Busey for November"

There is one overriding reason why complacency is so high right now among gamblers, stock analysts, media pundits, economists, and other assorted morons - because denialist monkeys prefer opinion over fact. It's that simple - in the face of existential economic risk, they prefer the soothing pablum from proven dunces to the inconvenient reality staring at them in the face. 

This week they've been buying their last chance to get out of Trump Casino with both hands. Now, it's time for panic.

Anecdotally, my twenty-three year old (middle) son told me yesterday that all of his friends at work were doubling down on Tesla.

It's clear that not only can one generation not learn from another, but one generation can't even learn from itself. This is the third Millenial bubble in two years.

And of course it's the third Boomer bubble in twenty years

Much virtual ink is now flowing over this as-yet minor selloff. Various "quants", pundits, and Ponzi schemers - the charlatans of our day, offering their predictions on when this will end. Almost all reaching the conclusion that the worst is over.

A quantitative analyst is a PhD who uses proprietary models based upon arcane technical indicators, while assiduously ignoring the world imploding around them in real-time. For all of their fancy pseudo-intelligence, they are merely pure play momentum traders. In terms of predictive accuracy it goes downhill quickly from there, next stop being "fundamental" analysts who use proprietary Magic 8 balls to predict the future. They are always right until it REALLY matters - at the end of the cycle, when they are ALWAYS wrong. 

From there it's a big leg lower in IQ to the Federal Reserve who were still debating whether or not the economy was in recession eight months after it had started in September 2008. They were actually considering RAISING interest rates on the day after Lehman. 

"The Fed then turned its attention to a discussion of whether to raise the federal funds rate, which on that day sat at 2%"

One thing they ALL have in common is that they are ignoring the bond market which has been screaming global recession for six straight months now.

We are to believe that 20-something gamblers in Tesla know something that bond traders don't know. Again, speculative opinions and speculative positioning over raw facts.

Disinformers' combined efforts to soothe the complacent herd have worked fantastic. Yesterday I showed Rydex cash balances at all time lows. Today we see Rydex bullish positioning has surged this week.

Instead of selling as they did the last two times, this week they doubled down:

Overnight, the S&P futures tagged the 200 dma (red line) and then bounced 80 points higher in a straight line. Leaving that index in no man's land. Yesterday's volume was 3x average:

Momentum stocks are backtesting the 50 day from below:

The next leg down will bring margin calls on a MASSIVE scale.

Tesla is 25% above the first level of support:

Bonds warned, banks warned, transports warned, retail stocks warned, autos warned, emerging markets warned, commodities/oil warned, deflation warned.

This is a bear market in everything except over-priced crap which is now about to explode with extreme dislocation.

In summary, the Useful Idiocracy is about to learn a hard lesson about the two types of ROI - Return On Intelligence versus Return on Imagination.

Conditioned To Implode

Gamblers have been well-conditioned to view global implosion as a fantastic buying opportunity...

I wonder where they got that idea

First off, as I've said many times recently, global central banks have lethally inverted the relationship between global GDP and asset prices. For the first time in World history.


https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/WEOWORLD

In theory, this is all to forestall a recession by creating a mega bubble ahead of time. It apparently never occurs to them what happens if global stimulus is only acting on asset prices and not the underlying economy. 


And then what happens when their bubble bursts:

It was only five years ago in 2015, when China's economic wobbles and minor currency devaluation were catalyst for global implosion. 

Subsequently, China's GDP has slowed considerably even before the Coronavirus,

Of course the usual psychopaths are out in force telling everyone to rejoice at implosion:

Which is why compared to 2015, there is no sign of selling:

Cash balances are record low

"Safe havens" are at critical support

Yesterday, several brokerages (Fidelity, Schwab, Ameritrade) had technical issues, a mere hint at what is about to come:

What you should know is that Trump is a lying bullshit artist

Inconvenient Reality Is Closing In On the MAGA Kingdom

Due to Banana Republican corruption, socialism is now the best case scenario. It could get far worse...

For the past decade, sane intelligence has had negative return on investment. That is about to change in a big way. It's time to cash in on Trump Casino. 

What we have learned in the past decade is that insanity is contagious. And very likely lethal. Far more lethal than Coronavirus that's for sure. The last thing we want to do is take a leave of our senses when they are most needed.

Sadly, this old age home has devolved into a tragicomedy. Clearly, the Creator had in mind to humiliate the MAGA Kingdom to the maximum extent possible before obliterating their Disney World of false pretense, rampant denial, and fake-believe delusion. Void of facts and data and fueled by infantile bullshit.

