Monday, June 15, 2020

You Can Lead A Horse To Water

I've been remiss in my (lack of) commentary on today's aspirational Idiocracy. Unfortunately, one grows bored of finding new ways to explain how and why ludicrously misallocated capital and delusion are ending badly...

The second stage of epic meltdown has commenced, as the chasmic divergence between intelligence and stupidity has never been wider.

Any questions?

Last week, post-FOMC witnessed the reversal of fortune we had been anticipating. Thursday was a 90% down day, attended by extreme volatility carrying over into Friday and now Monday. The algos are going berserk, featuring alternating jaw dropping rallies and crashes. The S&P finally found support at the 200 day this morning (Monday). We can see the big open gap from last week deja vu of the February top. We can also see that when the 200 day fails, the 50 day will fail at the same time. It's a two for one explosion:

Stepping back to the economy, the lagged economic data is surprising to the upside as it wobbles back from depressionary levels. My overall thesis remains the same - the combined effects of social distancing, lingering COVID fear, disorganized re-opening clusterfuck, and general anxiety have combined to collapse overall capacity utilization. None of which will get remedied any time soon. As COVID deaths begin to rise in lockstep with economic liberation, the calls to shutdown the economy will return. This aged corporate Idiocracy is caught between the Scylla and Charybdis of health and wealth. 

As a gauge of overall demand, here we see that gasoline demand at the service station level is still -20% year over year. The largest decline in our lifetimes. 

The insanity of the past several weeks somehow survived last week's turmoil and arrived this week fully unscathed. Seizing upon the home gamer zeal for bankrupt stocks, it was only a matter of minutes before Wall Street jumped on the opportunity to dump more worthless stock.

These are the types of headlines that make blogging somewhat redundant:

"Hertz Global Holdings warned potential buyers in its common stock offering that it’s almost certain that the equity will become worthless"

Remember, this has been the most popular stock on Robinhood for the past week (Hertz split off from its parent company in 2016):

The other breaking news this week is that the same home gamers who are chasing bankrupt companies are vastly outperforming active managers so far this year. Which brings to mind the Y2K bubble,when the lament among active managers was: the dumber the money, the bigger the return. 

As I recall, that didn't work out so well.

You can read the article, but I will tell you what they are buying - junk stocks, bankrupt companies, and crowded MAGA caps.

All of which makes this just another massive pump and dump.

In summary, we are getting buried with non-stop bullshit. First off because this is an election year, but also because we are surrounded by sociopathic salesmen desperate to make the quarter. A feat that is growing more difficult with every passing day. Under the calm surface of the Dow Jones Illusional Average, lies the ugly truth: The economy has been imploded and QE money printing can only drive a larger chasmic gap between reality and fantasy.

And between rich and poor.

“The downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the most affected,” Federal Reserve chair Jerome Powell said this week."

Ironically, the Fed itself has massively increased the divergence between rich and poor by way of their Japanified monetary asset pumping:

"Black and Hispanic families accumulate proportionately less in real estate, stocks, business assets and other forms of wealth than white families."

However, contrary to the disinformers of the day, the Fed didn't create economic inequality in the first instance. Decades of free trade and mass outsourcing created extreme inequality. When all of that exploded in 2008, the Fed was enlisted to paper over obvious failure with printed money. A process that has now gone into asinine overdrive.

In the near future EVERYONE will know what we know.

And they will be a hell of a lot poorer for it.

Wednesday, June 10, 2020

100% Moron Bubble. Accept No Substitutes

History will say that the Banana Republican party needed a con man to make them great again. No one else was up to the task...

Over the past decade, central banks have made being an ignorant fool extremely lucrative. However, all of that free largesse is about to come to a totally unexpected ending.

"No one saw it coming"

We have now achieved a 100% virtual economy, a figment of the imagination. And it's attended by a 100% Ponzi stock market. Central banks have succeeded in achieving FULL monetary euthanasia. The alt-right views this pump and dump as a big conspiracy. I view it as a conspiracy of dunces. There will be no beneficiaries when this house of cards collapses. When capitalism failed to achieve global prosperity and inadvertently wiped out the middle class instead, the con men of the day had to come up with something. What we are witnessing is market manipulation on a biblical scale. 

