The Best Election $1 Trillion Could Buy

Since it's abundantly clear that Banana Republicans can't win an election the honest way, they had to buy an election the Third World way - with bribery. Money they stole from taxpayers to give back to them as a tax cut. Except it all ended up in the Cayman Islands. Funny how that can happen...

The most amazing aspect of this election is that after two years of the Trump gong show, featuring 5,000 lies and America's standing in the world reduced to somewhere between farce and rubble, the Democrats are not set to run away with this impending election. And there is only one reason why that is the case - Trump stole a trillion dollars from the U.S. Treasury and injected it straight into the stock market. In the process bidding up assets, and dragging consumer confidence along for the joy ride.

Which is the entire "economic" story of 2018:

"Election 2018":

Now, with only a few days until the election, the sugar high is wearing off, and yet it's not at all clear which way the election chips are going to fall. There has been just enough denial attendant this global selloff to keep the dream alive at the edge of the cliff. Therefore with this looming Banana Republican attempt to maintain criminality as usual, the question on the table is will it even matter? Because say for example people who bought into this con job find out hours, days or weeks later they were taken for a ride. Filed under "careful what you wish for". 

In other words, does any of this political vitriol even matter at this point. The answer is no. Global risk off sentiment will be the arbiter of this circus. And by that standard, the down payment on Trumptopia has been made:

The balance is due. And it will be measured in carbon sequestration.

The only currency Mother Nature accepts.

The American Way: All Or Nothing

HINT: "All" is sold out...

The mythical American Dream is the guy who was living in his car but then goes on to bootstrap his way out of poverty, start a business, and build an empire. Ending up fabulously wealthy. Everyone outside the U.S. who hears that story wonders, why were you living in your car?

Anyone wanting to understand this week's 1929 rally amid asinine levels of risk, must first understand that it was predicated upon data starting in 1945:

Apple was the last global bubble to pop. On Friday. There is no place left to hide:

I will be honest, I never thought I would be blogging into the teeth of a global meltdown in real-time. And yet, this is exactly how it ends in an old age home. Massive denial right to the very end. No matter how nasty it gets, how illucid, irrational, incontinent. Just stupidity and denial. Nature is merciful. They never see it coming. Or going...

"The current standing is now at the highest level since February 6th of this year"

Meanwhile, recall that Barron's last week recommended the Hugh Hendry trade. As in, China is experiencing the slowest GDP growth in 25 years, and yet the Chinese authorities are in full control, hence that is where we will allocate your capital.

As we see, Barron's either timed a short-covering bounce perfectly, or they generated a short-covering bounce with their article. Makes no difference to anyone with a timeframe longer than 48 hours. 

This week, ever the optimists, they find new hope in a global arms race versus China (and Russia). Because you always want to be fully invested in your adversary, and the weapon systems to kill them, at the same time.

Diversification.

What they didn't notice is that EVERY sector has now rolled over. Unfortunately, those who are only focused on the S&P futures while listening to the soothing words of proven sociopaths, would have no way of knowing that this gong show is over. 

The Lonely Sheeple

The siren song of the demagogue is most irresistible when it's the exact opposite of the truth...

"Trump proved that facts don't matter"

I am watching the science fiction series Westworld. The gist of it is that the artificial intelligence robots eventually become more powerful than humans because they are able to learn, whereas the humans are incapable of overcoming their genetically programmed self-destruct mode. Which explains how primitive beliefs have survived for thousands of years - the part of the human brain which controls emotion is the most primitive and immutable. Unfortunately, from an historical standpoint, nihilistic periods such as now where logic and reason are wholesale abandoned to craven mass delusion, are followed by periods of extreme anarchy as the Lonely Crowd has no clue who they can trust anymore...

Speaking of inability to learn. What we've learned over thousands of years is that "belief" is the most powerful of human emotions both at the individual and societal level. Humans can't order reality, they can only order other humans through appeal to emotion. The entreaty to follow. Great good has been harnessed by the power of common belief and of course tremendous evil.

However, the greatest harm was inflicted when great evil was undertaken under the guise of great good. 

What we are witnessing in real-time are sociopaths preying upon the fears of the disintegrating middle class, in order to strip-mine what is left of the middle class. The most "powerful" men of our time don't waste their breath on facts and reality, instead they appeal to emotion. Why? Because human emotion is all powerful. Logic and reason are nothing by comparison. For various reasons, chief among them the fact that much about our existence is unknown. Hence, speculation and conjecture fill the chasmic void where otherwise fear would fester unchccked. 

Fear itself is an extremely powerful adjunct emotion to belief. Fear of the unknown. Fear of the future. Fear of change. Fear is the last redoubt of history's greatest demagogues. The easy play. Now being preyed upon to the maximum extent possible.

