The 1930s-inspired crack fantasy they've currently bought with both hands is that Trump is going to implode China by way of winning the trade war. Any resulting dislocation will lead to lower interest rates and higher "stocks". You have to be brain dead to believe it, hence belief is near ubiquitous. They have not the slightest understanding of history, since their History Channel is all hot rods and aliens.
As we see, the quality of this con job far exceeds that of 2008, because the Dow and S&P have been financial engineered higher via ~$1.5 trillion in stock buybacks, while everything else imploded in real-time:
Three years on from the Shanghai Accord and the Shanghai Discord is going fantastic, according to current gambler positioning. Crude oil futures net long, Treasury futures net short, S&P futures net long.
VIX futures net short:
Belief in central bank bailouts is total
The social mood bubble in arrogance has reached its apex under the twin delusions of MAGA and Brexit - the "seamless" dismantling of Globalization to the sole benefit of the two nations that created it in the first place. Three years ago both nationalist movements were launched amid fear and trepidation at the potential disintegration of Globalization.
Three years later and stock market euphoria attends the actual disintegration of Globalization.
Overlay U.S. bond yields with the British pound and we are literally right back where we started from three years ago - U.S. yields a bit higher, the British pound a bit lower, however both are vertical down.
The weak link in the MAGA daisy chain is Trump's arrogant and asinine belief that the world's second largest economy can be intentionally imploded without affecting the rest of the globe, U.S. financial markets, and the U.S. economy. A stunted view put to lie as recently as 2015, a lesson long since forgotten by today's hubristic Twitter-mob.
The other fatal flaw in the Shanghai Discord is the fact that gamblers have been front-running central banks all year long. Unlike 2016, this time around there has been no fear to shake out the weak hands and otherwise reduce speculative excesses.
Over time, excesses have been accumulating and concentrating in fewer and fewer overvalued Tech stocks, and perceived "safe havens":
Which is why when Disney World explodes with extreme dislocation, the Mickey Mouse club will be duly monkey hammered. Sure, central banks will panic and open the spigots wide, but the "recovery" in asset prices will be uneven at best. Liquidity will be scarce. Certain markets will cease to function. Certain ponzi borrowers will be cut-off from funding. From a balance sheet perspective, when the asset bubble implodes, what will be left are the liabilities.
The liars will take the field again, their credibility in tatters, what else to do but begin lying again. They will attempt to quell the panic. And on the surface it will seem to work. But rumours will abound that this entity or that entity is going under. This nation or that nation is in default.
Investor confidence will be eroded. Investor capital will be imploded.
Panic will take over. The no-bailout team will take to the streets with pitch forks.
2020 will be interesting, and everything currently being debated will be of nominal concern.