We now live in a society that has not even the slightest concept of basic economic reality. I am referring of course to today's economists. 

Among the gambling class, it gets even worse. This week, the hottest stocks were all bankrupt companies:

"In this day and age, as small day traders salivate at any opportunity to get rich quick, a bankruptcy filing has apparently become a buy signal for many of them"

In a market as bizarre as this, it seems only fitting that the next step would be a growing affinity for companies that can’t pay their debts"

Today's pundits consider this type of action "bizarre", however they have no reluctance in recommending the S&P 500 with its infinite P/E ratio, zero earnings visibility, and the largest impending corporate credit crisis in world history.

Enter the virtual economy, because for those who eschew bankrupt car rental companies, and near-bankrupt airlines and cruise lines, they can always buy the stay-at-home mega bubble. Hence it's fitting that as all of this insanity reaches climax, the leading stock is...


Here we see Amazon went vertical ahead of the FOMC and now sports a tall wick on the daily (and weekly) candle:

All of the MAGA stocks (Microsoft, Amazon, Google, Apple) are going parabolic. New all time highs all around except Google.

Compliments of MAGA caps, today the S&P Tech sector broke through the February high. This COVID rally was three times more rapid than the last melt-up:

Whereas the rest of the market is rolling over. Hard.

Volatility is getting set to explode post-FOMC as the largest cap MAGA stocks finally roll over and join reality.

Sadly, central banks can't handle what comes next. 

They had no problem getting copious fools into the insolvency bubble, but they can't get them out. Soon we will be limit down across every risk asset class globally, at the same time. When today's Idiocracy realizes that their leaders are as dumb as they are, then the underwear will be mighty stained. 

Monday, June 8, 2020

1930 Fool's Rally

The 1930 rally continued just long enough to convince the vast majority that the worst was over. As it turns out, the worst hadn't even started yet...

Central banks are out of economic ammo aka. interest rate cuts. All they can do is bid up asset bubbles and create the optimal conditions for global asset crash. The banquet of consequences has been set. Meanwhile, as any blind man can see, social mood is turning down hard, amid protests and rioting. Archaeologists won't understand how mass protests due to extreme inequality attended a vertical stock market rally. They will conclude, as I have, that this society is a late stage Idiocracy in full blown self-destruct mode.

Good times.

Without getting too politically incorrect and risk pissing off everyone, I would suggest that George Floyd was not the first black man to suffer Running Man brutality, nor will he be the last. He was merely the catalyst for the latest round of race riots. In the American tradition. In the background is the unquestioned global "system" that exploits anyone and everyone who is in poverty. There is no ladder out of poverty under the current paradigm of economic oppression, regardless of colour or race. However, the system becomes inherently more oppressive the darker the skin.

Be that as it may, as with global warming, it took a virus hoax to collapse the carbon levels down to previously unthinkable levels. And it will take the lingering state of fear to now level the economic playing field between the "haves" and the "have nots". So far, so good. There are currently millions of low wage Americans getting paid almost double their working wage to enjoy a free vacation. And they well deserve it. Should Congress fail to rollover their benefits, we will see rioting that makes the current unrest seem like a picnic. 

Which gets us back to social mood. Any blind man can see that America's long overdue socioeconomic rioting is well underway. Attended by stock market gamblers going late stage manic due to stay-at-home cabin fever. Essentially losing their minds and throwing all of their stimulus money away in Trump Casino.

Which sets up a lethal finale, as this combination of melt-up events has created a massive air pocket beneath the casino, which as been backfilled by wholesale bullshit.

The global Dow is giving a very clear warning wave count, which is corrective at two degrees of trend. The lower high at red "c" in early 2020 WARNED that global markets were heading for a crash. This post-crash rally is also a clear three wave retracement. 

It's a bear market rally. Also known as a sucker's rally.

