Wall Street Bulls Battle the Bears in Mother of All Recessions
FedMed proved dead awhile ago with the whole Bulls team looking dead on the field, until Team Trump, the owner’s club, joined Coach Powell. Then Powell’s coaching team upped its game; and, finally, the Wall Street Bulls revived. “Big deal!” the Bears now yell. “Let’s get back to playing ball!”
All the government juices served in the Bullpen may have floated the dead Bulls into another rally. Yay Bulls! But they’re dead, even if they dance like phantoms.
(By the way, this article is long, but it’s not half as long as listening to an actual ball game, and it’s a whole lot more important, so hang in there; or take an intermission halfway through, because there is a lot from a short time span to cover in order to fully lay out how bad this looks for the Bulls at a time when people still think they’re making a comeback.)
The Bulls woke up during a frantic locker-room pep talk then went back out to the field and played their hardest. They now anticipate that the worst of their game is over and they are about to make a come-from-behind win. I forecast, however, they are about to get their heads stomped into the Bullpen dust … again.
In fact, that will happen again and again because we are only in the third inning after the Bulls scored almost a 50% comeback, and they look wrung out like it’s game over when we have yet to even see what real carnage the Bears can bring. The Bulls are about to find, as always the case with these World-Series-sized Wall-Street wipeouts, they’re just caught in a trap set by the Bears.
In all their irrational, greedy, drunken exuberance, the Bulls mistook this to be the the final inning for a return home to victory … because the Wall Street Bulls just can’t wait to get back into the money-making game that Coach Powell, who moved onto their team from the Federales ten years ago, pep-talked them into.
The Bulls motto under Powell and former coaches Yellen and Bernanke became “Never fight the Fed.” That has taken them to victory for years, but their streak has ended, and it’s going to end in face-wiping disgrace.
As I’ve said for years right along side their rise, Coach Powell and his gang will not be able to save them when the next recession hits, and we’re there! The Bears are now coming back into the ball field for cleanup.
The Bulls are full of … something.
The Bullheads, as their fans are called, including the talking heads on TV that cheer them on during inning changes, are about to see the biggest defeat in history. Bear Coach Bill Bonner recently pointed out some of the world’s dumbest headlines pumped out by the Bullheads:
Our economy is the greatest it has ever been!
Donald Trump, 20 January, 2020, Team Owner.
Bloomberg Economics sees global growth slowing to 1.5% year on year.
Bloomberg, 9 February, 2020, Co-Owner of the Wall Street Bulls, betting for a slight edge in victory by the end of the 2020 series.
‘There is no systemic risk. No one is even talking about that.’
Goldman Sachs conference call to the team, mid-March, reported by Marc Faber
Oh my gosh, the outrageous volume of completely asinine headlines and comments I could point out from the most popular sportscasters in finance and the Bulls top leaders just a month ago; but I’ll stay with Bonner’s short list as exemplary and move on to his game commentary as one of the few worth listening to:
The real truth?
The initial jobless counts by the Bears against the Bulls at the top of the second inning pitched the biggest strikes against the Bulls in US history.
Bloomberg: ‘US Jobless Claims Soar to Once-Unthinkable Record 6.6 Million’. The figure topped all analyst estimates and compared with a median projection of 3.76 million.
Bonner in The Rum Rebellion
And still the Bulls rallied and then rallied again when the nasty strikes happened again.
This is closer to real Black Swan stuff. This week’s unemployment filings, compared to the last half-century, are considered by frequentist statistics as a 30-sigma event: less likely to happen than if you had to select one atomic particle at random out of every particle in the universe, and then randomly again select that same particle five times in a row.
‘A 30-sigma event should be outrageously unlikely, at universe-scale. But they happen. And when they do, they warn us: the problem is not that the universe didn’t behave correctly. The problem is that we were wrong.’
Bonner was referring to another team known as the Black Swans that has been known in the past to beat the Bulls down just when they thought they were winning. The recent voluntary shutout that almost instantly swept the globe as people stayed at home and sheltered in place to watch the game is something never seen in the history of the WORLD! Yet, the Bonehead Bulls, as they are about to become known, are still betting up! You could not find a more extraordinary example of boneheadness in world history.
