FOMC: Fear Of Missing Crash

I had no idea that Forrest Trump is both a climate expert AND a pandemic expert all rolled into one dumbfuck circus clown. Like his base of devoted followers he believes that he's the first all-knowing idiot in human history...

As it turns out, the less you know anything, the more you can pretend to know everything. Until it all blows up in your face, totally unexpectedly.

Fortunately as I've said, this gong show is now in the hands of a higher power who only accepts carbon payment. 2020 is the official year of carbon reduction. We can't ask for a lower carbon footprint than the one currently mandated by COVID pandemonium, or we will all be living in caves. Running down the litany of industries that will be permanently affected, airline industry experts are saying that air travel will never return to pre-COVID levels. Same for cruise ships, hotels, theme parks and rental cars. Then there is the entire office real estate market which will be permanently impacted by the new "work from home" mania. This is the first generation that thanks to broadband internet could even contemplate never returning to a full time office. Add in shopping malls, local strip malls, local retail and restaurants and you see why gamblers are crowded into a small handful of mega cap "winners" in this new virtual economy. Virtual being the key word.

"U.S. airlines hammered by the catastrophic loss of passengers during the pandemic are confronting a once-unthinkable scenario: that this crisis will obliterate much of the corporate flying they’ve relied on for decades to prop up profits."

Business travel makes up 60% to 70% of industry sales"

Here is where it gets interesting for Disney markets:

What the Fed already knows and gamblers haven't figured out, is that the FOMC can control asset reflation, but they can't control economic reflation. Which is why they keep pushing for more fiscal stimulus, which they will happily monetize with more bond buying. However, it's a bad time for an existential election which is creating this political impasse:

"Federal Reserve officials don’t like to wade into political debates, which is why it can be a distress signal when they do.

“Trouble is brewing with the expiration of these relief policies,” Chicago Fed President Charles Evans told reporters in early August after temporary federal unemployment benefits lapsed.

A month later, after little congressional progress on a new financial assistance package, Mr. Evans cited partisan politics as a threat to the economy. “A lack of action or an inadequate one presents a very significant downside risk to the economy today,” 

Getting back to Trump Casino ahead of the FOMC (Tues., Wed.):

This bounce is a weak three wave contrivance off of the 50 day moving average:

Semiconductors are deja vu of Feb/March, the last time the BTFD team got fooled by a dead cat bounce

Tesla is another very good indicator of social mood, as it was in February:

Same for Nvidia which always enjoys a nice pop at the end of the rally. They just acquired Arm holdings and for some reason the acquirer rallied on the news. Highly unusual, except in Disney markets where Skynet does everything possible to keep this fraud rolling:

I've become an expert on Disney markets. Add that to my resume.

There is literally no hedging taking place anymore, because gamblers have 100% faith in printed money:

FULL Disloclosure: I am long brick shitting volatility (UVXY).

Gamble at your own risk.

This back and forth at a top is reminiscent of Vixplosion

Winter Is Coming

We have reached peak economic activity for 2020 and several months past the election. The winter of COVID is coming... 

aka. Extreme Deflation:

Whenever we go to a restaurant, my wife and I sit inside. Why? Because there are more people outside than inside; and I practiced social distancing long before it became fashionable. I'm a trend-setter. 

But does anyone really think that economic activity will increase during the winter lockdown period? 

Not Dr. Fauci:

We know that young people will not be hunkering down this winter, as abstinence is not as good as it sounds. Nevertheless, senior citizens take these warnings very seriously.

