Sunday, July 28, 2019

Trump Casino: Double Or Dog Food

This should be an interesting week in Trump casino. Zerohedge was right, Trump IS now controlling the Fed. And so far, his election-rigging gambit is going great. He's only crashed the casino twice in the past 18 months...


Sheeple have been well-conditioned to believe that stocks ONLY go up after rate cuts:



"The Federal Reserve will probably cut rates this week. It could be the start of a summer rally in stocks."

"Don't worry, I've only gone bankrupt multiple times"




Below we see the schedule of major central bank meetings. The "Fed pivot" rally had run out of steam into the May 1st Fed meeting. At that meeting, the Fed indicated they were happy with the current level of rates because the trade war was "nearing the final round". Just a few days later, Trump escalated the trade war with China, in line with the Zerohedge hypothesis. By the beginning of June, the Fed was on message with rate cuts. Subsequently Trump has kept up the pressure threatening to fire Powell and otherwise stack the FOMC with Trump-controlled stooges. 



In other words, the bigger, fatter, uglier casino bubble is now managed by the croupier-in-chief. Albeit there has been no sign of untoward market manipulation.

The sectors that will not like a rate cut comprise the entire Trumpflation trade: Transports, Banks, Energy, Retail i.e. anything leveraged to the economy.

Deja vu of May, these stocks have rallied into the Fed meeting. And yet they have not made a new high and therefore have not confirmed the Tech bubble rally.

You know you're an optimist when:




Along with the reflation trade above, the reflation rate has been rallying into this Fed meeting:



We don't know if this (likely) quarter point rate cut is already priced in to bond proxies. We just know they rolled over a month ago:




Nasdaq breadth has round tripped to the same level as May (blue box):



Therefore, this Jedi Mind Trick all hangs on the most overbought stocks in the casino:

Momentum Tech

"This could be the start of a summer rally"





Defense stocks soaring into the latest Ponzi budget that just got approved




Casino stocks:






"Sometimes an investor must believe in things that don't really exist..."