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"

Yes, This Is "Meltdown As Usual"

The high altitude explosion of super stimulus ignited by arrogant bullshit at all time lies. Unforeseen by a society of zombies drugged by the virtual simulation of prosperity and its acolyte QE. A stoned old age home in which constantly lowered expectations are the secret to success. 

An ill-fated strategy culminating in soiled underwear:

As always, we are informed that today's persistently lower bond yields are solely due to the rest of the world imploding. The U.S. now being its own separate planet.  

"Move along, nothing to see here"

“America is working and there is a blue-collar boom,” he continued. “This a fundamentally very sound economy.”


History will say that under Forrest Trump, the unquestioning Borg borrowed their way into oblivion while being told the 'Conomy is fantastic. 

Debt was the new "GDP".

Getting back to the casino, yesterday (Thursday), the market flash crashed just before noon, in a minor taste of what is about to come. Then the BTFD team rallied the casino back in a three wave correction. However, overnight on Friday (today), the futures opened down and the casino closed near the lows of the day (updated after the close). 

Which puts into play my Efficient Implosion Hypothesis regarding options expiration. Also known as, "You know you're an optimist when..."

Here we see semiconductors rolling over again this week deja vu of late January when the casino gapped down on Corona Monday. The blue arrow was Friday. As we see, today's volume is already higher than it was on big Monday (Jan. 27th) gap open day.

This was a classic headfake overthrow, "designed" to show just how much risk these free money addled morons would buy. It turns out, all of it. Recall the news from Tuesday:

As the dollar rips higher, the Rest of the World (dollar terms) has been warning of what is to come.

A warning that as we see above, Lying Larry and others have assiduously ignored. This is setting up very much like 2015 smash crash. 

Except it's not 2015:

To be sure, there have been many market headfakes that have defied the underlying inconvenient truth. 

Which is why today's pundits ALWAYS side with the casino over reality. Gamblers misallocate their own capital and then point to rising asset prices as a sign of low risk. 

Here we see the carry trade just spiked deja vu of October 2018, just prior to the S&P imploding -20%: 

"Risk is low!"

The Australian market (local currency) continues to show the chasmic divergence between fantasy and reality that central banks have now created.

When in doubt, gamblers always choose their own positioning as indication of "truth":

This week, JP Morgan pointed out the fact that there are no more safe havens in the stock market. Traditional safe havens are now the most overvalued sectors.

“Bonds, momentum stocks, and low volatility stocks rallied – pushing the valuation spread between defensive and cyclical stocks to a level 2x worse than during the peak of the late-’90s tech bubble”

JP Morgan obviously can't say sell everything, that would be contrary to their own interest, so they recommend allocation to those stocks that are most highly leveraged to the imploding economy:

"JPMorgan reiterated its call to sell out of defensive assets and rotate into cyclical assets such as value stocks, commodity stocks and emerging markets"


In other words, the stocks that are now going into third wave down, are the new "safe havens". You just can't make this shit up:

"We really like banks here"

Continuing the 2015 analog, we are on the verge of an EM currency crisis, originating in China:

"At TD Ameritrade, million trade days reached 38 in fiscal Q12020 (Sept-December 2019), compared to 23 total million trade days in all of fiscal 2019" 

"Retail traders have become manic"

In summary, global volatility has been feeding through to the S&P VIX for several months now, while being assiduously ignored.  

Bringing the VIX just inches away from triggering VixPlosion 2.0.

At the same time as everything else goes into wholesale meltdown...

Bounding Down The Road To Perdition

In retrospect, the age of Trump will be seen as an age of unprecedented idiocy and buffoonery. A late stage Roman Circus run by and for a court of arrogant jokers and fools lying to themselves constantly, while the world fell apart in real-time...

Trump has been pardoning all manner of criminals this week, softening us up for what comes next - the pardoning of self-proclaimed dirty trickster Roger Stone. If you haven't already watched "Get Me Roger Stone" on Netflix, I highly recommend it. This Nixon-acolyte has been at the heart of GOP chicanery for forty years now. He and Paul Manafort essentially invented the Political Action Committee (PAC) to bypass campaign finance laws. And they took character assassination to a whole new level.

Continuing the theme, Trump will be pardoning Charles Manson by this time next week.

All of this arrogant buffoonery is part and parcel of a late stage empire sagging under the weight of its own past. Totally unable to find a path to the future, still enraptured by the glorious past. A generation incapable of realizing it's over. Why can't the Democrats find a viable candidate under the age of 100? One that people know and trust? What does it say about GenX, that there isn't anyone in the 50-something age range with the will and gravitas to lead? First off, we know that the exigencies of the day require finding someone willing to concoct a fantasy that has absolutely no basis in reality, carry that forward through to the general election and then pivot 180 degrees back towards the moribund status quo. Because no real change is allowed in the old age home. Alternatively, find a serial con man who will commandeer a lathered up mob on Twitter while all of his false promises turn to crap in real-time.

Which, gets me to the point of this post: Reality and the truth don't care what fake promises are made by con men. The willing mob cares, just not reality. Which is how we find ourselves at this parlous juncture where every aspect of Trump's Promised NeverNever Land is turning to shite in real-time, while the masses at large still believe, it's working.

The power of suggestion.

Take climate change as an example. Trump promised that he would make the U.S. energy independent, so he threw open the Federal lands to fracking. This created the second surge in over-investment in the past decade, wholly offsetting OPEC's 2016 supply-reduction agreement, leading to another downleg in prices. 

The law of unintended consequences. More unfettered supply meant more competition, more price-taking action, and hence less control over price. Leading to a second wave of insolvency for frackers.

In addition, Trump removed the U.S. from the Paris Climate Agreement. Hence, a large group of U.S. University students took matters into their own hands and demanded divestment by college endowment funds in big oil. Meanwhile, the ESG (Environmental, Social Governance) sustainable investing theme skyrocketed as private citizens voted with their own dollars. The next thing you know, the world's largest asset manager, BlackRock, announced in January of this year that they are divesting from fossil fuels. All of which has led to a mass exodus out of Big Oil.

Again, all the unintended consequences of arrogant buffoons who believed that they could control the world on Twitter. When all they could control was the colossal misallocation of capital of their own useful base.

Now, Bill Gates comes out and proclaims that divestment will not affect climate change. Which means that the world's richest man doesn't understand basic economics. The inevitable result of being wholly dependent upon central banks for his inflated wealth. A billionaire welfare queen who believes that printed money is the secret to effortless wealth.

Quite the contrary, Econ 101 suggests that lower investment will shift the supply curve to the left, meaning lower output at every level of price. Imagine if there was NO investment in fossil fuels, how much would be produced under that scenario at any price? None.

Add in oil speculators and investors sitting on a decade of losses. Oil nations running record deficits. A late stage global economy teetering on mega collapse. And of course Trump's old age home massively leveraged to delusion.

It's all quite a recipe for carbon collapse on a biblical scale.

And what did any poltical candidate have to do to make it happen?

Just lie constantly. And make sure no one bolted from the casino ahead of time.