At the individual level, powerful emotions include, feeling of purpose, fellow respect, and of course love. A strong sense of life purpose sits atop Maslow's hierarchy of needs. Self-actualization. The feeling that we've seized upon a way of life and body of work that makes living worthwhile. Hard work rewarding. 

Respect is another powerful emotional need. The need for affirmation from others.  

Love. The domain of songwriters and poets.

But belief is unparalleled in its ability to galvanize the masses to action. Its power lies in its independence from fact and reality. Combine that with the powerful sense of belonging within the cocoon of righteousness formed by fellow believers. Groupthink on steroids. 

The domain of belief is the great unknown, which for most people includes the entire future. Where it all goes sideways for the hairless monkey is when belief spills uncontrolled into the domain of the known. Like a drunk crashing a party. At which point belief is as defenseless as a chicken crossing a busy highway. 

Personally, I only put my faith in one thing - the power of Mother Nature to keep the hairless monkey in line.

Which is well overdue. 


The chickens are in the middle of the road.

Make A Gong Show Great Again

This week ended identically to the week leading up to VolPlosion 1.0 (Charts as of Friday close). Deja vu of February, Apple imploded on the Friday and today was a rare down day on the non-farm payrolls report due to "hotter than expected" wages...

As we see, the prior two declines this year were due to "hot wages". The goal of this rally was to kiss the 200 day goodbye, which happened at the open today:

Today lived up to full gong show billing as Donny discovered the power of Twitter-driven market manipulation only to be contradicted by his own economic advisor. Nothing like an administration that can't agree on its own lies. 

President Donald Trump told reporters the U.S. and China are much closer to striking a deal on trade

"We're not on the cusp of a deal." When asked whether the president explicitly requested his top advisors to drum up a trade deal, Kudlow said "no."

Trump had the last word.

Meanwhile Apple missed on iPhone unit sales and guided down for the next quarter. The outlook is so weak that management indicated they will no longer publish unit sales. The stock imploded today. The iPhoney era is now over and the last MAGA Tech stock has officially imploded. Also deja vu of February:

What was bid today were banks as bond yields soared due to the strong wage report. The Trump apologists were all over CNBS this week blaming the out-of-control Fed for killing Trumptopia. Unfortunately, Trump's mentally challenged errand-boys have yet to explain how a 2% Fed Funds rate could possibly derail "The greatest economy ever". Because when it does, it will be the definitive proof this was the biggest con job ever...

Meanwhile, notwithstanding fake trade agreements, Chinese Tech stocks finally ran out of gas today. These stocks have been missing earnings estimates all week due to the weakening Chinese economy/currency. Alibaba being the latest company to miss, today.

Which means the short covering rally is over.

Which also means that the next leg down will see 100% correlation. To the downside:

In summary, McJobs have monkey hammered the casino twice, now three times this year.

Which means the gong show is ending.

"Higher interest rates"

Lying To Save The Empire

Team Groupthink are covering their shorts en masse, for all the reasons - imaginary trade deals, the return of stock buybacks, Apple earnings, tomorrow's jobs report, next week's mid-term elections, volatility compression, [Insert any reason here]. Which means that when this punk rally ends, there will be no one on the other side of the trade...

This entire past two year circus since the last election has been a Roger Stone production. The tale of a Russian operative run amok in Washington. It's called "No Way Out":

When Roger Stone was called upon to "save" the Republican Party, he knew exactly what he needed to do. He had to find someone who could once again rally the World Wrestling Federation "base" to vote against their own interests. It was either Trump or Gary Busey, but Trump had the experience in the ring. He knew how to break down the "fourth wall" and communicate with the audience. 

Lie constantly.

In the event, they took a guy born on third base, having the conscience of a 12 year-old crack whore and turned him into the "Blue Collar President". The last great hope of the forgotten working man.

Only in the United States can this kind of jackass crazy shit happen:

But the tale gets far more cynical than that. From the book summary:

"It was only when Anthony joined the Donald Trump for President campaign as a surrogate and economic advisor that his eyes were opened to the plight of our country's middle class. It took a billionaire real estate developer who lived in a tower on Fifth Ave to show him what had happened to the neighborhood in which he'd grown up and communities like it throughout America."

Now picture all of the Scaramucci's out there, who 35 years since "Born In The USA" railed against blue collar annihilation, are still totally oblivious to anyone but themselves. A generation of morally void frat boys. 

In other words, in the process of creating an alt-right platform predicated upon non-stop lying, Trumptopia had to first cleave itself from the past. It was an ideological whipsaw that left half of the Republican party stranded without a talk show circuit. Max Boot relegated to MSNBC cameos to undermine his own party. They were given a choice to admit the truth that everything they believe in has been a colossal fucking failure, and move diametrically away from everything they believe in, or face the reality that no one cares what they think anymore. No one on the left and no one on the right. Quite a choice. Those who were ideologically "flexible" of course had no dilemma. Power is power any way you can get it. 