"Speculative excess has surged to the highest in at least 20 years among U.S. options traders"

Traders established fresh bullish positions last week by buying 35.6 million new call options on equities, according to Sundial founder Jason Goepfert. That’s up from a peak of 28.7 million in February, when speculative activity was rampant"

I call this next chart "Ponzi reflation". Because whenever gamblers get fully lathered up - as they are now - they create a three wave reflationary retracement due to their misallocation of capital. No ACTUAL economic reflation exists, however they throw enough money at the oil futures to give the illusion of economic reflation. In the process they get further self-lubricated and start to buy up banks and other cyclicals under the self-fulfilling illusion of economic recovery. 

Note the difference from 2009 when China was pulling the world out of deflation with 9% GDP growth, versus 1% today.

To summarize:

Gamblers are late stage manic, while broader social mood turns dark. 

In addition, central banks are totally out of interest rate cut ammunition. All they can do now is feed asset bubbles and create the optimal conditions for global asset crash. Good job everybody. 

However they can also monetize deficits and otherwise enable fiscal stimulus on a previously unfathomed scale. However, the current political environment ahead of the election is growing acrimonious to say the least. Both sides are slinging mud and otherwise maneuvering to inflict maximum pain. In the background is this thing called the imploded economy.

Bearing in mind that these political fools change their mind every second - at present there is no "agreement" on further dramatic expansion of monetized fiscal insanity. Which means that the current political environment is highly deflationary.

Once again, what I predict next is an epic crash and epic rioting. And then a newfound political consensus on further dramatic monetization of fiscal insanity aka. Heli money for the middle class.

All we are waiting for now, is the last glue fumes to wear off.

Friday, June 5, 2020

FOMC: Fear Of Missing Crash

In a week that saw the worst rioting in over 50 years fueled by record wealth inequality, the U.S. stock market soared, generating even greater inequality. In the American tradition...

We are now witnessing lethal amounts of monetary euthanasia. I mean "Easy Money".

Let's see: 2018 VixPlosion, 2018 December crash, COVID super crash - can you believe these morons STILL haven't learned their lesson? Yes? Ok, so can I, just checking.

First off, we see below what the excitement was about today via non-farm payrolls. Economists as usual guessed wrong on today's jobs number. The "re-opening" of the economy unexpectedly created jobs, because what dunce couldn't predict that happening? This below is what Trump gloated about at a news conference. This is what Joe Kernen jacked himself off over. And this is what caused Wall Street shorts to self-implode today.

Non-farm payrolls, total jobs, millions:

That blip in the lower right, if you can see it is the "grand re-opening" of the U.S. economy:

All we witnessed this week was the dumb money longs and the "smart money" shorts go head to head, with the end result being Wall Street idiots getting stampeded by Main Street idiots, and algos. Artificial intelligence all around. 

Why anyone would short consensus dumb money longs shows why the self-proclaimed smart money is not that bright. Everyone knew that these were the most beloved stocks on Robinhood. Therefore shorting airlines and energy stocks was a consensus trade for Team Groupthink aka. hedge funds. Which got annihilated this week. All due to a nominal uptick in economic activity. 

This is the first false economic dawn but by no means the last. We can look forward to many more of these headfake rallies before the true bottom is found. Each will be fueled by the same fake hopium and the same short-covering. These are people on both sides of this fake reflation trade, who have the attention span of a dead fly and who extrapolate a single data point into NeverNeverLand.

Where this gets "interesting" is that now because of this single jobs number, the Fed will be on hold AND Congress will be less likely to pass new stimulus. Which means the real economic deflation is about to begin. The only lasting effects of this headfake rally was to create a false sense of complacency, widen the inequality gap, and reduce the future flow of stimulus to the real economy. We are now seeing a record divergence between the fate of large publicly traded companies and small business in America. The former is picking up market share at the latter's expense. Think Amazon and Costco versus small retailers. And McDonald's and Chipotle versus small restaurants.

This monetary euthanasia has now created even larger divergences and will likely throttle the flow of new income to laid off workers. I am referring to the additional $600/week in unemployment benefits which ends in July.