And this is supposedly Wall Street’s greatest team. So, after the most prolonged scoring by the Bears (dead-bull bounce as I call it) in Wall Street’s history, we now get to see the Bulls pulverized all over again. Overconfident from years of winning, due only to steroids provided by Powell and, of late, by Team Owner Trump, they actually were in such a stupor they believed the game had turned in their favor even though they were still down by half; yet, the real bad news for the Bulls is just getting started! The Bullheads cheering them on are in their own mind-bending crowd, so let the trouncing begin in earnest as the Bears take the ball game back over.
We watched the tape. The US economy is in freefall. Stock market dip-buyers should be running scared.
But wait…no! Bad news is good news…up is down…dumb is smart. They bid up the Dow more than 400 points.
Go figure. The worst economic news ever received…and the stock market goes up? Have investors completely lost their minds?
And then up and up and up again. The Bullheads wrote loops of commentary to each other about how smart the Bulls were for rallying on the world’s biggest crash, and they restored Bull confidence after one of their greatest inning crashes. The Bulls, the commentators said, were alive and well again! Some that I read said, “It’s now S&P 4,000!” (Ra Ra, Bulls.)
As the brighter Bonner went on to say, it all made some sort of bullheaded sense because the Federal Reserve just went all-in on the grandest bailouts in global history, while the Federal government also made bigger bailouts for the Bulls than it did during the Great Depression era defeat, which happened before the Bull’s ten-year run.
The Braindead Brainard-Fed Bulls took this as certain proof new victory is coming because they have been conditioned to think bailouts can accomplish anything. In my view, the new bailouts are already larger than anything we saw during the Bulls’ Great Recession defeat, but they will be ineffective anyway. Team Trump and the Fed Heads who own and manage the Bulls already got away with bailing out the losers! We’ll see a $4 trillion USA deficit before the year is over.
We saw …
… a massive infrastructure package upgrading the nation’s broadband, road and water systems, Speaker Nancy Pelosi said Wednesday, in the next installment of Congress’ effort to help the country weather the destructive blows inflicted by the coronavirus outbreak.’
That isn’t going to save the Wall Street boys.
Now, the Feds are in charge. The government will soon be spending over half GDP. And they’ll destroy the rest in good time. How? The old-fashioned way…a stark-naked, third-world-ish, sh*thole country, money-printing lollapalooza. We’re all socialists now!
Indeed we are. (At least, as a nation, though not yet all as individuals. I’m still here; you’re still here; we’re not that dumb to think socialism, of all things, will save us from the unbridled corruption we’ve allowed to flourish in capitalism.)
The MMT-ers…the big spenders…the dreamers and schemers…the Hillarys, the Sanders, the big government lovers…all the jackasses in the DC metropolitan area — lobbyists, cronies, policy wonks. They all have their pulses revved up, their mouths slobbering…and their illusions in Full Retard mode.
Yup. They’re anticipating a strategy that’s been called the Big Bull Rush now that the owners have pumped in more bonus money than the players ever dreamed of for this next part of the game, but you can see the owners, when caught in candid photos, don’t look as enthusiastic as they pretend to be.
This optimism is the legacy of a long bull market. Investors can’t conceive that the Fed will ‘allow’ the stockmarket to collapse. Think again. That was the view in 2007 too. Omnishambles rather than omnipotent.
— Albert Edwards (@albertedwards99) April 7, 2020
https://t.co/hZIm2qpKtu
Cut the Bulls*** and get real!
Let’s look at Wall Street’s strike out with its first batter in the new inning today and the reason for the out because it foretells the story I have said would be coming back into this game now. (And let’s admit it, Wall Street, for all its supposed importance, is just a game venue for bookies now. It stopped being a functioning marketplace long ago.)
First, let’s look at the backstreet bookies who make bank when Wall Street loses. I call them the Hedgehogs, and they are finally back on a winning streak. They’re accomplishing what they’re supposed to, which is making lots of money by betting against Wall Street when it is falling; i.e., they’re actually hedging the fan’s outrageous bets and winning.
Of course, they’ve had the help of the Fed Repos, a government bunch that is not supposed to bet in the Hedgehogs’ game but have been doing so in great numbers lately. After a year of living dangerously in 2019 when the Hedgehogs were the big losers because Wall Street kept insanely rising, now the Hedgehogs’ bets for adverse times are paying off … bigly, as The Donald would say.