I posted this chart below of refinery crude oil demand on Twitter tonight - what it shows is that crude oil demand is collapsing earlier than usual this year. Usually crude declines hard in October, however this year it's already collapsing:

..."refiners restarted crude buying earlier this year in anticipation of a rebound in demand for fuels. This rebound, however, never came to pass, and now refiners—and commodity traders—are stuck with millions of barrels of fuels they can’t sell. What makes things worse is that the latest data on oil demand, particularly from China, is not encouraging at all"

Where this gets interesting as usual is the feedback through U.S. reflation expectations:

 

From there it gets more interesting, because the entire cyclical reflation trade is what was holding markets up last week. And yet here we see the cyclicals generally track reflation expectations:

Jobless claims remain at apocalyptic levels and have started rising again:

“It is especially concerning that the pace of layoffs has not slowed more materially even though the economy has reopened more fully, and more and more businesses have come back online” 

What it all comes down to is America's exceptional gap between the haves and the have nots:

"The unemployment rate among banks, insurers, Wall Street brokerages and other companies involved in the handling of money was just 4.2% in August"

"By contrast, the unemployment rate for companies involved in travel, hotels, dining out and other forms of leisure and hospitality stood at a stunning 21.3% last month. What’s worse, these jobs tend to pay far less than professional work in fields such as finance and technology"

In summary, "GDP" is about to hunker down for the winter.

Clowntopian Ground And Pound. In Progress

What comes next will be an unaffordable life lesson for true believers in unfettered criminality...


"They were so accustomed to non-stop lying, conflict of interest, election-rigging and market manipulation, they didn't see it coming"

Yesterday, Trump's criminal accomplice Roger Stone advised Trump to impose martial law if he loses the election. Like many of Trump's adoring acolytes, Stone is of the mind that Trump should be emperor for life. History will draw a straight line from proven Russian election rigging in 2016 (no collusion ;-), to the tax cut election rigging in 2018, to the Ukraine BidenGate in 2019 for which Trump was impeached, to the current set of all out election rigging criminality taking place this year, not the least of which is shutting down the U.S. postal service:

"President Donald Trump frankly acknowledged Thursday that he’s starving the U.S. Postal Service of money in order to make it harder to process an expected surge of mail-in ballots, which he worries could cost him the election"



Are there any Republicans left who still believe in democracy? Rule of law? Self-respect? Or do they now all believe in clown-for-life dictatorship? History will say there were far too few Republicans with any moral conviction left at this key juncture. They were solely preoccupied with getting their morally challenged avatar re-elected.

The question on the table of course is who will replace King Donny when he chokes on his last Twinkie? Which could come any day now. In the life of Mr. Creosote, emperor for "life" will not be as long as apparently expected. Such is the half life in a double stuffed Idiocracy. Which is precisely what the Republican Party has become, 100% Idiocracy, accept no substitutes. The stain of this presidency will never be removed.

"We have our next candidate lined up"

However, taking into account record deficits, record monetization of debt, record lying about the collapsing economy, and record gambler lubrication, there is one more order of business on the table right now. Trumptopian ground and pound.

It seems so long ago back in February when the exact same extreme risks abided albeit on a far lesser scale. The COVID virus had been circling the globe for well over a month and yet for some reason over-lubricated gamblers were ebullient. And then came the crash, out of nowhere. As always, the party ended "without warning".

Out of the ashes of that "unforeseen" COVID crash has arisen a far more ebullient RISK ON depressionary greed fest than even attended the last debacle. Today's pundits seem to be of the groupthink mind that overall investor "sentiment" is far too dour right now to allow a crash. I suggest that their old fashioned sentiment indicators are not polling the 80% of trading that is now taking place by machine-driven momentum algos, nor are they apparently polling the gamblers who have been using record call option leverage to manipulate the market higher:

"On a scale of 1 to record call option speculation, are you bearish or bullish?"

Rest assured, there will be plenty of surprise to go around. Again.

Because who wouldn't believe that "stocks" could reach new all time highs in a depression pandemic. This is the highest level for the VIX at an all time market high.

As I've said, the last time we saw a headfake double top unconfirmed by the broader market (lower pane) was at the top in 2007:

Barron's this week:
The kiss of death

"Every stock market bubble begins with a story, and make no mistake—this is a stock market bubble."