As I wrote in my last post, this massive false rally has set up the biggest shock and awe event in history. Somehow even more lunatic than the COVID crash. Take a look at high beta cyclicals, below. Due to massive short-covering they almost made it back to the February highs. These are sectors that have been blighted by the virus and social distancing. Many of them are on the verge of bankruptcy. Looking at these stocks, one would have no way of knowing the carnage that took place to the economy over the past three months. One would have no way of knowing that almost one third of workers are now wholly dependent upon unemployment insurance:

Aside from driving even greater inequality, the net effect of today's fake reflation rally was to implode the gold trade - which was predicated upon further dramatic monetary euthanasia. 

Gold just broke two month support and the 50 day moving average. No more further dramatic monetary expansion will be forthcoming until AFTER the impending asset crash.

Just like March:

But the more lethal effect of today's rally was to implode the "stay-at-home" bubble. Those stocks have been underperforming all week. 

Here we see Momo Tech:

In summary, while the country was burning to the ground, clueless gamblers were bidding up their own stocks this week. A process I call "Shanghai Surprise". Their risk exposure hit multi-year highs (see chart below). Meanwhile the smart money self-imploded on consensus short trades. 

Which leaves just us skeptics of idiocy and buffoonery. Because as I said in February, it's lonely at the top.

My advice is, get used to it. As long as our society is run by fakes and frauds on behalf of gullible sheeple, the con job won't end. 

This is a 100% Fed driven fantasy fueled by FOMC: Fear of Missing Crash.

Thursday, June 4, 2020

MAGA Crash 2.0: Fixing Inequality In America

I predicted that the March crash would be the biggest in world history. I was right for about three months, but now I expect this one will be far bigger. If I am right, then this is going to fix inequality, just not how anyone expected...

It appears that all of the "stimulus" bypassed the real economy and went straight into guns and stocks. In the American tradition. 

This crash has all of the insanity and risks of the last crash except with the following added risks: 40+ million job losses, the worst economic data since the Great Depression, an all new China-U.S. trade war, U.S. rioting and anarchy, monetary lubrication 3x larger than March, an even larger Tech bubble, AND a massive inflow of neophyte speculators using their stimulus checks to trade stocks. We now have both a monetary and fiscal stimulus fueled bubble. Really, what could go wrong?

This mega crash is going to give the white people something to riot about.

First off, I want to give Mark Zandi full props for being the biggest crack smoker in human history. Anyone can walk down any Main Street in the U.S. and see that the economy is not open.

I am currently visiting one of the most wide open (red) states in the U.S. hence the world, and I am surprised at how unopen it is in actuality. Most people are still wearing masks inside, and most restaurants are take out only. The local mall is still shut down, and I have eaten at the same burger joint four nights in a row because it's the only place that feels quasi normal even though the place is never more than a quarter full. It's either this or sit on the curb to eat my Big Mac for the good of society. Homeless people now have to walk through the drive thru to get take out. We're so compassionate.

We will never get to anything approaching "normal" when people have to prep for surgery in order to go shopping. This is an economic depression in which people tell themselves it's a pandemic. Because it makes them feel better apparently. My advice to Mark Zandi and all of the other economists who are of the exact same failed mindset, is to put down the crack pipe, son. As the saying goes, a recession is when your neighbour loses their job, a depression is when YOU lose your job. I suggest there will be very few employed economists before this is all over. The term "redundant" has never been more applicable. 

One of the key catalysts behind these protests is the fact that low income service sector workers have been disproportionately affected by the shutdown. Whereas, most white collar workers have been nominally affected. To many "knowledge workers" this has been merely an extended staycation. It's divergences such as these that allow economists to blithely declare the recession is over with 40+ million people newly unemployed.

Which is where this gets interesting, because the theme of this post is that the extended gambling vacation is about to come to a thunderous ending. All of this newfound "stimulus" is about to get margin called away.

Wednesday, the Nasdaq 100 made it back to the February record high level. However, we can see in the lower pane the chasmic new highs divergence, as ironically "inequality" is a major problem in the stock market as well. 

Thursday morning another rally fueled by exploding joblessness:

The mega caps blew through the February top a full month ago:

It was a well known fact that mega caps were dominating the market at the February top. This time around, it's even worse.