The Bulls placed a short squeeze on the bookies known as the Hedgehogs in the previous inning which is what helped the Bulls make their run-up as the big Bull rally caused the many whose bets shorted Wall Street’s game on the way down to experience high pressure on their shorts, forcing them to participate in betting the market up. (Which is one reason shorting the market is a high-risk venture because bull traps can squeeze you out if you don’t have the either the moral of the financial strength to stay with your convictions.)
On that basis, I commented to one reader on my blog that the worst would come later in the week when the short squeezes began to roll off and when we FINALLY started seeing actual score cards from statistics gatherers on how the economy is doing and from corporate quarterly score cards.
The real numbers are coming in now, and they are worse than terrible. They pounded the Bulls down by 445 points today (Wednesday). Trust me, there is a LOT more bad news to come for the Bulls! You would have to be deep in denial not to see it coming from this massive economic shutout that has spanned the entire world!
So, here we go, just from today’s first trickle down of real, bad news:
Home-builder confidence plummets to lowest level since 2012 as coronavirus disrupts construction activity.
The index from the National Association of Home Builders posted its largest monthly decline ever in April…. The National Association of Home Builders’ monthly confidence index fell a staggering 42 points to a reading of 30 in April from 72 the month prior.
MarketWatch
Any figure below 50 on this bookie’s odds is considered recessionary.
Who couldn’t see that coming? Players’ agents can’t host opens because we have mandatory sheltering in place. Owners who are selling don’t want a bunch of viral strangers parading through and coughing on everything anyway, since some reports have said the viral antagonist can live for days on surfaces. Buyers don’t want to go through the places of people who, for all they know, carry the plague.
So, of course that arena has shut down almost entirely!
You don’t have to be a guru of this game to have seen that coming! But the Bulls didn’t see it because greed makes them want to get back into the game as quickly as possible so they can return to the glory days of endless Fed-guaranteed bailouts. (And none of them listen to me! I’ve said endlessly that the Fed’s steroids just aren’t going to work this time! The players are overmedicated and breaking down.)
Moving right along …
Empire State manufacturing index plunges to record low in April
Second straight record decline in NY Empire Index as coronavirus-related shutdowns hit the factory sector hard.
The New York Federal Reserve’s Empire State business conditions index plummeted a record 57 points to -78.2.
MarketWatch
That looks like this:
Talk about a head smashed into the dust! Wall Street was expecting -35. But more than double that at -78! I’m cheering for the Bears, so Ha! (It’s just a game anyway, Folks. That’s all it’s been for a very long time.)
Immediately, there is something you should notice about that figure. If it hit -78 after dropping 57 points, that means the scorecard was already deeply negative, and negative numbers on this bookie’s system are considered recessionary. Why was it already so negative? Because, as I said throughout the second half of last year, we entered a manufacturing recession across the nation in the summer, which intensified as the year went on. (Services just barely started to catch down to that recession in the fall.) So, we were already going there! But the Bulls claimed anyone who wrote such things on The Marketplace sports page was an idiot.
Any reading below zero indicates deteriorating conditions.
Ahem!
And, yet, we were abused with an endless parade of headlines from Wall Street and even team owner Trump about HOW FUNDAMENTALLY STRONG THE ECONOMY WAS! (Excuse me for yelling, but it is a ballgame, and I just cannot believe how HARD it was to get that obvious message through over the noise of the Bulls, and the Bulls still don’t get it! Even though they’re crashing today, as I write this piece, there are plenty of headlines today about how the Bulls are back that were already written just before these scorecards started appearing.
What happened: New orders and shipments both declined at a record pace. Delivery times lengthened and inventories fell. Employment levels contracted at a record pace…. The survey found that 85% of manufacturers reported that conditions had worsened while only 7% reported improved conditions.
What are they saying? “Manufacturing has never been in worse shape. Severely depressed demand, supply disruptions, and extremely high uncertainty will keep manufacturing on an extremely weak trajectory in the near term….”
I’d say a lot longer than that.
Did you notice it “has never been in worse shape?” The world shut down. They turned off the circuit breakers in all arenas all over the world. What did the Wall Street crowd expect the results of that would be?
Yet, the Wall Street commentators seem to be shocked to find the Fed’s steroids aren’t helping like they used to because they actually believe the Fed is almighty, omniscient and omnipotent in all things financial.
