The Clown To End All Clowns

What we are witnessing is natural selection on a biblical scale. Super Clown was sent to finish the job Bush Clown started. To say that history won't be kind is a ludicrous understatement. Trump is Terminal Idiocracy...

Among his other admired forms of corruption - including but not limited to serial adultery, tax evasion, draft dodging, sociopathic lying, race baiting, and election-rigging, the Manchurian Candidate is human history's most blatant market manipulator. Banana RepubliCons are 100% behind him, likewise steeped in corruption. Sadly, non-stop bullshit can get them into Trump Casino, but it can't get them out... 

The inconvenient truth is no longer an option.

Two months to go until bonus time, so it's critical to keep the masses in Trump Casino as long as possible. Remember this headline from a year ago? Sadly it's no longer true:

One year later, we have this similar prediction for the end of the year. The word "guaranteed" should never be used in a casino:

I have steadfastly maintained that the stock market exists solely for the purpose of allowing insiders to cash out at public expense. We saw this play out in 2000, 2008, and it's playing out right now, amid peak stock buybacks and peak insider selling. 

In other words, even as used car salesmen are now guaranteeing roulette wheel returns for the next two months, insiders are bailing at a decade high rate:

Here is where it gets interesting...

Way back in Y2K, Wall Street kept dumping crap into the market until the Nasdaq exploded.

We saw a similar scenario this past month when the failed Peloton IPO marked the peak for pump and dump schemes. Here we see the IPO failed (Sept. 26th), taking down the ENTIRE IPO market in early October.

Now three wave corrective.

Beyond Meat was the best performing IPO of 2019. The lockup expiration was this week (October, 29th). Tilray was last year's star pump and dump:

Lyft was down today in sympathy with Uber. As we see, lockup expiration does not necessarily mark the bottom:

In direct correlation to the IPO market, Momentum Tech has now completed a symmetrical right shoulder:

The algos are FINALLY starting to figure out that Trump is human history's most blatant market manipulator.

Industrial trade war affected stocks have seen a massive short-covering rally compliments of Trump's non-stop market manipulations.

Thus completing the right shoulder:

Tomorrow's jobs report could be interesting, as the dollar is now at the precipice. Weak economic data and risk asset outflows are pressuring the massively crowded "TINA" trade:

Three years of incessant, non-stop bullshit later, and the MAGA con job is running out of carbon fuel:

What happens when all risk assets implode at the exact same time amid non-existent liquidity?

We are about to find out.

Rule #1: Never go FULL Dumbfuck

The Mid-Cycle Mind Trick. Is Over.

The Fed squandered one third of their dry powder to bail out Trump and improve his re-election chances. In the process, fabricating a "mid-cycle" fantasy tacked on to the end of the longest expansion in U.S. history. Which is why the masses don't see it coming. The longest expansion in U.S. history is only half over...

"Our new economic policy is called apocalyptic horse betting"

"The twin horsemen of doom that have dominated 2019 have slowed their gallop towards the abyss."

Trump's tax cut raised interest rates for the middle class, more than offsetting any small benefit they derived from the tax cut. In the end the tax cut was not stimulative it was deflationary. Which is why the Fed had to apply stimulus in 2019 to bail out Trump's tax thievery. Now the Fed has only 1.5% of dry powder, and they won't be using it until recession is confirmed, which will be a year late if the past is any guide. 

This chart sums it up. The right shoulder is the exact opposite of the left shoulder in terms of quality of breadth (new highs). 

Note that all major reversals took place at the rising trend line and at the beginning of the month.

Trick, or treat?

Crude oil can't get out of its own way:

Apple "beat" expectations after hours whatever that means. If this stock closes higher tomorrow I will be surprised

FinTech keeps making lower highs

Software is wrapping up a correction. Which means Microsoft's leadership is ending:

The algos backtested the 200 day for the IPO index. Testing to see if anyone is still around for pump and dump.

The largest IPO lockup expiration of the year is this coming week (November 6th):

Fed rate cuts steepened the yield curve, which put a temporary bid under banks and Financials.

However, with today's "pause" signal, the yield curve is rolling over again.

The mid-cycle fantasy is over. 

Which means that the casino is now leaning on semiconductors

In summary:

"Don't worry, this is only the middle of the cycle - which will make this expansion twice as long as the longest expansion in history"

"I can't remember the last time you were wrong"

FOMC: Fear Of Missing The Crash

For the third time this year, global risk assets have melted up into the FOMC decision. Which is why gamblers are well lubricated for what comes next...

