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.

Dumb Money Super Bubble. See It Or Be It.

In an Idiocracy that places their faith in known psychopaths, the burden of truth is on the truth. Those who don't see this coming are merely part of the dumb money super bubble, the new subprime. The right financial WMD for the right president. Monetizing useful idiots now a longstanding Republican tradition...

But first, the Faux News headlines:

Trump is guaranteed re-election
The coronavirus is over
The trade war is over
The U.S. economy is booming
The World economy is booming

It's the best case scenario, and it's all priced in. There's only one problem, none of it's true. After a decade of monetary bailouts, today's Super Idiocracy can no longer tell fact from fiction. They have now been fully euthanized by human history's largest stimulus bubble featuring combined fiscal and monetary dopium at 10% of GDP. MAXIMUM DOPIUM for maximum shock and "aw fuck, not this again!!!"

The Hindenburg Omens are stacking up on the right shoulder. To complete the two year top:

On the topic of the Big Short, you can't beat the irony of Lloyd Blankfein from Goldman Sachs - the company that invented the self-imploding subprime CDO circa 2008 which took down the Global Financial system -  now saying that Bernie Sanders will ruin the economy. Too late, Wall Street got there first. What kind of society still gives a damn what these proven criminals think? One that elects Donald Trump on the basis of far greater criminality, that's who.

Wall Street has invented an even bigger financial WMD this time around. The dumb money index super bubble, customized to meet the requirements of the current president.   

Looking back, historians will say that this last bubble was merely the biggest pump and dump in history, featuring human history's largest leveraged buyout of corporate insiders via record buybacks, and of course a Silicon Valley cash out. Trump was the only way these people could get out at the end of the cycle. There's no way anyone else could create this large of a divergence:

Wall Street's latest attempt to re-ignite the unicorn pump and dump, has already crashed:

Where to begin with today's crack high. Start with the comparison versus two years ago. Back then the tax cut crack high led to a top, rollover, and crash. This time around, the Repo/Corona crack high led to a top and then a selloff at the end of January wiping out all of January gains. However, come February, the market exploded higher fueled by China stimulus and led by Tesla and software/cloud stocks. The reflation trade has lagged since the January selloff. 

However, today, reflation is on fire, while cloud software is rolling over. Here we see that unlike two years ago, speculators never went RISK OFF in late January, they merely rotated to the riskiest stocks.

"Get some Tesla"

Here we see the selloff in January pounded banks which have now rallied back to the 50 day:

Likewise, EMs got pounded in January and are now clawing back to a lower high deja vu of two years ago. The attendant narrative: "The Coronavirus is fixed":

“The last weeks have been brutal and the number of cases and death toll have accelerated at a frightening rate,” said Craig Erlam, senior market analyst at Oanda, in a note. “It’s far too early to declare victory, but in the era of FOMO trading, investors are doing just that.” FOMO is an acronym for “fear of missing out.”

What we are witnessing is a minor three wave correction in the reflation trade attended by a motherlode of bullshit.

Big Pharma is soaring because every fool knows that Sanders can't beat Trump in America's greatest economy aka. stimulus super bubble. 

On the other hand when it explodes without any warning, that's an entirely different matter.

In summary: 

The world (ex-U.S.) crashed in late January, which kicked off the third wave down. Now the world is rallying back to a lower high as the Nasdaq completes its blowoff top. Note RSI (top panel) is not confirming this final Tech melt-up.

What comes next will be a Tech bubble explosion accompanied by third wave down at all degrees of trend in everything else. 

Super Crash.

Which is why gamblers who focus solely on the Dow and the S&P 500 don't see this coming. Today's index watchers and pundits are card carrying members of the dumb money super bubble.

‘The longer it goes on, the worse the crash will be’

"It's fixed"

In Printed Money We Trust

Central banks have done a FANTASIC job of ensuring no one sees it coming. With considerable assistance from other well known psychopaths. Just ask Herbert Hoover...

History will say that as the global economy went into final meltdown mode, stocks went parabolic. Gamblers were well-conditioned to believe that global economic disintegration was a buying opportunity. Central banks squandered ALL of their dry powder creating a feel good super bubble ahead of the recession, leaving nothing left for when it was really needed. 

Recall, according to Zerohedge, imploding China was the "genius" behind Trump's 2020 election strategy. Now we will find out just how genius it is:

"Maybe Trump is a genius, after all. What if he finally gets the steep Fed rate cuts he has been demanding? [He did]

After that, he ends the trade wars, tariffs go to zero [Or just stay in place], and the stock market surges to new highs -- just in time for the 2020 election!"

On the topic of MAGA and Y2K melt-up, it appears that Jeff Bezos remembers Y2K rather well:

"That’s the largest seven-day selldown by any executive tracked by the Bloomberg Billionaires Index, which began in 2012"

"The Trump administration and tech have had an often tense relationship and Trump pinned the name on the companies just hours after the FTC said it would investigate their past acquisitions."

Very soon, all of these mega cap Tech stocks will be dead money for years more likely decades, and Jeff Bezos clearly knows it. Why? Because these are mature companies whose current bubble valuations far exceed their growth rates. The four horsemen of Tech in 2000 were Microsoft, Cisco, Dell, and Intel. Of those four stocks, only Microsoft has reached new all time highs, but it took fifteen years for Microsoft to take out the Y2K high (2015). Similarly, the "Nifty Fifty" stocks circa 1972 languished for decades. Most having reached peak earnings growth in that era. 

As we see, Cisco is right now selling off deja vu of of 2007. It peaked last summer:

This final bubble is a mix of 5g wireless stocks and cloud internets. All four MAGA Tech stocks (Microsoft, Apple, Google, Amazon) are in an arms race to dominate cloud market share.

Not only are these mega caps leaving behind economic cyclicals, they are now leaving behind the rest of the Nasdaq. Two new Hindenburg Omens yesterday (NYSE, Nasdaq).

Which is why the crash ratio keeps becoming more extreme.

ANYTHING could tip this market over now.

VIXPlosion is waiting to happen, as volatility is not confirming this new all time high:

In addition to printed money, the current fairy tale is that these handful of overbought Tech stocks are safe havens from global implosion. The entire world is now crowded into MAGA Tech. 

"Members of the S&P 500 are near their priciest versus shares in the rest of the world since 2008"

All of which is the long way of saying that today's gamblers are massively leveraged to a Tech bubble going into global recession without a safety net.

"There have probably never been as many characteristics of a top as we are experiencing today"

“Exponentially rapidly rising or falling markets usually go further than you think but they do not correct by going sideways.”



In summary, central banks have done a FANTASTIC job of ensuring that no one sees this coming. With considerable assistance from other well known psychopaths.

“Something is happening out there to the economy and while we can’t be quite sure what it is, this collapse in the need for labor on the part of companies is not a positive development,”

Federal Reserve Chairman Jerome Powell on Tuesday struck an upbeat note on the economy and labor market, telling the U.S. House of Representatives Financial Services Committee that the economy was “in a very good place, performing well.”


No one believes central bank bullshit more than central banks. 

After all, they have a flawless record of NEVER seeing recession coming ahead of time. And yet the morons at large never stop asking for their opinion of the economy.

In 2008, the Fed was still flying blind NINE months after recession had started AND after the collapse of the U.S. banking sector. 

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

The Fed’s understanding of the crisis, however, was clouded by its reliance on indicators that tend to miss sharp changes in conditions"



"This is a mid-cycle adjustment"