The New Religion Is Money

Today's Consumption Borg is spiritually dead. A belief in anything, is a belief in nothing. Not a good place to be, heading into anarchy. We've never witnessed anything approaching this amount of non-stop lying...

"For some reason I can't explain

I know Saint Peter won't call my name

Never an honest word

But that was when I ruled the world"

https://en.wikiquote.org/wiki/Chernobyl_(miniseries)
"What is the cost of lies? It's not that we'll mistake them for the truth. The real danger is that if we hear enough lies, then we no longer recognize the truth at all. What can we do then? What else is left to abandon even the hope of truth and content ourselves instead with stories?"


I've been watching the HBO special "Chernobyl", as I am clearly behind in my binge watching. The key takeaway is that it's staggering how much a late stage empire will lie to its own people. Throwing them under the bus just to maintain false pretense that everything is A-Ok. Case in point, we're seeing the same extant lying in China as the Coronavirus spirals out of Politburo control. Ricocheting against the U.S. global Ponzi empire swaying like the leaning Tower of Babel. For those young people reading this - never in my 52 year lifetime have we heard as many lies as we're subjected to today. Not even close. This old age home can't handle the inconvenient truth in any direction now. Which is why they've placed their faith in a serial liar. They can no longer tell the difference between fact and fiction.

Which is a very dangerous place to be, spiritually, heading into financial nuclear meltdown. 

"The way markets have been acting this year, treating high-quality American assets as a haven, makes sense. But even a sensible move can reach extremes and create distortions."

The trick is trying to figure out when rational activity takes conditions to a riskier place. It’s unclear we’re there yet."

"In response to the vast uncertainty of Chinese economic performance, the U.S. has outperformed the rest of the world"



As it was in 2015 - until the rest of the world peaked at a lower high and rolled over again:

"And so, we see the liftoff of the Vanguard Mega-Cap Growth ETF versus the Global Dow. The latter is a roster of multinationals that has stalled, while the glamour stocks of the Nasdaq carry the MGK skyward"

The P/E of that Vanguard mega-cap growth basket that so many investors are hiding in is now 30, leaving a diminishing margin for error."

"It’s become commonplace to argue that the stock and bond markets are sending conflicting messages"



One is heading for NeverNeverLand and the other one is heading for recession:

"The forward price/earnings ratio of the S&P 500 now exceeds 19, the high for this bull market, while the expected rebound in profit growth keeps getting pushed ahead into the future by the global industrial slowdown"

We could be dead and be smarter than these people.

"Bank of America global strategist Michael Hartnett, who has been correct in calling for a strong run in risk assets into early 2020, continues to recommend playing this trend until investors grow more clearly “euphoric”

"We're looking for any sign of euphoria"

"Keep playing the momentum Ponzi trend until the greater fool arrives. If it turns out to be you, don't worry, you're used to it"

Five down. Three up. At all degrees of trend.

Buckle up.

Soon, the burden of truth will no longer be on the truth, it will be on Twinkies of men.

And the fools that follow. 

"No Useful Idiot Saw It Coming"

History will say that the Trump era stood for only one thing: greed, greed, and more fucking greed. The apex of forty years of Banana Republican criminality...

The gap between economic fantasy and reality has never been wider. Which proves that the Commander-In-Thief has done his job. Now no one can stop human history's best lubricated circle jerk of like-minded dunces. Last week's Senate impeachment acquittal has sent fake confidence soaring into the stratosphere...

Over on Zerohedge, a handful of their thousand alt-writers have attempted to raise the red flag on casino risk, in between UFO sightings. I give them a C- on the bearish scale and an A+ on the Circle Jerk scale. Half-assed depictions of risk that assiduously avoid pointing fingers at their beloved con man. Ensuring that he takes none of the blame for this epic delusion. After all, this is an existential election in November, with epic greed and corruption now at stake. Suffice to say, they've done nothing to slow the pace of the frenetic GOP circle jerk.

Sadly, the milquetoast bears are constantly being contradicted by their beloved Herbert Hoover who is continually seeking new ways to increase the magnitude of the super bubble. Using what else but more borrowed money:

Which is why, despite the fact that World economic uncertainty is now at record highs, the stock market is now positively correlated with global implosion. Central banks have increased gambler lubrication inline with global meltdown. 

Bear in mind this is through the fourth quarter of 2019, and does not include Corona risk. 

World Uncertainty Index:

"The World Uncertainty Index is a new measure that tracks uncertainty across the globe by text mining the country reports of the Economist Intelligence Unit"

Meanwhile, we learned that the U.S. budget deficit is blowing out to record highs as the economy slows. All of that new debt issuance heading straight for the Cayman Islands via Trump's tax cut. Which is why Trump is now talking about cutting Social Security and Medicare. There's only so much money to go around.

