Now For The REAL Meltdown

Central bank actions gave gamblers a last chance to get out, before the REAL crash...


The bailout for the wealthy is complete. Implosion may now resume.

"Let them eat stocks"

It portends ominously ahead of a three day long weekend in the U.S. that the S&P is once again camped on the 200 day moving average. As we see at the February top, the first wave down (i) exploded through both the 50 day and the 200 day moving average. Now of course, the moving averages are reversed due to the death cross that took place back in March.

After the close Friday:

U.S. Gamblers have been chasing risk all week ahead of the long weekend.

Complacency is extreme:

"Securities trading was among the most common uses for the government stimulus checks in nearly every income bracket"

The coronavirus rout brought a copious amount of new accounts to online brokers in the first quarter"

“The rush of retail investors into U.S. equities is at least partly a function of a world with no casinos, no sports betting to speak of, and little to do outside the home,” DataTrek co-founder Nick Colas said. “The dopamine rush of a full house is the same as holding a hat-sized stock into an up 3% open on the S&P.”

Now we know where the stimulus went - guns and stocks. Where else? 

Outside is America

Treasury issuance:

Tech is in a rising wedge and when it breaks volatility will explode. Stop losses will be hit.

ETFs will implode.

Amazon had a massive key reversal late this week:

Retail cash balances have now reached a new record low

Dual-listed Chinese Tech stocks are getting obliterated in multiple time zones ahead of the impending trade war escalation AND potential MASS U.S. exchange delistings. Baidu is the first major Chinese company to consider delisting in the U.S.

"According to ChinaLawBlog.com, a service of law firm Harris Bricken, "the likelihood that the Chinese government will comply with this demand is at most two percent." And assuming China does not comply, that means that "all Chinese companies currently listed on the U.S. markets will be delisted and no future listings from Chinese companies will be permitted on the U.S. markets."  

The Wall Street Journal, which calls HFCA a "nuclear option," notes that passage of the law "would require the SEC to prohibit trading in any shares" that fail to meet the law's requirements -- which is to say, potentially all Chinese stocks. Nasdaq says passage could "torch" the value of "around $1.8 trillion" worth of Chinese stock, which would no longer be nearly as easy to trade in the U.S. "


CNBC: Bill That Could Delist Chinese Companies Is Moving At Warp Speed Through Congress

The equal weight S&P peaked three weeks ago:

This virtual "rally" is 100% virtual economy

Gasoline demand remains our best real-time proxy for the REAL economy; however, demand fell week over week and is currently down -28% year over year. Which is interesting because this is the first week when every state took steps towards re-opening. 

https://www.eia.gov/petroleum/weekly/index.php


Somewhere along the road to reopening:

The central bank Jedi Mind trick is wearing off:

This next leg down will not test liquidity, it will test solvency.

"On the first day of China’s biggest political event of the year, Xi Jinping sent a clear message to Donald Trump: We’re going to do what we want in Hong Kong, and we’re not scared of the consequences."

China refrained from setting an economic growth target for the first time in decades, triggered immediate calls for fresh protests and sent the MSCI Hong Kong index to its worst loss since 2008."

Trump Administration Warns New Security Law Will End Hong Kong's Special Trading Status 

You Can't Warn Zombies. I've Tried.

Have you ever tried to save someone who didn't want to be saved? Of course you have...

Corporations spend $250 billion per year brainwashing sheeple. For that sum, they expect a substantial return on investment. And they get one. The Lonely Crowd long ago anticipated the rise of a mindless corporate Borg wholly incapable of thinking for themselves. Competitive consumption addicts drifting unmoored in a sea of nihilism, evaluating right and wrong based upon what every other competitive moron is doing. A school of minnows, easy prey for sociopathic sharks. 

My futile goal while in the grocery store is to avoid being monetized by a multinational food processor for fun and profit. Have you ever noticed that the healthy items in the store are never on sale, and the boxed crap always gives a discount at checkout? We live in a country that incentivizes unhealthy lifestyles while at the same time making healthcare less and less affordable to the people who can't afford healthy food.

Think about it. Those who do the back breaking work in this country have the least healthy diets and the least access to healthcare. Hiding exploitation behind a facade of superficial corporate generosity has become an overriding marketing theme in this country. It's not "virtue signaling" as the alt-right claims, it's far worse, it's token virtue. Token acts of kindness to ignore the chasmic gaps in the safety net, that are swallowing families whole. Charitable spectacle. And it's just as much the modus operandi on the far right, as it is on the far left.