Of course, now that Bernie Sanders is at the top of the polls copious idiots are warning of the perils of "socialism". Remember, in their lexicon socialism and communism are the exact same thing. Soviet Dictatorship. 

The U.S. crossed the "socialist" Rubicon a decade ago when it bailed out Wall Street, and every day since via Monetary policy, which is still stuck at full throttle going nowhere. The first cycle in U.S. history wherein monetary policy was not normalized during what is now the longest expansion in U.S. history. Abject insanity. 

The methods to deride socialism are always the same - they point to some dystopian hell hole such as Venezuela as the future for the United States. In other words, they pick the world's most failed socialist state as an example. They wouldn't point out Canada for instance as another example. Because most Americans would consider Canada to be socialist, but that's not the example the disinformers use. Nor do they use Norway, Finland, Australia, New Zealand or any other well run nation for that matter.

On the subject of America's exceptionally clusterfucked healthcare system, there is a reason why Bernie Sanders or any other "socialist" will have a difficult time remaking the healthcare system into a functioning and efficient model. And it has nothing to do with socialism.

It has to do with the fact that the U.S. has DOUBLE the obesity rate of the OECD countries and DOUBLE the healthcare costs per capita of the developed nations. Despite having a larger uninsured proportion of the population than any other developed nation. All the consequence of American capitalism and consumer choice. The U.S. healthcare system is the #1 cause of bankruptcy in the U.S. Meanwhile, tying healthcare to the employer is a disaster in the global economy best known for mass layoffs. Thanks to out-of-control costs and extreme racketeering, the average employer now pays $20k per year for employee health coverage.

Getting back to socialism versus capitalism, what if the roles were reversed and today's so-called capitalists were forced to explain Wall Street bailouts, tax cuts for the rich, and continual monetary bailouts for billionaires. What if the prime example of a true capitalist country for comparison purposes was the Philippines or some other Third World sweatshop. Because exactly, what is the role model country we are now using as this so-called capitalist nirvana?

Disney World?

NeverNeverLand?

If a good role model existed then we could make a good comparison. 

In this insane asylum we must always bear in mind what intelligent people would do under the same circumstances that we now face. If only to maintain our insanity while everyone else forfeits theirs to the MAGA Kingdom, until it explodes into a billion pieces.

I call it "What would intelligent people do?"

They wouldn’t hide from the truth
They wouldn’t make continual excuses for extreme greed

They wouldn’t gamble with the planet’s future for corporate profit

They wouldn’t believe that printed money is the secret to effortless wealth

They wouldn’t eat themselves to death

They wouldn’t borrow their children into penury

They wouldn’t rob the poor to pay the rich

And most importantly they wouldn’t trust a known con man for president

Because the price of that lie will be wholly unaffordable for those who indulge in record stupidity. 

BTFC: "Buy The Fucking Crash"

Another gap 'n crap like today and the underwear will be mighty stained...


Seven Hindenburg Omens on the NYSE in the past month, warning of the assiduously ignored chasmic bifuraction between the mega cap Tech bubble and the rest of the market:

Overnight crash off of last week's options expiration. What changed? Nothing. The exact same headlines that drove the casino to all time highs last week, imploded it on Monday. Is it news that the virus is spreading, no. And is it news that Bernie Sanders is leading the Democratic race, no.

Meanwhile, gamblers need not worry, because the Casino-Croupier-in-Chief says "BTFD". The virus is not an issue, and he can beat the Commie Sanders no problem. 

What could go wrong?

Let's take a look at some inconvenient facts and data.

"It was the Dow’s biggest point and percentage-point drop since February 2018"

Bueller?

It was the biggest overnight gap since Brexit almost four years ago.

Every sector was down today on 2x volume. There was no place to hide. The "low volatility" safe havens got shellacked along with everything else. NYSE breadth was worse than February 2018 (NYSE A-D), not shown. 

Looking at the Feb. 2018 analog, we see that the S&P is now below the 50 dma which triggered Vixplosion two years ago. The S&P is camped at final support before the 200 dma (red line) which is still a ways away. Notice, comparisons to August 2019 need not apply, as the VIX is already above the level that it hit at the 200 day in August (circled): 

Sadly for bulls, this is not February 2018, as we are reminded by the crash ratio:

Well-conditioned gamblers were not waiting for Trump to tell them to "BTFD". There was no sign of panic in the casino whatsoever:

The casino closed at the lows of the day with the Nasdaq (100) camped at the 50 day:

Banks are at the last line of support:

Energy stocks are bidless in the age of Donny

A preview of the fate that awaits the MAGA Kingdom

The world is in third wave down

In summary, the drugs are wearing off

Manias, Panics, And Crashes

"I didn't trust the Obama expansion, until Trump came along at the end and reassured me that everything was going to be fantastic"

Republican consumer sentiment was at 2008 levels until Trump got elected and then it sprang to all time highs, as the smart money sold in size. For democracy to function properly, every political party should have a fair allocation of useful idiots. Let's at least acknowledge that Trump is not the real problem in this equation. There's a symbiotic relationship in the GOP between useful idiots and the criminals who can't make an honest living without them.  