CNBC:

"I stand by our comments that the tax cuts will pay for themselves," Treasury Secretary Steve Mnuchin said at a congressional hearing on Wednesday. "This will be simple math."

We have been told the same blatant lies for forty years straight. Ever since Supply Side economist Arthur Laffer concocted the "Laffer Curve" claiming that tax cuts pay for themselves. The center-piece of Reagan's economic budget. In the event Reagan TRIPLED the U.S. debt in one decade and converted the U.S. from human history's largest creditor nation to history's largest debtor nation. As tax rates approach the zero bound, it becomes mathematically impossible for GDP growth to offset the reduced tax flows. After all, 0% of infinity is zero. The only GDP "growth" comes from the stimulus impact of the rising debt aka. Borrowed GDP. 

Here we see that under Trump, corporate tax receipts have collapsed on a nominal basis down to 25 year lows. On an inflation adjusted basis these are at Depression levels:

Worse yet, GDP growth is stalling despite the widening deficit. 5% of stolen money to barely achieve 2% growth. A recession at any other time in U.S. history, when honest men prevailed.

Here we see GDP growth (blue), a lagged indicator, and job openings the leading indicator:

All of which apparently explains why GOP consumer confidence is now back at all time highs. The same level it achieved post tax cut, right before the wheels came off the bus.

It appears they believe they got away with the crime of the century. And who would tell them otherwise?

They don't trust anyone who can be trusted.

In summary, record risk and record over-confidence have led to the widest gap between fantasy and reality in U.S. history:

Cyclicals are warning what's coming. Contrary to popular belief, Go Daddy is not a leading indicator.

Vixplosion has been delayed, not denied:

China Syndrome

China Syndrome: a nuclear meltdown scenario so named for the fanciful idea that there would be nothing to stop the meltdown tunneling its way to the other side of the world ("China")


According to Zerohedge, the Chinese economy has ground to a halt. If so, Trump just won the trade war. And his booby prize will be global super implosion. Speaking of Camacho-In-Chief, Monday is a trading holiday to celebrate President's Day. What could go wrong?

Below, via the IMF, we see China's GDP growth rate through 2019. I also added in an hypothetical decline of 2% based upon current estimates of the virus impact. Of course if Zerohedge is right, this forecast could be optimistic.

"Millions of small businesses in China could be destroyed by the coronavirus outbreak, which has swept across the country, threatening “social stability.”

"Economically, the impact looks certain to dwarf the financial fallout from Severe Acute Respiratory Syndrome, or SARS, which killed nearly 650 people across mainland China and Hong Kong between 2002 and 2003 with its flu-like symptoms."

While hard figures are even harder to predict, analysts have speculated on China taking at least a 2% hit in GDP growth this year, eating into previous forecasts of just under 6%."

The IMF was forecasting 5.8% for 2020, so a 2% haircut would look like this:

"The new estimates show that oil markets face a significant surplus despite the latest production cuts by OPEC and its partners."

Trade wars, divestments, coronaviruses, and massively subsidized over-production. 

What could go wrong?

In summary:

Mind the Gap 'n Crap

#Winning!!!

"I bought for the tax cut, but I stayed for the pandemic and wretched excesses"

Buy And Explode

We have achieved peak synthetic prosperity, as gamblers chase extreme risk into the apex of a super bubble fueled by wretched excess. But don't take my word for it...

I am constantly not amazed when these bailed out billionaires point to some secondary metric such as "EBITDA" to illustrate the day's excesses while ignoring the trillion dollar money printing operation required to keep this bubble inflated. Were it not for a decade of monetary bailouts, these billionaires would have a fraction of their current wealth. 

Nevertheless, outside of a handful of widely ignored cassandras, the order of the day is keeping the brainwashed sheeple locked in the casino. The mantra buy and hold is rock solid now. Everyone convinced they can ride out an imploding Tech bubble through greater recession. The Nasdaq drawdown was -80% post Y2K; I would expect nothing less than the same this time around, as the broader market left this rally over a year ago.

Below we see the con job of the day, this belief that everything is great in the world except the coronavirus. A fantasy that has given con men cover to continue recommending stocks at the end of the cycle, amid deepening economic weakness. Worse yet, today's collapsing interest rates are used as a rationale to justify asinine valuations, based on earnings predictions which at this point in the cycle have the veracity of a Magic 8 Ball.  

"He said the market is trading at 20 times his estimates for this year’s earnings.