The story of this week was a guy who refused to wear a mask in Costco. He claimed he "woke up in a free country". Woke is an interesting choice of words, because that's what alt-right nutjobs call outraged libtards, "Woke". It's a synonym for virtue signaling, intended to denote someone with a superficial concern for right and wrong. It speaks volumes that the alt-right automatically presumes that everyone is equally debased. The term cynical itself means to assume that everyone is equally debauched. Who has more motive to assume that everyone is equally corrupt than those who are profoundly corrupt?

Nevertheless, this drone in Costco didn't wake up in a free country. He woke up in a country controlled by corporations. Opinions on social media were largely in favour of the store manager who turfed the unmasked bandit from the store. However, plenty of people sympathized with his plight. I see both sides: A man fighting back against de facto mob oppression. And a man who is somehow unaware of the fact that he was long ago assimilated by the corporate Borg. From the machine's perspective this guy was no more interesting than a dying trout flopping around on the dock.

Zooming out to the historical perspective, none of this COVID theater of the absurd is a conspiracy, and none of it is going according to "plan". 

The human species has always had a need to play god and thereby to pretend to exert control over the incalculable numbers of variables that affect our lives. It works for a while - if only because ANYTHING can work for a while. And then it all explodes. The greater the illusion of control, the larger the meltdown. Nassim Taleb wrote an entire book about "fragility" and the apparent inability of humans to control universal chaos. He concluded that the end result of ever-encroaching sclerotic control is a society wholly unable to handle adversity, creating a veil of Potemkin fragility that is ultimately pierced and then shattered. Voila.

I can condense Taleb's entire book down to one sentence:

We are not God. 

I've said it before, this COVID pandemonium could have been avoided if we had a healthy population, but we don't. Toxic frankenfood has poisoned the human race. Add in vaping, binge drinking, xbox addiction, porn addiction, TV addiction, social media addiction, opioids, and big pharma to round out the myriad of toxic corporate vectors that have made this virus lethal. 

We live in a human toxic waste dump. 

And we can't save those who are addicted to corporate servitude.

Freedom is a choice.

Buy And Explode

This is the second COVIDIOT top in three months. For the second time since the global pandemic began, gamblers are about to learn that printed money is NOT the secret to effortless wealth. But who knew?

The 1930s analog is right on track, as Herbert Hoover is falling back on his signature election-rigging strategy:

There are no long-term investments on the face of this planet. Everything is now a dumb money trade -  Look around to figure out where the dumb money is heading, get in first and get out before the stampede. Is this unethical? Only if you are one of the psychopaths counseling buy and explode. As I've said, the casino is going to trade in a wide Japanified range for years to come. Which means buy the dips and sell the rips.

Just like Suze Orman:

Orman in her own account buys the dips and sells the rips while recommending that everyone else dollar cost average into a depression. Warren Buffett gives the same advice - buy and hold index funds for the long-term. However, right now he is sitting on RECORD cash. Both are intrinsically using the same strategy: buy low, sell high. The sheeple who buy and hold just happen to be the bagholders on the other side of their trades. It's the perfect system. 

Looking at the S&P 500, we can see that this rally started running out of glue fumes several weeks ago. Recently it's been levitated by fewer and fewer over-crowded bubble stocks.

Having made two unsuccessful attempts to close above the 200 dma, Skynet just rinsed the bears above the 200 day at wave ('2'), the exact same way as at wave (ii): 

Here is year-to-date performance by major market sector. As we see, only Tech has been moving higher for the past month:

There are several dumb money bubbles taking place right now - some of which I comment on regularly. 

One bubble that has really taken off in the past week is the junk Biotech rally which is predicated upon the theory that every revenueless Biotech stock will invent the first COVID vaccine:

Among the companies going parabolic is Novavax which was at $4 per share at the beginning of this year and hit $61 yesterday:

Of course video games are on fire as a generation of boy-men have figured out they now have a new "career" playing xBox. 

I would point out that this mega Tech bubble is now a global rally, led by eCommerce "stay at home" stocks. 

Pop goes the bubble:

Silver confirms that precious metals are about to get monkey hammered. Gold (futures) peaked April 14th, although the gold stocks have been making new highs. 

I would be remiss if I did not show the central bank managed internet index again, chock full of the "big names"

Here we see the VIX back-testing the 200 day with the internet index in the background.

I think we all see where I'm going with this:

One thing you have to have in any pandemic is lots of guns

Now we know where all of the stimulus money went:

Here we see that options risk exposure is similar on the right shoulder as it was on the left:

In summary, the 1930s analog is right on track. This week, the U.S. made moves to implode Huawei, to increase scrutiny of Chinese-listed companies, and to fan the flames in Taiwan.

All moves to get China to react and therefore invite further trade sanctions.