No, it's THE BIGGEST stock market bubble we've ever seen, and investors are already in deep trouble. 

Trump v.s. Biden In The Age Of Denial.

No matter who wins this existential election they will be an incontinent embarassment to the nation...

God is taking her revenge for this desecration and idolatry, and she is merciless. 

The U.S. is run by the weak and the corrupt now. Neither side can take pride in their candidate. Trump acolytes constantly decry Biden's cognitive decline, while assiduously ignoring Trump's mental challenges from birth. Rest assured, history won't make that same mistake. Elizabeth Warren was the right woman for the job, however the U.S. was not ready for a capable female president. Hillary proved that in spades four years ago, unceremoniously Trumped by a circus clown. Unlike Hillary, Elizabeth Warren officially challenged the narrative of fake exceptionalism and thereby rankled the establishment in both parties. As it's been in Japan for three decades, true reform is not an option in the U.S. at this juncture. The printed money is flowing directly into the coffers of America's Casino Class who are fat and happy with the status quo. That will soon change. Trump Casino will fix America's inequality problem, just not in the way anyone right now expects. 

The U.S. still can't look itself in the mirror and admit to its failed past. So for now we settle for the token symbology taking the knee on sports fields across the country. The weak and corrupt preside over the Remains of the Day handed down from all prior generations. Today's frat boys were sent to the "best" schools to learn the art of sociopathy. Nevermind the details, the science and technology, it's not what you know it's who you know that matters. America's top schools are factories for churning out homogenized sociopaths.

For some reason today's alt-paranoids continually refer to these country club sociopaths as the "elites". Why, I don't know. There is nothing elite about them. They are as dumb as a brick, and rampant throughout society. We all know and work with these people, they are inveterate sociopaths bulldozing their way through life.

Which is how you end up in a society bereft of historical perspective. Bereft of wisdom and knowledge. These social climbers dominate every domain of society. They thrive on the efficient frontier of the generally accepted false narrative. Hyper-competitive on all the fake facts and assumptions, which must never be questioned. Their battle is a circus ring in an intellectually void desert. An appeal to emotion and belief over inconvenient reality.

These people are in no way a conspiracy. As Gore Vidal - born himself into the privileged class - once said: these people don't need to conspire - they all think alike anyways. They were raised to believe that they are better than everyone else and they deserve to maintain their country club advantage by any means possible.

Of course if this WAS all a conspiracy, it would be the biggest planned clusterfuck in history. Unfortunately, the Dark Ages was not a conspiracy either. History dictates that anarchy follows decadence. And this is the most decadent society in U.S. history.

Day in and day out we are deluged with ludicrous stupidity, compliments of arrogant unquestioning morons. The Japanese put up with this type of corruption for 30 years, because they're Japanese. The most obedient society on the face of the Earth. However this is America, wherein any form of government imposed restriction portends imminent authoritarian communism and therefore demands acquisition of maximum firepower. This is an experiment gone bad.

What once was exceptional - open borders and attracting the best and brightest from around the world, is now going in reverse at the helm of dumbfuckistan - those who were discarded by the Globalized Ponzi scheme. And yet these same people never once question their own contorted beliefs. From an historical perspective, Trump was the right man for the time. He rinsed and repeated the exact same lies all over again, this time under the banner of "change".

Biden was chosen because he was no major threat to the generally accepted narrative. Neither one is fit to lead, although a dead squirrel would do less damage to America's global standing than the incumbent.

This is all just history 101 in real-time.

Trump Casino Is Rigged. To Explode.

All casinos exist to monetize idiots. Trump's casinos are no exception...


Machines, central banks, and psychopaths are herding gamblers off a cliff:

Pandemic depression, mass unemployment, vaccine uncertainty, existential election, ongoing rioting, stimulus clusterfuck, record wildfires, bear market, fastest Tech crash on record.

What's not to like in Trump Casino?

