Club Orlov: License To Kill
"The story is the same every time: some nation, due to a confluence of lucky circumstances, becomes powerful—much more powerful than the rest—and, for a time, is dominant. But the lucky circumstances, which often amount to no more than a few advantageous quirks of geology, be it Welsh coal or West Texas oil, in due course come to an end. In the meantime, the erstwhile superpower becomes corrupted by its own power.
As the endgame approaches, those still nominally in charge of the collapsing empire resort to all sorts of desperate measures—all except one: they will refuse to ever consider the fact that their imperial superpower is at an end"
Nominally in charge, featuring Forrest Trump. Mother Nature has a cruel sense of humour indeed. Cue Gary Busey 2020:
A decade of serial central bank bailouts later, it's abundantly clear that the frat boys on Wall Street are criminals AND morons, intoxicated by their own imagined realities. Fed members are the pledges who didn't make it into the country club. Super Clown is strictly the entertainment while the traditional Banana Republican looting takes place in the background...
The ONLY skill they ALL have is the ability to herd useful carbon. America's last line of "business"
Three years ago, Trump excoriated Janet Yellen for creating a big, fat, ugly bubble by keeping interest rates too low in order to rig the 2016 election. Which he won. Now he's excoriating Jay Powell for not lowering rates enough, to rig the election. It's Trump's bigger, fatter, uglier bubble, we just live in it.
"A mania in markets... is “marked by excessive enthusiasm that leads to belief in the impossible that allows for a bubble to form.” And, he says, that’s exactly what we’re seeing now — just like we saw in 2000"
Liquidity has collapsed in Trump casino. We don't know what Twitter spark will ignite this Bonfire of the Sanities, we just know it won't matter. This is the calm before the shitting of bricks.
Trump's mega deficit is causing financial conditions to tighten. The Fed is unwilling to monetize Trump's tax cut, because that would be a major step towards MMT. Hence liquidity is collapsing.
"Move along, nothing to see here"
S&P ETF volume has collapsed this past week. Today was 50% of average volume. Overall liquidity in Trump casino is non-existent. The only thing keeping the casino from collapsing is short covering by low conviction bears i.e. schmucks who don't read this blog
Retail (small investor) sentiment is deja vu of last December when the wheels came off the bus:
Active manager positioning also deja vu of last December:
Bueller?
S&P (emini) futures open interest has collapsed year over year:
Money (Out)flow:
The equity call / put ratio is at a level last associated with 2015 smash crash, December 2015 FedPlosion, and December 2018 FedPlosion:
Speaking of which. The Fed plans to deliver a hawkish message next week regarding the need for further rate cuts:
“We expect the ‘act as appropriate’ sentence to be replaced with a reference to the easing actions already delivered (mirroring the language in October 2007 and June 2008)"
Perfect. No details left out.
"On the morning after Lehman Brothers filed for bankruptcy in 2008, most Federal Reserve officials still believed that the American economy would keep growing despite the metastasizing financial crisis."
James Bullard, president of the Federal Reserve Bank of St. Louis, urged his colleagues “to wait for some time to assess the impact of the Lehman bankruptcy filing, if any, on the national economy,”
That statement was eight months into official recession.
“We saw growth of about 2 percent in the second quarter, which suggests a campaign slogan for the Republicans, ‘The Economy: It Could Be Worse,” Mr. Bernanke joked in early August 2008"
Try it this time, with Super Clown 2.0.
August 2019:
"Federal Reserve Chair Jerome Powell told a conference of central bankers last week that the economy was in a “favorable place”
How is it these fucking morons lowered rates to 1.5% but never saw recession coming?
The same way as now.