The data mining in the above article is compliments of looking at global stocks in local currencies, all of which have been massively devalued relative to the dollar.

Here we see an example: The Aussie dollar has been crushed to decade lows while Aussie stocks are at decade highs. The Aussie dollar is pricing in slowing global growth, and Aussie stocks are pricing in imagined realities, compliments of record low interest rates. 

The hunt for yield is obligatory to those money managers who must produce enough income to meet their annual investment goals. Which forces them to pretend that default risk doesn't exist. Capital is now subsidizing consumption. Which is what negative interest rates implies - borrowers paid to borrow money. Ironically, the bidding up of bond values compresses yield spreads giving the illusion of low risk. Everyone gets to say no one saw it coming. All over again.

This is the biggest Tech (breadth) divergence we've ever seen:

For the past three years October was the turning point for volatility:

Distribution by large institutions visualized. Not conducive to a new bull market. 

Useful Carbon

What Putin wants is what the U.S. wanted in the 1980s - to bring down a competing empire. Payback is a bitch...

Under the old Soviet Union, KGB agents had a term to describe Westerners who were pro-Russian sycophants - "useful idiots". History will show that today's Russophiles are this era's useful idiots. By encouraging Trump to continue his relentless destruction of American democracy, they are doing Putin's bidding for him. That is not a conspiracy per se, merely the fruitful production of a true puppet master. Republican support for Russian interference in U.S. affairs merely continues America's long-standing romance with fascism. Putin is just one of dozens of fascist regimes historically supported by the U.S. (House of Saud, Ferdinand Marcos, Pinochet, Mbuto, Shah of Iran, Saddam Hussein, Batista (Cuba), Chiang Kai Shek, Noriega) etc. Usually these fiends were operating against their own countries not against the United States, but since Trump is allied with Putin, any election assistance is much appreciated.

This is not the first democracy the U.S. has subverted by any means. The U.S. has sought to undermine every "left wing" government in the world. That is the tremendous irony in this situation - that the Democratic party is now viewed as a "foreign" threat to U.S. hegemony. Yet another "socialist" incursion against America's storied capitalist greatness. A fantastical myth now running on MAGA glue fumes. Nevertheless justifying every effort to undermine the opposition - taking Nixon's malfeasance to an entirely new level. 

For two years straight all we heard was "no collusion" between Trump and Putin. The minute the Mueller report exonerated him - despite locking up several of his co-conspirators - Trump picked up the phone and began colluding with foreign governments - this time on the record. Which is nice, because now we don't have to hear "no collusion" anymore from useful idiots. Apparently they've figured out what it means. Footnote for history, you never want to go on record denying something you have literally no way of knowing took place or not. Just because a serial liar tells you so. One hundred lies equals one truth. 

The U.S. didn't really bring down the Soviet Union. The old empire was already collapsing for all of the well known reasons - primarily economic stagnation. Likewise, Russia can't really collapse the U.S., because the U.S. empire is already collapsing under the weight of relentless corporate greed. All empires are destroyed by corruption from within. All that Putin's manipulations vis-a-vis Trump can do is obfuscate the final denouement of the empire. So that the fewest number of people see it coming. When all they think they are doing by colluding with Putin is sealing Trump's presidency. Making America great again. Do these fools really think that Putin's goal is to make America great again? Is there nothing they won't believe? No. Not when tax cuts are involved. The fact that these people continuously pass themselves off as patriots is a sad joke. Nothing could be further from the truth.  The limitations of cultivated ignorance and rule by idiots are on broad display for anyone to see. So far, the damage appears strictly reputational and political, but the true damage is taking place beneath the facade of this Potemkin farce. The removal of all fiscal, monetary, and regulatory safety nets at the end of the cycle. The dismantling of the worker healthcare safety net to give more tax cuts to historically enriched corporations.  

Pure insanity and criminality.

The Mueller report thoroughly documented extensive Russian interference in the 2016 election. All of which was assiduously ignored by Republicans. All they searched for in the document was Trump's name. To ensure there remained degrees of separation between him and his Kremlin handler. Which means that three years ago, Putin got exactly what he wanted - a Manchurian super dunce in the White House. Sowing non-stop anarchy. The greatest "asset" placement in the history of spy craft. These people are partly right, the fate of Trump's presidency IS sealed. But there is far more at stake now than just an election.

History is being made in real-time. And suffice to say it will not be kind to those who make it their overriding goal in life to know absolutely NOTHING about history.