I said a week ago at the top that we were being inundated with record bullshit. One week later and at the cusp of total implosion, the bullshit has been amplified 10x. What we are witnessing right now is a RECORD pump and dump into an imploding market.

First off, traditional IPOs are ramping up big time, racing to get ahead of the implosion:

Secondly, there are a record deluge of "blank check" pump and dump schemes coming to market as well:

"SPACs raise money in an IPO, and then place it in a trust while the sponsor searches for a business or businesses to acquire, usually within a two-year period. The companies then complete a merger and the target becomes a listed stock"

Of 223 SPAC IPOs conducted from the start of 2015 through July, 89 have completed mergers and taken a company public..Of those 89, the common shares have delivered an average loss of 18.8% and a median return of minus 36.1%"


Wall Street sees the general public and their monthly retirement savings as an endless wellspring of fresh capital to implode.

Which gets us to Trump Casino. 

What a week in Disney markets. Only market manipulation using options volatility suppression kept this con job from exploding. Every major index ended the week at key life support on the 50 day moving average. The Nasdaq has been down five out of the past six trading days and yet complacency is rampant. Hedge funds monetized their hedges this week which drove volatility lower even as the market declined.

First, here we see the S&P 500 basically at the same level it was in February when the wheels came off the bus. And yes the last cliffhanger was also a Friday (Feb. 21st):

For this chart I manually calculate dollar volume (lower pane). The main pane uses "equivolume" wherein each candlestick is sized relative to the amount of volume.

If this much volume came into play at the 50 day, picture what happens when it breaks:

Momo Tech is not only below the 50 dma, it backtested it and failed today:

The Biotech bubble has officially imploded, as concerns over the timing and efficacy of a vaccine continue rising.

Hedges were monetized this week because everyone knows this is just a correction and not another crash like the one in February that came as total surprise:

The call/put ratio is three wave corrective this week off of last week's decline, showing that social mood is still alive and well in Trump Casino:

You know you're an idiot when you think THIS is a new bull market:

In summary:

One more gap 'n crap, and denial time will be over.

Going Down With The Clown

All bubbles explode. The biggest bubble in human history will be no exception...

MAGA is the biggest bubble in human history. It has cost untold trillions in squandered monetary and fiscal stimulus, and record bullshit to inflate. Only King Donny could create a monster bubble in a pandemic depression.

History will show that everything about this era was fraudulent. Today, another apocalyptic level of weekly jobless claims. Corporations are frantically cutting staff to finance their stock buyback bloated balance sheets which are now imploding.

We have a climate crisis with the most environmentally irresponsible president in U.S. history. And a health care crisis with a president who has done everything possible to destroy public healthcare. Now Trump admits that he intentionally downplayed the severity of the COVID pandemic. A decision that cost thousands of lives, for no reason other than to get himself re-elected. I say this now with 100% conviction, those who have supported Donald Trump will come to regret supporting him for the rest of their lives. No amount of fake values will offset the stain this man will leave on the Republican party and the conservative movement. These are people who never knew when they had gone too far and crossed the line into historical farce.

It's all coming to a reckoning ahead of the election.

I had been thinking that the Trump cult and its acolytes could continue on for a while longer, but I don't think so anymore. I believe that it's a spent farce, running on MAGA glue fumes. This four year circus has done tremendous damage to the economy, the environment, to human health and well-being, and of course America's standing in the world which has collapsed; however this four year vacation from responsibility has reserved its greatest pain for those who believed in it. The cost of ignorant arrogance will be totally unaffordable.

Zooming out to the global view, last week when Shinzo Abe spuriously resigned, it was a stark reminder that 30 years of Japanonomics has failed. The continued greater overuse of fiscal and monetary stimulus as a proxy for a functioning economy doesn't work. Who knew. Worst of all, the continued abuse of stimulus gimmicks prevents politicians from making the kind of reforms that are needed to create a sustainable economy. And yet Japan never learned the lesson. Which is why the rest of the world is heading down the exact same path.

