Start with the fact that Trump has unleashed the entrepreneurial forces of unfettered corruption. Which means that for the financial services crime syndicate, this is now an existential con job:
Basically every part of this willful delusion can be explained by the pervasively narcotic effect of "free money". Today's stampeding herd is not just single lubed as they were at this time last year, this year they are double lubed, via maximum fiscal and monetary stimulus.
Apparently anticipating what always comes next for them.
"Federal Reserve economists warn that printing money to pay for deficit spending, as Modern Monetary Theory proponents recommend, has been a disaster for other nations that have tried it"
"Monetizing deficits only works for rich people"
"How dumb are these leftists, no clue how markets work"
In other words, a Magic 8 ball of imagined reality inducing financial heroin, on top of their herd-culling pharma-narcotics.
The ones we see here going late stage parabolic the exact same way they did the last two times the casino exploded.
"New highs"
As befits the name of this blog, it falls on me to explain why "free money" sugar highs are neither healthy nor sustainable. We know for certain it doesn't fall on anyone who makes their living off of this deception. Nor does it fall upon anyone from the mainstream economics establishment, all of whom have been drugged by the simulation of prosperity and its acolyte QE. Now all dedicated converts to Disney markets.
Had I only chosen instead to write the DisneyWorld blog, I could have taken an entire decade off from writing and left the heavy lifting to today's economic Mickey Mouse club.
Never before in U.S. history has the U.S. stock market resembled a pure form Ponzi scheme, as now:
"A Ponzi scheme is a form of fraud that pays profits to earlier investors with funds from more recent investors. A Ponzi scheme can maintain the illusion of a sustainable enterprise as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own."
In today's scenario, the early investors are corporate insiders cashing out at a record rate via record stock buybacks. Also via multi-year high IPO issuance. The later investors are the home gamers who moved to the sidelines in 2008 and didn't rejoin the market fully again until Trump's election. Why they picked the end of the cycle to crowd into Trump Casino, is again not for me to say.
Here we see smart money insiders hitting the dumb money bid:
The illusion they bought with both hands was the illusion of liquidity given off by this low volume melt-up Icarus rally. Even as liquidity itself is collapsing as indicated by the "repo" market - the overnight clearinghouse between banks. This nascent liquidity problem which will grow more acute into the end of the year, will soon be manifest across every speculative asset class at the same time.
Here we see a measure of unprecedented liquidity removal, via the record U.S. Federal debt issuance taking place right now:
5% of borrowed GDP, nothing to show for it:
And below we see the solvency crisis that will be revealed by the impending liquidity short fall. Corporate debt as a percentage of GDP. If not a short-term market timing mechanism, at least one that would suggest this is all very late in the game.
In summary, what we are witnessing is the culmination of a decade of fraud - first monetary, and now combined monetary and fiscal for maximum delusional effect. Aided and abetted by today's epochal economic alchemy and flat out deceit on a scale never before approached in all of U.S. history.
Any questions?