Ironically, Chinese Tech stocks have been leading the global rally lately. Now through the February high:

The world has been playing catchup recently, however, still far below the February high. This is the clearest wave count we are going to see for social mood:

As measured by the call/put ratio, as of Wednesday close, market froth has never been higher:

In summary, inequality is about to get "fixed". And when it does, the REAL rioting will begin.

Tuesday, June 2, 2020


The great reckoning has arrived. Those who don't see it coming were not meant to see it coming. MAGA is the biggest dumb money bubble in human history...

FAR too much time has been wasted on this failed way of life. For those drones who followed it to their logical conclusion we can only feel sorry for them. This combination of COVID hoax, global depression, and grapes of wrath anarchy is not the buying opportunity it appears to be. It's human history's biggest dumb money bubble without any question. 

For me personally, I am 100% zen. As far as I am concerned righteous reality has returned with a biblical vengeance. Martin Luther King famously declared that the "arc of the moral universe is long, but it bends toward justice". Long indeed. Many of today's pundits see parallels with 1968 the year King was assassinated: An eerily similar global virus, extreme racial tensions, and of course plenty of rioting. And my birth year, let's not forget that. At that time, the country lurched to the right to elect Richard Nixon. I don't see that happening this time around.

This time around, the Republicons are on the ropes grasping their failed ideologies. History will say that Nixon was the beginning of the fraud, and Trump was the end of the fraud. Book-ended criminals. Nixon, to his downfall, kept recorded tapes of himself fully admitting Watergate malfeasance. Like Trump, he enjoyed the sound of his own voice. Trump has incriminated himself over and over again. Whereas Biden isn't allowed any pussy whatsoever - he is married after all - Trump's evangelical base allows him to grab as much pussy as he wants. I've decided I'm evangelical now. I haven't told my wife yet, because she will kill me without hesitation.

In other words, it's quite a double standard that we've become FAR to used to, thanks to the rabid right. So much so that the alt-left is prepared to pass on an imperfect candidate, and hand re-election back to Super Dunce, while they wait for Mrs. right to never appear. There are enough fucking morons to go around. The Anti-Christ-in-Chief gained props from his acolyte base yesterday when he posed in front of a Washington church holding a bible. It's the same type of meaningless spectacle they've built their entire lives upon. So of course they loved it. I was surprised he didn't explode on the spot. History will say that his base were the last ones to know this was all ending extraordinarily badly. What they perceive as a new beginning happens to be the end of their entire Faustian way of life. The only question from an historical perspective will be, how many demented hillbillies were there at that time?

Global central banks have now administered lethal doses of monetary euthanasia. So much so that global asset prices are now heading in the opposite direction of global GDP for the first time ever. It's the largest misallocation of capital in human history. Today's masses are now fully convinced that printed money is the secret to effortless wealth and far more important than jobs, industries, and economic output. According to these people, economic output could fall to zero and it would make no difference to asset prices. As of this week, over 40 million (27%) of U.S. jobs have been lost and an estimated HALF of all small businesses.

Globally the picture is as bad or worse. And yet today's economists still see a "v-shaped" recovery. 

Small investors always rush into stocks in droves at the end of bull markets, and this time is no exception. This is the second COVIDIOT top in three months, and yet this one is even frothier and more lethal than the last one. This time gamblers are crowded into the most speculative and over-owned Tech stocks. At the last top, most sectors made new highs. This time it's Tech and Biotech alone making new highs.

Gambling through a pandemic has now become a widespread preoccupation:

"A global pandemic has thrown the world’s economy into a terrifying tailspin. The stock market’s gyrations, which often seem wholly disconnected from the actual economy, are more unpredictable than ever — and no less an investment wizard than Warren Buffet says his fund remains on the sidelines because “we don’t see anything that attractive” to buy. Yet somehow an app designed to encourage inexperienced young Main Streeters to play the market, and that has been dogged by reliability issues, is a smash hit, bolstered by the smartest Silicon Valley investors."

Any questions?

Add in dumb money index allocations, fund managers chasing performance, and momentum-chasing algos to create the largest dumb money bubble in human history.

