The Crack Up Boom. And Bust.

“There is no means of avoiding the final collapse of a boom brought about by credit expansion."

History will say that Trump's tax cut mega deficit forced the Fed to ease massively with stocks already at all time highs. Which generated a crack up boom at the end of the cycle, popping the massive credit bubble...

"The Federal Reserve has been pumping billions into the financial system after the mid-September tumult in very short-term lending markets known as repo."

But this isn’t 2009. Instead, it’s 2019...where the decade long bull market has taken another leg higher in step with a Fed liquidity effort."

Outside of the melt-up 5g Tech bubble, which I will discuss next, gamblers are already starting to ask is this reflation rally real. And the answer is no.

Ironically, borrowed Trumpflation hammered interest rate sensitives on the left shoulder and now on the right shoulder:

Higher mortgage rates are coming at the worst possible time:

The rotation into cyclicals is a headfake on the right shoulder. 

The economy won't be coming along for the ride, with borrowing costs now rising. 

Only two S&P sectors confirmed the S&P 500's all time highs this week - Technology and Industrials. No surprise these two sectors were the prime beneficiaries of the "trade war is over" hoax.

Within Industrials - only two of the top ten stocks have made new all time highs: Honeywell, and United Technologies.

Incidentally, General Electric made a new 52 week high, based entirely upon short covering. 

Within Technology the rally is also extremely narrow: A handful of 5g semiconductor stocks and of course Apple.

As we see (lower pane), new highs on the Nasdaq actually fell on the week:

Here we see via semiconductors that the 5g Tech bubble has been proceeding in fits and starts for two years now, due to the trade war. The global rollout of 5g started earlier this year. Which means this latest melt-up is every late in the game. The right shoulder of this rally is a larger fractal of the left shoulder - three higher highs:

Where this gets interesting, is that along the way, Apple got sucked into the 5g mega bubble:

Which is why Apple is also going vertical, AND is highly correlated to semiconductors:

But what really powered the rally late in the week, was Qualcomm's earnings which were better than expected, which means not as bad as expected. 

"Qualcomm reported fiscal fourth-quarter earnings of $506 million, or 42 cents a share, on sales of $4.81 billion, down from $5.83 billion a year ago"

The stock has increased 48.7% so far in 2019, including a 24.1% gain in the past three months, despite concerns about the ramp into 5G technology and a ban on selling gear to China’s Huawei Technologies Co. that sent forecasts down."

Got that? The Huawei ban sent forecasts down, which explains why the stock is now at a new all time high:

We haven't seen this kind of insanity for at least ten years:

That's the good news.

The bad news is that this rally began over three months ago, and is now running on glue fumes and blatant lies.

And subsequently, U.S. Tech and China Tech have reached over 90% overnight correlation.

Which is how this all ends. Overnight.