“That is not unreasonable,” considering the low interest rate environment, he said. “But it’s certainly not cheap.”


And when their estimates turn out to be a figment of the imagination, what will they say? What they alway say at the end of the cycle, "Oh well, we were off by a minus sign".

In other words, it has never been more difficult to be a sane investor, because there has never been more mass insanity than right now. The forgotten term "unrealized gains" is the lesson these people have yet to learn. Everyone believes that they alone will retire at the apex of human history's largest super bubble.

Overnight, the first pillar of delusion began to fall as come to find out the virus is not contained, quite the contrary it's rapidly increasing, and/or vastly under-reported. Likely both.

"The hard-hit central province of Hubei reported 242 deaths in just one day and 14,840 new patients -- by far its biggest one-day tally since the crisis erupted last month."


Of course, the futures were down overnight as the rest of the world sold off, but the order of the day in the U.S. was "BTFD". Because everyone knows that an expanding pandemic is a buying opportunity.

Here we see via Momentum Tech that the urgency to BTFD has been increasing for three weeks straight. Every gap up is followed by a rollover with weakness peaking post weekly opex aka. Monday:

Here we see via the call/put options ratio, that speculative surge precedes every implosion. The magnitude of the surge and expiration matches the magnitude of the volatility spike (lower pane). Note, I used the Global Dow to show that U.S. speculative appetite is following global patterns of risk:

The widely ignored Hindenburg Omens have been warning as to what is about to come, as new highs are rolling over and new lows are expanding (not shown):

Yesterday I showed the NYSE HO count, here's the Nasdaq HO count. The right shoulder is now identical to the left shoulder per the moving average:

Prepare for global panic 

aka. "Overnight risk"

  

An Inconvenient Paradigm Shift

For those who were five years old in Y2K, this is going to come as quite a shock. For the rest of today's overleveraged amnesiacs who've seen this exact same movie twice, this will come as an even bigger shock, when they realize they were beguiled by Forrest Trump. God's way of proving they would believe the Devil himself just to be great again...

Young people are not waiting for November to watch Trump Make Democracy Implode Again. When the Tesla rally unwinds amid cycle high misallocation of capital, Trump's dumb money super bubble will spontaneously explode. The irony is biblical.


"I think we took a wrong turn back there"

The rise of Tesla at this late stage was no coincidence. It was harbinger of a momentous economic paradigm shift taking place. Out with the old in with the new...

Any questions?

It appears that the generation that "never votes" has had enough of rigged elections and are taking matters into their own hands. And who could blame them, having been trapped in an old age home with a bunch of incontinent geezers incapable of accepting the inconvenient truth in any direction. Are Millenials ready to lead? Of course not. Who the hell raised these kids anyways? It's called bad parenting when one generation is imploding from self-inflicted consumption overdose and the next one coming along has non-existent life skills. Their parents too busy living vicariously through their own children to raise them properly.

Sermon over. What does this have to do with the mega explosion of Trump Casino? 

EVERYTHING it turns out:

Last week:

This week:

"More than 50 campuses — including Harvard, Boston College, Boston University, Tufts, MIT, Brandeis, Clark, and Worcester Polytechnic — will participate in Fossil Fuel Divestment Day."

"Institutions divesting from fossil fuels include over 1,000 organizations, representing nearly $14 trillion".

Which is why Millenials are now moving markets.

In size:

Bringing options trading volumes to a new record:

"Other than Tesla, recent growth in options volumes has also been driven by a pickup in trading big tech stocks including Amazon, Apple, Google, Microsoft"

What happens when these rented lottery tickets expire en masse? What happens is that the market makers who've been accumulating the underlying stocks as a (delta) hedge, dump these most active dollar volume stocks back onto the Nasdaq in record size. Which is why Mondays have been a shit show recently, as weekly opex is Friday.

And the data proves it:

This is the third Millenial bubble in this two year market top:

But don't give the Millenials all of the credit, they couldn't do this without Trump:

"As big endowment funds face mounting pressure to reduce their exposure to the fossil fuel industry, there’s one thing making their decision easier: the energy sector’s underperformance."

“I’m done with fossil fuels ... they’re just done. We’re starting to see divestment all over the world,” Jim Cramer said Jan. 31 on “Squawk Box.” “You’re seeing divestiture by a lot of different funds ... we’re in the death knell phase,” 


Trump vastly accelerated the death knell of Big Oil:

Just don't assume King Donny is a lock for November.

That is a record-leveraged fool's bet right now. When the MAGA Clean Energy rally unwinds amid cycle high margin calls, the underwear will be mighty stained.