"They got the early cycle, and we got the late cycle"

Most people don't believe that social mood (greed, fear) drive markets, which is the reason why it always works. As we've seen over and over in this era, the same fools continually get caught up in speculative manias. Because when they're not going along with rampant stupidity they feel left out.

In this cycle, there have been more market distortions than any other cycle in U.S. history, from algo-driven momentum to central bank money printing, record low interest rates, record stock buybacks, to record fiscal stimulus. So it can come as no surprise that today's gambling class no longer believes that actual human beings play any role in markets. And I would say that most of the time they don't, they are merely along for the centrally managed roller coaster ride in Disney markets. Except, at the extremes - the tops and bottoms, when volumes increase and greed and fear take over, such as now.

Even at this late stage, the vast majority of investors still somehow believe that the economy drives the stock market, despite the fact that central banks have lethally inverted the relationship between global GDP and stocks. A critical fact that has escaped the attention of dopium stoned zombies. All a testament to the power of brainwashing. We have what I call the Suze Ormanization of markets. She comes on TV and makes everyone feel like an idiot for not plowing as much hard earned savings as possible into "stocks". Somehow conflating responsible investing with throwing away money at the record overvalued Trump Casino while insiders cash out in record size using debt-fueled stock buybacks. Orman merely being the ambassador for an entire financial services industry preoccupied with growing assets under management.

She has plenty of assistance in this regard. Warren Buffett is sitting on record cash and admits that valuations are astronomical, he can't find anything to buy, yet for everyone else he still recommends (indexed) stocks over bonds, much less cash. Basically telling people to buy a Tech bubble at peak valuation:

Buffett was born in 1930, at the onset of the Great Depression, which is apparently why he never learned the lessons from that era, having ridden the longest secular bull market in world history, from one end to the other. Those who bought stocks at the peak in 1929 took 25 years to breakeven. At the lows in 1932 they were down -90%, that's how much "return" was pulled forward into the Roaring '20s. Bubbles don't correct sideways. They first find true valuation, and then they dig out of the hole from there. Assuming the economy is still intact.

By distorting the term "responsible investing", these people such as Orman and Buffett have given their official stamp of approval to rampant criminality. The bilking of the old age home in the age of Trump. The wholesale abandonment of fiduciary duty. History will not be kind to the purveyors of this chicanery at peak Boomer retirement. 

The reason why no one sees this coming is due to all of these various distortions. Elliott Wave patterns have been rendered obsolete, particularly on the major U.S. averages. For the true pattern of greed and fear we must look below the surface to the various sectors.

And what we find, portends unforeseen panic on a massive scale. A third wave down in a two year stealth bear market. The moment at which today's bulls come to realize that the bears were not wrong, we were merely ignored. Unable to compete with rampant bullshit.

Here we see Nasdaq relative strength (weekly, top pane). Overlaid with the world ex-U.S. Meaning that U.S. speculative appetite peaked in January two years ago and again in January this year.

Wave 'a' was May 2019:

Within U.S. markets, a three wave pattern is recognizable within Oil. Although it's a weak retracement in which wave "c" is lower than wave "a". 

Wave 'a' peaked in May 2019, whereas wave 'c' peaked at the end of December 2019 ahead of global stocks.

Nasdaq breadth, same idea.

U.S. social mood is aligned with global implosion:

NextGen internet, peaked in May 2019, and is peaking again now. A three wave retracement in social mood but one that was turbo-charged to new highs:

Here we see U.S. deflation with the average U.S. stock. It doesn't matter where you look, you see the same bullshit market.

Bought and believed by RECORD fools.

Fittingly, social media stocks exhibit the clearest social mood wave pattern within U.S. Tech stocks:

Doubled Down In Trump Casino

To be honest I never expected end-of-cycle pandemic meltdown to be the catalyst for cycle-extreme risk exposure. I just never predicted this level of rampant insanity. Therefore, I may have to re-rate my risk assessment from biblical to existential...