All Time High Denial

This Trump Casino will be imploded by the exact same technique Trump used on all of his other casinos - lack of liquidity due to too much borrowed money. Aided and abetted by buffoonish over-confidence...

The borrowed Trump tax cut hit paychecks on February 1st, 2018. The same day the global casino exploded. Since then, liquidity has grown more and more scarce. The term we will all be hearing in the very near future is "no liquidity". 

“In our mind, this persistently low market depth leaves U.S. equities vulnerable from here if central banks fail to validate market expectations or U.S. recession risks resurface”

Unfortunately, denialism is now a rampant and contagious mental health disorder...

Conspiracy theories are the last refuge of abject denialists. Because they can't handle the truth in any direction, they must concoct asinine and conveniently unprovable theories for why everything is fucked up beyond all recognition. Recently one of the fathers of a murdered child at Sandy Hook elementary successfully sued some lunatic denialist who claimed that the father had falsified his deceased son's death certificate. Denial doesn't get any more hideous than this, unless we're talking about destroying the planet to bolster Exxon profit. The author of this garbage was a professor no less. Denialism is now a rampant mental health disorder.

"Nobody Died at Sandy Hook" was pulled from bookshelves in June and the publisher, Moon Rock Books, has apologized to the Pozner family."

Sheer greed and ineptitude are never to blame according to these grand conspiracy theories. There must always be some secret grand plan. George Soros is always the master planner. He is rich, Jewish, and liberal. He checks all of the master planner boxes. Given the collapsing state of affairs, he is busier than a one legged man in an ass kicking contest. Sadly, global meltdown is not someone's grand "plan". It's not even Trump's plan - he's just inherently skilled at imploding things. His entire business career was one imploded casino after another. This one will merely be his biggest, and his last. No one will be amused by out-of-control dumbfucks and their Lost Boy theories when this circus explodes with extreme dislocation.

Speaking of incompetence. This failed gambit takes the cake: A year ago Standard & Poor's was worried that Big Cap Tech was too dominant in terms of index weighting. So they had the brilliant idea of moving internet stocks (Google, Facebook) out of  the technology sector and arbitrarily moving them to "Communication Services", which used to be Telecom and is one of the least owned sectors. Their theory was that all of that dumb passive ETF money would follow. Of course that never happened - no one sold the Tech sector to rebalance to Communication Services. Which means that the remaining two mega cap Tech stocks left in the Tech sector - Microsoft and Apple are now the two most massively overbought and overowned companies in world history. And also why the only sector that made a new high today with the S&P 500 was...you guessed it, Technology. One year later, problem made far worse. Because that's how we roll baby...

On the subject of abject denial:

"A year of wild Trump tweets on his trade war with China. Stocks have shrugged them off. It’s been a year of decelerating global economic growth — thanks to that Trump trade war — and gloomy predictions from the likes of the IMF, and stocks could seemingly care less. Earnings growth in Corporate America has slowed noticeably through the first three quarters of the year. Mr. Market says who gives a damn"

The market is evincing the same denialistic psychosis as this society. Go figure. After all, who do you think is buying this crap?

"The stock market is at a new all time high"

Turning to the new highs list, it's a bunch of miscellaneous crap, 5g semiconductors, and of course Microsoft and Apple.

Google attempted a new high today but then imploded after hours. Deja vu of May:

Among the 5g names, KLA-Tencor - no bubble here:

As always, cyclicals (banks, autos, homebuilders, transports) have rallied into the Fed.

The definition of insanity:

Here is where it gets interesting, the Tech-heavy Nasdaq 100 confirmed the S&P 500's new high today. The Dow and Nasdaq have yet to confirm.

The equal weight NDX also has yet to confirm. Which gives us a working wave count.

This is the 1987 count:

Gamblers still haven't noticed that defensives are breaking down. These are the "safe havens" which have garnered the largest inflows year to date:

The legend of the unstoppable "consumer" lives on:

What Cramer does is use a typical denialist stunt - alter the chart timeframe to produce whatever fabricated conclusion you want. Then he throws in a bunch of technical babble for good measure. 

“Polaris caught a bullish MACD crossover at the beginning of this month, and that’s one of the most reliable signals in the chart book.”

"The charts show things are looking “very good” for some discretionary stocks, indicating that the consumer and the overall economy are in great shape."



"Good news, the mid-cycle adjustment is over"

Sadly, when it comes to denial, there is no strength in numbers