ALL IN Trump Casino

In my last blog post last Tuesday I posited that we may have seen the last rate cut for this cycle - That the combination of fiscal stimulus and monetary easing was going to create inflation sooner than later. On Thursday morning, Barron's said the same thing:

"Traders are growing in confidence that the Federal Reserve will cut rates by another quarter-point in December...But the outlook for interest rates in 2025 is only becoming less certain"

To be clear, stock traders are disagreeing with bond traders - the latter of which are not happy with Trump's fiscal policies. Nevertheless later that same day (Thursday afternoon) Powell came out and monkey hammered stock gamblers with the inconvenient truth:

From that point forward, stocks imploded and closed at the lows of the week on Friday afternoon. In other words that denial over the imminent collision of monetary and fiscal policy has already been costly, but it could become completely unaffordable in the weeks to come because we've learned over the weekend that traders rushed into stocks this past week:

"U.S. equity exchange-traded and mutual funds drew nearly $56 billion in the week ended Wednesday, the second-largest weekly haul in records going back to 2008"

Such funds have drawn inflows for seven consecutive months, the longest streak since 2021, when a dizzying market melt-up sent stocks to repeated records."

Some of the riskiest corners of financial markets are thriving too. Three of the top five days for trading in call options have occurred this month, according to options records going back to 1973."

Three out of the top five days for call volume in the same month? That's a Black Swan event in FOMO.

The junkiest crap is leading this market using call options and futures to manipulate assets higher. However, this past week was monthly options expiration. As I showed on Twitter, back in November 2021, the markets peaked during the week of monthly opex.

Revisiting Momentum Tech stocks which I showed last Tuesday, below we see that they rolled over hard at the end of this week, right on schedule.

Confirming the speculative froth hypothesis, in this chart we see that risk seeking is now at the 2007 subprime level.

The leading asset class for 2024 is of course Crypto led by Bitcoin. Here's more from the WSJ Melt-up article:

"A frenzy of trading in cryptocurrencies sent bitcoin prices above $90,000 and unleashed a historic rush into crypto funds. Dogecoin, a speculative coin backed by nothing, shot up after Trump revealed plans to create a government-efficiency department called DOGE, to be co-led by Elon Musk, a dogecoin evangelist. Its $55 billion market cap now tops that of Ford Motor."

This is Elon Musk's final insult to the legacy auto industry to champion a totally worthless currency that is now worth more than Ford.

This other WSJ article says that retail investors have been rushing into Bitcoin in record numbers which confirms that this is indeed the year of Bitcoin:

"Bitcoin demand coming across from ETFs has skyrocketed as of late"

"These assets would most benefit from a potential shift in the regulation by enforcement approach"

Fittingly, the leading stocks are the Wall Street brokers which are now 95% correlated to totally worthless Shit Coins. Two sectors that are totally worthless and the epicenter of fraud are leading this market.

In this chart, we see that Wall Street brokers are already up 50% in 2024 which is their best year to date performance to this week in November, since 2009 when they were digging out of a massive hole.

In summary, the idea that markets are just beginning a new Trump rally is fundamentally buffoonish, hence it's consensus.

Criminality has now been legalized. Position according to your beliefs and values and reap the consequences.