Tuesday, September 15, 2020

The Last Trump Casino

When the Nasdaq crashed at the fastest rate in history in February, FOMO gamblers viewed it as their last chance to get in to Trump Casino, unfortunately, it was their last chance to get out ahead of margin calls, limit down futures, and trading halts. When the Nasdaq crashed at an even faster rate two weeks ago, gamblers yet again viewed it as their last chance to get in to Trump Casino. Is it just me or is someone not learning their lesson around here?

This Tesla bubble is one for the ages. We've never seen a mega cap stock that commands this much dollar volume and is this volatile. When it final implodes it will lead the rest of the market lower. 2020 brought a confluence of factors that all worked in Tesla's favor. Under the law of unintended buffoonish consequences, Trump's abject climate change denial sparked a grassroots movement towards fossil fuel divestment that has accelerated all year long, amid various public pension funds and university endowments.

It's the death knell for an industry that was already reeling from over-investment, global competition, and of course COVID. This year, Exxon was booted from the Dow after almost 100 years. And now due to years of reckless mismanagement, it's facing an existential debt crisis, having to actually borrow money to pay its dividend. It's an asinine strategy that will soon see this stock in single digits. 

Meanwhile, Tesla and the entire ESG sector (Environmental, Social, Governance) has been leading the Tech bubble rally.

And the retracement, as they did in February/March:

All of the speculative charts I am looking at now sport the same three wave corrective form that we saw in February right before the real crash.

Where it gets interesting - and what I posted on Twitter - is that the Fed held an emergency meeting back on Tuesday March 3rd. Which marked the end of the counter-trend rally.

At this parlous juncture we are still seeing an epic reach for risk and absolutely no risk management or hedging:

“Rather than fear being priced in the options market, there’s fear of missing out. The price of out of the money calls, as was the case throughout August, is still trading at a premium to the price of out of the money puts...That is a very abnormal position.”

“That tells us that the public is still very committed — as are the large institutional investors,”

Of course we saw a very similar pullback in volatility in February ahead of the Fed's emergency meeting:

And we saw monetization of hedges due to FOMC: Fear of Missing Crash:

Of course this RISK ON greedfest dwarfs the one from February - truly a global end-of-cycle 1929 rally.

Into this lethal set-up, Wall Street will now dump year-high IPOs with the largest one coming tomorrow:

What could go wrong?

Monday, September 14, 2020

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

Sunday, September 13, 2020

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. 

Friday, September 11, 2020

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.