This is the second straight record decline in the Empire Index as the coronavirus-related shutdown hit the factory sector hard. The prior lowest level of the index was -34.3 during the Great Recession of 2007-2009.
I have said consistently that this recession is going to take us into a pit as deep as the Great Recession and sometimes said it may get as deep as the Great Depression. After all, we haven’t even BEGUN to see the knock-on effects yet: 1) Because the Fed has been saving the Bulls from who knows how many bank and other institutional failures by bailing them all out again. 2) Because the US taxpayer is backstopping the Fed’s effort to swallow bad debts of the banks via the US Treasury’s guarantee from the Munchkin who runs it that the taxpayer will pay for all bad debts that eventually resolve via bankruptcy cradled in the Fed’s lenient palms. 3) Because most of the knock-on effects haven’t had time to happen yet. It generally takes more than a month of hard times for zombie institutions and manufacturers to start to crumble. So, don’t even expect to see any of the knock-on effects until next month, and then expect to see them continue to show up longer than the viral shutdown continues, as they are a slightly delayed effect.
One of the first knock-ons in corporations in the US is a service provider that should be doing great business while everyone is stuck at home watching the game on their service:
“Frontier Communications Announces Restructuring Support Agreement“
Why? Because it was already a zombie company whose junk debt was rising in cost before the crisis hit.
And another zombie company:
“Retail Icon JC Penney Prepares To File For Bankruptcy Protection“
You could file that under the “Retail Apocalypse” section of this article, too.
What about the knock-on effects to banks as the bankruptcies from companies like those two above start to roll out from their major debtors? You’ll be sad to learn Bank of America’s profits have plunged 45% since the Coronacrisis. And JPM just announced its sees its profits plunging 75% in the next quarter with no recovery in profits until 2023! These are the Bulls’ big bankers who have been funding the team-building effort!
We haven’t even begun to see the bank failures yet — just word of falling profits. Clearly, the stock market does not think ahead on the economy as Wall Street loves to proclaim it does. It is intentionally in denial about totally realistic expectations of knock-on effects and chooses to believe, contrary to ALL evidence, that there will not be any lasting effects from this global shutout.
That is beyond absurd!
Next …
Industrial output in March suffers largest drop since 1946
Auto production falls sharply
MarketWatch
No kidding! Who couldn’t see that coming out of Detroit to help knock the Bulls down this season?
The almighty Ford motors is now a junk bond!
We were already in Carmageddon for almost two years, and now it’s worse. And that is just the March numbers, even though auto manufacturers did not close factories until late in the month of March! Imagine how much worse April’s inning is going to turn out to be! It’s a no-brainer, but the Bulls thought they had priced in the worst already because they want to see things through rosy glasses so they can get back to having victories and making money!
Wall Street cheerleaders hooting full of helium
What a funny sound bunch the pep crew is, even as the Bull’s Achilles heal is that they hear only the cheerleaders they want to hear.
Economists polled by MarketWatch expected a 4.1% decline in production…. Manufacturing production fell 6.3% in March.
The Economists are nothing but an out-of-town cheer squad hired by the Wall Street Bulls to root the team upward. So, who could be surprised that the Economists were too optimistic? That was constantly the case during the plunge into the Great Recession, too, when NONE of them saw it coming! And they are supposed to be the economic brains of the nation!
Nouriel Roubini might have been the only exception among economists last time the Bulls were defeated. I saw it coming, too. Why couldn’t the Economists? Roubini saw this recession coming, as well. He’s one of the few big-name economist I have any respect for because he’s not a cheerleader. The rest cannot even get things right in the area of their supposed skills! Well, shame on them! All over again for rooting for the route of their own team!
Big picture: The collapse was bigger than during the worst months of the Great Recession of 2007-2009, economists noted.
No kidding! And that was for a month when the Bad News Bears only started got up to bat near the end of the month. Wait until the April inning is over!
Factories began shutting down late in March as the coronavirus pandemic forced social distancing. Economists think manufacturing conditions will continue to deteriorate in April.
OK. They’re slow, but they are forced now to start seeing the big picture, lest they look altogether as stupid as they apparently are. But they’re cheerleaders, so what do you expect beyond ditzy? (Hey, cheerleaders, settle down. I love ya, and I know some of you are quite brilliant. Smarter than me, no doubt. Just not the popular ones on Wall Street who are deafened by their own cheers.)