Sadly, the corporate simulation of everything is ending. Badly. Now what to do, live life, what's that? Life outside of spectacle, where to begin. If you think about these social media giants that dominate the stock market, what are they dispensing other than personal reality TV shows, laced with ad-sponsored disinformation. While cable TV can boast 2,000 channels of mindless crap, Facebook has a million times that amount of bullshit. Zuckerborg was on the hot seat this week for giving license to Trumptopian fraud. Unfortunately, what regulators don't understand is that enabling disinformation IS the Facebook model. And what can Google say when their entire business is ad-sponsored bullshit. Sure they have profitless side ventures, but 99% of their revenue is paid disinformation. When Morgan Stanley installed their CFO at Google, the corporate motto changed from "do no harm" to "never miss the quarter again".

History will say that between Faux News and Facebook, America's last business model was a massive river of bullshit. That got bought with both hands. Right before the total collapse.

No one saw it coming. Mass bullshit had substituted for everything real. 

FOMA: Fear Of Missing Anarchy

Blogging in the apocalypse. Where to begin...

I was planning to call this post: THIS is Running Man, whereby the Game-Show-Host-in-Chief will now impose martial law to save the day. But, he beat me to it...

Trump's new election pivot is to become the "law and disorder" president. He needed a new schtick after his China/Hong Kong implosion scheme was hijacked by mass protests. He is now threatening to bring in the U.S. military to quell the protests. 

Since the COVID outbreak we have witnessed the wholesale collapse of civil liberties. First featuring a fiat-ordered shutdown, and now featuring nightly curfews. Libertarians are going batshit crazy right now. After all, their own beloved saviour will be the one who completes the authoritarian takeover of the United States. They better than anyone know that the U.S. military was never intended to police the domestic populace. This would be an unprecedented foray into Third World martial law, as I predicted a few months ago.

Meanwhile, Trump just threw Hong Kong under the bus because his threats of military force are precisely what the Hong Kong security bill was threatening last week. No sooner had the high and mighty EU, UK, and Canadian governments criticized China for abuse of power, than Trump does the exact same thing only days later. Do you think these sackless puppet governments will ever criticize Trump? No way. Just as they all pander to Saudi Arabia, they have no problem ignoring civil rights when there is real money on the line. 

"Throughout the protests in Hong Kong last year, the US was consistent in its support of people's right to take to the streets and have their voice heard, and that sporadic violence or illegality did not undermine the core demands or legitimacy of the movement.

Facing widespread unrest and public anger at home in the wake of the death of George Floyd, an unarmed black man, at the hands of a police officer in Minneapolis, the reaction from US President Donald Trump appeared markedly different."

It was a response that might not have appeared out of place on the pages of China's own government-controlled newspapers"

The arsenal of hypocrisy is on wide open display. Goodbye Hong Kong, we hardly knew ya.

Jim Cramer who has to find something to say every day to explain away mass insanity, informed us yesterday that the market remains bid because Wall Street has no conscience. All they care about is making money. 

No shit.

"At the end of the day, the market has no conscience. Investors are simply trying to make money, and that's why they're crowding into the stay-at-home economy stocks" 

"the stay-at-home economy just got a major extension for many investors [and] right or wrong, thoughtless or cerebral, it's worth exploiting."

Of course Wall Street's lack of empathy for protest movements is not any stretch of imagination. However, believing that Hong Kong doesn't matter, China trade tensions don't matter, and indeed U.S. rioting is more reason to buy "stay at home" stocks, is where things get a tad psychopathic. After all, this entire rally has been touted over and over again as the "economic re-opening" rally. So now we are to believe that martial law is the latest catalyst for rally?


As true P/E infinity would suggest, there is no bullish case anymore. There are only weak bears getting crushed by momentum algos fed by monetary euthanasia. A big fat ugly bubble further fueled by stay at home speculators rushing into the junkiest stocks using their stimulus money.

It all makes perfect nonsense.

Here we see the stay-at-home bubble going parabolic:

Cyclicals are stalled at a familiar level:

The Dow just closed above the 200 day, the last senior index to do so:

Here are a few of the recent new highs on Cramer's Anarchy 2020 stock list:

Check out Lululemon

Tesla has a double top similar to February. Shorts once again getting annihilated.

Momo Tech looking similar to the last top:

But the real winners this week are gun stocks

Outside is America