Perversely in some measure we have to be thankful to Trump. His wrecking ball administration is tearing down the walls of Globalization faster than anyone could imagine. This week he said that he wants to "decouple" the U.S. from China. The Realtor-in-Chief has not even the slightest clue what is involved in creating an industrial supply chain, but he wants to end the trading relationship first and work out the details later. Imagine what his base will say when everything in Walmart triples in price and half the shelves are empty. Trump is one stop shopping for what is wrong with the conservative movement. He is all marketing  deception and empty talk, nothing more. 

Which gets us back to the casino. Contrary to ubiquitous belief, alternating 1,000 point up and down Dow days are not "normal". It's a sign that Skynet is losing control over Trump Casino.

I put this on Twitter last night. It shows that fifteen of the twenty largest percent down days in the past six years have come in 2020. It also shows that 80% of the losses were incurred Thursday through Monday which is the weekly options expiration window. The period during which market makers are unwinding their delta hedges.

The battle of the 50 day moving average is moving into its third day (Thursday). The first leg down was the fastest on record. 

I predict that when the 50 day falls, the next leg down will be much faster. Here we see that weak bears got rinsed twice through the all time high, first at the RNC, and second this week.

As they say, the second mouse gets the cheese. 

Again.

MAGA Imploding

Microsoft Apple Google Amazon

It's the unspoken irony of this era that the only stocks that have led the MAGA rally ever-higher are the new economy Tech stocks that the Trump Administration loves to hate. While the legacy smoke stack industries get destroyed by a virus that preys on fat denialists.

Proof that God has a wicked sense of humour, and she only accepts payment in carbon:

This neatly summed up today's sentiment:

The self-nominated leader of the Ponzified masses begging for help:

The Tesla bubble has officially imploded

Record call options down the drain:

As it was during the Feb/March decline, only the last :5 minutes of trading was worth watching. The rest of the day consisted of volatility algos desperately trying to generate momentum. Get used to it until the zombies shit a brick and discover the "sell" order.

The story of the day was the Nasdaq fighting for its life at the 50 day moving average. It tagged the key support line multiple times throughout the day and then closed at the lows of the day. As did the S&P futures, which sets up an interesting day tomorrow.

Any further dislocation from this level will prove the "correction" camp already wrong on day 3 of the selloff, and then it's on to bear market:

"The Nasdaq’s 10% downturn from its Sept. 2 all-time peak, however, is notable because it surpasses the previous record pace of six-sessions that it took for the index to crash from an all-time high into correction back in March"

In other words, the Nasdaq just did in three sessions what took six sessions at the previous record crash back in March.

Got MOAC?

Momentum stocks as a whole closed below support:

Semis below the line:

Software

"BTFD" was the order of the day:

Oil was monkey hammered today

"The IEA joined the growing chorus of voices who see the oil demand recovery stalling out"

ExxonMobil’s financial pressure mounts. ExxonMobil (NYSE: XOM) faces a cash shortfall of about $48 billion through 2021, according to a Reuters analysis. The widening cash flow gap may require deep spending cuts, asset sales, and/or more debt. Exxon has already added $23 billion in debt this year. Analysts are even beginning to see the sacrosanct dividend as no longer untouchable"


History will say that the Trump era killed Exxon. 

As a reminder, in Trump Casino, there are no safe havens. 

I saw a commercial for gold today that said it's a hedge against uncertain times. Which reminded me that there are going to be a lot of gold bars on the secondary market soon. So if you want some you should wait until they go on sale.

Within a year from now there is going to be a glut of everything you can imagine except for the cash to pay for it all.

Think of it as human history's largest yard sale from people who just assumed it could happen to everyone else.

But not them.

Any questions?

"The last time that the S&P 500 and the VIX were headed in the same direction in this way was when the dot-com bubble popped in March 2000, and the tech-heavy Nasdaq plunged about 80% from its peak to reach a trough at a six-year low in October 2002."