What are they saying? “Very bad, but worse to come.”
Some cheering squad this is now!
Still more …
We Blew a $4.2 Trillion Debt Bubble – Then 10 Million of Us Lost Our Jobs
The Federal Reserve’s latest consumer credit report shows Americans were borrowing at record levels just as the COVID-19 crisis struck.
CCN
Yes, consumers were already borrowing at record levels? Why? Because the economy was not so great! (Tell them, now that they’re shut out of the stands and cannot even attend the games in person, that they’re supposed to be the ones who save the economy.) The benefits to the rich did not ever trickle down, and THEY NEVER WILL! (Remember. It’s a New York ball game. I can yell if I wanna!)
The latest Federal Reserve consumer credit report released on Tuesday. It shows record levels of outstanding credit in February: $4.2 trillion…. As the economy flails through the worst financial crisis in living memory, consumer credit has become a massive liability to consumers and lenders alike…. Just before the 2008 financial crisis, total outstanding consumer credit was a comparatively “paltry†$2.6 trillion.
You see: This is one of the deep economic fault lines I have been saying we have made worse since the Great Recession that will make the “next recession,” now the “present recession” so much worse. We solved a credit-created bubble by blowing up a much larger credit bubble, and that leaves us weaker for dealing with the present recession because recessions are when you may legitimately need some credit to pull over yourself when the game gets rained out because you are OUT OF WORK! (Yellen’ again because of someone who repeatedly said she couldn’t understand why things just weren’t tricklin’ down.)
Statistics have shown again and again that Americans did not have enough savings to cover one month’s worth of bills, and it turns out they also don’t have enough credit left to do that either! That is why we are seeing ready embrace of calls going out all over the world for universal wages … even from the Pope:
‘This may be the time to consider a universal basic wage which would acknowledge and dignify the noble, essential tasks you carry out. It would ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights.’
MarketWatch, The Pope
What if you don’t carry out any “noble, essential tasks” but are just a couch potato? Do you still get universal income? People have made themselves defenseless and dependent by not being prudent and saving for the bad times and by not keeping their debt levels down to where they have plenty of available credit for the hard times. Now we’re going to give them guaranteed salaries for this?
Well, you see we have to in order to quiet the masses as we bail out businesses that were equally imprudent with their cash reserves and credit!
As a result, many people are utterly dependent on the nouveau government stimulus checks, plus congress’s new hopes being talked up for guaranteed basic income for all. Unemployment benefits are one thing, as you earned them by paying for the insurance all along; but free income for life, even if you do nothing, just encourages rampant slothfulness, which now even the pope encourages, though it used to be venial sin or something like that. (Catholics, don’t attack me for not knowing my Catholic sin categories. I never made it through catechism.)
Consumers should have, as the writer quoted earlier from CCN argues, “used that opportunity [of better economic times] to shore up their finances and pay down consumer debt.”
That is how you rightly manage credit. Use it primarily when you need it, not to buy the things you simply want.
And the knock-on effect yet to show up from that?
With the economy suddenly ground to a halt, and millions of Americans losing their jobs, lenders may find that they are holding a massive pile of toxic consumer credit loans…. Consumers may find they didn’t leave themselves enough borrowing power to weather the economic storm of a lifetime.
CCN
No kidding! Who was writing about all that bad debt months before all of this? The cheering days now are ended. Thus, we find consumer sentiment has cratered. (The crowd is no longer joining in with the professional cheerleaders.)
A deeper silence was never heard.
Or, as it was heard from the nosebleed section:
Nothing. It’s the sound of silence.
Almost overnight consumers have turned from being optimistic to deeply pessimistic. The rapid spread of COVID-19 has not only destroyed lives, it’s arguably delivered the deepest blow to the U.S. economy since the Great Depression nearly a century ago.
MarketWatch
Since it was widely acknowledged that relentless consumer sentiment was the only thing buoying the spirits of the flailing economy, do you think flocking crowds are going to keep the Bulls’ spirits out of recession now that the people are not attending any games?
The same kinds of consumer-sentiment surveys are coming out of Asia and Australia and probably anywhere else. Do you think people are going to stampede through the gates when things reopen and buy a new Ford on credit as soon as they are allowed back out of their homes? Only if they are as stupid as these Bulls and as naive as the Economists … and I doubt they are.
