False Profit

It was another crazy week. By necessity, the lies got larger as the week progressed and the markets rallied back to maximum overbought.

In my last blog post I described how markets tanked this past Monday on news that Trump was seeking ways to fire Powell. Then Trump denied those rumours and the market rallied. Mid-week, the lies grew larger. Treasury Secretary Scott Bessent claimed that trade war de-escalation with China was in the works. Trump doubled down by saying that the U.S. is actively talking to China. Markets levitated on the news. Unfortunately, Beijing came out and said that the two countries are NOT in active trade talks and no talks will take place until there is "mutual respect".

Clearly, market manipulation is now a key priority within the Trump Administration:

Bessent told reporters that the two sides weren’t formally negotiating yet, even as President Donald Trump said across town that the U.S. is “actively” negotiating with China — throwing the state of play into further confusion."

How can de-escalation be "floated" if there are no talks being held? What does that even mean.

By the end of the week, Trump had secured 200 trade deals despite there being only 195 countries in the entire world. Markets were soaring.

We've never seen this kind of lethal market manipulation before. The net effect is that shorts have now covered and retail gamblers increased their bets all while risk increased due to rampant lies. We are now entering the lowest liquidity period of 2025: Peak earnings season. And the market is the most overbought it has been since July of last year. A fact that has somehow been conflated as "good news" due to the "Zweig Breadth Thrust" which includes ONLY NYSE stocks and excludes the largest cap Tech stocks which have been dragging down the market in 2025.

As I showed on Twitter, what is being conflated as "good news" is in fact a head and shoulders top for the largest cap Tech stocks which is now as overbought on the right shoulder as it was in July on the left shoulder.

What was interesting about this week is that Tech stocks led the (short covering) rally whereas safe havens such as gold and recession stocks got pounded. In other words risk is now spreading to those parts of the market that until now have been the safest.

I will go out on a limb and say that gold has peaked given the high level of selling (see volume pane) coinciding with the extreme call volume.

All of which means that ALL global risk assets are about to implode at the same time on record volume and record volatility. Which will bring about the largest wealth collapse in human history. At that point, investors will realize they got trapped in the last and largest bankrupt Trump Casino.

And who to blame but the fool that followed?