As it was in May 1930, this rebound rally was just enough to embolden policy-makers to do something really stupid:

Here is the long-term count:

Belief In Printed Money Dies Hard

Central banks bought this Idiocracy a tree a horse and a rope to see what they would do with it...


Which makes this a con man's paradise. While Trump's base sits around jacking each other off over "Obamagate", Super Dunce is getting set to explode them, for good. 

"Ill-fated" will be the term that is most often used to describe America's first mentally challenged President and his like-minded followers. 

In a hyper optimistic society constantly sniffing glue fumes, no one wants to be the bearer of bad news. So when it comes to predicting the future, today's money-for-hire pundits all take the most fantastical interpretation possible.

Some say that no one can predict the future. This is the standard belief of today's used-car-salesmen investment advisors. Stay the course. Don't panic.

However, as Robert Louis Stevenson famously wrote:

"Sooner or later everyone sits down to a banquet of consequences"

This blog was never about "predicting" the future, it was merely about acknowledging the past. Past failures and bad decisions that had systematically winnowed down the future  state to an inevitable banquet of consequences the likes of which we are experiencing right now.

Today's recovery mirage all hangs on Fed Chief Jerome Powell and his magical money printing capabilities. The ability to resurrect an entire economy solely by injecting liquidity into financial markets. The ultimate endgame for Supply Side Voodoo economics.

Quantitative easing is what I call the Jedi Mind Trick for weak minded fools. Hugh Hendry called it Disney Markets. Take your pick. 

This time, the PhD money printers have their work cut out for them to be sure, as the stock market is now inversely correlated with U.S. GDP. Every time jobless claims come out in the multi-millions, stocks rally, due to the well-trained Pavlovian expectation of further dramatic monetary euthanasia.

This past week (Friday), House Democrats passed their latest version of a "go big or go home" fantasy stimulus package. An even bigger version of the last monstrosity. However, the GOP is having none of it. The partisan divide is widening into the election, as both sides smell blood. The Democrats are ALL IN stimulus and cautious re-opening. The GOP is ALL IN unlocking the economy and ramping the economy. They view further stimulus as an extension of lockdown. 

Which means we will get some clusterfucked version of neither scenario. Inadequate stimulus attended by a lackluster re-opening.

Mark Cuban laid it out very well yesterday. He said that the paycheck protection program was a failure. And more middle class stimulus will be needed:

The "big catch" according to his plan is that the money must be spent within 10 days and not used to pay bills:

"It's time to face the fact that PPP didn't work. Great plan, difficult execution. No one's fault. The only thing that will save businesses is consumer demand.  No amount of loans to businesses will save them or jobs if their customers aren't buying."

“We have to get to that point where the White House standard becomes the national standard, I think, in order for consumers to feel safe going out, in order for employers to feel completely safe bringing people back to work,”

On this last point, there is a chasmic divide between the White House and the blue states run by Democratic governors. We could not be further from a "national standard" on re-opening.

Whether Mark Cuban's stimulus gimmicks are dumb ideas or not, the fact is that he is right, short-term loans to small business are pointless if there are no customers.

Through his Shark Tank ventures, Mark Cuban has invested in 85 small businesses so he knows better than anyone that the stimulus programs to date have FAILED. The money is not circulating within the economy. Unlike the economists I cited yesterday, he didn't need to conduct a survey to figure this all out.

We are in the eye of the storm, which is a con man's paradise. All nature of fantasies are being bought and believed. However, the most lethal narrative is "stay the course". The Titanic is sinking to the bottom, those who don't figure this out in time, are never getting out.

For those who say this is like groundhog day, it is, except the stakes keep growing with every passing day.

“We’re not out of ammunition by a long shot,” the Fed chairman told CBS’s “60 Minutes” show in an interview aired Sunday. “We can enlarge our existing lending programs. We can start new lending programs if need be.”

Who to believe, a Trump-installed stooge at the Federal Reserve or Mark Cuban who is watching small businesses die in real time. These are the last days of Supply Side Ponzinomics. Time is running out as once again the Jedi Mind Trick is wearing off.

When this last COVIDIOT rally explodes, everything will implode at the same time

Of all of the fake rallies we've had to contend with, this one is by far the fakest

"Trump needs distractions from his mismanagement of the Covid crisis and his strategy looks straightforward: distract and “flood the zone.” So expect the “Obamagate” trope to recur endlessly and the relentless portrayal of China as an economic enemy. Economists will have to factor poor bilateral relations into their growth forecasts for this year and beyond, because it will impair growth no matter how transparent and cynical the tactic. Markets want a V-shaped rebound but the fiercer the rhetoric, the flatter that recovery curve will be."