What about that Retail Apocalypse?
Going back a little more than a week, you could see and hear all of this coming from the Bad News Bears early in this final game:
It’s appearing as though Wall Street hasn’t quite prepared for what is coming down the pipeline, as companies across the board prepare to blindside analysts with upcoming earnings reports. Walgreens, this morning, was a perfect example. Everyone believed they were a company that was coronavirus-proof, yet the stock fell after the company admitted it was still seeing decreasing foot traffic — even after the company beat its earnings estimates.
Zero Hedge
Blindsiding the ditzes of blitz, not too difficult. That was one of the first reports to come out, and it should have been heard like a roar as to what was about to come. What about this headline:
Retailers lost 46,200 jobs in March but could lose millions by May….
Cuts will be much deeper as the crisis wears on, research from the National Retail Federation shows.,… The total retail workforce could drop by two million by May.
MarketWatch
How loud has that booing from the other side gotten to be now?
That’s a big thumbs down! And that is in spite of record amounts of hoarding that sucked the shelves clean in a lot of stores.
Most of the loud clash came from the brick-and-mortar side of the industry that I’ve been reporting was losing the fight for the past two years. As I’ve also said in recent articles, contrary to Wall Street’s persistent delusion of a V-shaped, rapid, full recovery, many of those jobs are not coming back.
Does the following confirmation of my claim sound like everything is going to bounce right back to normal when the shelter-in-place order is lifted:
In what might disappoint those hoping for an immediate recovery after restrictions are lifted, Gallup found that 71% of respondents would wait and see what happens with the spread of the virus before returning to normal activities, while 10% say they would wait indefinitely. 20% said they would resume normal activities immediately.
Zero Hedge
The crowds are booing the Bulls! A sudden consumer-confidence bounce back is not one of the plays in store here, so why would businesses that were already so marginal take another swing at the ball when they already had three strikes against them? It’s a nonsense hope!
“While retailers with robust e-commerce capabilities will be better positioned, store closures will be detrimental to financial results and also compound stress in an already declining traffic environment for mall retailers,†wrote Cowen analyst Oliver Chen in a Friday note.
No kidding. Who has been saying that all along?
And the knock-on effects just to retailers has already begun:
“Fitch Downgrades 9 Retailers In One Day, Including Macy’s, Nordstrom And J.C. Penney”
Headline says it all.
S&P is no different … and the bad news there is all across the board, not just retail:
“S&P Downgrading Companies At Fastest Pace On Record“
And that was two weeks ago! Imagine what they are saying now!
The Bulls flinched to all of that and then went right back to playing hard, but the game is already over:
Yousef Abbasi, global market strategist at INTL FCStone told Bloomberg … “the fundamentals are broken.â€
No kidding. It took you, as a global market strategist until April to figure that out? The fundamentals have been broken since the Great Recession! What’s happening is that the Fed can no longer lift the Bulls out of them.
Jonathan Golub, chief U.S. equity strategist at Credit Suisse said: “While analysts are updating their numbers much more frequently than normal, their estimates remain stale. This pattern will likely continue until the start of earnings season, and beyond.”
I should think so!
Headlines like this one from Scott Minerd were the strike and ball calls Wall Street should have been listening to (if it’s only going to listen to its own) but clearly it was not:
Wall Street star money manager says S&P 500 could plunge to 1,500 in worst case, with coronavirus fallout lingering for years
“When the markets start to see some of the data on unemployment rising and economic growth and corporate earnings contracting, there will be another level of panic in the market….” Minerd said his outlook has darkened considerably further on the economy because the data has been worse than he had estimated.
MarketWatch
It is not, at all, worse than estimated here. You take the major shutdown of the world and couple that with institutions loaded with debt and starving from lack of actual business development that were kept in place since the Great Recession, and what can you expect when bad times finally hit?