Trump's proclivity for lying has even gained his own attention:

"The Washington Post’s Fact Checker reported last month that Trump had made more than 5,000 false or misleading claims in the first 601 days of his presidency — an average of 8.3 claims a day — and that the pace is picking up."

In summary, lying constantly was the entire "plan" to make America great again. Because there was no other plan. The people who led us down this path in the first place couldn't go quietly into that good night. They had to go out the most humiliating way possible. And here we are.

Their vaunted "Blue Collar" president was nothing more than a Trojan Horse for the criminal class to bilk the Treasury one more time. And yet with every asset class on the planet now going negative, the continual stream of bullshit is now piling up everywhere. Soon they will be drowning in it. 

Crude Oil is through the 200 day, as fake reflation turns back into a pumpkin. Here, there, everywhere...

The Last Bubble: Mass Delusion

Continual stream of bullshit is the last bubble on the planet, literally. There's no place left to hide, except behind make-believe. But don't take my word for it...

ZH: Record Asset Classes Down On The Year
"This is the highest percentage on record based on data back to 1901, eclipsing the 84% hit in 1920."

This retracement rally is now led by short-covering in Chinese internet stocks, which means it will have the shelf-life of a rotten banana. Overall, this week is setting up similar to February VolPlosion 1.0, albeit with a few differences. Suffice to say, high expectations going into Apple earnings were not amply rewarded back then...

This time, the stakes are 10x higher:

Rewind to February 2nd, the day after earnings:
Feb. 2nd, 2018: Apple Falls -4% Despite Strong Earnings
"The company's stock fell more than 4% on Friday. Apple released strong earnings results on Thursday but failed to fully dispel lingering concerns about iPhone demand."

Here is the lone bright spot for Tech:
Bulls don't just have to worry about what could wrong, they now have to worry about what could go right. 

But first, Donny is blatantly trying to game the casino ahead of the election next week using Twitter-based Jedi Mind Trick. Just as he did ahead of the North Korea summit in June, he has to take back everything he has said on trade until the "event" is over.

The North Korea Summit was June 11th, he imposed the $50 billion in tariffs on June 15th. The problem with Trump is that he thinks everyone is as dumb as he is. China is still pissed off about the last time this happened:

“Every flip-flop in international relations simply depletes a country’s credibility”

You never want to see Chinese Tech stocks "leading" a rally

I've learned a lot in this past decade. But by far the biggest lesson I've learned is the unlimited extent to which human beings will lie to themselves. Almost as much as they lie to others. There is NOTHING they won't believe, unless it's the inconvenient truth. In which case all bets are off. Which is how we ended up with thousands of religions and belief systems - everyone wanted their own version of what wasn't going to happen...

When Hugh Hendry penned his "Power of Imagined Realities" letter to shareholders, I was taken aback by this Madoff-inspired approach to investing. I thought it was a joke. When he turned out to be "right" - by predicting an impending Ponzi rally in real-time, I was even more taken aback. Who can predict and then monetize these types of manias? It had turned into a line of business. The practice of predicting how stupid our fellow humans will be and then cashing in. Looking back however, that is exactly what 2008 and subprime represented - cashing in on mass delusion. 

Fast forward ten years since The Big (Subprime) Short and there have been myriad bubbles across virtually every asset class. Untold opportunities to ride delusion up and short it on the way down. If that's your bag. This last delusion however was the biggest in human history - powered by $1 trillion of borrowed money. Now featuring an S&P 500 unchanged on the year and record global assets negative on the year. Despite - or indeed because of capital inflow to mass delusion.

One of the "features" of every Third World nation is the ubiquitous "get-rich-quick" scheme. If your job is unending toil in a Chipotle/Subway/[Insert here] food assembly line feeding a society of elephants hell bent on eating themselves to death, then the unoccupied mind quickly turns to how the fuck do I get out of this sweatshop? You see your friends making bank on Bitcoin, Fucktoken, Titcoin, PotCoin, CasinoCoin, SpankToken, GraftCoin, etc. etc. and the mind soon thinks "why not me?". All I need is someone dumber than me. Rule #1 of sales: always sell to friends and family first. 

It's all fun and games until someone loses an everything. 

And then you get to the end of it all and see that hopes are now pinned on the most overowned and overvalued stock in human history. A company that was once the greatest Tech company ever, then almost went out of business, and is now the greatest Tech company ever. Even better than the first Apple, the one that almost went out of business.

"Apple is the last domino standing. Its FAANG brethren have all crashed"

"Apple is the lone bright spot for Tech, within the smartphone space as well"

"I'm optimistic"