Overnight risk is back

"We have to factor in implosion of the world's second largest economy"

"For the win"

Watch Super Dunce pull the plug on his entire gong show. You know it's inevitable. 

The New Permanent Plateau of Delusion

The Elliott Wave Theory posits that human beings will do the same stupid things over and over again until they explode spectacularly. It's a tradition, dating back centuries...

In summary, the only people who are fooled by this con job are all economists, media dumbfucks, politicians and 7.5 billion hairless monkeys, plus or minus.

The algo-driven S&P has been oscillating between the 50 day and 200 day moving average for six weeks, but who's counting. Today is the third back-test of the 200 day moving average.

The machinations keeping the casino pinned at this new "permanent" level of delusion are central banks, momentum algos, denialistic idiots, and too many weak bears getting rinsed constantly.

Morons who keep putting stop losses at the 200 day:

On the topic of extreme delusion, this is the most deflationary event in human history which is why the fake reflation trade remains well bid. For now. This is the exact same pattern we saw in February. Featuring a tall wick on the daily:

Alongside the fake reflation fantasy, leadership is shared by the extreme deflationary Jim Cramer stay-at-home "COVID-19" virtual economy index.

(No actual index exists called the COVID-19 yet, however, I expect a new ETF any day now).

However, most of these new Tech stocks are recent IPOs, which is very handy when it comes to getting the all-important Wall Street IPO pump and dump back on track. Think Zoom, Peloton, Wayfair, revenueless Biotechs etc. etc...

What took 14 months during the last rally, just took 2 months now:

"That's not FOMO, THIS is FOMO"

The only stocks NOT taking part in this grand re-opening rally are the stocks representing the actual economy. Although they are up almost 9% today compliments of Energy. Which is further indication that this rally is running on glue fumes. 

Those who believe this is 2009 deja vu and hence the beginning of a new bull market, either were not around in 2009, or are sniffing glue.

Or, are working on Wall Street and afraid they are about to lose their jobs, which is the case of this capitulated perma-bear who decided now is a great time to buy stocks:

Among other mistakes, Wall Street analysts are still in massive denial as to how many companies are about to go bankrupt. They are driving forward by looking in the rear view mirror. Wall Street future projections are never anything more than an extrapolation of the recent past. 

"This is 2009 all over again"

Has anyone figured out why economists are such fools? And why the public at large continues believing them? These will be among the biggest questions of this entire age - how can so many university trained "experts" be so fucking dumb. It's Groupthink on a massive scale. They can never admit that their life's work is a COLOSSAL failure. These will be the next people to lose their jobs as college enrollment collapses like a cheap tent. The $200k four year college frat party is ending.

This study looked at how the $1200 stimulus checks were being spent. The economists believed that people would use them to buy cars and appliances - despite the fact that car dealerships and shopping malls are on lockdown. They were shocked to find that people spent the money on rent and food. 

Here Is How Americans Are Spending Their Stimulus Checks

“Given the size of the 2020 stimulus checks, we might have expected large impacts on categories like automobile spending, electronics, appliances, and home furnishings”

“Instead, it seems that individuals are catching up with rent and bill payments as well as engaging in spending on food, personal care, and nondurables.”

Where do you buy a $1200 car online, Amazon?

These people only know about the economic multiplier only in the most superficial text book sense of the term. This is a year over year comparison of the 2019 rally versus this current rally - the S&P has traveled roughly the same distance. This was entirely a Tech led rally, the rest of the economy is dead:

I still predict that semiconductors will ultimately lead the market higher from the true low, as they usually do. However, now they are lagging badly due to the newly re-ignited trade war.

Given his eroding re-election prospects, Trump must now once again dust off his patented strategy of using China as his scapegoat for all problems.

Meaning the much vaunted "trade deal" is over. He had to tear up this fake trade deal in order to get to the next fake trade deal.

Here is the longer-term view of semiconductors for perspective. The first crash in Y2K wasn't that bad. However, those of us who thought the retracement rally was a new bull market were in for a real treat as the Nasdaq tanked -80% in two years.

Good times.

One exception to semiconductor underperformance is Nvidia which is part of the video game stay-at-home trade. Now in parabolic blow-off mode. As it was in February. 

So-called safe haven stocks are ready to re-implode.

Bueller?

In summary, JC Penney is now officially bankrupt, meaning Amazon "won" the war of the 100% virtual economy.

NOW, the casino class is going to partake in the Pyrrhic spoils of victory. And learn the hardest way possible that there is no such thing as a virtual economy.

And that only total fucking morons would believe otherwise.

Today's economists who collectively exhibit the IQ of a dead gopher, will NEVER be trusted again.