Risks have reached the all asinine level now. The system is now massively leveraged to a known con man. Bernie Madoff is wondering why he's still in jail when everything he did is now government policy:

To be sure, I did not predict this level of insanity. Pandemic buying opportunities and so forth. Sure, negative rates, Ponzi borrowing, printing money, all of that asinine policy I've said repeatedly would end badly. However, I did not predict that Trump's mega deficit exploding the overnight lending (repo) market last August would become a buying opportunity. A liquidity collapse forced the Fed to monetize the deficit and thus set off an epic end-of-cycle melt-up. All of which was going great into late January, as it appeared that implosion was imminent. But then the Coronavirus struck and China came out with massive stimulus. Which set off the February pandemic rocket ride. RECORD options speculation and record retail trading volumes focused on the riskiest and most overbought stocks. A late stage parabolic blow-off top.

Still, no widespread inkling that maybe this could all end badly. 

All of which shows that we can never predict how much more insane this society will become. Nor can we predict how much mass insanity today's lamestream media will rationalize away as normal. They are just along for the ride. Selling ad-sponsored pablum to weak-minded dunces. 

This is a feckless society driven solely by appeals to emotion. Facts have become entirely meaningless.

Social media has amplified Borg-like behaviour. Now, today's masses don't take a shit without posting it online to see how many likes they can get. They no longer live in the world of reality, they live in the world of contrived happiness. It's more important to stream pictures of what they are doing, than to experience what they're doing. The posting and streaming of virtual reality has become more important than the real world, which is now just a massive prop stage for everyone's personal reality tv show.

All of this Tech addiction is the perfect conduit for mind control. Instead of making machines more like people, we made people more like machines. Artificial intelligence is rampant. We now have centrally managed economic euthanasia administered by central banks. While the mindless Borg is infotained on iPhones. 

Into this con man's paradise walks a well known con man. And yet no one within the vaunted business community asks themselves, what could go wrong? From Gates, to Buffett, to Bezos, to all of the CEOs in between. Nothing wrong with this picture. Along with today's economists, academics, and market pundits, they all have one thing in common: They're all brain dead. 

Wall Street now prefers Bernie Sanders over Biden or even Michael Bloomberg, because they believe that their Manchurian Candidate can more easily beat Sanders. Which means they bet the system on a stimulus mega bubble fueled by liquidity collapse, borrowed GDP, global deflation, record low interest rates, trade wars, Twitter bullshit and global pandemic.

This society has no intelligence anymore. It just has the here and now, no sense of the future and no recollection of the past. Instant gratification in every direction. A big, fat, ugly dumbfuck bubble. One that can only end one way - cataclysmic explosion.

It's A Bullshit Market Everywhere You Look

My 2020 prediction for super crash followed by rioting and Trump incarceration, took a massive leap forward this past week. And it's only February. In the Wall Street tradition, I may have to upgrade my yearly price target to change of underwear from a mere -60% previously...

Only one generation has an excuse not to see this coming. The rest of today's cybernetic organisms have been programmed for self-destruct mode. Twenty years ago via the Dotcom bubble. Ten years ago via the housing bubble. Now, at the pinnacle of maximum "I should have seen it coming" Boomer retirement pain, it's the everything super bubble, compliments of Donald Trump. These people never miss an opportunity to self-implode. It's a tradition. For the past ten years, the stampeding crowd has been right en masse. Now, they will self-destruct en masse. Sadly, in a mindless Borg there is no strength in numbers. 

The only asset class today is momentum of useful carbon from one bubble to the next. 

This week in summary:

Any questions?

"The latest effort on this front came this past week when Morgan Stanley (ticker: MS) unveiled a $13 billion all-stock deal to buy E*Trade Financial"


The two year market top is ending the exact same way it started amid record stimulus-lubricated "FOMO" - fear of missing out. In every cycle, the usual bagholders come in at the end. 

"At Charles Schwab, trading volumes, which Sundial measured through daily average revenue trades, are up 74%"

"Retail traders have become manic" 

"The preliminary February results fell just short of a 101.4 reading two years ago that set the high watermark during the current economic expansion that began in the middle of 2009."

"Looking at data back to 1916, the researchers said that the index was a reliable recession indicator since it rose leading up to every prior recession"

In summary, it's a bullshit market everywhere you look.

What this pundit calls "good news", anyone with a brain would call "nowhere to hide":

"In the week just past, we witnessed record-high prices in risky assets—including U.S. stocks and corporate bonds, both investment- and speculative-grade. At the same time, havens from risk—gold and long-term Treasury bonds—also registered records."

"The prospect of a democratic socialist facing off against the incumbent U.S. president in November's election is viewed positively by Wall Street. The odds of President Trump's re-election are seen as better if he were opposed by Bernie Sanders"




What I say is don't count your money while you're still in Trump Casino. That has never worked out well for anyone.

"Trump economist Larry Kudlow says you can ignore record low long-term bond yields, but they're a leading indicator of a stock market crash"