Now a quick rundown before it’s game over
Here’s just a quick slew of other recent headlines that Wall Street is ignoring, which I won’t elaborate on because truly massively bad news is pouring in faster than I can write. So, just the facts, which you can check out more if you want more:
“US COVID-19 Deaths Set Daily Record As 1000s Die“
“Second Wave Of Coronavirus Layoffs Claiming Workers Who Thought They Were Safe“
“CBO Reveals Apocalyptic Forecast: Expects -28% GDP“
“Fed’s Balance Sheet Hits $6 Trillion: Up $1.6 Trillion In 3 Weeks“
“Fed’s New Repo Measures Followed a $100 Billion Treasury Exodus“
“Q1 Saw Record Downgrades To Junk And The Real Pain Is Coming“
“Dallas Fed Manufacturing Survey Crashes To Lowest Level Ever“
“U.S. Virus Plan Anticipates 18-Month Pandemic and Widespread Shortages“
“WTI Extends Losses Below $20 After Record Surge In Crude Inventories“
The oil industry right now can’t catch a bid to save its sinful soul. Oil at an eighteen-year low that stomps into the Texas dust the crisis of 2016?
“Worst global downturn since the Great Depression†says the IMF”
“Actually, it’s potentially worse than that,” says the article.
Does all of that sound like our economic collapse is letting up anytime soon? Are we going to flash back to good times and long rallies by the Bulls? What about when the coronavirus resurges in the fall? The Bulls are betting only the good stuff is coming now! In a truly schizo manner they are betting simultaneously that Fed steroids are going to keep coming, even though a return to good times would shut that supply off. That’s how disconnected they are.
Wait until real GDP numbers come in (especially in June for the second quarter, given half of the first happened before the Coronacrisis).
Do you think that last headline might indicate tha, as I’ve been saying would prove to be the case, the Fed’s steroids are creating negative side effects now that are making the players worse off because the side effects from the steroids are killing them? That is why I was saying for years that the Fed will be an utter failure at saving the game for the Bulls from the next recession. That recession is here, and The Feds meds are past their shelf life to where the negative side effects now outweigh the good effects.
The Great Plate Spinner is going to find more plates falling than it can keep up in the air, even with the (now) largest and most sweeping bailouts in the history of the world (over any same amount of time at any other point in history).
If you think the Fed isn’t failing, try this from one of the Fed’s own as she tries to put a good plate spin on how her team is losing the game now:
NY Fed Head Trader: “The Scale Of Our Asset Purchases Has Been Unparalleled”
In remarks delivered before the Foreign Exchange Committee of the NY Fed, Lorie Logan, who is the head of the Fed’s open markets … commented on the Fed’s unprecedented intervention, and takeover, of capital markets, saying that “the scale of these purchases has been unparalleled, totaling about $1.6 trillion in the past four weeks”
Zero Hedge
That’s the setup for her comments. She’s saying the Fed has never done more in her steroids department, which looks like this:
Those are some pretty big hits of the Feds meds. Clearly, that proves it is taking a LOT bigger hits from the Fed to accomplish a lot less, given that Wall Street, now having received about all that was administered in 2008 and 2009 to save the dying Bulls, has still not rebounded from 50% of its losses. Moreover, it just struck out again today!
Now listen to this department head explain Coach Powell’s failure as Team Fed now socializes the US economy in a balls-to-the-walls, unprecedented effort to manipulate and rig and cajole and force-feed the Wall Street boys upward through record QE steroids:
Logan than explain why the Fed decided it was in America’s best interest to nationalize the capital markets, saying that “supporting smooth market functioning does not mean restoring every aspect of market functioning to its level before the coronavirus crisis.“
In other words, they can’t get it up! They can’t restore the game of the Wall Street Bulls to what it once was. The Fed may not be giving up, but they’re already explaining why they’re losing to prepare their fans for that eventuality.
Why?
Some aspects … are importantly affected by fundamental factors such as how the current extraordinary uncertainty about the economic outlook influences trading behavior. These aspects of market functioning may not return all the way to pre-crisis levels for some time, even as our purchases slow.
Really? REALLY!
WHO WOULD HAVE THOUGHT OR EVER DARED SAY THAT THE MARKET AND THE FED WOULD GET TO POINT WHERE THEY COULD NO LONGER FIGHT OR DENY ECONOMIC REALTY? WHO WOULD HAVE EVER SAID IT WOULD EVENTUALLY COME BACK TO FUNDAMENTALS, AND THE FUNDAMENTALS WOULD WIN?
