Hot Air Explosion
Since Weekend At Biden's abruptly ended two weeks ago, hysteria over the latest "existential" election has boosted partisan hot air to levels that are unsafe for human consumption. Each side thinks that the other side are total idiots, and for once both sides are right. Which means that the stock market is now hostage to extreme political acrimony until the election. By the end, this Idiocracy will finally figure out that neither one of these candidates is worth electing.
The hottest day on record was recorded just days before the start of the Paris Olympics which is predicted to be the hottest Olympics on record. By impossible coincidence, the previous hottest Olympics was four years ago at the Tokyo Olympics. The indelible image in Paris will be the triathletes who were face down in the brown slurry of the River Seine which was deemed unsafe for swimming mere days earlier. One is tempted to ask this festival of idiots at what point should the summer Olympics not be held at the peak of summer amid continually rising (but not man made) temperatures?
From an economic perspective, consumers are now imploding via the last source of inflation which is sky-rocketing electricity costs due to record air conditioning demand combined with record Artificial Intelligence data center demand competing with record Crypto Ponzi demand. Therefore it's only fitting that the last stocks making new all time highs are electric utility stocks which usually are the last stocks to rally.
They were in 2020:
Regarding these record Asset Inflation (AI) bubbles fueling record energy consumption, namely Crypto and Artificial Intelligence - roughly half of total Crypto market cap is Bitcoin, the other half comprises what are called shit coins. As one could surmise, shit coins are totally worthless. They are created out of thin air by Xbox couch potatoes who believe they have discovered the secret to effortless wealth. However Bitcoin has proven its "utility" in global money laundering and child porn. Which gives it some residual value, let's say 90% below current Ponzi value.
"Former President Donald Trump, who once called bitcoin "a scam," is now pitching himself as the pro-crypto presidential candidate"
Over the last two years, he appears to have made a substantial amount of money buying and selling them. He sold NFTs featuring cartoon pictures of himself in various costumes"
Trump will be the first and last Ponzi President. He would be running against Bernie Madoff right now if he was still alive.
Lastly there is the AI super bubble, wherein trillions of retirement savings are deployed with the goal of destroying white collar jobs en masse. In other words, 401k yuppies are eagerly investing in their own early retirement, just not the way they planned. Needless to say, when they finally figure out this is all 100% fraud, they will be outraged at how they were so easily conned into believing that it was everyone else's job that would be eliminated.
Which gets us to Wednesday's FOMC decision and the most widely telegraphed rate cut in FOMC history, slated for September. That fake news was met with a vertical stock market ramp on Wednesday. However, come Thursday morning and the inconvenient truth returned via the ISM Manufacturing report which showed that the economy is imploding far faster than FOMC meetings are scheduled. So the market reversed direction and promptly gave back the majority of Wednesday gains. And of course Friday morning (today), the jobs report came in much weaker than expected which is now raising the specter of imminent recession.
This was the summary insight drawn by CNBC "Pro":
Who knew?
The chart of the week is the gargantuan reversal in the Yen carry trade which I have repeatedly warned will be the source of massive global financial dislocation. Starting with a -100 point S&P futures decline this morning.
All of the trades highlighted by BofA (Hartnett) last weekend in order to maintain a "healthy correction" have now broken key support levels.
1) The Yen ($USD) shown above which has decisively broken 150 to the downside.
2) Copper is below the 200 dma:
3) The Nasdaq 100 (NDX) had to hold 18,700 and as of this writing the low of Friday (mid-afternoon) is 18,250.
Momentum Tech is even worse trading below the 200 dma.
Semiconductor stocks are falling faster than in March 2020.
The AI trade is now officially in bear market.
"The market may be just one bad monthly payrolls report away from cracking monopolistic/oligopolistic dominance, by which he means Magnificent Seven market capitalization as a percent of the S&P 500"
Check.
