Ponzi Unwind

This week the Fed tanked markets with a hawkish pivot off of a universally expected and yet totally unwarranted rate cut. As I said on Twitter, we are witnessing the largest monetary policy mistake of our time - the easing of monetary policy in human history's largest super bubble. To put the cherry on top of the super bubble, stock inflows prior to the FOMC meeting hit a new all time record as stock gamblers went ALL IN monetary shock. Fittingly, in a year of record inflows, the year is ending with a week of record inflows. What every Ponzi gambler finds out the hard way is that not everyone can time a Ponzi exit at the same time:

"US equities are on course for a record inflow in 2024, however, BofA flags “abnormally large daily inflows across all S&P 500 funds” on Wednesday"

ALL IN:

Heading into the holiday break next week, liquidity will collapse just as gamblers go ALL IN Ponzi markets. The carnage this week was significant, and yet there is mass complacency heading into the holiday.

Here we see that at Friday's opening lows the iconic Dow gave up all of the election rally gains:

The equal weight S&P 500 is now BELOW the pre-election level:

Jumping back to the article above:

"Strategists cautioned that both US and global equity market breadth remain dire. “Winners must keep winning to keep stealth correction ‘under the hood’,”

Let me get this straight, the market has dire breadth and yet the rally is predicated upon the divergence between winners and losers continuing to grow?

What if somehow they roll over along with the rest of the market like they did the last two times.

Then what?

New highs-new lows worst in over a year:

In summary, U.S. stocks are enjoying record inflows while the rest of the world is bidless and trading below the 200 dma for the first time in 2024.

The lesson to be learned by all Ponzi acolytes is that getting in was easy.