That is the New York Fed’s head trader explaining why their utmost is no longer enough to restore the market back to its former height. (But, hey, “S&P 4000 coming right up!” yell the Balderdash Bulls) The Fed can’t even set the pace anymore for the bond market, which they most directly manipulate:
“During the unprecedented disruption caused by the coronavirus pandemic, a great deal of new information arrives every day about the outlook for specific markets, such as housing, and for the economy as a whole. These changes in the outlook should move the Treasury and agency MBS markets irrespective of the Federal Reserve’s purchases.“
In other words, the real news is driving prices like it always should have, and the Fed can no longer overcook that, in spite of what this department head has just said is the Fed’s best and most heroic effort ever … not even in bonds where the Fed is now soaking up almost the entire market.
The final game came just as buybacks ended for losing teams
The article was a marathon, but so is all the bad news to cover. If you have any inclination left after all of that to think the game is over for the Bears just because of the Bull’s last hurrah, let’s look at how long the Bears’ game has been so far:
Yeah, what feels like a marathon, is that little yellow squeak in the corner. Do you think that, given this was the steepest crash in history at the start of the broadest global economic shutdown in history the Bears might have a little more time left to play in this game? I’m pretty sure the Bears aren’t going to pack up and run home because of half an inning that didn’t go their way. If history tells us anything, they have a lot of game left in them.
Consider, knowing full well as even most Bulls finally acknowledge, that the Wall Street team was driven upward for the entire past decade almost entirely due to Fed and tax-supported stock buybacks, then factor in this:
Goldman’s buyback desk warned that nearly 50 US companies have suspended existing share repurchase authorizations in the past two weeks…. “More suspensions are likely….” The strategist concludes that “higher volatility and lower equity valuations are among the likely consequences of reduced buybacks…. Many of our investor discussions gravitated towards the topic of dividends and share repurchases. The intensifying economic crisis, collapse in company revenues, flurry of suspension announcements, and restrictions in the recently-passed $2 trillion fiscal package have raised questions regarding future corporate cash spending priorities.”
Zero Hedge
With the Bulls’ nutrition falling off already and more fall-off to come, in addition to economic conditions being far worse than Wall Street was willing to admit, what is going to fuel a rally to new heights?
You can blame the recent rally in spite of all common sense on dumb algorithms. Fair enough to a point, but look at who programs the algorithms. Look at who wants the market to be driven by them. Look at who keeps them in place even when they are clearly pushing the stock market further and further out of joint with the real economy.
Even IF the absurd rise is due to the aglos, it is people on Team Wall Street who designed them to game each other and who are choosing to be run by them now. So, it still comes down to pitifully stupid Bulls that are going to get their heads smashed into the dust because of their own chosen denial and game rigging.
Now, here is where we are in the third inning of the game. The inning we just completed was nothing but another totally predictable bull trap. As I said at the beginning of the article, every major crash has one, and this one will be the worst trap seen in history. Like this:
If you want to watch the greatest Bull Bash in history, it’s time to buy your ticket and find a seat now. As you can see, there are a lot of innings left, and you can see how the Bulls always do when they find themselves in this kind of game. They play with all they partway through the game to pull out of the loss, wear themselves into exhaustion, then stumble and tumble and crumble into the dust.
All of the big crashes look like this! The Bears get 2-3 time’s as many runs in each inning, but they keep trying. Totally predictable bullheaded greed. Why greed? Because the Bulls just can’t stand to stay out of the game and not be making the easy wins they grew accustomed to. They think they are entitled to a world that works for them, so they eagerly rush back in at the first whiff of hope (like that single down day in New York COVID-19 death counts I mentioned a few days ago when the Bulls hit a home run).
Thus, I’m not about to let the Bulls have a free pass for their blind stupidity and roaring greed! I’m going to boo them into the dust.
Even in the extraordinary event the market does keep going up, in spite of the endless outpouring of historically atrocious economic news … all that means (as I said before) is the S&P 500 is going to become a list of revenue-stripped shell corporations, matching Frontier and JCPenny while still trading at record valuations. And what does that matter … because they’ll just be meaningless chips in a casino — nothing left but space holders for a bet? It will become the most meaningless market in history.
All of that is only the beginning of why the Bulls (to share another video) now look like this as they try to climb the stairs again … and there is more falling to come:
I hope you’ll help me pound sense into people because the blindness and the idiocy on Wall Street is all bull****, and the bailouts are already beyond anything we ever saw in the Great Depression:
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